The US remains, by some margin, the world’s most vigorous enforcer of anti-bribery rules. However, there are signs of growing enforcement activity in other parts of the world. While the trend lines do not yet prove an established global commitment to anti-bribery enforcement, attitudes appear to be moving slowly in that direction. Companies, large and small, need to review their compliance risks.
In 2013, the US courts imposed total fines under the FCPA of $720M on corporations. This was up on the two previous years but still down from the peak of $1,782M in 2010.
The US DOJ brought prosecutions against 14 individuals, also up on the previous three years but down from the peak of 38 in 2009. Non-US citizenship has proved no barrier to indictment. A US judge has, just last week, filed default judgements against two former executives (both German nationals) of Siemens Argentina for bribing Argentinian officials on behalf of Siemens in the 1990s. Both were fined over $500K.
Spreading commitment to enforcement
A range of countries, including Canada and BRICs Brazil and Russia, are now actively strengthening or seeking to strengthen their anti-bribery laws and enforcement agencies. Prosecutions have been brought in countries which are not signatories to the OECD Convention, such as China in relation to the GSK case. Last week the chief executive of Oman’s National Gas Company was arrested on charges of bribery. Meanwhile the OECD is putting pressure on Convention signature countries such as Australia, France and the Netherlands to enforce more actively their anti-corruption laws.
In some places, accusations of high levels of endemic government corruption have helped inflame angry street protests and destabilised states: for instance the Ukraine, Thailand and Turkey.
International anti-corruption regulators are co-operating more than ever before. The Hewlett Packard bribery investigation involved extensive co-operation between US, German and Russian regulators. On another HP investigation, the US is co-operating with regulators in Mexico and Poland.
In October 2013, the UK saw the first prosecution under its Bribery Act, which makes prosecution for bribery much easier. The UK also now allows the use of Deferred Prosecution Agreements which should simplify and accelerate enforcement. Meanwhile, the SFO has called for an amendment to the UK Bribery Act that would expand the law to cover failure to prevent “all financial crime” (not just bribery) and lead to the possible blacklisting of companies.
Up until recently bribery compliance and enforcement has mainly been found in the large corporate sector (Siemens, HP, GSK etc). Now, there is growing recognition in the SME sector that bribery is a major issue. A recent global survey by the ACCA concluded that 60% of SME’s considered bribery a risk factor in their business dealings internationally, while fewer than half thought that SME’s where fully prepared for anti-corruption compliance or indeed understood the definition of bribery. On the other hand, there is some evidence that fear of breaching bribery rules actually deters SMEs from seeking business in new markets. The big challenge for SMEs is how, given limited resources, to introduce cost-effective measures to protect themselves.
While it is too early to claim that there is an ever stronger and more effective global anti-bribery enforcement trend, there is clearer commitment in many places to challenging corruption. Companies, large and small, need to review and strengthen their anti-corruption risk protection.