This report focuses on the concept of kickback in business. Ethics and legal are two terms that have a very thin line between each other. The definitions and explanation of the kickback concept identify the difference between ethics and legal regulations. The primary factor which covered in this report is the perception of kickback in the United States of America (USA) and France. According to measurements and investigations from past releases, Kickbacks have been use for benefits in small businesses, large enterprises, and even in politics. The questions which are covered in this report include what a kickback in business is? What are the Legal kickbacks? What is an example of the kickback in a business? Are kickbacks illegal in business? Is taking kickbacks from vendors are legal? Are kickbacks illegal in private business? What is a kickback party? Are kickbacks legal in the US? The answers to these questions clarify the concept and the limitations of the kickback.
Keywords: corrupt payment, kickback, businesses, corrupt practices, the USA, illegal, laws and regulations, unethical.
Kickback Ethics and Illegality: Borderline Between Kickback Ethics and Illegality in Business and the Concept of Kickback in the US and France.
With no surprise, it is clear to us that ethical values are different for every country. The world has become a global market now, but these differences made business processes difficult sometimes. The standard business practice that the people are used to do in one country may be not considered ethical or even legal in another state. Every country has its regulatory laws, values, ethic limitations, and legal setup.
Kickback can define as a percentage of income, gifts, or any other type of benefit to a person in power or an advantageous position. It seems to be considered unethical in the whole world but nor necessary that would be illegal too in the entire world. It is essential to introduce kickback to the student in the university level for the learning process and to make them able to lake decisions between the right and wrong (Miriam & Dana, 2017). In business processes and operations, kickbacks offered to an external influencer or business in exchange for a significant benefit or a massive contract.
The Concept of Kickback In The US And France
Kickback not considered as an ethical practice in the world according to different studies. This report is focusing on the France and US perception on the concept of kickback use in a business. France has changed many of their laws and regulations in recent years in favor to punish or fine the companies those are found involved in unethical behavior like the kickback to gain large contracts or to enjoy other benefits. In the recent years, France had many incidents of violating Foreign Corrupt Practices Act. According to the past measurement, the government of France has left no choice for America to continue prosecution (Fayez, 2017).
In all nations including France and the US, kickback is unethical in all means and fields including medicine, corporate, businesses, politics, and private operations (Pauly, 1979). It identifies that kickback is unethical in France and America and illegal in many cases. France ranks number 23 and US ranks number 16 on the Transparency International’s public corruption index. Kickback seems to be attractive to solve any business issue. But in the long run, it affects the business strategy structure and image. The United States Department of Justice (DOJ) took many steps to punish the companies who were found involved in kickback practices. This proves that kickbacks do not consider as legal or even ethical in the US. These practices are contributing to the global laws and regulations, defining global ethics and long-term beneficial practices.
The Question To Clarify The Concept And Limits Of Kickback
There is some question that considered elaborating the concept and limitations of kickback. These questions with its answers mentioned below.
1. What Is The kickback In Business?
Businesses considered kickback as it helps to protect company’s value. Businesses get involved in high-profits misconducts (e.g., bribery, kickbacks, discrimination) to enjoy different types of benefits. Mostly, businesses do that to reduce the adverse stock price reaction during their difficult times on in any problem. Kickback used in business with the goal of self-selection. But the businesses that report and maintain its corporate practices are less likely to involve in misconducts like the kickback. If a government contributes more in these reporting processes of businesses and punishment allocations, then kickback and corrupt practices can be control. These contributions can help the companies to operate their operations better (Dane, 2016).
2. What Is An example Kickback In A Business?
On March 1, 2016, it was announced by the United States Department of Justice (DOJ) that the nation’s largest endoscopes and related equipment’s distributor, Olympus Corp. of the Americas (OCA) had agreed to pay $623.2 million to solve the civil claims and criminal charges that occurred due to a scheme to pay kickbacks to hospitals and doctors. Olympus Latin America, Inc. (OLA) that is a subsidiary company of it also spends $22.8 million to solve criminal charges regarding the Foreign Corrupt Practices Act (FCPA) in Latin America (Gregory, 2018). This is an example of kickback and its punishment in the USA.
3. Is kickback Can Be Legal?
The intent of giving a gift or service depends on its acceptance. Giving a gift or entertainment of any type to the potential client and even after that client goes to work with another company, you can’t claim anything. Kickback is ethical practice but may be legal in some countries with a different perception. Having meals together and golf games and entertainment is the very common strategy used by any salesperson of a company. This couldn’t be illegal. But, many companies involved in severe bribery to gain global business is illegal anyhow. Therefore, giving gifts are not illegal in many nations except that kickback is illegal.
