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The Biggest Bribery Cases In Modern Business History

Paying foreign officials for expediting legal processes or obtaining contracts was a common business practice around the world well into the 1970s. In 1973, the Watergate scandal, that ultimately caused Richard Nixon's resignation as president, brought corporate bribery into the spotlight. The Securities Exchange Commission (SEC) and the U.S. Department of Justice (DoJ) began investigating the sources of Nixon's illegal campaign contributions and discovered that hundreds of U.S. companies had bribery slush funds on hand in order to curry favor with legislators and other officials.

In 1977, the Foreign Corrupt Practices Act (FCPA) was enacted to bar U.S. corporations and some foreign companies operating in the U.S. from making such payments. That hasn't stopped some companies from continuing the practice. These are among the top five business bribes in modern U.S. history.

Key Takeaways

A bribe is an illegal act involving the exchange of consideration, such as money, with the purpose of influencing behavior.
In business, it is illegal to bribe public officials or regulators in order to win contracts, expedite processes, or look the other way on any number of other activities.
Here, we look at some of the biggest corporate bribery scandals in modern U.S. history.

Investopedia / Sabrina Jiang

Kellogg Brown & Root

This company, now known as KBR, Inc., was spun off from a subsidiary of Halliburton. It is one of the largest engineering and construction firms in the world and has been connected to large U.S. military contracts. According to the New York Times , in 2008, the Department of Justice charged the company with offenses under the FCPA, including paying hundreds of millions of dollars to secure a natural gas plant construction contract to Nigerian officials. KBR pleaded guilty, as did its CEO Albert Jack Stanley, and paid $402 million in fines, as well as $177 million to the SEC. Stanley was sentenced to 2.5 in prison, beginning in 2012.

Foreign companies that do business onshore in the U.S. also fall under the provisions of the FCPA. According to the SEC, Siemens AG , a German engineering firm, ran afoul of the law in 2008 when it was charged for paying $16 million to the president of Argentina to secure a contract for making Argentinean identity cards. The contract was worth $1 billion to Siemens AG. In total, the company was accused of paying more than $100 million in total to government officials. Eight former employees and contractors were charged in the scheme. Siemens settled with the Department of Justice and paid $1.6 billion in fines in the U.S. and Germany.

The British aerospace company has been under investigation by British authorities since 1989, making it one of the longest fraud investigations in history. The main concern surrounded a deal between Britain and Saudi Arabia to supply fighter jets. The investigation spread to BAE's dealings in South Africa, Tanzania, Chile, Romania, the CzechRepublic and Qatar. The investigation focused on payments made by BAE through a "go-between" company to foreign officials. The British version of the Department of Justice dropped most of the investigations, citing national security concerns, but U.S. authorities picked up the ball in 2007. In 2010 , BAE pleaded guilty with U.S. courts and paid a $400 million fine.

Kerry Khan and Michael Alexander

Individuals can also find themselves charged for bribery and fraud. According to Lubbock Online, in October 2011, two U.S. Army Corps of Engineers employees were arrested and charged with fraud for taking kickbacks , estimated at over $20 million. Kerry Khan and Michael Alexander are accused of taking bribes from contractors in exchange for being awarded lucrative government contracts, and of inflating invoices to the government and skimming the difference. Khan, the ring leader, was sentenced to more than 19 years in prison.

At the end of 2010, Alcatel-Lucent, the largest landline phone network company in the world, settled its bribery case with the Department of Justice in 2010 by agreeing to pay $137 million, including $45 million to the SEC. The case revolves around a complex series of money transfers between shell companies and to consultants, resulting in payments being made to foreign officials. Alcatel-Lucent admitted to making improper payments in many African and South American companies.

As the Department of Justice continues to investigate the business practices of some of the largest companies in the world, it is likely that more evidence of bribery and corruption will be found. The penalties upon conviction, however, should make companies think twice before engaging in bribery and fraud.

United States Senate. " Select Committee on Presidential Campaign Activities-The Watergate Committee ."

The United States Department of Justice. " Foreign Corrupt Practices Act ."

KBR. " About Us-Our History ."

The New York Times. " Former KBR Executive Pleads Guilty to Bribery ."

The United States Department of Justice-Office of Public Affairs. " Kellogg Brown & Root LLC Pleads Guilty to Foreign Bribery Charges and Agrees to Pay $402 Million Criminal Fine ."

The United States Department of Justice-Office of Public Affairs. " Former Chairman and CEO of Kellogg, Brown & Root Inc. Sentenced to 30 Months in Prison for Foreign Bribery and Kickback Schemes ."

U.S. Securities and Exchange Commission. " Litigation Release No. 22190/December 13, 2011-Accounting and Auditing Enforcement No. 3342 / December 13, 2011 ."

The United States Department of Justice-Office of Public Affairs. " Eight Former Senior Executives and Agents of Siemens Charged in Alleged $100 Million Foreign Bribe Scheme ."

U.S. Securities and Exchange Commission. " SEC Charges Seven Former Executives with Bribing Leaders in Argentina ."

The Fletcher School-Tufts University. " The Al Yamamah Arms Deals ."

The United States Department of Justice-Office of Public Affairs. " BAE System PLC Pleads Guilty and Ordered to Pay $400 Million Criminal Fine ."

Federal Bureau of Investigation Archives. " Former U.S. Army Corps of Engineers Manager Sentenced to More than 19 Years in Prison in $30 Million Bribery and Kickback Scheme ."

The United States Department of Justice-Office of Public Affairs. " Alcatel-Lucent S.A. and Three Subsidiaries Agree to Pay $92 Million to Resolve Foreign Corrupt Practices Act Investigation ."

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Lessons from the massive Siemens corruption scandal one decade later

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Ten years ago a colossal corruption scandal involving Siemens, one of the world’s largest electrical engineering companies, shocked the world. The scale of it marked it out as the biggest corruption case of the time.

A few years later, Linda Thomsen, Director at the Security Exchange Commission described the pattern of bribery in the company as:

… unprecedented in scale and geographic reach. The corruption involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East and the Americas.

How did it happen and why is it important to keep this case in mind?

Prior to the corruption scandal, the reputation of Siemens was extremely good. It was renowned for its technological products and reliable services in telecommunications, power, transportation and medical equipment. It was common to see articles featuring its activities in remote areas, developing new high quality products and winning competitive bids.

So the world was taken by surprise when the police raided the company headquarters in Munich as well as other subsidiaries on November 15th 2006 . The company’s first reaction was to claim innocence and to blame events on a small “criminal gang” .

For years the company had pretended to do business according to the highest ethical and legal standards. Since at least 1991, Siemens had developed corporate anti-corruption norms, fancy codes of conduct and strict business guidelines. It was even selected to become a corporate member of Transparency International’s German chapter in 1998 – a non-governmental organisation created to fight corruption.

