Navigating the Global (Corruption) Landscape

Official corruption remains the norm in many countries around the world and causes massive difficulties for companies operating in these environments. Understanding how to navigate the cultural norms in-country while adhering to the Foreign Corrupt Practices Act requires working with well-vetted, well-connected vendors, partners, and facilitators. Failure to employ the right resources can cost companies contracts or land them in hot water with US authorities.

According to Transparency International, more than two-thirds of countries in the world fall closer to the “corrupt” end of the spectrum than the “clean” end. In their most recent ranking of corruption perception, Transparency International notes ” Unfortunately, compared to recent years, this poor performance is nothing new.”

The business community is awash with stories of “favors,” “baksheesh,” “unofficial tolls,” “compensation,” “overtime pay,” “tips,” and other examples of public officials expecting – or soliciting – bribes to accomplish everything from gaining building permits to avoiding parking tickets. In the Democratic Republic of Congo, for example, 80% of the income for traffic cops in Kinshasa comes from “informal tolls,” according to a recent study by Raul Sanchez de la Sierra of Harvard and Kristof Titeca of the University of Antwerp. 

This worldview runs directly counter to the Foreign Corrupt Practices Act or FCPA. 

The FCPA website explains, “In 1998 the United States Congress and 33 other countries acted against the bribery of foreign officials, essentially government officials in an attempt to reduce corruption and money laundering through the global financial system. Corrupt political officials and those in high army office were targeted with a view to preventing government officials from exploiting their positions to gain an unfair commercial advantage. The FCPA has and will continue to have a profound impact on the way US firms undertake business in at home and abroad.”

And the FCPA is not merely a guideline or a suggestion. Again, from the website, “Any breach of the FCPA is taken as a serious business offense. The penalties for breaking the Act extend to being barred from tendering for U.S. government contracts, large fines and in some cases criminal convictions for prosecuted company executives. Some of these convictions have resulted in jail time for the guilty.”

In the second quarter of 2018, the Department of Justice announced five FCPA corporate enforcement actions, with companies paying $985 million in settlements. Two individuals were sentenced. One individual was sentenced to 48 months in jail and ordered to pay $1 million in restitution after he bribed UN officials in exchange for support for a conference center, and another was sentenced to 35 months in prison for bribing an official in Aruba’s telecommunications company. 

So how can a company successfully operate in an environment where corruption is the norm? Carefully. The key is to hire a network of experienced, savvy, and trusted individuals who not only understand the environment but also can convey the message of transparency to officials without insulting them or losing business opportunities. Bolstering this approach with strong intelligence collection to understand all forces at work and to combat corruption by other companies will provide a positive basis for successful operations overseas. 

By | 2018-09-18T19:12:40+00:00 September 18th, 2018|International|0 Comments

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