[davbaby]

I am attempting to write a paper on whether an overseas office is violating the FCPA and I need a better understanding of the term Commission Expense. I get the impression that it is the company's expenses spent on paying their salespeople commission, but I need to be sure. Anyone?

[Fr_Chuck]

Need more understanding of what you are looking at.
For myself, any and all expesne I have in making the sale is a commission expense, since it comes out of my money ( commission) and my profit is the difference.

[davbaby]

See the Multimedia activity on Ethics in International Business. Then read the case study about Geletx and Jed’s concerns about the office in Lima, Peru. Research the Foreign Corrupt Practices Act (FCPA) and then discuss whether this situation would be a violation of FCPA. What do you think that Jed should do?



Geletex, Inc. is a US Telecommunications corporation attempting to expand its operations worldwide. As Geletex beings its operations in other countries, it has discovered cultural, governmental, and ethical standards that differ significantly from country to country and from those in the United States. Geletex has had a code of ethics for its US operations since 1975. The company's director of compliance, Jed Richardson, provides ongoing training for employees, runs a hotline through which employees can report problems, and is well known and respected through the company for his high standards and trustworthiness.



As Geletex's international operations grow, Jed is becoming increasingly uncomfortable with what appear to be double standards for the company's US operations and its operations in other countries. Jed, who has been raveling to each of the Geletex international offices, has found the following situations, which since have been causing him some sleepless nights:



In the Lima, Peru, office, Jed, in reviewing financial records, discovered that the commission expense for the branch is unusually high. Geletex pays its salespeople commissions for each commercial customer they recruit for cellular or long-distance services. Jed knows from experience that some companies pay unusually high sales commissions to disguise the fact that salespeople are paying kickbacks in exchange for contracts. In the United States, such payments would be commercial bribery and a violation of Geletex’s code of ethics. When Jed confronted the Lima, Peru, district manager and questioned him about the high commissions, he responded, “Look, things are different down here. We’ve got a job to do. If the company wants results, we’ve got to get things moving any way we can.”



Does this office violate the FCPA? Support your answer.



This office is not violating the FCPA, unless the salespeople are offered commission in order to disguise the kickbacks being given to customers - then they are in violation.