1. What are some notable corruption risks that could arise in the United States?
While the spending of corporate funds in politics has long been legal in the United States (U.S.), the practice has increased significantly since January 2010, when the U.S. Supreme Court’s Citizens United decision pronounced that corporate spending was protected under the First Amendment of the U.S. Constitution. Leading the way is an ever-growing array of lobbyists, Super Political Action Committees (PACs), political donors and government-relations professionals that help funnel corporate contributions. In 2012, private interests spent an estimated USD $12.5 million on lobbying for every member of U.S. Congress. Given its ability to finance political campaigns, the private sector has substantial influence in U.S. politics.
More direct forms of quid pro quo bribery, such as gifts of money or in-kind contributions, also exist in many corners of U.S. politics, despite being strictly prohibited.
In 2013, over 1,000 federal, state and local officials were convicted on bribery-related charges. Bribe payers are also subject to prosecution, as investigators and prosecutors have access to a wide range of statutes under which they may charge individuals and companies for bribery and corruption. Law enforcement in the United States has become increasingly proactive in investigating white-collar crime. According to UN statistics, over the five-year period from 2005 through 2009, the U.S. Department of Justice charged 5,765 private individuals with public corruption offences nationwide and obtained 5,086 convictions.
2. Do foreign investors in the U.S. face business risks related to corruption or bribery?
Corruption is not a significant business risk for foreign investors in the U.S., which is reflected in its low ranking of 10th out of 197 countries on TRACE’s business bribery risk index (TRACE Matrix). However, this is not to say that foreign businesses do not closely involve themselves in U.S. politics. According to the Project on Government Oversight, a non-profit advocacy group that focuses on investigating abuse in the U.S. government, foreign principals spend about half a billion dollars annually to influence policy in the United States. Compared to domestic businesses, these foreign contributors typically must navigate stricter disclosure rules, such as the Foreign Agents Registration Act (FARA), and are forbidden from contributing directly to political candidates.
3. What are America’s greatest corruption risks for foreign businesses?
While no single sector is at higher risk, businesses that contract directly with the U.S. government are more likely to encounter extortionate demands. Recent bribery scandals have largely centered on contracts between foreign businesses and the U.S. military.
A 2013 investigation into the U.S. Navy found that several commanding officers received bribes from a single foreign contractor, Glenn Defense Marine Asia, which had engaged in a multimillion-dollar fraud scheme at various ports in Southeast Asia. Over the past five years, cases of suspected fraud and other wrongdoing by U.S. troops and contractors overseeing reconstruction and relief projects in Iraq and Afghanistan have also increased.
4. How can foreign companies operating in the U.S. protect themselves against corrupt practices?
Businesses operating in the United States should familiarize themselves with requirements and guidelines for instituting compliance programs and internal controls. The U.S. Securities and Exchange Commission and the Department of Justice have jointly published a Resource Guide to the Foreign Corrupt Practices Act, which outlines the hallmarks of a robust compliance program. Those businesses dealing as direct contractors with the U.S. government should also closely examine the procurement rules regarding federal, state and local contracts. Federal public procurement, for example, is regulated by the Federal Acquisition Regulation (FAR), and applies to all executive and military departments, and to state-owned companies.
5. Where can companies find support in the U.S. to ensure anti-bribery compliance?
Various organizations and free resources are available to companies looking to reduce their risks and exposure to corruption in the United States. The United Nations Office on Drugs and Crime (UNODC) and the United Nations Global Compact offer free training called “The Fight Against Corruption.” This training covers topics such as gifts and hospitality, facilitation payments, intermediaries, and insider information. Transparency International also offers a free online anti-bribery course – “Doing Business Without Bribery.” TRACE, through its membership program, leverages a shared-cost model to provide practical and cost-effective anti-bribery compliance services for multinational companies and their commercial intermediaries.
Companies may also refer to TRACEpublic, the first global register of beneficial ownership information, which allows companies to share and search for beneficial ownership information at no cost. The database supports the efforts of companies seeking to conduct business ethically.
This Q&A article was originally produced for ExportWise.ca, Export Development Canada’s online magazine.