NCJ Number
70403
Date Published
1980
Length
22 pages
Annotation
An alarming number of examples of questionable corporate overseas payments has surfaced in recent years, including transactions facilitated by elaborate methods of concealment, such as the falsification of records.
Abstract
Illegal corporate payments overseas have been made for four basic reasons; i.e., (1) to procure or maintain business and corporate activities, (2) to evade the payment of foreign taxes, (3) to prevent potential government interference with corporate operations, and (4) to affect or expedite ministerial matters at the lower levels of foreign governments. In almost all cases of overseas corporate payment a specific business benefit is sought, and a foreign government official is involved, either directly or indirectly. Some foreign payments, intended to influence the outcome of a public election, are more political than business in nature. Improper and illegal corporate payments have involved both cash and noncash transactions; payments have often been made from secret slush funds and secret bank accounts (e.g., numbered bank accounts in Switzerland or Liechtenstein). The techniques for concealment or diversion of funds include overbilling; rebating; and entering illegal payments as entertainment, or publicity and promotion expenses. Among the chief causes of improper corporate activity abroad are the different standards of business ethics prevailing in other cultures, defined by American corporations practicing them as a different cultural approach to doing business. Another determinant of this type of corporate corruption is the competition by other western countries, such as Great Britain and France, which are aggressive in paying bribes when doing business abroad. Corporate corruption of this type is by no means common to all American corporations with interests abroad, but is widespread enough to cause alarm and require corrective measures.