The reality was completely different.

Since at least the 1990s, Siemens had organised a global system of corruption to gain market share and increase its price . It was able to get away with this because of big loopholes in the legal systems of a host of countries, including Germany.

Anti-corruption existed only on paper

Over many decades bribes became the accepted business norm at Siemens. They were channelled through hidden bank accounts, obscure intermediaries and pseudo “consultants”. When calculating the cost of a project, Siemens employees used “ nützliche aufwendungen ”, a common tax term literally translated as “useful expenditures” or internally understood as “bribes.”

The situation wasn’t helped by the fact that the law in Germany was written in a way that allowed bribes to be accounted for as tax-deductible expenses . This changed in 1999 when the country finally brought its law into line with the 1997 OECD Convention on Combating Bribery . This made it illegal to bribe foreign officials for a German company.

On the day the new law was passed in February that year, discussions began at the highest level at Siemens on how to handle the new regulation.

Time for justice

On July 5th 2000, Siemens issued a new corporate circular requiring operating groups and regional companies to ensure that a new anti-corruption clause would be included in all contracts with agents, consultants, brokers, or other third parties. The following year it issued new guidelines that stipulated:

No employee may directly or indirectly offer or grant unjustified advantages to others in connection with business dealings, neither in monetary form nor as some other advantage.

And on taking up a listing on the New York Stock Exchange in 2001, the company became subject to the 1977 Foreign Corruption Practice Act . In addition, from November 2003 the company was obliged to comply with the Sarbanes-Oxley Act, with a code of ethics that required chief financial officers and business heads to act responsibly and with integrity.

In July 2004 Siemens’ chief financial officer delivered a speech entitled “Tone from the Top ”. The aim was to show that fighting corruption was finally a priority and contrary to the company’s principles of integrity.

In reality, as a German prosecutor was to comment later, the Siemens compliance programme existed only on paper .

Government investigations into corruption had been launched in Israel, Hungary, Azerbaijan, Taiwan and China while issues were also becoming apparent in Nigeria, Italy, Greece and Liechtenstein.

But, as American prosecutors discovered :

Siemens management failed to adequately investigate or follow up on any of these issues.

All over the word – from Bangladesh, Vietnam, Russia, and Mexico to Greece, Norway Iraq and Nigeria – Siemens paid bribes to government officials and civil servants. The magnitude of the bribery system was widespread. As Reinhard Siekaczek, a Siemens employee put it :

We all knew that what we were doing was illegal. Paying a bribe was customary in practically all business units at Siemens AG, except for business units that deals with lamps and such.

Action was finally taken against Siemens in a number of countries including the US, Germany, Italy and Lichtenstein.

Following the US and German prosecutions, Siemens paid more than $1.6 billion in fines, penalties and disgorgement of profits, including $800 million to US authorities. This was the largest monetary sanction ever imposed in a case under America’s Foreign Corruption Practice Act since it was passed in 1977.

Lessons from a corruption scandal

The Siemens case is emblematic of the past and we hope that it’s remembered and used to set up real compliance programmes. Without real counter actions, the risk is that the spread of corruption will continue as a virus, with companies imitating one other. .

Another lesson is that the only real justice system taking on corruption seriously is the US. Only the US Department of Justice has been able to sanction corporations sufficiently. But the US shouldn’t be alone in punishing corporate misconduct. All governments should stop simply saying that corruption is bad. They should also show that it will be punished.

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Top 10 Bribery & Corruption Stories of 2020 (so far)

Even with much of the world under partial lockdown during the COVID-19 pandemic, there’s been no shortage of bribery and corruption cases through the first half of 2020. Each of these stories makes it clear that organisations must have proper controls in place to prevent bribery and corruption. ISO 37001 Anti-Bribery Management Systems standard provides a comprehensive approach to mitigating bribery and corruption risk. Organisations of all sizes and industries should take steps now to ensure that they don’t end up on a future list of top bribery and corruption scandals.

In no particular order, here are 10 of the top bribery and corruption stories we’ve seen so far in 2020.

In February, French-based Airbus agreed to pay a record $4 billion in fines for alleged bribery and corruption spanning at least 15 years. The company reached a plea bargain with prosecutors in Britain, France and the United States. According to prosecution documents, Airbus used a global network of agents or middlemen for corrupt transactions, included payouts disguised as commissions to push airplane sales.

“Fallout from the Airbus bribery scandal reverberated around the world on Monday as the head of one of its top buyers temporarily stood down and investigations were launched in countries aggrieved at being dragged into the increasingly political row.” ( Reuters, 2020 )

While the investigation into suspected corruption at Novartis began seven years ago, it appears that 2020 is the year the company can finally close this damaging chapter in its history. The resolution comes at a steep cost. The Swiss-based pharmaceutical company will pay a staggering $1.3 billion in a settlement for kickbacks, bribery and price-fixing.

“The latest settlements cover two different cases. In the first, federal prosecutors claim Novartis used ‘tens of thousands of’ speaker programs and events — some entailing exorbitant meals — as disguise to provide bribes to doctors. The goal, according to prosecutors, was to encourage doctors to prescribe its drugs, including Lotrel, Valturna, Starlix, Tekturna, Tekamlo, Diovan and Exforge.” ( Fierce Pharma, 2020 )

Ohio House Speaker Larry Householder

While political corruption is nothing new, his constituents were nevertheless shocked when Ohio House Speaker Larry Householder was arrested, along with four alleged co-conspirators, as part of a $60 million racketeering and bribery investigation. The alleged scheme is being described as one of the biggest public corruption cases in Ohio, U.S. history.

“All the charges are tied to what federal prosecutors said was a criminal enterprise dedicated to securing a bailout for two nuclear power plants in northern Ohio owned by FirstEnergy Solutions of Akron. The bailout is expected to cost the state’s utility ratepayers $1 billion.” ( Cincinnati Enquirer , 2020)

Alexion Pharmaceuticals

Charged by the SEC with violating the FCPA by bribing officials in Turkey and Russia, Alexion Pharmaceuticals will pay $21.4 million to resolve an investigation that began in 2015. The Connecticut, U.S.- based company was also accused of failing to keep accurate financial records at subsidiaries in Brazil and Colombia.

“In Turkey and Russia, Alexion paid government officials and doctors at state-connected hospitals to promote use of its blood-disease drug, Soliris. Alexion retained a consultant in Turkey from 2010 to 2015 with ties to health officials. Alexion Turkey paid the consultant over $1.3 million for ‘consulting fees and purported expense reimbursements,’ the SEC said. … In Russia, Alexion paid doctors at government hospitals over $1 million from 2011 to 2015 to increase Soliris prescriptions. … The bribery resulted in Alexion being ‘unjustly enriched’ by about $6.6 million in Turkey and $7.5 million in Russia, the SEC said.” ( FCPA Blog, 2020 )

Taiwan Presidential Office Secretary-General Su Jia-chyuan

In Taiwan, a scandal embroiling some top legislators prompted Presidential Office Secretary-General Su Jia-chyuan to resign from office. Su Jia-chyuan’s nephew, Democratic Progressive Party (DPP) Legislator Su Chen-ching, is reportedly under investigation in a bribery case related to the ownership of a department store. Su Jia-chyuan said he has “nothing to hide” and insisted he is stepping down to avoid letting the controversy continue to affect the president.

