Subsidiaries of Daimler charged with paying bribes to officials in Russia and Croatia have agreed to pay a $93.6 million fine to the U.S. Department of Justice (DOJ) and will also pay $91.4 million to the U.S. Securities and Exchange Commission (SEC). It is just the latest in a series of high-profile corporate bribery and corruption cases in recent years that have drawn attention to the need for companies to develop and implement international corporate anti-corruption programs.
In the United States, it is the Foreign Corrupt Practices Act (FCPA) that outlaws the practice of companies paying bribes to officials to do business in countries around the world. Many countries have statutes similar to the FCPA. There’s also an international framework under the Organisation for Economic Co-operation and Development’s (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions that requires the 38 countries that are party to it to put in place laws that criminalize the bribery of foreign public officials.
“What we see is corruption is looked upon as kind of a global threat,” says Helge Kvamme, a partner at PricewaterhouseCoopers in Norway, who specializes in anti-corruption efforts. “It’s a crime, but in addition to a crime, it’s a threat to the society; it challenges so many other areas of life. It [can even play a role in] the increasing difference between rich and poor in some countries.” The same focus has not been placed on other types of economic crime, he notes.
In 2008, German engineering giant Siemens AG settled charges that it violated the FCPA; the charges were brought by the DOJ and SEC. In one of the largest corporate fines issued in connection with the FCPA, the company agreed to pay $1.6 billion to U.S. and German authorities. That action should have served as a wake-up call for companies with global operations. Since then, investigations related to the FCPA— jointly enforced by the DOJ and the SEC—have increased.
While the precise number of ongoing investigations is not given out, in its proposed 2011 budget, the DOJ’s Criminal Division stated that it had 100 ongoing FCPA investigations from January 2009 to July 20, 2009, a 100 percent increase from the year prior. Mark Mendelsohnwas head of DOJ’s FCPA enforcement when he told attendees at the Global Ethics Summit 2010 in February that his section may grow as much as 50 percent in size in the next year or two (at press time Mendelsohn had left the DOJ for the private sector.)
In August 2009, the SEC announced the creation of specialized teams dedicated to specific enforcement areas, including the FCPA. According to media reports, Cheryl Scarboro, who was selected as the team’s leader, recently said the team’s staff size would be between 25 and 30 and that operations would be located throughout the country, including Fort Worth, Texas; Boston; Los Angeles; San Francisco; and Washington, D.C.