Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages
The Con-Way Inc. Research Paper
The Con-Way Inc. Research Paper
Summary of Findings
Con-way is a Delaware corporation headquartered in San Mateo, California. It is an international freight transportation and logistics services company that conducts operations in a number of foreign jurisdictions. During the relevant period, the company was named CNF, Inc.; it changed its name to Con-way in April 2006. Con-way’s common stock is registered with the SEC pursuant to Section 12(b) of the Exchange Act and is listed on the NYSE. 1
Menlo Worldwide Forwarding, Inc. (Menlo Forwarding), was a wholly owned U.S-based subsidiary of Con-way that Con-way purchased in 1989. During the relevant period, Menlo Forwarding was headquartered in Redwood City, California, and had a 55 percent voting interest in Emery Transnational (Emery). Con-way sold Menlo Forwarding to United Parcel Service of America, Inc. (UPS), in December 2004.
California-based Con-way Inc., a global freight forwarder, was charged by the SEC with making payments that violated the FCPA. The company paid a $300,000 penalty and accepted a cease-and-desist order to settle the FCPA enforcement action. Con-way’s FCPA violations were caused by a Philippines-based subsidiary, Emery Transnational.
It made about $244,000 in improper payments between 2000 and 2003 to officials at the Philippines Bureau of Customs and the Philippine Economic Zone Area, and $173,000 in improper payments to officials at 14 state-owned airlines. In connection with the improper payments, Con-way failed to record these payments accurately on the company’s books and records and knowingly failed to implement or maintain a system of effective internal accounting controls.
Lack of Oversight over Emery Transnational
During the relevant period, Con-way and Menlo Forwarding engaged in little supervision or oversight over Emery. Neither Con-way nor Menlo Forwarding took steps to devise or maintain internal accounting controls concerning Emery, to ensure that it acted in accordance with Con-way’s FCPA policies, or to make certain that its books and records were detailed or accurate.
During the relevant period, Con-way and Menlo Forwarding only required that Emery periodically report back to Menlo its net profits, from which Emery then paid Menlo a yearly 55 percent dividend. Menlo incorporated the yearly 55 percent dividend into its financial results, which were then consolidated in Con-way’s financial statements.
Neither Con-way nor Menlo asked for or received any other financial information from Emery. Accordingly, neither Con-way nor Menlo maintained or reviewed any of the books and records of Emery—including the records of operating expenses, which should have reflected the illicit payments made to foreign officials.
Payments to Philippine Customs Officials
Emery made hundreds of small payments to foreign officials at the Philippines Bureau of Customs and the Philippine Economic Zone Area between 2000 and 2003 in order to obtain or retain business. These payments were made to influence the acts and decisions of these foreign officials and to secure a business advantage or economic benefit.
By these payments, foreign officials were induced to (1) violate customs regulations by allowing Emery to store shipments longer than otherwise permitted, thus saving the company transportation costs related to its inbound shipments; (2) improperly settle Emery’s disputes with the Philippines Bureau of Customs, or (3) reduce or not enforce otherwise legitimate fines for administrative violations.
To generate funding for these payments, Emery employees submitted a Shipment Processing and Clearance Expense Report to Emery’s finance department. These reports requested cash advances to complete customs processing. The cash advances were then issued via checks made payable to Emery employees, who cashed the checks and paid the money to designated foreign officials.
Unlike legitimate customs payments, the payments at issue were not supported by receipts from the Philippines Bureau of Customs and the Philippine Economic Zone Area. Emery did not identify the true nature of these payments in its books and records. From 2000 to 2003, these payments totaled at least $244,000.
Payments to Officials of Majority State-Owned Airlines
To obtain or retain business, Emery also made numerous payments to foreign officials at 14 state-owned airlines that did business in the Philippines between 2000 and 2003. These payments were made with the intent of improperly influencing the acts and decisions of these foreign officials and to secure a business advantage or economic benefit.
Emery Transnational made two types of payments. The first type was known as “weight-shipped” payments, which were made to induce airline officials to reserve space for Emery on the airplanes improperly. These payments were valued based on the volume of the shipments the airlines carried for Emery.
The second type were known as “gain shares” payments, which were paid to induce airline officials to falsely underweight shipments and to consolidate multiple shipments into a single shipment, resulting in lower shipping charges. Emery paid the foreign officials 90 percent of the reduced shipping costs.