“Taipei prosecutors on Saturday filed a motion to detain Su Chen-ching, along with four other former and incumbent lawmakers as part of an investigation into bribery allegations against six current and former legislators and their aides. The court hearing on whether to grant the prosecutors’ request to detain them was ongoing as of press time last night. The DPP’s anti-corruption committee convened a meeting at 8 pm to discuss the penalties for Su Chen-ching and former legislator Mark Chen, who has also been implicated in the case and was released on NT$500,000 bail early on Saturday.” ( Taipei Times, 2020 )

Former Malaysia Prime Minister Najib Razak

As part of the 1MDB corruption scandal, former Malaysian Prime Minister Najib Razak was convicted on seven counts for charges that include money laundering, abuse of power and criminal breach of trust. Investigators said he transferred about $10 million from a 1MDB affiliate to his own bank accounts, and the Malaysian High Court agreed. Razak was forced out of office in 2018 during the scandal.

“In 2015, the Wall Street Journal reported that Najib deposited about $700 million from 1MDB into his personal accounts. He has always denied the allegations. He faces more trials in Malaysia on at least 35 additional corruption charges. The judge Tuesday imposed a 12-year prison sentence on Najib, 67, but suspended it during any appeals.” ( FCPA Blog, 2020 )

A multi-year, multi-million-dollar bribery and money laundering investigation involving Alstom Indonesia resulted in more indictments this year. Reza Moenaf, former president, and Eko Sulianto, former director of sales, for Alstom Indonesia were charged along with a former deputy general manager of Marubeni Corporation’s overseas power project department. They are accused by the U.S. Justice Department of violating the Foreign Corrupt Practices Act (FCPA) and of conspiracy to commit money laundering.

“According to the Justice Department, Kusunoki, Moenaf, and Sulianto engaged in a conspiracy to pay bribes to officials in Indonesia — including a high-ranking member of the Indonesian Parliament and the president of Perusahaan Listrik Negara, the state-owned and state-controlled electricity company in Indonesia — in exchange for assistance in securing a $118 million contract, known as the Tarahan Project, for Alstom Power and its consortium partner, Marubeni, to provide power-related services for Indonesian citizens.” ( Compliance Week, 2020 )

Los Angeles City Councilman Jose Huizar

Corruption in local politics is still a major issue, especially in a major city like Los Angeles, U.S. That’s where City Councilman Jose Huizar is alleged to have engaged in a wide array of bribery and corruption acts to enrich himself and his associates. He now faces a laundry list of charges after a federal grand jury returned a 34-count indictment against Huizar.

“Huizar was charged last month with one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. Thursday’s indictment charges Huizar with the following criminal charges: 12 counts of honest services wire fraud; two counts of honest services mail fraud; four counts of traveling interstate in aid of racketeering; six counts of bribery; five counts of money laundering; one count of structuring cash deposits to conceal bribes; one count of making a false statement to a financial institution; one count of making false statements to federal law enforcement; and one count of tax evasion, according to prosecutors.” ( CBS News, 2020 )

Asante Berko, Former Goldman Sachs Executive

Former Goldman Sachs executive Asante Berko was charged by the SEC as a result of their investigation into his alleged bribery plot. Berko is accused of FCPA violations in his effort to help an energy company based in Turkey secure a contract for a power plant in Ghana. He was charged in a civil complaint in New York, U.S., for “aiding and abetting violations of the FCPA anti-bribery provisions.”

“According to the SEC, Berko helped the Turkish energy company pay at least $2.5 million to a Ghana-based intermediary, ‘all or most of which was used to bribe Ghanaian government officials’ to secure approval of an electrical power plant project. … In 2015, Berko negotiated a contract for the Turkish energy company to pay the intermediary $2.5 million at first, and up to $42 million over five years, the complaint said.” ( FCPA Blog, 2020 )

Cardinal Health

Ohio, U.S.-based Cardinal Health paid the SEC $8.8 million Friday to settle FCPA offenses related to a Chinese subsidiary that provided marketing services. Cardinal Health allegedly violated provisions for maintaining books and records, as well as internal accounting controls. Cardinal Health first began doing business in China after acquiring an existing company and rebranding it. It appears the company made voluntary disclosures and has been taking proactive steps to address the corruption issues in its ranks.

“In 2016, Cardinal China learned that the marketing employees and the dermocosmetic company had disguised some ‘marketing payments’ that were funneled to healthcare professionals who provided marketing services, as well as other employees of state-owned retail entities. The state-owned entities had influence over purchasing decisions related to the dermocosmetic company’s products. Cardinal took steps to stop the suspect payments in 2016 when it learned about the misconduct, the SEC said. In December 2016, Cardinal voluntarily disclosed the results of its internal investigation to the SEC.” ( FCPA Blog, 2020 )

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A case study in bribery violations

Governance and risk

N o company wants to make international headlines due to corruption charges.

But that's the position the multinational telecom giant Ericsson found itself in late last year, when it agreed to pay the second-largest fine in the history of US Foreign Corrupt Practices Act (FCPA) enforcement actions.

Ericsson's mistakes were extremely costly to the company, both in terms of reputational damage and finances: In total, the company paid more than $1 billion in combined fines to the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ) to resolve the long-standing FCPA investigation.

It also makes an excellent case study for finance professionals of what to guard against.

While the Ericsson CFO was not implicated in the crimes, the top financial officer still has responsibility for corruption that took place under their watch, according to Allison Borgatti, an attorney with the Philadelphia-based law firm of Archer & Greiner, where she is a member of the firm's White Collar Defense and Corporate Compliance Group.

"The bottom line is that by being the CFO at the senior level of management of an organisation, you have the duty and the responsibility to implement the appropriate programmes to ensure that your company is effective in implementing these protocols to prevent these types of bribes and payoffs from taking place," she said.

Under the FCPA, it's illegal for US businesses and individuals to pay bribes to foreign officials in exchange for business.

The Ericsson FCPA violations were global in scope, involving millions of dollars of bribes to public officials via company offices in China, Djibouti, Indonesia, Kuwait, and Vietnam, according to US authorities.

From 2000 to 2016, US prosecutors believe, Ericsson and its subsidiaries engaged in large-scale bribery schemes to secure lucrative telecommunications contracts from state-owned customers, according to a DOJ press release. The company's corruption violations were systemic and implicated high-level executives, the DOJ said.

"Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that 'money talks'," US Attorney Geoffrey Berman of the Southern District of New York said in the press release. The "guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated". (See details of the charges against Ericsson in the sidebar, "The Scheme".)

Ericsson declined to comment for this article. But in a 2019 press release announcing the resolution of the FCPA case, Ericsson President and CEO Börje Ekholm said he was "upset by these past failings", and that the settlement showed that "we have not always met our standards in doing business the right way".

"This episode shows the importance of fact-based decision-making and a culture that supports speaking up and confronting issues," Ekholm said in the release. "We have worked tirelessly to implement a robust compliance programme. This work will never stop." However, that effort came too late to save Ericsson money on the penalties. Tom Fox, a lawyer in Houston who focuses on compliance issues, said, "Cooperating with the government and fixing the problems can give companies huge discounts, but Ericsson didn't self-disclose, so that was off the table. They didn't get full credit for cooperation, and they got no credit for remediation."

The DOJ has recently been cracking down on companies that have failed to produce documents related to FCPA investigations in a timely way, according to an analysis of the Ericsson resolution by the law firm Skadden. In fact, Ericsson was the fifth company in 2019 that received only partial credit due in part to a failure to produce materials in a timely matter, according to Skadden.

"Ericsson's business is a high-risk model, and they should have put procedures into place and invested in a compliance programme long ago to prevent, mitigate, and detect this kind of behaviour," said Jessica Tillipman, assistant dean and professorial lecturer in law at The George Washington University Law School. "Instead they had a paper programme that no one bothered to enforce."

Learning from Ericsson's mistakes

While prosecutors allege Ericsson's misdeeds were massive frauds in terms of duration, scope, and geography, the schemes used to perpetuate that fraud were actually "relatively pedestrian" and should have been preventable with better leadership and internal controls, according to Fox.

"There was a real lack of due diligence, which points either to incompetence or to an intentional act," he said. "You have a husband-wife couple that was not disclosed in one office, and payments of $2 million for work that was never done in another. These are things that controls should have picked up on."

Here are some of the key lessons that CFOs and management accountants can learn from the Ericsson enforcement action:

Always have a second set of eyes

While it's impossible for a CFO of a big multinational to keep tabs on 100,000 employees in multiple locations, they can still be legally responsible for ensuring that their employees and subsidiaries behave ethically and comply with anti-corruption legislation.

"As a CFO, you can't put your head in the sand or engage in what we could say is conscious indifference," said Fox. "If you don't ask the right questions when you see the red flag, in the eyes of US prosecutors, that's the same as being involved."

That's why Fox recommends that CFOs and other finance executives who want to avoid Ericsson's mistakes keep an eye on multimillion-dollar transactions by putting controls in place to apply additional due diligence to transactions over a certain amount, and regularly ask regional executives hard questions about how funds are being used.

"The CFO is the big picture person, so while they might not look into it themselves, they should have in mind what the five highest-risk transactions might be and then direct management accountants to investigate further," he said. "That's where you'd get deep into the weeds, to look at the contracts and make sure services were delivered, that due diligence was performed properly, and so on."

The various Ericsson bribery schemes involved the movement of hundreds of millions of dollars. Given the vast sums involved, the CFO or board members should have been asking tough questions to verify transactions were legitimate, according to Philadelphia-based Jonathan Marks, CPA/CFF, CGMA, firm practice leader in global forensic, compliance, and integrity services at global law firm Baker Tilly Virchow Krause.

Fox said, "The most important lesson is having a second set of eyes, meaning that there is someone involved in oversight. You had $45 million paid out in Indonesia — that's a lot of money. Why wasn't someone asking questions?"

Ensure your company has a good whistle-blower programme

According to the DOJ complaint, Ericsson executives were involved in corruption in multiple locations. For example, in Djibouti, one of the key Ericsson violations flagged by the DOJ was due diligence that failed to disclose a spousal relationship between a vendor and a high-level public official. This suggests managerial override, according to Tillipman.

"Falsifying due diligence to that degree suggests a deliberate cover-up involving multiple individuals — and possibly even senior-level management," she said. "That's where a whistle-blower programme comes in."

A good whistle-blower programme should allow employees a direct line to the company's compliance programme, in case upper-level management is tainted, according to Tillipman. For it to be effective, employees should receive training on how the whistle-blower reporting protocol works. It should also guarantee whistle-blowers protection from retaliation. A good whistle-blower programme is often the only means that employees working under tainted management have to report corruption, according to Fox.

"If there is managerial override and there is no internal reporting system, you are really stuck," Fox said. And while, at least in theory, employees could go directly to the SEC — realistically, it's unlikely that a local employee in an office outside of the US would necessarily know how to do that, he added.

Build a top-down culture of compliance

The fact that so many subsidiaries were engaging in violations of the FCPA over many years suggests a failure on the part of Ericsson's C-suite executives to create a corporate culture of compliance within the company (and its subsidiaries), according to Borgatti.

"There are certain countries that most auditors are aware of where payments to government officials may be routine," she said. "And if you are doing business in environments where this type of behaviour is prevalent, you have to be inordinately cautious at the ground level that your employees are following the laws of the United States."

To ensure that all employees understand their duties and obligations, Borgatti suggests putting all employees through in-depth compliance training — during onboarding and then annually.

Another useful tool is regular outside audits to test the compliance and internal controls of subsidiaries located in higher-risk areas, according to Borgatti.

"There's no boilerplate programme to be in compliance with the FCPA," she said. "You need a customised compliance programme based on the countries and sectors you are working in, and you need to verify that your employees understand it."

Consider self-reporting violations and address issues

Upon learning about an incident of internal corruption, the CFO should consider self-reporting to the SEC, DOJ, or other relevant authorities, according to Borgatti. Companies facing US charges that self-disclose upon discovering incidents of internal corruption, fully cooperate with the authorities, and also show that they are taking appropriate disciplinary action not only qualify for a financial discount on penalties but send a strong message that corruption isn't an acceptable internal practice.

Not only did Ericsson fail to self-report, it also failed to produce information in a timely manner and to discipline those involved.

But it's not always a good idea to self-report in every situation, as it can bring public scrutiny and doesn't always guarantee discounts on fines, according to US-based forensic accountants Howard Scheck, CPA, J.D.; Greg Buchanan, CPA; and Katy Creecy, CPA, who wrote " Uncovering Bribes Hidden in Books and Records ", Journal of Accountancy , October 2019. Businesses should make a decision about whether to self-report after talking with legal counsel.

Weeding out misconduct, bad actors

Ericsson got caught in the crosshairs of federal regulators — and paid dearly for its failures. Its mistakes should serve as a warning to other multinational companies to take compliance seriously, to build adequate controls into their operations, and to comply with SEC investigations — which includes dismissing employees responsible for misconduct.