4. Are kickbacks Illegal In Business?
According to some global laws and regulations of the world, kickback is illegal and unethical. In the business process, kickback defines as bribing to officials for any financial gain which occurred off the book means to have no record which is illegal. It includes corrupt payments, for example, bribery, money laundering, illegal payments, smuggling, fraud, and other illicit payments (Qing, 2008). Bribes and gifts giving in the form of money are illegal in business processes. It is clear that kickbacks are used to enjoy the favor from someone in power which damage the system and merit process. Hence, in any type or size of business, kickback is illegal.
5. Taking kickbacks From Vendors Is Ethical?
Different countries have different cultures, and it observed that kickback became a culture in many countries. The common kickback practices observe between vendors and purchasers. Giving lunch or dinner, outings for games and entertainment, different types of gifts or services are the example of kickback which very common in sales processes. These all mentioned above are totally unethical but it may not illegal depending on the country. Kickback is unethical because of its damage the systematic methods or processes and unfavorable for others who are on merit. It also breaks the laws and regulations of a country and promotes corrupt payments.
6. Are kickbacks Illegal In Private Business?
Kickback is considered the same for private business as it is considered for government matters. Most of the businesses are private if its measure on the scale of all businesses in a country. Private businesses contribute more than a half to the economy of the nation. Kickback is illegal regarding its levels which are set by the government according to the country’s policy, and it is unethical in all aspects. The circumstances of kickback may vary among different cultures because of perception and context. But these circumstances are unfavorable for the nations and business system in the long run.
7. Are Kickbacks Legal In The USA?
According to the Foreign Corrupt Practice Act, the kickback or bribe is the payment, authorization, promise, or offer to pay money or any other thing possess a value with corrupt intentions or influencing anyone for the favor or a decision taken in the best interest of a one who is paying. In the USA, kickbacks are of many types, and many are illegal in different states and federal statutes beyond the Foreign Corrupt Practice Act (FCPA). New York State declares kickback and bribery as a kind of corrupt payment and unfair, corrupt practice in which someone accepts the offer or promise to act as in the best interest of a one who pays (Craig & Paul, 2018). Approximately 25 states in the USA consider kickback as a crime and have law and punishment policies on making commercial bribery. It is not legal in many states and regarded as the unethical practice.
This report concludes that kickback and commercial bribery is unethical in all countries of the world but considered illegal according to the different regions. Kickback is illegal and unethical because of its core characteristics which include the unfair influencing of a decision maker who has power and position to act in the favor or personal gain of a person paying. Kickback and corrupt practices became a global issue and getting more complicated with various types and indemnity. These entire questions above clarify the perception, context, circumstances, and damages of using kickbacks and corrupt payments and practices in a business. Different cultures of countries also contribute to set the level of differences in illegal and unethical kickback. It is unethical and illegal in almost all the nations because it promotes lawbreaking, corrupt payments, destroying merit system, and corrupt practices in the businesses that more or less damage the nation’s structure and order.
Craig, L. G. and Paul, B. C. (2018). Bribery, kickbacks and payoffs. McGovern & Greene Fraud Archives; Chicago, Las Vegas, Retrieved from https://www.mcgoverngreene.com/archives/archive_articles/Craig_Greene_Archives/bribery-kickbacks-payoffs.html [Accessed 10 Aug. 2018].
Dane, M. C. (2016). Corporate accountability reporting and high-profile misconduct. Accounting Review, 91(2), 377-399.
Fayez, R. (2017). Ethics in France & the USA. Allied Academies International Conference: Proceedings of the Academy of Legal, Ethical & Regulatory Issues (ALERI), 21(1), 15-19.
Gregory, G. A. (2018). Justice department announces largest settlement ever for violations of the anti-kickback statute by a medical device company. News & Resources LLP. Retrieved from https://www.agg.com/Justice-Department-Announces-Largest-Settlement-Ever-For-Violations-Of-The-Anti-Kickback-Statute-By-A-Medical-Device-Company-03-17-2016/ [Accessed 10 Aug. 2018].
Miriam, M., Dana, B. (2017). The ethical competence of graduates as a part of their professional competence. Scientific Papers of Silesian University of Technology. Organization & Management, 110, 139-150.
Pauly, V. M. (1979). The ethics and economics of kickbacks and fee splitting. The Bell Journal of Economics, 10 (1), 344-352.
Qing, T. (2008). Perception of business bribery in china: the impact of moral philosophy. Journal of Business Ethics, 80(3), 437-445.