Answer the following questions regarding this tip.

1. Which law(s) are you concerned that the company may be violating and what are the consequences of violating this (these) law(s)?

2. As audit committee chair, what action should you take to investigate the lip?

3. If you find through whatever initiatives you take that the allegations are true, what should you do and what are the pros and cons of self-reporting of the government?

You are the audit committee chair for a large construction company. A year ago you purchased a development company in Europe for approximately $100 million. This company has already lined up a number of large projects in Italy, Ger many, and other European countries that take advantage of government incentives and subsidies.

You just received a tip (not anonymous) from a female attorney working for the European subsidiary who alleges that the CEO of the European subsidiary is paying bribes to key governmental officials to get favorable treatment on major projects. The tip is quite specific in that it names (I) the government officials who have been paid bribes, (2) the nature of the payments (they have been labeled consulting fees but you have been told they lack any legitimate documentation), and (3) the amounts that have been paid.