A global crackdown on companies that use bribery to advance their foreign business interests is rapidly gathering steam.
Governments in the United States and other nations have dramatically increased their investigation and prosecution of foreign corruption cases in recent years, thanks to a spate of new anti-corruption laws that has fostered growing international cooperation.
The effort logged another high-profile catch earlier this month with the conviction of former Halliburton Co. executive Albert J. "Jack" Stanley, who led a scheme to bribe Nigerian government officials to secure lucrative contracts related to the natural-gas business. Investigators in France, Switzerland, the United Kingdom and Nigeria are investigating the matter, according to Halliburton corporate filings.
The U.S. federal government had open investigations into 84 companies at the end of last year, up from three in 2002, according to Shearman & Sterling LLP, a law firm based in New York that tracks anticorruption cases.
"In the 30-plus years I have followed these matters, there were long periods of little activity and few prosecutions in the early years. Recently, there has been a dramatic increase in such activity," says Danforth Newcomb, a partner at Shearman & Sterling.
Mark F. Mendelsohn, deputy chief of the U.S. Justice Department's fraud section, says pursuing anti-corruption cases has become "a significant priority in recent years." Additional lawyers have been assigned to these cases, and a year ago, the Federal Bureau of Investigation created a team to work on foreign bribery and antitrust cases, he says.
"U.S. companies that are paying bribes to foreign officials are undermining government institutions around the world," he says. "It is a hugely destabilizing force."
The Justice Department declined to comment on the Stanley matter or any other specific cases.
The severity of the penalties is increasing. Stanley, who was removed as chairman of Halliburton subsidiary Kellogg, Brown & Root and is cooperating with prosecutors, received a seven-year prison sentence, equaling the longest term ever given in the 30-year history of the Foreign Corrupt Practices Act.
Last year, a subsidiary of Houston-based oil-field services firm Baker Hughes Inc. entered a guilty plea in U.S. District Court in Houston and agreed to pay $44 million in fines and to return profits for bribing Kazakhstan officials to win oil-related work. It was the largest financial penalty yet given under the act.
The parent company separately agreed to a Securities and Exchange Commission settlement without admitting or denying the allegations.
Increased cooperation among investigators in different nations is believed to be a primary reason for the escalation, say lawyers who handle these cases. German prosecutor Anton Winkler says international legal assistance has greatly improved in the last 15 years, particularly in corruption and bribery cases.
"A decade ago, requests for international legal assistance meant months of waiting or no answer at all. That has changed," Winkler said in a telephone interview. He says the quality of assistance varies from country to country, depending on a variety of factors, including bilateral treaties and agreements.
Another factor: More companies are voluntarily turning over evidence of wrongdoing in the hope of getting leniency from prosecutors. The 2002 Sarbanes-Oxley law in the U.S., which requires executives to certify that their company's financial disclosures are accurate, has also led to more disclosures. A bribe that is mischaracterized as a legitimate payment to a consultant, for instance, can be considered a misleading entry on the corporate books.
Companies are getting the message. Having a written antibribery policy that isn't enforced in a muscular manner won't be enough to protect a company, says Shearman & Sterling's Newcomb. "Real investigations are happening, and real fines are being paid," he said.