September Poll – What was this month’s biggest anti-bribery story? Reply

There were several important events this month in the world of compliance and anti-bribery.  Vote for which story you think deserves the top spot!

  1. Bulgarians march a long time to protest corruption.  For one hundred days straight, Bulgarians en masse have marched in the streets of Sofia to protest rampant corruption and clientelism in their government.  It is the largest protest in Bulgaria since 1997, when mass rallies led to a change in the then-Socialist government.
  2. G-20 commits to fight corruption and increase corporate transparency.  Leaders at the G-20 Summit in St. Petersburg renewed the call for more countries to combat money laundering and corporate corruption as well as to restrict the allowed use of off-shore tax havens.
  3. China anti-bribery push continues.  It’s been another big month in China for corruption.  Not only was former Communist Party politician Bo Xilai sentenced to life in prison by a Chinese court, but Chinese authorities also reportedly are investigating numerous employees of PetroChina, one of the State’s biggest oil entities, for extorting bribes.  Foreign companies in China are also continuing to feel pressure after new investigations regarding possible bribery of local officials were opened by Bayer, Agilent, Dumex Baby Food Co. and Alcon.
  4. Polish authorities working with DOJ to investigate bribery at HP.  Hewlett Packard announced that the Polish Central Anti-Corruption Bureau (CBA) has joined a probe by the Department of Justice into potential violations of the Foreign Corrupt Practices Act by the company.  The announcement follows the recent trend of increased cooperation between US enforcement agencies and their foreign counterparts in cross-border corruption cases.
  5. 4 UK Nationals Appear in Court Under the UK Bribery Act.  Four individuals connected to Sustainable AgroEnergy plc have been charged by the UK’s Serious Fraud Office (SFO) with “offences of making and accepting a financial advantage” contrary to the 2010 UK Bribery Act.  Their hearing is to begin on October 7 and will mark the first ever case brought by the SFO under the Bribery Act of 2010.

Combatting Extortion, Bribery and Cheating in Schools Reply

ImageWhile it is no secret that corruption in academic institutions exists in many countries around the world, just how big of a problem it is remains unknown.  Several recent scandals seem to indicate that it continues to be a formidable challenge in many parts of the world, and that large-scale efforts will be required to reverse the trend.

In the United States, just this past March, over thirty school administrators, teachers, principals and other educators were indicted by a Federal grand jury in a wide-scale test-cheating scandal that rocked the Atlanta school district.  And as we’ve previously explored on TRACE Blog, corruption continues to be a big problem in Russia’s higher education system as well, including teachers who are intentionally failing good students in an effort to extort more money from them.  Similar incidents of corrupt school teachers have been reported in high schools in Vietnam, elementary schools in South Korea, and universities in Italy.

Anti-bribery activists are afraid that school corruption is beginning to have long-term consequences that are bigger than just inflating a few grades.  One is that corruption dilutes the quality of learning for all students.  In a study of corruption in schools in Moldova, the Partnership for Transparency Fund found that students who knew that money could buy them better grades tended to exert less effort in studying.  Nguyen Quoc Binh, a principal of the Vietnam-German High School in Hanoi, recently echoed this sentiment in an interview with the Business Recorder newspaper: “bribery in exams makes students lazy.”

There is also a more serious concern that students who experience corruption at such a young age may develop a tolerance for corruption that will stay with them later in life.  In a recent study of 1,000 youths published this month by Transparency International-Korea, 40% thought that being rich was more important than being honest, and 51% agreed that people who cheat have more success in life than those who don’t.  That problem is already beginning to emerge in Russia.  In what’s been dubbed “plagiarism-gate”, a series of scandals has recently exposed plagiarism in the dissertations of politicians and officials, including, most embarrassingly, by Vladimir Burmatov, a head of the education committee of Russia’s ruling party who has recently had to step down from his post.  More…

TRACE Remembers Author Chinua Achebe Reply

Last week, on March 21, celebrated Nigerian author Chinua Achebe passed away at the age of 82.  TRACE recognizes not only the literary importance of Achebe’s work, but also the significance that many of his essays and novels had in critically evaluating difficult problems of corruption in Nigerian society.

Chinua AchebeFrom the Niger Delta to International Acclaim

Achebe was born on Nov. 16, 1930 in Nigeria’s southeastern delta region in the Igbo town of Ogidi. The region is also home to Bonny Island, which many in the FCPA community may recognize as the location of a massive bribery scheme by the TSKJ consortium to bid for the construction of liquefied natural gas facilities throughout the 90’s and early 2000’s.  (You can read more about the TSKJ scandal on the TRACE Compendium).

Achebe’s first novel, Things Fall Apart, chronicles the history of a small Nigerian village during the time of British colonization.  Like many of Achebe’s works, Things Fall Apart is both eminently readable while still presenting the reader with complex analytical themes.  This great storytelling made Achebe into the most widely-read African writer of all time.  Things Fall Apart sold more than 10 million copies worldwide and is now standard required reading for many American high school and college students. More…

Top 12 of 2012: A look back at the biggest anti-bribery stories from last year 1

Guest blogger Severin Wirz, an attorney specializing in compliance with the Foreign Corrupt Practices Act, reflects back on the most noteworthy anti-bribery developments of 2012.

