When companies come clean on bribery
A global report on foreign corruption reveals a high rate of self-reporting by companies that paid bribes, a sign of the momentum to curb graft in both business and government.
In October, the drilling firm Layne Christensen Co. agreed to pay nearly $5 million in federal fines over allegations that it paid bribes in Africa to win business. But here’s the real news: Because the company self-reported the “improprieties,” the penalty was about half of what it might have been. A confession led to mercy in enforcement.
In the United States, an estimated one-third of cases brought under the 1977 Foreign Corrupt Practice Act have been a result of companies self-disclosing bribery in their overseas transactions. One reason for this high level of legal – and moral – compliance is a 2010 law that gives whistle-blowers greater protection to report corruption.
But perhaps just as important, a global drive to curb foreign bribery keeps gaining momentum, especially because of better cooperation between 41 signatory countries to the 1999 Anti-Bribery Convention.
“Every day, more countries reject the notion that bribery in international business is inevitable and acceptable,” said Leslie Caldwell, head of the US Justice Department’s criminal division, in a speech last month. “Fighting corruption is not a choice we have made. It is, increasingly, a global imperative.”
Certainly more is now known about how companies pay bribes. In a report released Tuesday, the Paris-based Organization for Economic Cooperation and Development (OECD) revealed details on more than 400 cases involving companies or individuals over the past 15 years. The most welcome news in the report is this: In nearly a third of anti-graft cases, the companies brought information about bribes to the attention of authorities.
In addition, more than two-thirds of cases against companies resulted in a settlement rather than convictions. The wrongdoing was perhaps too blatant to battle in court, or the companies decided to join the trend against corruption.
The OECD estimates that if corruption were an industry, it would be the third largest, accounting for about 5 percent of the global economy.
Fear of being caught may have indeed forced many of the confessions. But perhaps more company officials recognize the damaging effects of corruption. The OECD report found the financial penalties on companies prosecuted for bribery amounted to 34.5 percent of their profits, or about $13 million per bribe.
Honesty in business dealings brings with it a measure of immunity from even being asked to pay a bribe. Openness about corruption is always a big first step. In a recent report, the Berlin-based watchdog group Transparency International stated: “The world’s largest companies are increasingly committed to reporting on their measures for preventing corruption.”
Angel Gurría, the OECD’s secretary-general, says the world has been “fighting in the dark” until this report about actual cases. The information “brings us, for the first time, face to face with our foe.”