There's a saying about fraud that "a bad apple creates a bad bunch, which leads to a bad crop", according to Marks.

"In the Ericsson case, the only way to change the corporate culture is to eradicate the bad apples. You need to dismiss them, to move them out," he said. "Regulatory bodies are paying much more attention to this."

Here’s a summary of Ericsson’s US Foreign Corrupt Practices Act (FCPA) violations, as outlined by the US Department of Justice (DOJ):

In Djibouti, an Ericsson subsidiary directed nearly $2.1 million in bribes to high-ranking government officials in order to secure a $23 million telecom contract with a state-owned company. To pull off the scheme, the subsidiary entered into a fake contract with a sham consulting company, and then approved fake invoices to conceal the bribes, according to the DOJ. Additionally, a due diligence report written by an Ericsson employee failed to report that the owner of the sham consulting company was married to a high-ranking government official.
In China, between 2000 and 2016, an Ericsson subsidiary diverted tens of millions of dollars to consultants and service providers, some of which was used to pay for gifts, travel, and entertainment for Chinese officials, in order to win business from Chinese state-owned customers. To create the slush fund — which subsidiaries allegedly used to continue payments to third parties, allowing them to circumvent Ericsson’s compliance policies — the Ericsson subsidiary created sham contracts, paying a third party $31.5 million for services that were never performed.
In Vietnam, between 2012 and 2015, an Ericsson subsidiary paid a consulting company more than $4.8 million to create an off-the-books slush fund in order to pay third parties who wouldn’t have passed Ericsson’s due diligence process.
In Indonesia, between 2012 and 2015, an Ericsson subsidiary made approximately $45 million in payments to a consulting company in order to create off-the-books slush funds, and concealed the payments on Ericsson’s books and records.
In Kuwait, between 2011 and 2013, an Ericsson subsidiary concealed a $450,000 payment to a consulting company by creating a sham contract and approved invoices for services never performed.
And finally, an Ericsson subsidiary, Ericsson Egypt LTD, pleaded guilty to a one-count criminal information charge for conspiracy to violate the anti-bribery provisions of the FCPA for paying over $2 million in bribes to public officials in order to win a $20 million contract.

Not only did Ericsson neglect to self-disclose the corruption, it failed to disclose materials to the DOJ related to the corruption allegations in a “timely manner” and also did not take adequate disciplinary measures on employees involved in the misconduct, according to federal prosecutors. Companies that cooperate with FCPA investigations can qualify for “discounts” on fines, according to Tom Fox, a Houston-based lawyer who has more than 34 years of experience advising companies on compliance issues, and the founder of a network of compliance podcasts. Those reductions can be significant: up to 25% of the total fine for remediating; up to 50% for remediation and full cooperation with the investigation; and up to 100% for self-disclosure, remediation, and full cooperation, according to Fox.

However, because it failed to “disclose allegations of corruption with respect to two relevant matters” and did not disclose materials in a timely manner or take adequate disciplinary measures with employees involved, Ericsson did not receive a significant reduction in fines. The company only received a 15% discount under the FCPA Corporate Enforcement Policy for its actions, according to the DOJ.

" Fraud Red Flags for Third-Party Intermediaries ", FM magazine, 6 May 2020
" Developments in Anti-Bribery and Corruption Enforcement ", FVS Eye on Fraud , Spring 2019
CIMA ethics resources, anti-bribery, cimaglobal.com

FVS Section and CFF credential

For AICPA members, membership in the Forensic and Valuation Services (FVS) Section provides access to specialized resources in the forensic and valuation services discipline areas. Visit the FVS Center at aicpa.org/FVS . Members with a specialization in financial forensics may be interested in applying for the Certified in Financial Forensics (CFF) credential. Information is available at aicpa.org/CFF .

Malia Politzer is a freelance writer based in Spain. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at [email protected] .

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15 biggest bribery cases in business history.

In this article we are going to list the 15 biggest bribery cases in business history . Click to skip ahead and jump to the 5 biggest bribery cases in business history .

Bribery is part of human life, and it is a part of civilization. No matter where you live, you will see bribery happening, either on a small scale or on a large scale. For example, if you live in a developing country, you will see breaking laws such as traffic signals or not wearing seatbelts with impunity. They're not afraid of their license being cancelled or being hauled off to jail, as the traffic cops who are stopping them are susceptible to small bribes of only a few dollars each, and the person breaking the law can get off scot-free. This may seem like a small thing but these people then don't see any reason to follow laws and this can result in increased traffic accidents, which in turn can result in death. As you can see, small actions have large consequences. Large actions have even larger consequences.

Throughout history, large companies have always shown a disdain of the laws and regulations. You can find numerous examples about companies breaking laws, and profiting off these activities by billions or even tens of billions of dollars in some cases. After all, when GSK ( NYSE:GSK ) was fined $3 billion for misleading people and unlawfully promoting several drugs. And while you may think that $3 billion is a really major amount, the fact is that many people thought this was a very small fine since the company generated around $25 billion from the sale of these drugs. So basically, the net revenue that the company earned from breaking regulations was around $22 billion.

As I mentioned before, it has always been part and parcel of major corporations to flaunt rules and disregard authority, and bribery falls within this ambit as well. Even up to a few decades ago, laws weren't even close to as stringent as they are today, and companies weren't as closely monitored or regulated. In fact, back then, it was the norm to pay officials, especially foreign officials bribes in money and gifts to get them to expedite the process and reduce the expenses of the company. It was a worthwhile trade, though still completely illegal; the company got to save time and money and the officials pocketed the extra amount.

Over the past decade or so, laws have started to tighten, especially after the financial crisis which ruined lives, careers and the economy of the entire world. That financial institutions were able to manipulate the market to such an extent and mostly escape without major repercussions was a major blow to the trust held in the financial system of the company. Hence, new rules and regulations were quickly drafted and brought into law, to ensure that banks didn't do anything like that ever again. Many financial institutions were fined for billions of dollars, though again, while that may seem like a major achievement, it's a drop in the bucket for these companies with hundreds of billions of dollars in revenue annually.

Of course, bribery and corruption isn't just a United States thing. It is a global phenomena and present everywhere in the world. However, most of the biggest companies in the world are present in the United States, which is why when there is a scandal related to these companies, it hits headlines all across the world. All, major companies in the US are well-known to everyone across the world which is why whenever any incident related to them occurs, it piques the interest of everyone, even if they're not located in the US or have ever engaged in business with these companies.

The biggest bribery cases are extremely interesting reads on their own. And these are just the ones we know about. Some of these are epic sagas that don't care about borders and involve many companies as well as many countries. So sit back, grab some popcorn and learn about the biggest bribery cases in history, which should and often do have movies made about them, starting with number 15:

15. Inter-American Water and Utility Society

The company ended up paying around $1.5 million in fines for bribery cases in Columbia.