By Severin Wirz

Snowflake 2013With 2012 behind us, it seems a perfect opportunity to pause and reflect back on the anti-bribery developments of the last twelve months.  So here are TRACE’s “Top 12 of 2012” – all the biggest trends, breakthroughs and scandals of 2012, composed neatly in list form:

12.   Whistleblowers favored – The US government showed just how serious it is about encouraging whistleblowing when the IRS agreed to pay jailed banker Bradley Birkenfeld $104 million in September for information he provided against his former employer UBS.  The payout followed on the heels of the DOJ’s announcement in early August of the creation of an Office of Inspector General Whistleblower Ombudsperson and the SEC’s first whistleblower payout later that month.

11.   Barclays’ woes worsen – It’s been a difficult year for international banking giant Barclays plc.  Four months after settling a $160 million fine over interest rate manipulation, Barclays announced that it was also being investigated by both British and US authorities for potential acts of bribery in Qatar.

10.   UK adopts deferred prosecution agreements –  In October, Britain’s Ministry of Justice declared that it would begin using deferred prosecution agreements (DPAs).  Widely used in the United States, DPAs are expected to encourage more self-reporting and greater certainty for corporations in negotiating settlements with the UK Serious Fraud Office.

9.      Ongoing FCPA sweep of the medical industry – The SEC and DOJ brought no less than 10 separate FCPA-related actions in 2012 against companies in the healthcare sector, including suits against Pfizer, Wyeth, Biomet, Smith & Nephew and Orthofix.  Read more about these cases in the TRACE Compendium.

8.      Twilight of the facilitation payment exception –  Only 6 OECD countries continue to uphold the facilitation payments exception.  Among those is Australia, which this year proposed getting rid of the defense altogether.  TRACE’s 2012 Anti-Bribery Benchmarking Survey indicates that even when legal, companies are increasingly choosing to prohibit employees from making so-called “grease” payments abroad.

7.      Wal-Mart bribery scandal in Mexico – Reminding us of the power of journalism as an anti-corruption tool, the New York Times published a investigative exposé in April revealing that Wal-Mart sought to cover-up millions of dollars in bribes to agents and government officials in Mexico.  The article has since led to a growing probe of Wal-Mart’s activities in other countries as well as a formal investigation by Congress.

6.      DOJ’s FCPA unit suffers trial losses– Prosecutors at the DOJ suffered several surprising FCPA losses this year, including defendant John O’Shea’s acquittal in January, the dismissal of all charges against the African sting defendants in March and the end of the DOJ’s appeal in the Lindsay Manufacturing case in May.  And while the stinging setbacks won’t stop future FCPA prosecutions, it may well embolden more pushback from defense lawyers who now perceive cracks in the DOJ’s enforcement facade.

5.      SEC implements widening net of Dodd-Frank rules – The SEC issued several new rules this past year mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, including disclosure requirements concerning the use of conflict minerals as well as payments made in the extractives industry to foreign governments.  Along with new federal regulations against human trafficking, companies are becoming ever more vigilant against compliance problems that may arise during the course of overseas dealings.

4.      New collective action tools alleviate costs of anti-bribery compliance –Speaking of compliance, for many the two biggest buzzwords of 2012 were “collective action.”  Online platforms such as TRACE’s TRAC tool now allow companies to conduct broader baseline due diligence at a lower cost.  It should come as little surprise, then, that the Basel Institute on Governance launched the International Center for Collective Action (ICCA) in October to serve as a resource hub for companies looking to improve their anti-corruption programs.

3.      Anti-Corruption efforts rev-up in “BRIC” countries – There’s been an undeniable increase in the attention paid to anti-bribery concerns within BRIC countries (Brazil, Russia, India and China) recently.  Over the past year, Brazil’s former presidential chief-of-staff was sentenced to over 10 years in prison in a vote-buying scandal there, Russia entered into the OECD anti-bribery convention, the grassroots anti-bribery movement in India continued to pick up steam, and China’s new leader Xi Jinping voiced renewed resolve to launch an offensive against corruption in his country as well.

2.      Morgan Stanley’s Declination– The DOJ and SEC declined to initiate an enforcement action against Morgan Stanley for violations committed by a “rogue employee.” Not only is the value of a robust compliance program and frequent training confirmed, a true breakthrough in the history of the FCPA, the seldom accepted “rogue employee” defense prevails.

1.      DOJ and SEC publish long-awaited FCPA Guidelines – The hype surrounding the much-anticipated FCPA Guidelines finally proved real when, in mid-November, the DOJ and SEC released their 120-page compilation of information about the FCPA.  And while the Guidelines are by no means game-changing, they have been roundly applauded for providing needed insight into such lingering questions as the definition of a foreign official, what makes for a good compliance program, and what constitutes a facilitation payment.