A HISTORY OF BRIBERY IN THE UNITED STATES

Bribery is the act of giving compensation in various forms (it may be through money, goods, or services) for a change in the behavior of a particular recipient, ultimately resulting to the fulfillment of some request which is to the interest and/or benefit of the giver.

 

In the United States, bribery has been evident most especially in the corporate arena. The act of bribery often occurs when companies make payments in order to expedite a process, obtain a contract, or retain business. These payments are usually made to foreign government officials or any person who is in a position of power to alter something within a process. Practices of bribery in the U.S. have been recorded dating back to the 1800’s.

 

Even though there were already allegations on officials involved in bribery even during the 1800’s, these cases were not officially investigated and no reports have actually been made. It has only been in the late 1990’s and early 2000’s that bribery cases involving large sums of money and massive companies and conglomerates were submitted to thorough and formal probes and queries.

 

The primary catalyst for the formulation of legislative laws against bribery in the United States was the 1973 Watergate political scandal which ultimately led to the Former U.S. President Richard Nixon’s resignation. Through investigations made by the U. S. Securities and Exchange Commission (SEC) and the United States Department of Justice (DOJ), the scandal revealed quite a number of U.S. companies who have admitted that they have made suspicious or illegal payments to different foreign government officials and politicians. Due to this, the U.S. government has enacted the Foreign Corrupt Practices Act (FCPA) in 1977 which accordingly bans these companies from making payments and or offering any form of compensation in order to influence foreign officials.

 

Although the Foreign Corrupt Practices Act has been in implementation since 1977 and has been amended a few times, this hasn’t stopped some companies from committing acts of bribery all the way to the 2016 snapsex case. In fact, below are three of some bribery cases committed by companies in the history of the United States.

 

  • KBR and Halliburton Case

In 2008, a formal investigation by the U.S. SEC alongside the U.S. DOJ found significant evidences of FCPA violations made by Texas-based engineering and construction company Kellogg Brown and Root (KBR), along with parent company Halliburton.

 

It was evident in the case that KBR and Halliburton made payments closely amounting to the sum of $200 million to the various-ranking officials in the Nigerian Government in order to obtain engineering, procurement and construction contracts.

 

By 2009, the companies pleaded guilty and were fined a sum of nearly $600 million in order to settle the FCPA charges. Additionally, former president Albert ‘Jack’ Stanley was sentenced to seven years in jail.

 

  • Siemens AG

Siemens AG is a large German conglomerate, and possibly Europe’s biggest engineering company, embroiled in what was arguably the largest bribery case recorded in history. The company’s bribery payments made across four continents, in order to secure government contracts, totaled to a massive $1.4 billion. These payments were made to foreign officials from the years spanning 2001 to 2007.

 

When the company pleaded guilty in 2008, its fines amounted to $1.6 billion paid to Germany and the U.S. This not yet including the $1 billion paid to the prosecutors and accountants in charge of the investigation.

 

What is actually a relief to note though is that following the results of the prosecution, the Siemens conglomerate had undergone a sort of transformation and cleansing process in the leadership of Chief Executive Officer Peter Löscher with the aid of Peter Solmssen. Ironically, the massively-fined scandal has paved the way for Siemens to be recognized as one of the most transparent firms globally, implementing a corporate compliance program that is debatably top in its ranks.

 

  • BAE Systems

BAE Systems is a defence company considered to be one of the largest in the world with services comprising technology-led defence, aerospace and security solutions. In 2007, the company was submitted to several investigations regarding formal accusations involving bribery. Allegedly, the company had made payments to foreign officials in order to secure defence contracts from Hungary, Saudi Arabia and numerous other countries in the 1980’s and 1990’s.

 

Three years after U.S. investigations, the company admitted to issuing false statements of FCPA compliance. The company was fined a sum nearly amounting to $500 million.

 

The abovementioned cases are only small representations of how rampant bribery has become especially in the corporate world. The FCPA enforces civil penalties including fines depending on the flagrancy of the violation and forbiddance of continuing and/or conducting business with the government to those found to be guilty of bribery. One can only hope that these penalties and sanctions are enough to discourage companies from ever engaging in the illegal act.

