OECD Foreign Bribery Report
An Analysis of the Crime of Bribery of Foreign Public Officials
On Dec. 2, 2014 the OECD released the OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials, which analyzes more than 400 foreign bribery enforcement cases worldwide involving companies or individuals since the implementation of the OECD Anti-Bribery Convention in 1999. The report found that nearly two-thirds of the cases occurred in four industry sectors: extractive; construction; transportation and storage; and information and communication. A majority related to payments made in securing public procurement contracts. However, almost a third of the cases involved bribes related to operational or procedural issues such as customs clearance, tax treatments, licensing and obtaining travel visas. The report also discusses the complexities law enforcement agencies face while trying to conclude cases and the involvement of intermediaries in bribes. On average, the bribes constituted 10.9 percent of transaction values and 34.5 percent of related profits.
Three broad themes emerge from the study. First, a strong tone at the top and internal controls remain two of the most important factors to a successful anti-corruption effort. Alarmingly, more than half of the enforcement cases involved the knowledge of senior management. At the same time, self-reporting was the most frequent source of referrals to authorities—with internal audit, M&A due diligence and whistleblowers as the main sources of detection for companies.
Second, interactions with overseas third parties may pose real risks and potential vulnerabilities to an organization that must be addressed through robust third-party due diligence. In nearly three quarters of the cases, intermediaries such as agents, consultants, brokers, distributors and legal counsel were involved in making corrupt payments.
Finally, foreign bribery enforcement actions are expensive, time-consuming endeavors. One interesting finding is that the length of time between the opening of an investigation and the conclusion of an enforcement case has steadily inched up over time with a particular increase in the last two years.