Often times when discussing anti-bribery compliance with companies who want to “do what’s right,” there’s an underlying frustration that’s expressed by the following question: “why play by the rules when we know that our competitors aren’t?” There are many ways to answer that question, but one answer is simply to appeal to the company’s own sense of self-preservation: “if you pay the bribe, it will always haunt you.”
Forget for a moment the external factors that will get you caught — the hard-nosed journalists, the watchdog organizations, and the restless government enforcers — the reality is that many bribery schemes simply self-implode. Think of it this way, once a bribe is paid, a corresponding debt is created to all who are involved in the scheme: to the business partner who provides the funds; to the third party “consultant” who launders them through false pretense; to the accountant who cooks the books; to the bagman who delivers the payment; to each and every role player, big or small, who helps to bring about the bribe.
At the time, loyalties may seem obvious: each co-conspirator will usually have a clear self-interest in keeping the bribery scheme hidden. But as situations change, so too do incentives, and in business there are few guarantees as unsure as the honor among thieves.
Don’t believe me? Think of all the bribery stories that have come to light simply by their own accord.
In early 2010, the Las Vegas Sands Corporation, led by CEO billionaire Sheldon Adelson, fired Steven Jacobs, then-CEO of the company’s China subsidiary for breaking company policy and pursuing unauthorized deals. But in October 2010, Jacobs fired back, suing his former employer in a Nevada district court for breach of contract and tortious discharge, alleging that in reality he’d been dismissed for refusing to partake in a scheme to bribe Macau government officials and associate with members of organized crime. Jacobs’ complaint apparently had enough merit to spark interest from government authorities, and four months later Las Vegas Sands received a subpoena from the Securities and Exchange Commission asking that the company produce documents relating to its compliance with the Foreign Corrupt Practices Act.
How else can a bribery scheme unravel? Many have heard of the TSKJ Bonny Island scandal in Nigeria: TSKJ – the energy consortium comprised of an American company (KBR), a French company (Technip), an Italian company (Snamprogetti) and a Japanese company (JGC) – was investigated for improperly paying vast sums of money to Nigerian government officials over a decade-long period in order to secure lucrative contracts to build liquefied natural gas plants in Nigeria. To-date the consortium and its agents have paid upwards of $1.7 billion in penalties and fees to settle the charges against them and several senior executives and individuals have also been personally prosecuted.
But few remember how the Bonny Island scheme was first exposed. It was by way of a completely unrelated 2002 French investigation into Elf-Aquitaine, which unveiled a secret slush fund in Switzerland and led to an investigation of bribes paid to Uzbek government officials. The investigation soon spread to Technip when it was discovered that the fund had been opened by George Krammer, CEO at the time of Technip. When Technip refused to defend Krammer, who had worked at the company for 35 years, he turned against them. Going before a French judge, Krammer told the court not only about Technip’s practices in Uzbekistan, but also about how Technip’s commission payment system worked in Indonesia, Thailand and, last but not least, on the Bonny Island Project in Nigeria. More…