Pixabay/Public Domain

13. Troika Laundromat

Troika isn't a single company, or even 10 companies. The collective term Troika Laundromat was given to around 70 shell companies which were formed to launder massive amounts of money. Billions of dollars ended up moving from Russia to the West, with bribes being paid to mix black and white money, and ensure that no one could differentiate anymore.

Gajus/Shutterstock.com

12. Daimler

The producers of one of the most famous brands in the automobile industry, Mercedez-Benz, paid $185 million to the United States against charges of bribery and corruption in 2010. Foreign officials were provided with money and gifts between the time period of 1998 and 2008 to get government contracts, and more than $56 million were paid on around 200 occasions in at least 22 countries.

It is now owned by L3 Technologies ( NYSE:LHX ), but when it was independent, Titan, a defense company, received the biggest fine in history at the time by the FCPA, which totaled more than $28.5 million back in 2004. $13 million of this pertained to foreign bribery including in Benin, where the bribery took place to get a contract and establish business within the country. $2 million in bribes were directly sent to the President of Benin.

10. GlaxoSmithKline

We mentioned earlier that GSK earned a fine of $3 billion for its role in the scandal related to misrepresenting its drugs including Wellbutrin and Paxil. However, that's not all. The company also paid kickbacks to physicians to prefer their drugs over those of the competition and promoting it for situations the drug was not intended for.

9. Lucent Technologies

To win lucrative contracts from China, Lucent Technologies, which doesn't exist anymore, would pay for more than 1,000 Chinese officials to travel to destinations such as Las Vegas. The company paid $2.5 million in fines. Later, when the company had been absorbed by Alcatel, there were even more such cases, which are mentioned in more detail below, in our list of the biggest bribery cases in business history.

EvgeniiAnd/Shutterstock.com

8. Kellogg Brown and Root ( NYSE:KBR )

The American engineering company has been involved in several controversies throughout its existence, one of which was the Justice Department charging the company with paying bribes worth billions of dollars to Nigerian officials to earn foreign contracts. The company ended up paying $402 million in fines while its former CEO was sentenced to 30 months in prison.

7. BAE Systems

One of the biggest defense companies in the world, BAE Systems was engaged in controversy in 2006, where it was accused of using corruption to sell arms to various countries across the world including Chile, Qatar, Tanzania, South Africa, Romania, Saudi Arabia and Czech Republic. Even though it was investigated and later charged by the Serious Fraud Office, BAE refused to concede that it had used bribery, which is why it was not banned from future contracts. However, the company ended up paying $400 million to the US and 30 million pounds to the UK against charges of overseas corruption.

6. Alcatel-Lucent SA

The company was a French American telecommunications company, and among the biggest in the world in this industry. However, in 2010, it was engaged in a massive scandal where it ended up having to pay at least $137 million in fines after bribing officials in several countries including Malaysia, Honduras and Taiwan.

Please continue to see the 5 biggest bribery cases in business history . Suggested articles:

15 Biggest Corporate Fines in History

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15 Biggest Companies That Aren't Profitable

Disclosure: No position. 15 biggest bribery cases in business history is originally published at Insider Monkey.

JP Morgan: A bribery case study

Written by Richard Wegrzyn on Tuesday 9 May, 2017

Historically, there hasn’t been a large number of high profile enforcement actions in relation to bribery. The low numbers could be taken as a sign that regulators are not focusing on this risk or conversely that firms have improved systems and controls so much that bribery is a thing of the past.

In reality, bribery and corruption incidents can be difficult to identify and extremely complicated to investigate and so there’s a high chance that a number of significant investigations are underway. As to whether firms’ systems and controls have improved to the extent that no breaches are occurring – ongoing scandals suggest this is unlikely to be the case.

The enforcement actions we do see highlight a number of themes, including the:

Different ways bribery manifests itself
Challenges of developing effective systems and controls
Impact a firm's culture has on staff acting dishonestly

We will use a case study to illustrate these three points in more detail.

In late 2016, JP Morgan reached a settlement with the US Securities and Exchange Commission (SEC) and other regulators to settle charges of violating the Foreign Corrupt Practices Act (FCPA). The bank paid $264 million after facing charges of corruptly influencing government officials in the Asia Pacific region, by giving jobs and internships to their relatives and friends.

The firm’s subsidiary in Asia was found to have engaged in a ‘systematic bribery scheme’ by hiring the children of government officials and other clients (who were typically unqualified for the positions on their own merit), in exchange for lucrative business rewards and new deals. JP Morgan’s internal controls were found to be so weak that not one Referral Hire request was denied.

1. How bribery manifests itself:

The view of bribery being about the passing of envelopes of cash is clearly old fashioned. The case study shows how a client Referral Hire programme for the ‘sons and daughters’ of actual or potential clients was used to influence decisions, ultimately securing lucrative financial returns for the firm. The programme was deliberately designed to operate outside of the usual graduate/intern recruitment programmes and the enforcement noted that ‘the primary goal of client referral hiring was to generate revenue for JPMorgan APAC by extending personal favors to client executives and government officials through hiring their relatives and friends’.

The case study reinforces the need for firms to think broadly and creatively about the risks that they face. Risk assessments need to consider all areas where someone may be induced, or induce another, to act improperly. This might cover the giving/receiving of gifts and hospitality, but also extends into the use of third parties, procurement processes and, as highlighted, recruitment.

2. The challenges of developing effective systems and controls

It was well documented within the bank that recruitment programmes could lead to bribery risks. The group’s Anti-Corruption Policy stated ‘it is improper for a person to offer or give anything to a public official, either directly or through an intermediary, in an effort to secure an advantage that would not have been granted if the offer or gift had not been made,’ noting that ‘”value” can include such things as the offer of internships or training for relatives of a public official.’

These policy requirements were reinforced through training which was rolled out to all staff across the region. This means all employees were aware of the risks associated with recruiting children of clients.

In recognition of the risk, legal and compliance developed a process for screening prospective Referral Hires. Under the process as it was intended to work, each requesting banker was required to fill out the questionnaire for each specific hire, and then submit that questionnaire to the bank’s regional legal and compliance staff for review and approval.

Additionally, the bank imposed restrictions on what confidential information Referral Hires were able to access. This was designed to prevent conflicts of interest and the sharing of sensitive, confidential information regarding JP Morgan’s clients, or the competitors of those clients, with the relatives and friends of senior officials with those same clients. In cases in which the referring person was employed by a government ministry, Referral Hires were supposed to be walled off from transactions involving that ministry.

On the face of things, it may appear that the control design put in place was adequate. They covered a range of governance, people and process approaches to mitigate an identified risk. And yet in spite of the controls in place, there was continued misconduct of both investment banking and legal and compliance staff regarding the Referral Hire programme.

