Foreign Corrupt PrActices Act Quiz: Bribe Or Not?

Approved & Edited by ProProfs Editorial Team

The editorial team at ProProfs Quizzes consists of a select group of subject experts, trivia writers, and quiz masters who have authored over 10,000 quizzes taken by more than 100 million users. This team includes our in-house seasoned quiz moderators and subject matter experts. Our editorial experts, spread across the world, are rigorously trained using our comprehensive guidelines to ensure that you receive the highest quality quizzes.

Learn about Our Editorial Process

| By MichelleDunaway

MichelleDunaway

Community Contributor

Quizzes Created: 1 | Total Attempts: 246

Questions: 5 | Attempts: 248 | Updated: Mar 22, 2023

Settings

Create your own Quiz

Share on Facebook Share on Twitter Share on Whatsapp Share on Pinterest Share on Email Copy to Clipboard Embed on your website

Do you know what violates the Foreign Corrupt Practices Act? Take our quiz and find out. The Foreign Corrupt Practices Act is among the statues most feared by companies with global operations. It can also be one of the most confusing. Since 2008, the U. S. Justice Department and Securities Exchange Commission have extracted billions of dollars in criminal and civil penalties over alleged violations of the 1977 law, which bars U. S. Based or U. S. Listed companies from bribing foreign officials in exchange for business and requires them to keep accurate books and records. But the line Read morebetween legitimate business expense and bribe is sometimes hard to comprehend, and the U. S. Government takes an expansive view of the statute’s reach. How well do you know the FCPA? Take this quiz adapted from guidance published by the Justice Department and the SEC last year, to find out.

Questions and Answers

1.

Gas Corp. is a large energy firm based in New York and listed on the New York Stock Exchange. It enters into a joint venture with a private European company, Euro Gas Ltd., to bid on a contract to develop an oil field in Nigeria. Senior vice presidents at Gas Corp. and Euro Gas meet in New York and decide to hire a consultant, Middleman Inc., to funnel payments on the joint venture’s behalf to a deputy oil minister with influence over the bidding process. The payments are invoiced as consulting fees, but Middleman Inc. passes most of the money to the deputy minister. The joint venture wins the contract. Which entities are liable under the FCPA?
- A.
  
  Gas Corp.
- B.
  
  Gas Corp and Euro Gas
- C.
  
  Middleman Inc.
- D.
  
  All of the above
Correct Answer
D. All of the above

Explanation
D). All of the above: Gas Corp. is both based in the U.S. and listed on the U.S. stock exchange, either of which means it is bound by the FCPA. Euro Gas is liable because its executives made the decision to pay the bribe while they were in New York. And Middleman Inc., even though it never took any actions in the U.S., could be charged with conspiring with the other two companies to violate the FCPA. (Euro gas could be charged in the same conspiracy, even if its executives had never stepped foot in New York.)

Rate this question:
2.

At a trade show in Shanghai, Widgets Co., a Kansas City, Mo., company that wants to expand its presence in Asia, invites current and prospective customers out for drinks and pays the bar tab. Those invited include mid-level executives at companies owned or controlled by the Chinese government. Is this a violation of the FCPA?
- A.
  
  Yes
- B.
  
  No
Correct Answer
B. No

Explanation
No, the FCPA doesn’t prevent companies from promoting their businesses or providing legitimate hospitality. However, be mindful that the Justice Department and the SEC consider employees of state-owned enterprises to be foreign officials, meaning it is illegal to bribe them under FCPA.

Rate this question:
3.

After drinks, Widgets Co. executives invite executives at one of China’s state-owned utility companies to the U.S. to talk about a lucrative contract with the utility on which the American firm is bidding. Widgets pays for the officials to fly first class with their spouses to Las Vegas and puts them up in a casino hotel for a week before meeting with the Chinese executives on the final day of the trip to discuss the contract. Is this a violation of the FCPA?
- A.
  
  Yes
- B.
  
  No
Correct Answer
A. Yes

Explanation
Yes, this trip can barely be said to have a legitimate business purpose. It is extravagant and clearly meant to curry favor with the Chinese executives who have influence over whether Widgets wins the contract.

Rate this question:
4.

Mining corp., a mining company listed on the New York Stock Exchange, just identified a new mineral deposit in Afghanistan. The company needs to build a road from the deposit to a nearby port and hires a local agent to help secure the necessary permits from Afghan authorities. The agent informs Mining Corp.’s international vice president that he plans to make a one-time small cash payment to an Afghan clerk, so the clerk will stamp and file the permit applications quickly. In the past, the clerk has sat on such applications for months. The vice president authorizes the payment. Does the payment violate the FCPA?
- A.
  
  Yes
- B.
  
  No
Correct Answer
B. No

Explanation
No, the FCPA contains an exception an exception for “facilitating payments” - a euphemism for grease payments or bribes – that are paid to obtain a routine service. In other words Mining Corp. is paying the clerk to do something the clerk is suppose to do – file an application for permits. A note of caution however: Facilitating payments may be illegal in the country in which they are paid, and they have to be recorded accurately in the company’s books and records.

Rate this question:
5.

A few months later, the agent tells Mining Corp.’s vice president that he can’t get an environmental permit for the road because the planned route would cut through protected wetlands. Mining Corp. could build the road around the wetlands for about a million dollars more. Or, the agent says, the company could make a $3,000 cash payment to the director of the country’s natural resources department, who in return will sign the permit so the road can be built on the wetlands. The vice president authorizes the payment. Is this a violation of the FCPA?
- A.
  
  Yes
- B.
  
  No
Correct Answer
A. Yes

Explanation
Yes, the payment is clearly designed to influence the director, a foreign official, into using his power improperly. Unlike the clerk, the director has discretion to approve or reject the application.

Rate this question:

Quiz Review Timeline +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

Current Version
Mar 22, 2023

Quiz Edited by
ProProfs Editorial Team
Oct 01, 2013

Quiz Created by
MichelleDunaway