Nine British companies in US bribery inquiry

Daily Corruption Report: Nine British companies are being investigated by American authorities for allegedly paying bribes to win business in overseas markets, according to new research. The study by Freshfields Bruckhaus Deringer, the UK law firm, will further stoke fears about the growing reach of international regulators.

This month, in one of the biggest corruption cases to date, BAE Systems, the defence contractor, agreed to pay £285 million in fines and to plead guilty to minor accounting violations after it was accused of paying bribes to win defence contracts. The deal brought to an end a six-year investigation led by the US Department of Justice (DOJ) and Britain’s Serious Fraud Office (SFO). BAE has always denied bribery.

Your Daily Corruption News team — Monday 15 February 2010

International: Wall St. helped to mask debt fueling Europe’s crisis
International Herald Tribune

International: Nine British companies in US bribery inquiry
The Times

ChinaChina charges tycoon with financial crimes
Agence France-Presse

JapanAnti-whaling campaigners plead not guilty to theft and trespass
The Guardian

KenyaFresh tussle rocks Kenya’s shaky unity government
Agence France-Presse (TI mention)

UK: Serious and Organised Crime Agency turns spotlight on police corruption
The Guardian

Nigeria: Speech Writer’s Book Alarms Sylva Government 


— News from the TI movement

Other British companies are also being pursued for allegedly bribing foreign officials.

Nine British companies in US bribery inquiry

The DOJ and other leading US regulators are investigating at least 111 companies for suspected bribery in overseas markets, Freshfields said. Of those, 33 are from outside the US, including 9 from Britain.

Multinational companies are being targeted under a US law known as the Foreign Corrupt Practices Act (FCPA), which gives American regulators jurisdiction to pursue foreign companies as long as they conduct some business in the US. 

The DOJ and other US regulators handed out a total of $620 million in fines for FCPA violations last year, Freshfields said. That was a seven-fold increase from 2007, when fines stood at $87 million. 

Aaron Marcu, a partner specialising in global investigations at Freshfields, said that the increase in fines is evidence of a growing trend toward American regulators expanding their reach. 

“The aggressive approach by US regulators has expanded the universe of non-US companies under investigation for alleged FCPA transgressions,” Mr Marcu said. “Many of these investigations are based on fairly inventive interpretations of US law.”

However, while American authorities have been the most aggressive at targeting corporate corruption, regulators in other jurisdictions are also beginning to target companies suspected of paying bribes. 

The biggest corruption prosecution to date, against Siemens, the German electronics group, was a joint effort by authorities in the US and Germany. Siemens agreed in 2008 to pay more than £1 billion to settle corruption allegations.

Similarly, the investigation into BAE was involved co-operation between regulators in several countries, principally in the US and UK. In Britain, the SFO has indicated that it will use tough new anti-bribery laws which are expected to come into force later this year to pursue foreign companies if they are suspected of paying bribes.

Mr Marcu said: “Any way you look at it, there is a definite and growing trend toward multi jurisdictional enforcement actions.”

The increased risk of scrutiny by foreign regulators has led to a growing number of multinationals launching their own internal investigations into suspected corruption. About 60 per cent of corruption prosecutions since 2008 have resulted from companies coming forward to report them to regulators.

However, internal investigations can be time-consuming, disruptive and cost millions of pounds in fees for external lawyers and accountants.

Network, learn and be part of the solution at the 14th International Anti-Corruption Conference (IACC).

Submit your workshop proposal from 15 February to 31 March