Both types of payments to foreign airline officials were paid in cash by members of Emery’s management team. Checks reflecting the amount of the weight-shipped and gain shares payments were issued to these managers, who cashed the checks and personally distributed the cash payments to the foreign airline officials.
Emery Transnational did not characterize these payments in its books and records as bribes. During the 2000–2003 period, these payments totaled at least $173,000. Neither Con-way nor Menlo requested or received any records of these payments or any of Emery’s expenses during this period.
Discovery of Improper Payments and Internal Investigation
Con-way discovered potential FCPA issues in early 2003. Starting in January 2003, Menlo initiated steps to increase Emery’s internal reporting requirements, including requiring Emery to begin reporting its income and expenses, in addition to its net profits. As a result, in reviewing Emery’s records, Menlo employees noticed unusually high customs and airline-related expenditures.
Menlo conducted an internal investigation of the suspicious payments at Emery and determined that Emery employees had been making regular cash payments to customs officials and employees of majority state-owned airlines. Based on Menlo’s investigation, Con-way conducted a broader review of all of Menlo foreign businesses and voluntarily disclosed the existence of possible FCPA violations to the staff.
After completing its internal investigation, Con-way imposed heightened financial reporting and compliance requirements on Emery. Menlo terminated a number of the Emery employees involved in the misconduct, and Con-way provided additional FCPA training and education to its employees and strengthened its regulatory compliance program. In December 2004, Con-way sold Emery to UPS.
The FCPA, enacted in 1977, added Exchange Act Section 13(b)(2)(A) to require public companies to make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer, and added Exchange Act Section 13
(b)(2)(B) to require such companies to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (1) transactions are executed in accordance with management’s general or specific authorization; and (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for assets.
As already detailed, Con-way’s books, records, and accounts did not properly reflect the illicit payments made by Emery to Philippine customs officials and to officials of majority state-owned airlines. As a result, Con-way violated SEC Exchange Act Section 13(b)(2)(A).
Con-way also failed to devise or maintain sufficient internal controls to ensure that Emery Transnational complied with the FCPA and to ensure that the payments it made to foreign officials were accurately reflected on its books and records. As a result, Con-way violated Section 13(b)(2)(B) of the Act.
Securities Exchange Act Section 13(b)(5) prohibits any person or company from knowingly circumventing or knowingly failing to implement a system of internal accounting controls as described in Section 13(b)(2)(B), or knowingly falsifying any book, record, or account as described in Section 13(b)(2)(A). By knowingly failing to implement a system of internal accounting controls concerning Emery Transnational, Con-way also violated Exchange Act Section 13(b)(5).
According to the SEC’s complaint, none of Emery’s improper payments were reflected accurately in Con-way’s books and records. Also, Con-way knowingly failed to implement a system of internal accounting controls concerning Emery that would both ensure that Emery complied with the FCPA and require that the payments that it made to foreign officials were reflected accurately on its books and records.
- The FCPA distinguishes between so-called facilitating payments and more serious activities. Do you think such a distinction and the related penalties for violations under the Act make sense from an ethical perspective? Use the utilitarian analysis to support your position.
- Assume the auditors of Con-way knew about the accounting for FCPA payments in the books and records of the company. Do you think the auditors would be guilty of: (1) ordinary negligence; (2) gross negligence; or (3) fraud? Explain.
- Given that the FCPA permits facilitating payments, do you believe it is ethically appropriate for companies to deduct such payments from their income taxes? Why or why not? What about outright bribery payments? What does the law require in each instance with respect to tax deductibility?
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
Do You Have Any Other Essay/Assignment/Class Project/Homework Related to this? Click Here Now [CLICK ME] and Have It Done by Our PhD Qualified Writers!!
The Con-Way Inc. Research Paper
Tired of getting an average grade in all your school assignments, projects, essays, and homework? Try us today for all your academic schoolwork needs. We are among the most trusted and recognized professional writing services in the market.
We provide unique, original and plagiarism-free high quality academic, homework, assignments and essay submissions for all our clients. At our company, we capitalize on producing A+ Grades for all our clients and also ensure that you have smooth academic progress in all your school term and semesters.
High-quality academic submissions, A 100% plagiarism-free submission, Meet even the most urgent deadlines, Provide our services to you at the most competitive rates in the market, Give you free revisions until you meet your desired grades and Provide you with 24/7 customer support service via calls or live chats.