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A Spirited Perfect Ten
- Thread starter WDW1974
- Start date
Nubs70
Well-Known Member
How is every taxpayer in violation of the FCPA? How are citizens of other countries in violation of the FCPA?
the.dreamfinder
Well-Known Member
It seems like a good time to do a repost of my primer on FCPA. I'm working on a follow up, but I'm not sure when it will be finished.
-----
Since we have been discussing what may have made Bob want to have the HuffPo Op-Ed pulled, I thought I would contribute a primer on the United States' chief foreign anti-graft law; The Foreign Corrupt Practices Act (FCPA). While I am not saying that The Walt Disney Company has made illegal payments to government officials, contractors, or its state-owner partner, the Shanghai Shendi Group, I felt it would be important to discuss the consequences of such actions and the changes it could bring to the company.
Before the passage and ratification of the FCPA, American multi-national corporations had little oversight from the federal government over payments made to officials of foreign governments and no recourse for prosecution as bribes to foreign officials were not illegal. As American corporations had unrivaled control over key global industries in the wake of WW II, unscrupulous methods for obtaining business from foreign governments became a common practice. According to a congressional report from 1977, American corporations had given "$300 million to foreign government officials, politicians and political parties.”[1] Two of the biggest scandals associated with graft involved the produce and aerospace industries.
In the early seventies, the largest Central and South American banana exporting nations created a trade bloc called the Union of Banana Exporting Countries (UBEP) in an attempt to gain leverage against the North American banana exporters who grew the bananas, controlled their export to market and had lobbied hard against increasing export taxes on each box of bananas. After the government of Honduras increased export taxes on boxes of bananas from 25 cents to 50 cents, the American based exporter United Brands paid the then president of Honduras, Oswaldo López Arellano, $3 million to return the tax to 25 cents. The trade group fell into disarray and United Brands and its fellow exporters saved millions on their tax bills. At this point, the federal government could not investigate or take the company to trial for bribing a foreign official. However, it was illegal under American securities law for corporations to hide bribes from their stockholders as hiding bribes would give them an inaccurate understanding of the company’s expenses. In Honduras, news of the bribe led to the overthrow of the military government which had placed Arellano as President. [2]
The second and much more important instance of bribery involved aerospace company Lockheed. From the fifties to the seventies, the company had a well funded operation to bribe foreign governments to purchase its military and commercial products. Countries which were bribed to buy such product included Italy, Japan, The Netherlands, Saudi Arabia and West Germany. The Japan case is interesting given Japanese officials were used by Lockheed to pressure non state-owned airline All Nippon Airlines into purchasing their jets. [1] Public outrage in these countries as well as the United States led to the forced resignation of Lockheed's chairman, president and other key management in December 1976.[2]
As a result of these major scandals and lingering public outrage over the Watergate scandal, The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter the following year in 1977. The FCPA defines bribery as the following
So here we have the US Federal Government’s core definition of bribery. However, the FCPA was updated in 1998 by the International Anti-Bribery Act of 1998. The most notable change to the law was that foreign businesses operating within the United States could not bribe foreign officials. However, the other big change was the law being brought into compliance with the OECD Anti-Bribery Convention. After the passage of the FCPA, other rich industrialized democracies, who make up the OECD, began to work on a framework for a universal anti-bribery policy. This will be more important in a little bit, but for now the Anti-Bribery Convention laid out a universal definition for what constitutes a “foreign official".
So employees of a public enterprise are considered by the OECD convention, which FCPA is compliant with, to be foreign officials. For further clarification, from the Department of Justice’s guide to the FCPA.
In China, everything is owned by or to some degree controlled by the state. For foreign multinational corporations, like Disney, to operate in PRC, they must enter a joint-venture with a local state-owned corporation, like SHENDI. So if these multinational companies are doing business with state-owned corporations in a country with a graft problem, it appears it would be incredibly difficult for a multinational corporation like a Disney or a General Motors to have tripped over the Foreign Corrupt Practices Act in their day to day operations. While that last statement may make it seem as though I am accusing those specific companies of bribery, I am not, it just seems implausible that a someone, either an official directly from the state or an employee from a state-owned enterprise, would not come along and demand to skim a little bit of money off the top.
