A Sea Change in Global Anti-Bribery Enforcement

A Sea Change in Global Anti-Bribery Enforcement

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September 15, 2015

Every country in the world prohibits their citizens from bribing government officials. But it is equally accepted that most countries did not criminalize bribery of foreign government officials until the late-1990s, and enforcement of those laws has historically been weak outside of the United States. According to data released in 2013 by the Organization of Economic Cooperation and Development (OECD), over half of the forty signatories to the OECD’s anti-bribery convention had yet to impose any sanctions for cross-border corruption.

But a confluence of factors, including increased international cooperation amongst enforcement agencies and public outrage caused by recent global scandals like Petrobras and FIFA, have caused an undeniable sea change in the enforcement statistics over the past few years. According to the TRACE 2014 Global Enforcement Report (GER), non-U.S. enforcement actions have more than doubled since 2012, and in 2014 non-U.S. enforcement actions concerning bribery of foreign officials outnumbered U.S. enforcement actions for the first time.

This change is good for international business; it helps to normalize compliance with international anti-bribery laws among global competitors. It used to be that U.S. companies could justifiably complain that strict enforcement of U.S. anti-bribery laws put them at an unfair disadvantage in global business. That argument holds less weight as more and more countries up the enforcement ante. In Australia, local police are investigating a surge of foreign bribery allegations, and in a speech last September by David Green, the head of the United Kingdom’s Serious Fraud Office (SFO), announced that the agency had officially “recovered its mojo” and is actively pursuing cases against thirty-seven different defendants.

More governments are also following the lead set by the SEC’s whistleblower program and encouraging their citizens to come forth with allegations of wrongdoing. In China recently, the Reporting Center of the Supreme People’s Procuratorate announced that it had received on average 15,000 whistleblower reports per week over the past year. Companies, too, are coming forward and self-disclosing to enforcement agencies. This month, a judge in Oslo convicted the former chief executive officer of fertilizer firm Yara International and three members of his top management team after the company disclosed to Norwegian officials that it had paid bribes in order to win business in Libya and India. A few days later, Chinese authorities arrested six former employees of Tencent Holdings Ltd. after the company notified police of wrongdoing as a result of an internal bribery investigation.

As recently as just five or six years ago, it was common to hear critics of U.S. law say that corruption was “just the way business is done” in certain parts of the world. But while corruption is certainly a constant challenge in many jurisdictions, the trend of anti-bribery enforcement and corporate compliance is no longer exclusively a U.S. phenomenon. According to Deloitte’s Compliance Trends 2015 survey, over half of African companies had increased their compliance budgets over the past year. Global awareness of the corruption problem and a willingness to actually go after corrupt actors has flattened the playing field in international business transactions. That should be a welcome change for everyone.

For more on this topic, please see the following resources:

TRACE Global Enforcement Report (GER) 2014
DOJ Poised for Uptick in FCPA Enforcement in 2013
Anti-Corruption Efforts Heat Up in Italy

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