INCIDENT 2 Illegal Hiring

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from bribing foreign officials; yet, the number of violations each year is staggering. Some violations center on the use of unethical HR practices. For example, the banking industry has been investigated for its internship and full-time employment hiring practices. The Bank of New York Mellon Corp. (BNY Mellon) gave internships to family members of foreign government officials. The banks leadership intended to maintain or increase business with a Middle Eastern sovereign wealth fund. Internship programs are legal and BNY Mellon has a legitimate internship program, but these internships were awarded outside the accepted procedures and criteria used in its program. The U.S. SEC issued a cease-and-desist order, stating that Delivering them [internships] was seen by certain relevant [bank] employees as a way to influence the officials decisions. This is the first cease-and-desist order of which internship hiring was the subject. Phillip Bezanson, a Bracewell & Giuliani Law LLP (firm) partner stated that the concept of anything of value under the FCPA can be really abstract.. . . In the end, the bank agreed to pay a $5 million penalty, give up $8.3 million, and pay $1.5 million in interest.

1. 2-21. What would you have done in response to learning about these facts?
2. 2-22. What factors in this situation might influence a company to make less-than-ethical decisions?

Writing Assignments

1. 2-23. Why should a firm want to create an ethical culture?
2. 2-24. Why is everyone not on board about corporate social responsibility?