Of particular note:

Investment bankers did not demonstrate understanding of the risks; in many cases they completed the questionnaire honestly, for instance ‘It will strengthen our relationship with [client] and solidifying [sic] our position as an advisor to him and the IPOs of his companies (expected to be >$500mm in offering size’. This brings into question the effectiveness of policy requirements and training activity.
Legal and compliance support staff challenged such submissions, explaining that such recruitment would not be allowed. Responses to probing questions would provide a radically different answer obfuscating any risk and these were then escalated by the support staff with no mention of the original insight and no follow-up challenge from legal and compliance staff. This suggests ineffective process, training and segregation of duties. It also suggests challenges with culture, level of seniority/authority or understanding of their purpose.
It doesn’t appear that sufficient independent investigation was carried out into the accuracy of information contained in the questionnaires. Independent checks may have uncovered the fact that the forms were not being completed accurately, exposing the improper behaviour much earlier on.
The business deliberately defined contract dates and durations in order not to appear on the year-end headcount figures (e.g. 11.5 month contracts from January to mid-December), again hiding the true numbers of people being employed. This brings into question the effectiveness of management information protocols as well as HR oversight and challenge.

3. The impact a firm's culture has on staff acting dishonestly

Fundamentally the failings in this case, as in so many others, appear to come down to cultural issues. Despite the presence of numerous directive controls a sufficient number of staff felt that their own agenda was more important than the firm's stated position.

This is exemplified through:

a focus on the financial benefit seemingly at any cost
lack of challenge from legal and compliance support staff
wilful provision of false information in formal records
continued and extensive use of a prohibited approach to recruitment.

Firms need to ensure that staff are actively encouraged to do the right thing, in line with policy requirements. They need to feel supported when they take actions to prevent risks even when this is to the detriment of influential colleagues. Whilst culture must be driven from the very top of the firm through the way they incentivise, target and challenge senior management, it can be driven from the middle or locally too.

As the case study highlights, the Referral Hire process was effectively ended when:

a compliance officer in a newly-created position was tasked with reviewing and approving client Referral Hire questionnaires. In denying a request to hire a Referral Hire, he stated that hiring Referral Hires at the request of clients and outside of the normal hiring system was impermissible under JPMorgan’s compliance and anti-corruption policies.

This demonstrates how an individual with the courage and conviction to do the right thing, or for that matter the wrong thing, can have far reaching effects across even the largest organisations.

The case study focuses very much on a formal arrangement for improper use of recruitment activity. This formal nature makes it very easy to see where improper behaviour was occurring. However, everyday individuals within firms are making decisions which could well involve actual impropriety (or could well be perceived to be improper by an ordinary person).

By working through the case study it was clear that despite awareness of the risk, a range of controls failures were still able to occur. So what can firms do to protect themselves?

All of the ‘typical’ controls need to be in place, as they were in the case study – risk assessment, policies, procedures, training and reporting are all critical parts of the control framework. Firms need to independently critically assess the effectiveness of these controls to try and understand if the controls are functioning as intended through their design.

Additionally, firms should also consider the following.

Culture: To be fully effective this has to come from the very top, and that means that senior management have to genuinely want to do the right thing. It should be driven locally by senior and middle management by way of leading by example. It should be played out in the way they direct the activities of the institution, the way success is rewarded and the way unacceptable behaviour is dealt with. It can be difficult to influence this type of culture but making senior management aware of the risks and consequences is an important first step.
Escalation procedures: Staff need to be encouraged to raise concerns and be confident they can do so without recrimination. This doesn’t need to be via a formal whistle-blowing process it could just be a suggestion box. Heavily linked to culture, often staff will be aware of problems but may not report it for various reasons: knowledge of how to report, fear of reporting or expectation that little will change as a result of their escalation.
Monitoring and independent checking: Whilst a process to complete a questionnaire was a sensible step in the case study, without independent validation of the information provided, even on a sample basis, the process was always open to being abused. Compliance staff and senior management need to have insight into what is really happening on the frontline – independent review, re-performance of controls or validation of information on a risk sensitive sample basis may make the difference in the level of insight.

Richard Wegrzyn is a Managing Consultant in the Financial Crime Advisory team at Bovill Limited. All views expressed are those of the author and should not be considered as advice.

Find out more about the ICA Certificate in Anti-Corruption today.

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New anti-bribery case studies

Posted on december 5, 2021.

The BPN has launched a series of new case studies to support businesses working through the challenges associated with preventing, detecting and addressing bribery and corruption.

Each case spotlights a different anti-bribery issue or procedure, including:

Implementing an anti-bribery and corruption policy
Implementing a whistleblower policy
Conducting thorough due diligence
Facilitation payments
Investigating an internal complaint
Responding to contact by an authority
Enforcement

These hypothetical case studies cover a range of industries and offer guidance on how to respond to common scenarios. Designed to help SMEs, these case studies can be easily incorporated into anti-bribery training.

Access the case studies here.

Thank you to Corrs Chambers Westgarth for supporting the development of these case studies.

Top 10 Bribery and Corruption Cases of 2019

There is a never-ending stream of news stories documenting bribery and corruption cases around the world. Some of those cases rose to the top of the headlines in 2019. All of the stories help illustrate the need for organisations to have proper controls in place to prevent further bribery and corruption cases popping up. A certification such as ISO 37001 – Anti-Bribery Management Systems standard can provide a comprehensive approach to mitigating bribery and corruption risk. Organisations of all sizes and industries should take steps now to ensure that they don’t end up on a future list of top bribery and corruption cases and scandals.

Here, we count down the stories we’ve chosen as the 10 most eye-popping bribery and corruption cases reported in 2019.

#10 – juniper networks.

California-based cybersecurity firm Juniper Networks was ordered by the U.S. Securities and Exchange Commission (SEC) to pay more than $11.7 for violations of the Foreign Corrupt Practices Act (FCPA). The SEC alleges that some of the sales employees in Juniper’s Russian subsidiary “secretly agreed with third-party distributors to fund leisure trips for customers, including government officials through the use of off-book accounts.” In the settlement, Juniper did not explicitly admit nor deny the SEC’s claims – but it did agree to “cease and desist from committing or causing any violations”. ( Reuters, 2019, SEC, 2019 )

#9 – Alstom

Paris-based Alstom came under the attention of the UK Serious Fraud Office (SFO), resulting in a £16.4 million judgment in fines and costs for a corruption scheme. Alstom Network UK Ltd was ordered to make the payment after an SFO investigation revealed a fraudulent contract with an intermediary that was “simply a conduit for bribes”. To hide the corruption, Alstom went so far as to provide fake paperwork and fraudulent compliance checks. Three former Alstom employees were jailed in the case.

