A series of anti-bribery conventions sponsored by international and multinational organizations have been ratified by almost every country in the world. As a result, these countries have enacted laws that prohibit the payment of bribes to their own government officials, and many have enacted laws that prohibit the payment of bribes to foreign government officials. But little is known about the patterns of enforcement for these laws. TRACE publishes the Global Enforcement Report (“GER”) annually; the GER is a summary of trends in anti-bribery enforcement worldwide. The information is based primarily on investigations and cases tracked in TRACE’s Compendium, an online database of cross-border corruption cases. The trends reflected in the GER have practical implications for compliance professionals and compliance programs.
- Enforcement of anti-bribery laws remains a global priority
While the United States leads the world in the total number of investigations and enforcement actions, more countries are taking action against companies and individuals who have bribed foreign officials. Non-U.S. enforcement actions have more than doubled in the past few years and, in 2014, non-U.S. enforcement actions outnumbered U.S. enforcement actions. Companies headquartered outside of the United States should not overlook their risk of prosecution under the Foreign Corrupt Practices Act (“FCPA”). By the end of last year, approximately 40% of ongoing investigations by U.S. authorities involved non-American companies. Of those, the majority involved European companies. For example, in 2011, Magyar Telekom and Deutsche Telekom AG, both headquartered in Europe, settled civil and criminal charges with the U.S. authorities for $95 million. In 2014, two non-U.S. companies, Alstom S.A. and Marubeni Corp., paid $772 million and $88 million, respectively, to settle charges with U.S. authorities for alleged violations of the FCPA.
[bctt tweet=”Anti-Bribery Enforcement on the Rise Worldwide @TRACE_Inc” via=”no”]
Companies face the risk that they will be prosecuted in multiple countries for violating various anti-bribery laws. Far more countries focus on investigating bribery of their own officials than on investigating possible bribery of foreign officials. This trend may be increasing, as there are more than twice as many countries conducting investigations as have brought enforcement actions with respect to the alleged bribery of domestic officials. IBM, Siemens, and Diageo, for example, all settled charges with the U.S. and also paid fines or had employees prosecuted in the countries where the alleged bribes were paid. It is crucial that compliance programs be structured to prevent behavior that could lead to liability, regardless of where it takes place instead of being tailored to a specific country’s laws or regulations.
- Bribery remains a global problem
No country is immune from the impact of bribery, but doing business in certain countries comes with an increased risk of prosecution for bribery. China, Nigeria, India, Russia, Brazil and Indonesia have been the focus of enforcement activity. Compliance professionals should be aware that these countries might have both an increased risk of bribery and an increased risk of prosecution as authorities focus on these countries. Compliance efforts should be tailored to the challenges faced in these countries, such as doing more in-depth due diligence, ensuring triggered audit rights in contracts with third parties or stricter compliance requirements for agents or joint venture partners.
- Certain industries have an increased risk of bribery.
The extractive industry remains the primary focus of enforcement activity worldwide, although, increasingly, the U.S. has focused on IT and financial services. Companies operating in these industries should take more precautions and be vigilant in their compliance efforts.
Companies face risks of bribery everywhere. They now risk prosecution by both U.S. and non-U.S. authorities. The trends reflected in the GER highlight the challenges facing companies in the current enforcement environment, but also provide opportunities to strengthen compliance programs strategically. With this information, compliance professionals can tailor their programs and lower the risk that their company will become an enforcement statistic.
TRACE Global Enforcement Report: http://www.traceinternational.org/wp-content/uploads/2014/08/TRACE-Global-Enforcement-Report-2014.pdf.
TRACE Compendium: http://www.traceinternational.org/compendium