Fines for Foreign Bribes Spike, Drawing Scrutiny

The Foreign Corrupt Practices Act, a 1977 law targeting businesses that bribe foreign officials, spent the early part of this decade in a slumber. In 2000, there wasn’t a single prosecution, and in 2006, the Justice Department won just $18 million in penalties. Now the law has come roaring back to life, with more than $1 billion in fines this year alone. Recent high-profile cases include guilty pleas from fuel-concern Innospec, for paying kickbacks in Iraq to German automaker Daimler AG; and Jack Stanley, the head of energy consultancy KBR, for bribing Nigerian officials to secure billions in natural-gas contracts. With prosecutions likely to continue—the FBI has doubled the number of agents tasked to FCPA cases—business is responding in kind. Law firms are competing for top FCPA talent, banks financing international deals are insisting on anti-bribery stipulations in contracts, and a new cottage industry of experts has emerged, offering country-by-country advice on gifts and local laws.

In the words of an FBI spokesperson, FCPA are “four letters you need to be aware of if you’re doing business in the international marketplace.” Emerging markets, such as the BRICs, figure to be major drivers of the economy in the near future, and it’s these same countries that often have cultures of graft. China and Russia, for example, rank, respectively, 79th and 146th (out of 180), on Transparency International’s Corruption Perceptions Index. There are encouraging signs: last month, those countries sat in as observers for the first time during an anti-bribery meeting of OECD nations. To play in risky markets, U.S. companies must be extra careful to act within the law.

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