The multinational conglomerate, which serves the rail industry in locations worldwide (and formerly included interests in the power industry), has seen trouble at several units in various regions. In 2014, Alstom SA pleaded guilty in the U.S. to violating the Foreign Corrupt Practices Act (FCPA). The company bribed officials in Saudi Arabia, Egypt, Indonesia and the Bahamas, resulting in $772 million in criminal penalties. In 2016, Alstom Power Ltd pleaded guilty in the UK for corruption involving a Lithuanian power project. ( WSJ 2019, FCPA Blog, 2019 )

#8 – Microsoft

In Hungary, a wholly-owned subsidiary of Microsoft (aptly named Microsoft Hungry) was busted for a bid-rigging and bribery scheme, costing the corporation $25.3 million in combined criminal and civil penalties. The action was brought by the U.S. Department of Justice (DOJ) and the SEC for violations spanning from 2013 until “at least” 2015.

The scandal centered around the sale of Microsoft software licenses to Hungarian government agencies. Microsoft Hungary employees, including executives, were found to have falsely represented steep “discounts” in order to conclude deals with resellers, in violation of the FCPA. The SEC further found Microsoft’s subsidiary in Turkey “provided an excessive discount to an unauthorized third party in a licensing transaction for which Microsoft’s records do not reflect any services provided”.( Compliance Week, 2019 )

Big Four accounting firm KPMG found itself in all sorts of embarrassing (and costly) trouble over allegations that some of its former employees used stolen information to alter previous audit work – and cheated on training exams. The firm admitted to the allegations and agreed to pay the SEC $50 million to settle the charges. The case is significant as it marks the largest fine imposed on an auditor by the SEC to date.

“The breadth and seriousness of the misconduct at issue here is, frankly, astonishing”, said Steven Peikin, one of the SEC’s enforcement directors. “This settlement reflects the need to severely punish this sort of wrongdoing while putting in place measures designed to prevent its recurrence”. ( Reuters, 2019 )

#6 – Samsung Heavy Industries

A subsidiary of Samsung Group, South Korea-based Samsung Heavy Industries Company Ltd. (“SHI”) found itself under investigation for involvement in the Petrobras scandal. Specifically, the company was charged in a scheme to pay millions of dollars in bribes to Petrobras official in return for Petrobras chartering one of SHI’s oil drillships. Petrobras is the Brasilian state-owned energy company caught up in a major, ongoing investigation over widespread corruption.

According to the DOJ, SHI conspired to pay commissions, including some of that money for bribes, to Brasilian intermediaries beginning 2007 and continuing until 2013. The amount topped $20 million. SHI admitted to the charges and entered into a three-year deferred prosecution agreement with the DOJ. As per the agreement, SHI will pay 50 percent of the total penalties to the U.S. and the remaining 50 percent to the Brasilian authorities. ( Lexology, 2019 )

#5 – Fresenius Medical

Fresenius Medical Care AG & Co. KGaA (based in Bad Homburg, Germany) agreed to pay $231 in penalties for bribing doctors and public health officials in at least 17 countries. Fresenius is the world’s largest provider of dialysis equipment and services. It will make the payments to the DOJ and SEC to settle violations of the FCPA in various countries and continents, including Africa, the Middle East and Europe.

According to the SEC, in some locations, Fresenius failed to train employees or conduct due diligence on agents, and “in many instances, senior management actively engaged in corruption schemes and directed employees to destroy records of the misconduct”. Fresenius paid about $30 million in bribes “using sham consulting contracts, falsifying documents, and funneling bribes through a system of third party intermediaries”. ( FCPA Blog, 2019 )

#4 – Walmart

Retail giant Walmart is alleged to have engaged in corrupt payments to governments and officials around the world for more than 10 years, according to an agreement reached with the DOJ and SEC. Walmart will pay $282 million to settle the charges that it violated the FCPA in an effort to open new locations in various countries and jurisdictions around the world. Notably, Walmart’s Brasilian subsidy pleaded guilty to breaking U.S. federal law – but allegations included cases in Mexico, China, India and other locations.

Federal regulators said Walmart looked the other way as subsidiaries on three continents paid millions of dollars to middlemen who helped the company obtain permits and other government approvals from July 2000 to April 2011. ( The New York Times, 2019 )

#3 – TechnipFMC

London-based TechnipFMC was charged with making illicit payments to advance the company’s interests in Iraq and Brasil. The company paid a $296 million settlement to the DOJ for the two bribery schemes. In Tuesday’s enforcement action, the DOJ said the charges against TechnipFMC “arose out of two independent bribery schemes: a scheme by Technip to pay bribes to Brazilian officials and a scheme by FMC to pay bribes to officials in Iraq”.

The SEC alleged that from 2003 until at least 2013, Technip conspired with Singapore-based Keppel Offshore to pay $69 million in bribes, disguised as “commission payments” passed in part to Petrobras – as well as more than $6 million in payments to the Workers’ Party in Brazil and to Workers’ Party officials. In Iraq beginning in 2008 and continuing until at least 2013, FMC bribed at least seven government officials “through a Monaco-based intermediary company”, the DOJ said. ( DOJ, 2019 )

#2 – Ericsson

Number two on our list is Swedish telecom giant Ericsson. The company paid a blockbuster sum of more than $1 billion (U.S.) to the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) for “violating the anti-bribery, books and records, and internal controls provisions of the FCPA.”

According to the DOJ, the corruption scandal spanned 17 years and at least five countries. It involved high-level executives and was geared toward increasing Ericsson’s profits. Ericcson allegedly used slush funds to bribe officials in various countries including China, Vietnam, Indonesia and Kuwait.

In China, for example, Ericsson subsidiaries paid millions in bribes that were ultimately delivered to officials, including about $31.5 million for services that were never performed. ( DOJ, 2019 )

#1 – Unaoil

And finally, number one on our list: The massive Unaoil scandal continued to make headlines. Four businessmen pleaded guilty in London courts in 2019, admitting that they were involved in paying millions in bribes. According to investigators, the illicit payments were made to officials in nine different countries over a span of 17 years. As part of the scheme, participants were alleged to have engaged in widespread money laundering and attempts to destroy evidence.

It is alleged that two of the key players in the scandal made millions of dollars in bribe payments to government officials in Algeria, Angola, Azerbaijan, the Democratic Republic of Congo, Iran, Iraq, Kazakhstan, Libya and Syria. Fallout continues from the massive Unaoil case, which some have said is the largest bribery scandal in history. The family business from Monaco is alleged to have systematically corrupted the global oil industry, paying our millions of dollars in bribes for big-name companies including Samsung, Rolls-Royce and Halliburton. ( The Guardian, 2019 , The Age )

Let us know if you would like to learn more about other bribery and corruption cases or our solutions!

If you have any questions or interest in implementing compliance solutions, please contact us.

CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud ), employee background screening , investigative due diligence , business intelligence , third-party risk management , forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems , ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management , providing training and certification . ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training

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