However we are not talking solely about American corporations because the rules that govern bribery of foreign officials have been aligned in most of the industrialized world. Recall the OECD Anti-Bribery Convention I referred to for the definition of “public enterprise”? Every standing member of the OECD has signed that treaty and has implemented legislation in their respective countries to enforce those standards. [6] (China considers itself an “observer’ to this pact)
This brings us to the significance of the graft problem in the People’s Republic. The issue of graft tends to come up in the infamous case of the coked-out son of a senior party official who crashed a Ferrari. [7] While embarrassing given that party officials salaries on paper are quite low, much bigger problems abound. From the Central Government’s perspective there are two main issues. First, the Party sees corruption as an issue that offers domestic opponents/dissidents a platform which could give rise to strong movement against their single party rule of the country. To prevent a situation like this from getting out of hand, the party must prove to the people that it deserves to have complete control and its rule will serve the public most effectively. This is why Xi Jinping’s anti-graft campaign is so ruthless. The state isn’t just addressing a problem that is out of hand, but rather purging all the weeds to prevent an infestation. The other major issue is foreign investment into the country. If you have been following world news for the past couple years, concerns over a slowdown of economic growth in China has been one of the constant stories. China has had almost 40 years of economic growth at a rate that has never been seen before in history, but there has been a slow down over the past couple years. All economies need to have market corrections or recessions to preserve the health of the economy for the long term. In these circumstance, especially given how over extended the Central Government is, foreign investment is a very important lifeline and would be that more vital if the economy were to enter a recession. The opportunity in China for foreign corporations to do well, provided they understand the country and its people see Disney CEO Fumbles Entry To China, is so tremendous it is hard to resist. No matter how large that opportunity may be, corporations do not want to do business in a country where the risk of violating the law in their home countries is high. Those nations anti-bribery laws are very strong and these companies cannot shrug their shoulders and say graft is the price of doing business. Execs love money, but they certainly don’t want to go to jail either.
Now lets talk about the single largest foreign investment into the People’s Republic of China of all time, Shanghai Disneyland.
So how would this effect Disney?
Let's play a name association game. If I say sweatshops, you say....
Nike?
Apple?
Both companies are industry leaders who took the brunt of the public outrage over working conditions that plague their entire industries because they were highlighted by the media since they were prominent targets. They have become the so called posterchilds of sweatshop labour. IF The Walt Disney Company or Shanghai International Theme Park Company, SDR’s legal name, or the resort’s Disney controlled management company have violated the FCPA or investigate by the DOJ and SEC, the two departments who administer FCPA, or called to a congressional hearing, its actions will have tremendous consequences.
Does that sound really terrible? You betcha! Yet at the same time, I am very optimistic because a lot of good can come from it. For China, this may help them move past their graft culture making the business climate there much better for entrepreneurs and executives from home and abroad. For Disney, and by extension us fans, may get what we have wanted for so long; a good scrubbing of the company and new leadership that can take the company to infinity and beyond as the saying goes. The brouhaha over Mrs. Bob Iger’s role in the removal of the HuffPo article Disney CEO Fumbles Entry To China while serving as the head of USC’s Annenberg School of Journalism has given us our best ever shot at Iger. With the potential of graft at Shanghai Disney Resort, we can get rid of the whole d a m n bunch too. Let’s not let a good opportunity go to waste!
Sources:
[1]http://www.justice.gov/criminal/fraud/fcpa/history/1977/houseprt-95-640.pdf
[2]http://www.ghi-dc.org/files/publications/bulletin/bu053/bu53_007.pdf
[3]Foreign Corrupt Practices Act
http://www.justice.gov/criminal/fraud/fcpa/docs/fcpa-english.pdf
[4]OECD Anti-Bribery Convention
http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf
[5]Department of Justice Guide to The Foreign Corrupt Practices Act
http://www.justice.gov/criminal/fraud/fcpa/guidance/guide.pdf
[6]OECD Anti-Bribery Convention Ratification Status
http://www.oecd.org/daf/anti-bribery/WGBRatificationStatus.pdf
[7]http://www.theguardian.com/world/2012/sep/03/china-scandal-fatal-ferrari-crash
-----
Since we have been discussing what may have made Bob want to have the HuffPo Op-Ed pulled, I thought I would contribute a primer on the United States' chief foreign anti-graft law; The Foreign Corrupt Practices Act (FCPA). While I am not saying that The Walt Disney Company has made illegal payments to government officials, contractors, or its state-owner partner, the Shanghai Shendi Group, I felt it would be important to discuss the consequences of such actions and the changes it could bring to the company.
