CES Professional Ethics & Compliance 2 — Questions and Answers
Question 1: The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from bribing foreign government officials primarily to:
- Reduce import tariffs on U.S. goods
- Obtain or retain business (Correct answer)
- Expedite visa processing for employees
- Gain access to classified trade data
Correct answer: Obtain or retain business
The FCPA's anti-bribery provisions prohibit payments to foreign officials for the purpose of obtaining or retaining business.
Question 2: Under U.S. anti-boycott regulations, a U.S. exporter receiving a letter of credit that requires a certificate stating goods are not of Israeli origin must:
- Comply silently to avoid losing the sale
- Refuse to comply and report the request to the BIS (Correct answer)
- Comply only if the contract value exceeds $100,000
- Seek a waiver from the State Department
Correct answer: Refuse to comply and report the request to the BIS
U.S. anti-boycott laws require exporters to refuse such conditions and report them to the Bureau of Industry and Security (BIS).
Question 3: Which of the following best describes a 'facilitation payment' under the FCPA?
- A legal payment to speed routine government actions (Correct answer)
- A bribe disguised as a consulting fee
- A payment to a foreign official to obtain a contract
- An advance payment required by a foreign buyer
Correct answer: A legal payment to speed routine government actions
The FCPA contains a narrow exception for small payments to foreign officials to expedite routine non-discretionary government actions, known as facilitation or 'grease' payments.
Question 4: An export compliance officer discovers a colleague submitted a Shipper's Export Declaration with an incorrect Schedule B number to reduce the apparent value of a shipment. The most appropriate first action is to:
- Quietly correct the record internally and say nothing
- Report the issue to the EAR Voluntary Self-Disclosure program (Correct answer)
- Fire the colleague immediately without documentation
- Continue monitoring for additional violations before acting
Correct answer: Report the issue to the EAR Voluntary Self-Disclosure program
Voluntary self-disclosure to BIS can significantly reduce penalties and demonstrates good-faith compliance when an export violation is discovered.
Question 5: A compliance officer faces pressure from the CEO to approve a shipment to a country under comprehensive OFAC sanctions to avoid losing a major customer. The officer should:
- Approve the shipment to protect jobs and revenue
- Approve only if the customer provides a written indemnification
- Refuse and escalate the issue to the board or legal counsel (Correct answer)
- Seek an informal opinion from a personal contact at OFAC
Correct answer: Refuse and escalate the issue to the board or legal counsel
A compliance officer must refuse to approve a sanctions-violating shipment regardless of business pressure and should escalate to appropriate governance levels.
Question 6: Which act requires U.S. persons to report requests to participate in unsanctioned foreign boycotts, even if they decline to comply?
- Export Administration Act
- Arms Export Control Act
- Export Administration Regulations anti-boycott provisions (Correct answer)
- Foreign Agents Registration Act
Correct answer: Export Administration Regulations anti-boycott provisions
The EAR's anti-boycott provisions (Part 760) require U.S. persons to report boycott requests to BIS within a specified timeframe, even when they refuse to comply.
Question 7: An exporter's sales manager offers a foreign distributor a 'special discount' contingent on the distributor paying a local government official to secure a contract. This arrangement most likely violates:
- The Export Administration Regulations only
- The FCPA, because the exporter knows the funds will bribe an official (Correct answer)
- Only the laws of the foreign country, not U.S. law
- The Buy American Act
Correct answer: The FCPA, because the exporter knows the funds will bribe an official
The FCPA prohibits U.S. companies from using intermediaries to pay bribes to foreign officials, making the company liable even if the payment is made through a third party.
CES Professional Ethics & Compliance 2
The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from bribing foreign government officials primarily to: