Bribery Prosecutions Revive Following 2012 Lag
The National Law Journal
Foreign bribery and corruption prosecutions declined during 2012, even as 15 new countries were cracking down on such crimes involving their own government officials, according to a survey by Trace International Inc.
Trace's Global Enforcement Report, released on Monday, found that prosecutions under the U.S. Foreign Corrupt Practices Act against individuals, businesses or government entities dropped by 52 percent compared with 2011. In countries other than the United States, foreign bribery prosecutions fell by 42 percent.
"It's back to 2009 levels and about the same is true for all the rest of the world," said Julie Coleman, senior director of advisory services at TRACE, a nonprofit organization based in Annapolis, Md., that focuses on anti-bribery compliance. "It's a continuing downward trend."
According to the report, the number of FCPA enforcement actions during 2012both by the U.S. Department of Justice and the Securities and Exchange Commissiontotaled 20, down from 42 in 2011 and from 26 in 2010. Enforcement actions under foreign bribery laws by other countries fell to seven from 12 in 2011.
Despite last year's decrease, enforcement actions are surging in 2013, Coleman said. "We don't think 2012 is a harbinger of what's going to happen in 2013," she said. "Originally, it was off to a slow start, but there are a lot of things percolating."
The report found that mining and other extractive industries continued to be responsible for the most foreign bribery actions, followed by manufacturing and service providers; aerospace or defense/security; and health care. However, investigations now are pending in retail and entertainment.
For the first time, the report included the number of anti-bribery inquiries or enforcement actions closed by enforcement authoritiesreferred to as declinations. The United States accounted for more than 73 percent of the worldwide number of declinations since 1977, when the U.S. Foreign Corrupt Practices Act was enacted; six other countries were responsible for the remaining actions.
"The U.S. government and the Department of Justice have been very adamant that they will reward self disclosure and really give credit for robust compliance programs," Coleman said. That became especially true after federal prosecutors declined to prosecute Morgan Stanley last year after reaching a plea deal with its former managing director, Garth Peterson.
The government cited the company's disclosure that Peterson had conspired with a Chinese public official to secretly purchase from Morgan Stanley an ownership interest in a building in Shanghaiand its extensive internal policies designed to prevent bribery.
The number of declinations, culled primarily from SEC filings, supports that trend, she said.
The report traced a number of continuing trends. Since 1977, the United States has pursued 302or nearly 65 percentof all foreign bribery actions. The United Kingdom ranked second, with 38 actions.
The largest number of enforcement actions involved bribes to government officials in Iraq, China and Nigeria. The top enforcers of bribery by foreign companies of their own government officials have been South Korea, Nigeria and China, according to the report. But 15 countries were new to the list this past year, including Guinea, Kenya, Iraq, the Philippines and Tunisia.
"We saw 15 new countries in 2012 enforcing domestic in-bound bribery lawsbribery of their own government officials. So if the United States says, for example, it's pursuing an FCPA case against a U.S. company involving allegations that that the U.S. company bribed a Nigerian government official, we're seeing there will be cooperation between the U.S. and Nigeria, and Nigeria will be pursuing enforcement of the incoming bribery of its own government officials by the U.S. company," Coleman said. "You're facing a number of prosecution fronts."
This article originally appeared in The National Law Journal.