I am not ranting against the FCPA, but the J.P. Morgan cases raises an opportunity to look at a “do as I say, not as I do” aspects of the FCPA.
If you spend anytime working with diplomats or individuals in the U.N. community, you will quickly find that these government and quasi-government bodies engage in exactly the behavior that has caused the investigation against J.P. Morgan. Hiring people to build relationships.
Hiring people who are part of important families of government leaders is also not unusual for corporations, as long as done within the U.S. But in the international setting, this can be seen as corrupt. Its that rational?
The unacceptable forms of nepotism within the U.S. public and private sector are, for example, when a relative is hired within the same part of an organization, or when government contracts are directly at issue. But even this is not often viewed as criminal with the same degree of penalties as imposed by the FCPA,
It is unclear at this point if the friends and family hiring alleged in the J.P. Morgan case matches well against the same standards applied to corporations within the U.S. but, assuming that the friends and family members were not be be account managers directly associated with Daddy or Mommy’s ministry contracts, is this really criminal?
Such hiring practices serve useful purposes in helping government and quasi-government organizations such as the UN achieve important objectives. These objectives may occasionally and appropriately override the objectives of general policies and procedures. (Nonetheless, there is a cost to the organization, however, that will be discussed in a separate article.)
I know that the nepotism articles in How to Fight Corruption are among the most popular.
Governments provide financial and other support for countries in order to obtain security and favorable business conditions for their corporate citizens, among other reasons.
Thus, in some respects, we are saying that we expect our governments to be the sole avenue by which business advantage is gained. Certainly not a new topic.
Perhaps J.P. Morgan and other FCPA related cases will add some additional thinking to the discussion.
Should government be allowed to develop positive relations via nepotism, but private corporations should not? Should the standards be different when corporations act domestically versus in foreign enviornments.
Where do we draw the line?
It’s far to early to predict any result of the J. P. Morgan investigation. But the evolution of the debates about the benefits and negative impacts of nepotism should be interesting.
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