Before the passage and ratification of the FCPA, American multi-national corporations had little oversight from the federal government over payments made to officials of foreign governments and no recourse for prosecution as bribes to foreign officials were not illegal. As American corporations had unrivaled control over key global industries in the wake of WW II, unscrupulous methods for obtaining business from foreign governments became a common practice. According to a congressional report from 1977, American corporations had given "$300 million to foreign government officials, politicians and political parties.”[1] Two of the biggest scandals associated with graft involved the produce and aerospace industries.
In the early seventies, the largest Central and South American banana exporting nations created a trade bloc called the Union of Banana Exporting Countries (UBEP) in an attempt to gain leverage against the North American banana exporters who grew the bananas, controlled their export to market and had lobbied hard against increasing export taxes on each box of bananas. After the government of Honduras increased export taxes on boxes of bananas from 25 cents to 50 cents, the American based exporter United Brands paid the then president of Honduras, Oswaldo López Arellano, $3 million to return the tax to 25 cents. The trade group fell into disarray and United Brands and its fellow exporters saved millions on their tax bills. At this point, the federal government could not investigate or take the company to trial for bribing a foreign official. However, it was illegal under American securities law for corporations to hide bribes from their stockholders as hiding bribes would give them an inaccurate understanding of the company’s expenses. In Honduras, news of the bribe led to the overthrow of the military government which had placed Arellano as President. [2]
The second and much more important instance of bribery involved aerospace company Lockheed. From the fifties to the seventies, the company had a well funded operation to bribe foreign governments to purchase its military and commercial products. Countries which were bribed to buy such product included Italy, Japan, The Netherlands, Saudi Arabia and West Germany. The Japan case is interesting given Japanese officials were used by Lockheed to pressure non state-owned airline All Nippon Airlines into purchasing their jets. [1] Public outrage in these countries as well as the United States led to the forced resignation of Lockheed's chairman, president and other key management in December 1976.[2]
As a result of these major scandals and lingering public outrage over the Watergate scandal, The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter the following year in 1977. The FCPA defines bribery as the following
[3]
So here we have the US Federal Government’s core definition of bribery. However, the FCPA was updated in 1998 by the International Anti-Bribery Act of 1998. The most notable change to the law was that foreign businesses operating within the United States could not bribe foreign officials. However, the other big change was the law being brought into compliance with the OECD Anti-Bribery Convention. After the passage of the FCPA, other rich industrialized democracies, who make up the OECD, began to work on a framework for a universal anti-bribery policy. This will be more important in a little bit, but for now the Anti-Bribery Convention laid out a universal definition for what constitutes a “foreign official".
[4]
[4]
So employees of a public enterprise are considered by the OECD convention, which FCPA is compliant with, to be foreign officials. For further clarification, from the Department of Justice’s guide to the FCPA.
In China, everything is owned by or to some degree controlled by the state. For foreign multinational corporations, like Disney, to operate in PRC, they must enter a joint-venture with a local state-owned corporation, like SHENDI. So if these multinational companies are doing business with state-owned corporations in a country with a graft problem, it appears it would be incredibly difficult for a multinational corporation like a Disney or a General Motors to have tripped over the Foreign Corrupt Practices Act in their day to day operations. While that last statement may make it seem as though I am accusing those specific companies of bribery, I am not, it just seems implausible that a someone, either an official directly from the state or an employee from a state-owned enterprise, would not come along and demand to skim a little bit of money off the top.
