OECD highlights uneven enforcement of bribery laws

The US is seen to be leading the way in pursuing overseas bribery, but many other leading nations failed to prosecute a single case of foreign corruption within the OECD's sample period

Only 17 of the 41 member countries of the Organisation for Economic Co-operation and Development (OECD) – and only eight of the G-20 leading economies – have successfully penalised foreign bribery schemes, with more than half of all successful investigations occurring in the US.

Of 207 schemes successfully investigated and penalised worldwide since 1999, 128 were in the US, says the OECD's Foreign Bribery Report. And according to Leslie Caldwell, assistant attorney-general at the US Department of Justice (DoJ), the country is "far from done in eliminating the scourge that is foreign bribery", particularly with its heightened "focus on the larger and multinational cases".

Caldwell, speaking in Paris this week at the launch of the report, said that since 2009 the DoJ has convicted more than 100 individuals and companies for offences related to the Foreign Corrupt Practices Act (FCPA), with penalties and forfeiture in that time reaching "approximately $3 billion".

During the same period, the US Securities and Exchange Commission (SEC) resolved civil actions against more than 65 companies and 25 individuals, she said, bringing the total FCPA penalties by the DoJ and the SEC to "roughly $4.5 billion".

The OECD report looks at 427 cases of individuals and companies being investigated, prosecuted and sanctioned between February 1999 and June 2014. The report shows that the majority of bribes paid at the international level are by large companies from developed countries, and carried out with a high degree of involvement or awareness from senior managers and even chief executives.

Often involving multiple individual and corporate defendants from different countries, 128 separate foreign bribery schemes have been sanctioned in the US since 1999, with the second-highest tally reached by Germany (26), followed by South Korea (11).

Speaking at the same event, Brackett Denniston, general counsel at General Electric, said: "It's shocking that enforcement is so uneven in the OECD countries. [Court cases and settlements] have been confined to just a handful of countries. There are so many in the OECD that haven't prosecuted any foreign bribery cases."

Denniston also pointed to the strong economic incentives for enforcing against bribery in countries at all levels of development: "Every dollar spent to bribe is a dollar not spent on innovation or put to productive use. Companies that use dollars to bribe are not going to lead the world in innovation and jobs."

Jose Ugaz, chair of the anti-corruption NGO Transparency International, agreed, saying that "corruption is a tax imposed on the poorest and most vulnerable in our societies." Transparency International published its annual Corruption Perceptions Index on December 3, which examines the perceived levels of corruption in 175 countries, with a 0 being "highly corrupt" and 100 being "highly clean".

Some OECD countries yet to make the list of successful sanctions against foreign bribery schemes received below 50 on this year's Transparency International index, including Mexico, which scored 35 out of 100, Greece and Italy, both scoring 43, and Turkey, 45.

Only eight of the countries to have prosecuted foreign bribery are members of the G-20 countries – demonstrating "significant scope for G-20 countries to do more to effectively investigate, prosecute and sanction bribery of foreign public officials", the OECD said.

Approximately 390 foreign bribery-related investigations are currently ongoing in 24 (out of 41) countries party to the OECD Anti-Bribery Convention. The OECD stresses that international collaboration remains vital to begin proceedings against others, regardless of where the bribe is carried out.

As an example of cross-border collaboration, the DoJ's Caldwell described a multi-year scheme carried out by executives at Japanese trading company Marubeni Corporation and French energy company Alstom. Millions of dollars were spent in bribes to high-ranking members of the Indonesian parliament to secure a $118 million contract for power-related services in Indonesia.

Marubeni Bank pleaded guilty in the US in March 2014 and paid an $88 million penalty – in addition to four Alstom executives being charged separately – and enforcement actions for the scheme have also been brought by authorities in Switzerland and the UK and by the World Bank. In addition, the UK's Serious Fraud Office in July 2014 charged the UK arm of Alstom with six offences of corruption and conspiracy to corrupt, alleging the company paid around $8.5 million in bribes over six years, to win transport contracts in India, Poland and Tunisia. The case was based on information from the Swiss attorney-general office, which ordered Alstom in another case to pay SFr38.5 million ($39 million) for corporate negligence in 2011.

"That's what we're going to see in the future," explained Caldwell. "Big countries involved in the scheme, and big countries that can bring it to justice."

The OECD report calls on countries to lead by example, strengthen their whistleblower protection measures and better publicise the findings of all concluded cases of foreign bribery, particularly as a lack of access to information limited the scope of its report.

Widespread use of intermediaries in foreign bribery cases (three out of four) also shows that businesses need to have reasonable due diligence procedures in place and more effective supervision as part of compliance.