A HISTORY OF BRIBERY IN BUSINESS

Acts of bribery committed by companies and business establishments by paying foreign officials to hasten processes and/or procurement of contracts that have been recorded date back to the mid-1970’s yet the actual earliest records of the practice remains obscure.

 

Bribery is essentially the offering of anything of value that might influence the actions of a government official or someone in power. The offering of bribes has been seen in many fields including sports, politics, medicine, research, government and business. When we talk of bribes, it may take on any form. It may be in the form of cash, gifts, rights in action, property or a particularly difficult favor which otherwise may not be given if not in exchange for something.

 

Bribery: An Overview

 

The sole purpose of bribery is to influence or alter an action of a recipient in favor to the giver of the bribe. Typically, both the giver and the recipient is charged with bribery. In which case, a prosecutor must be able to provide substantial evidence that an actual agreement has been made. Since in most bribery cases there is no actual written agreement, it is difficult to charge someone with the crime. Prosecutors rely on accounts and records, as well as demonstrate that there is corrupt intent.

A crime usually affiliated with bribery is extortion. These two are often confused with each other. The main difference between them though is that the former uses positive reward for the alteration of the recipient of the bribe’s behavior whereas the latter involves negative acts such as threats or violence in order to initiate compliance in the part of the recipient.

 

Bribery in Business

 

            As already mentioned in the first part of this article, bribery has been seen in many fields – sports, politics, medicine, research, government and business. For the longest time though, bribery has been a common practice most especially in the corporate world. The main process in which bribery is involved in business is when companies and conglomerates offer payment to foreign officials in order to procure a contract, expedite legal processes or secure the continuation of a business.

In which cases, these bribes that are often made range to hundreds of thousands of dollars to billions. In fact, the largest amounts tallied as bribes occur in business. Most companies admit that they have paid questionable amounts to officials just to be able to secure the future of their business. Many of the bribes are initiated through blackmail using dirty usernames techniques. In the following segment in this article, we will be showing some of the largest bribery cases in the history of the modern corporate world.

 

Cases of Bribery in Business

 

Ralph Lauren Corp.

In 2013, Ralph Lauren Corp. was quick to report a case of bribery by its South American subsidiary. Accordingly, the payments amounting to $568,000 was made to certain Argentinian foreign officials to make sure that prohibited goods were cleared for import, to avoid inspection and to be able to import goods without the necessary documents.

Although Ralph Lauren Corp. was praised by the Securities and Exchange Commission (SEC) for its efforts to report its subsidiary, it still had to pay more than $8.6 million dollars in penalties.

 

KBR and Halliburton

KBR and Halliburton forked out a massive total of $1.2 billion in fines for pleading guilty in 2009 to bribing Nigerian officials in one of its joint ventures. Its former president, Albert “Jack” Stanley, also had to face seven years in prison for the same charges.

 

Siemens AG

In 2008, Siemens AG – considered to be one of Europe’s biggest engineering company – pleaded guilty to bribery and had to pay $800 million fines in the U.S. and another $800 million more to Germany for the same reason after being proven to have paid at least $1.4 billion in bribes to four continents just to procure land government contracts.

 

BAE Systems

This British defence company was charged with the crime of bribery under the 1977 Foreign Corrupt Practices Act (FCPA) of the United States. The company eventually had to pay a total of $400 million in fines for making payments during their weapons sales to several countries such as Saudi Arabia, Hungary and the Czech Republic.

 

Laws to Counter Bribery in Business

            Many countries have legislated several laws in order to counter bribery in the corporate world and bring a level playing field to all companies and save the integrity of business with various different countries. One of this is the United States’ Foreign Practices Act of 1977 (FCPA) which aims to eliminate bribery in U.S. companies. Other anti-bribery and corruption laws are the Philippines’ Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act (ACPA) and the United Kingdom’s Bribery Act 2010.

 

Final Say

            Despite the many laws against bribery and corruption implemented by many countries, various companies are still practicing the act of bribery in order to gain more profit and influence in favor of their sales and increase in status. Still, we can only hope that these laws might be implemented properly so that these companies may be encouraged to stop and eliminate the practice of bribery.