However we are not talking solely about American corporations because the rules that govern bribery of foreign officials have been aligned in most of the industrialized world. Recall the OECD Anti-Bribery Convention I referred to for the definition of “public enterprise”? Every standing member of the OECD has signed that treaty and has implemented legislation in their respective countries to enforce those standards. [6] (China considers itself an “observer’ to this pact)
This brings us to the significance of the graft problem in the People’s Republic. The issue of graft tends to come up in the infamous case of the coked-out son of a senior party official who crashed a Ferrari. [7] While embarrassing given that party officials salaries on paper are quite low, much bigger problems abound. From the Central Government’s perspective there are two main issues. First, the Party sees corruption as an issue that offers domestic opponents/dissidents a platform which could give rise to strong movement against their single party rule of the country. To prevent a situation like this from getting out of hand, the party must prove to the people that it deserves to have complete control and its rule will serve the public most effectively. This is why Xi Jinping’s anti-graft campaign is so ruthless. The state isn’t just addressing a problem that is out of hand, but rather purging all the weeds to prevent an infestation. The other major issue is foreign investment into the country. If you have been following world news for the past couple years, concerns over a slowdown of economic growth in China has been one of the constant stories. China has had almost 40 years of economic growth at a rate that has never been seen before in history, but there has been a slow down over the past couple years. All economies need to have market corrections or recessions to preserve the health of the economy for the long term. In these circumstance, especially given how over extended the Central Government is, foreign investment is a very important lifeline and would be that more vital if the economy were to enter a recession. The opportunity in China for foreign corporations to do well, provided they understand the country and its people see Disney CEO Fumbles Entry To China, is so tremendous it is hard to resist. No matter how large that opportunity may be, corporations do not want to do business in a country where the risk of violating the law in their home countries is high. Those nations anti-bribery laws are very strong and these companies cannot shrug their shoulders and say graft is the price of doing business. Execs love money, but they certainly don’t want to go to jail either.
Now lets talk about the single largest foreign investment into the People’s Republic of China of all time, Shanghai Disneyland.
So how would this effect Disney?
Let's play a name association game. If I say sweatshops, you say....
Nike?
Apple?
Both companies are industry leaders who took the brunt of the public outrage over working conditions that plague their entire industries because they were highlighted by the media since they were prominent targets. They have become the so called posterchilds of sweatshop labour. IF The Walt Disney Company or Shanghai International Theme Park Company, SDR’s legal name, or the resort’s Disney controlled management company have violated the FCPA or investigate by the DOJ and SEC, the two departments who administer FCPA, or called to a congressional hearing, its actions will have tremendous consequences.
- Iger and Company would be gone.
- Central Government would begin an aggressive purge of the state-owned corporations involved with SDR.
- Most importantly, Disney is permanently associated with bribery, much in the way Nike and Apple have been with sweatshop labor. This leads to a permanent scar on the company and the BRAND from which they may never fully recover from.
Does that sound really terrible? You betcha! Yet at the same time, I am very optimistic because a lot of good can come from it. For China, this may help them move past their graft culture making the business climate there much better for entrepreneurs and executives from home and abroad. For Disney, and by extension us fans, may get what we have wanted for so long; a good scrubbing of the company and new leadership that can take the company to infinity and beyond as the saying goes. The brouhaha over Mrs. Bob Iger’s role in the removal of the HuffPo article Disney CEO Fumbles Entry To China while serving as the head of USC’s Annenberg School of Journalism has given us our best ever shot at Iger. With the potential of graft at Shanghai Disney Resort, we can get rid of the whole d a m n bunch too. Let’s not let a good opportunity go to waste!
Sources:
[1]http://www.justice.gov/criminal/fraud/fcpa/history/1977/houseprt-95-640.pdf
[2]http://www.ghi-dc.org/files/publications/bulletin/bu053/bu53_007.pdf
[3]Foreign Corrupt Practices Act
http://www.justice.gov/criminal/fraud/fcpa/docs/fcpa-english.pdf
[4]OECD Anti-Bribery Convention
http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf
[5]Department of Justice Guide to The Foreign Corrupt Practices Act
http://www.justice.gov/criminal/fraud/fcpa/guidance/guide.pdf
[6]OECD Anti-Bribery Convention Ratification Status
http://www.oecd.org/daf/anti-bribery/WGBRatificationStatus.pdf
[7]http://www.theguardian.com/world/2012/sep/03/china-scandal-fatal-ferrari-crash
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Because I'd be willing to bet tax dollars make their way into the hands of others as bribes etc.
ford91exploder
Resident Curmudgeon
That's a bet I think you would win.
Nubs70
Well-Known Member
Please see post 6638800
Um ok.
I can't in any way compare WDW's stagnation in the 21st century to the OLC in any way, shape or form.
