The Organisation for Economic Cooperation and Development (OECD) released its Foreign Bribery Report (Report) this week. The Report is the OECD’s first ever analysis of foreign bribery on a global scale.
The Report analyses 427 legal cases involving companies (164 cases) and individuals (263 cases) who allegedly bribed foreign public officials in one or more of the 41 signatory countries to the OECD Anti-Bribery Convention (Convention). The Report reflects data obtained from law enforcement authorities in 17 countries where foreign bribery cases were concluded between February 2009, when the Convention came into force, and June 2014.
The Report highlights trends identified by the OECD relating to the investigation and enforcement of foreign bribery offences. It does not discuss specific companies or cases.
The Report’s key findings include the following:
Sources of foreign bribes
- Four sectors were involved in almost two thirds of the foreign bribery cases considered: extractive (19%), construction (15%), transportation and storage (15%) and information and communication (10%).
- In 60% of cases, the company associated with the corrupt transaction had more than 250 employees.
- Corporate management or CEOs were involved in 53% of foreign bribery cases.
- Intermediaries were involved in 75% of foreign bribery cases. Intermediaries included agents (41% of cases) and corporate vehicles (35% of cases). Agents incorporated local sales and marketing agents, distributors and brokers. Corporate vehicles incorporated subsidiaries and companies established under the beneficial ownership of the public official who received the bribe.
Targets of foreign bribes
- Bribes were promised, offered or given most frequently to SOE officials (27%) and customs officials (11%).
- Nearly half of all cases involved bribery of public officials in countries with high (22%) to very high (21%) levels of human development.
Purpose of foreign bribes
- Bribes were most frequently paid to obtain public procurement contracts (57%), clear customs procedures (12%) and gain preferential tax treatment (6%).
- On average, bribes equalled 10.9% of the total transaction value and 34.5% of the profits.
- Cases were brought to the attention of authorities through self-reporting (31%), law enforcement investigations (13%), formal and informal mutual legal assistance between countries (13%), media reporting (5%) and direct complaints by whistleblowers (2%).
- Of those that self-reported, foreign bribery was discovered during internal audits (31%), during merger or acquisition due diligence (28%) and through whistleblowers approaching internal leaders (17%).
- Enforcement increased steadily after 2005, peaked in 2011, dropped off considerably in 2012 and levelled through to the end of 2013. This correlates with a rise in the average time taken to conclude foreign bribery investigations.
- In 2013, the average time to conclude foreign bribery cases was 7.3 years.
- 390 investigations are currently underway in 24 of the 41 parties to the OECD Convention.
The majority of sanctions have been imposed through settlement procedures (69%) with the remainder imposed through convictions.
The Report is available here.