The OLC was in a period of assessing where their business was and where they thought it was going. They considered many things, even theme park projects that did not involve Disney or its IP.
So, for a few years all you got was multiple new parades and stage shows a year, new menus, new seasonal entertainment in parks run to the highest standards that are actually a 'deal' to visit.
Yeah, no comparison to what is (or isn't) happening in the swamps.
BTW, found this great hashtag on the Twitter: #DisneyBribes ... I think that goes well with #DisneyCensors myself!
Not the point, Cesar. If one park ... one resort is managed so much better than the other (they really aren't, believe me, they just are investing in things beyond MAGIC tracking bands, datamining and trip planning apps), then it has to get the basics down.
One basic is show quality. You don't have the money scene of your much-hyped new attraction non-functional a very large portion of the time it is open.
You just don't. Unless you are a UNI apologist.
#DisneyBribes #DisneyCensors
spacemt354
Chili's
10? The ride hasn't even been open for 10 years
Interesting way to put it. I kind of like that analogy. I have some thoughts as to why Disney isn't talking about its partners, but at this point ... well, I just don't want to go there. You might want to look into some of the 'residents' of Golden Oak to, perhaps, better get where I am coming from.
RSoxNo1
Well-Known Member
This was getting ridiculous 5 movies ago.
A thesis (much more academic and realistic than Dr. Blondie's PhD in texting. No, I am not making that up!) could be written on how Disney has been working for over 15 years to condition its Guests to expect less, pay more, and then talk about how MAGICal the place is on social media.
The monorail thread, with apologists doing their thing, is a great example of that. Any thread on tickets going up in price (like say 20% in two years for the Halloween and Christmas parties because Disney wants to remove the value that some people get by buying them and using them as a de facto day's admission to the MK) would be the same.
#DisneyBribes #DisneyCensors (BTW, how many passive aggressive Twits who have issues with my style won't Tweet those even if they could help bring about REAL, positive CHANGE for the company they profess undying love for?)
RSoxNo1
Well-Known Member
I know the nature of these threads is something different, but I'm pretty sure this is the only post in this thread that contains actual rumor related to the parks.
What effect on Gringotts isn't working correctly?
It's not just that $800 million. I am trying to get my hands on actual Disney releases and docs that typically are sent to analysts, but it seems like a few hundred million more (from the initial accounting seems to not be figured in down the line) ... but what's a billion amongst friends anyway.
Pass the $21 'shrooms. (much like the asparagus, they damn well better please me orally in multiple ways!)
#DisneyBribes #DisneyCensors
Spirited CM Musing:
I really feel bad for WDW CMs who are sold the idea that working in lousy conditions for a company that views them as a body ...a body that often is abused mentally (and sometimes physically) by entitled Guests ... because that $8.50 an hour will come with a pass that allows them to walk into the parks for free and bring family and friends as well.
Have you looked at the number of blockout dates (I always call them blackout dates. Am I being a racist?) It is astounding that you barely have any open dates at the MK over the next three months and plenty of dates where you can't walk anyone in at the park without a name and DAK. Only EPCOT has absolutely no dates blocked out in April, May or June.
Gee, a cynical Spirit might suggest that is because Disney is looking to direct CMs there to spend money on food and booze.
I really feel bad for WDW CMs who are sold the idea that working in lousy conditions for a company that views them as a body ...a body that often is abused mentally (and sometimes physically) by entitled Guests ... because that $8.50 an hour will come with a pass that allows them to walk into the parks for free and bring family and friends as well.
Have you looked at the number of blockout dates (I always call them blackout dates. Am I being a racist?) It is astounding that you barely have any open dates at the MK over the next three months and plenty of dates where you can't walk anyone in at the park without a name and DAK. Only EPCOT has absolutely no dates blocked out in April, May or June.
Gee, a cynical Spirit might suggest that is because Disney is looking to direct CMs there to spend money on food and booze.
Fulton's is almost inexpensive at lunch ... and you can dine with some way kewl Spirits there from time to time!
#DisneyBribes #DisneyCensors
RSoxNo1
Well-Known Member
Disneyhead'71
Well-Known Member
I love Fulton's. I am just thinking that the WDW fan base will be drawn to the shiny new toy like moths to a flame.