TRACE's 2013 Global Enforcement Report: U.S. Maintains Lead, China Steps Up

25 Mar, 2014, 11:41 ET from TRACE

ANNAPOLIS, Md., March 25, 2014 /PRNewswire/ -- TRACE International today announced findings of its fourth annual Global Enforcement Report (GER), noting that in 2013 the United States continued to lead the world in foreign bribery enforcement actions, but that other countries -- China, in particular -- gained ground in combating domestic bribery. Domestic bribery enforcement actions refer to enforcement actions by government agencies for bribes paid within the country that is prosecuting the action while foreign bribery enforcement actions are defined as enforcement actions by a government agency for bribes paid in a country other than that of the enforcing government.

China's Great Leap Forward

Data in GER 2013 show that China took decisive steps in the enforcement of domestic bribery laws, pursuing 13 actions, while eleven other countries pursued their first domestic bribery enforcement in the period. By a wide margin, however, China remains the nation where bribe payments to government officials are most likely to occur.

"Nearly all of the global anti-bribery indicators TRACE tracks and analyzes trended in a positive direction in 2013," said Alexandra Wrage. "The developments we're reporting today suggest progress is being made on many fronts to ensure that international anti-bribery conventions and national anti-bribery laws are enforced, and that there are, increasingly, real consequences for engaging in both foreign and domestic bribery."

Latest findings for domestic and foreign bribery enforcement

In terms of foreign bribery, enforcement actions by the U.S. remained flat between 2012 and 2013, while enforcement actions by other nations increased 42%.  Despite this increase, the number of enforcements pursued by the U.S. since 2003 exceed the total number of such actions pursued by all other enforcing nations combined in the period. Since the passing of the Foreign Corrupt Practices Act (FCPA) in 1977, the U.S. has led the world in anti-corruption and anti-bribery efforts.

In the U.S. in 2012, the total amount paid by corporations from 13 settlements came to $283 million; in 2013, that number tripled to $731 million from 11 settlements.

"2013 was an interesting year," said TRACE president Alexandra Wrage. "There was a steep increase in corporate fines, which nearly tripled. The likely explanation may be that agencies like DOJ and SEC are building larger cases that require more time and resources, but result in bigger fines. Representatives from both agencies have alluded to multiple cases in the pipeline, so enforcement is robust."

Trends 1977 through 2013

Since the U.S. pursued its first FCPA enforcement action more than three decades ago, 25 other countries have pursued enforcement of foreign bribery laws and 64 have pursued enforcement of domestic bribery laws.  Many countries have pursued the enforcement of both. 

The U.S. pursued 316 foreign bribery enforcement actions in the period, the most of any nation. The United Kingdom ranks second to the U.S. in the number of foreign enforcement actions, pursuing 46.

China pursued 19 domestic bribery enforcement actions in the period, topping other nations; Nigeria and South Korea rank second, with 17 domestic bribery enforcement actions each.

Some 125 countries have been named in at least one domestic and foreign bribery allegation since 1977.  Countries with the greatest number of government officials alleged to have engaged in bribery are China, Iraq, Nigeria and India.

About one-quarter of U.S. foreign bribery enforcement actions have been associated with a company headquartered outside the U.S. or an individual working for such a company. Companies in the extractive industries have been the subject of more domestic and foreign bribery enforcement action than any other sector, with companies in the manufacturing sector ranking a close second.  The aerospace/defense/security and health care sectors rank third and fourth respectively.

About the Global Enforcement Report

GER 2013 provides graphic and textual analyses of all known enforcement actions -- including investigations, prosecutions, settlements and cases settled with no finding of bribery -- since the first bribery cases were prosecuted in the United States following the enactment of the FCPA. TRACE cannot know or accurately estimate how many enforcement actions may be underway but not made public or not included in a major international publication. The analyses exclude purely domestic matters involving local companies bribing local government officials, reflecting only enforcement actions for an alleged bribe with an international component that involve an alleged payment to a government official or an employee of a state-owned entity.

The Annapolis, MD-based nonprofit is a leading global provider of information about the pace of and trends in foreign and domestic anti-bribery enforcement worldwide. The GER 2013, TRACE's fourth annual compilation, provides anti-bribery enforcement data from 2013, as well as summarizes 37 years of anti-bribery enforcement activity by 26 countries and three public international organizations.

The complete GER 13 is available here: http://www.traceinternational.org/Knowledge/ger2013.html

About TRACE

TRACE provides an end-to-end, cost-effective and practical solution for anti-bribery and third party compliance. TRACE International, the leading anti-bribery standard setting business association, pools resources to provide members with technology-enabled compliance tools and an expansive knowledge center. TRACE members include hundreds of multinational corporations, as well as thousands of small and medium-sized enterprises throughout the world. TRACE International works with TRACE Incorporated to offer both members and non-members customizable risk-based due diligence, training and advisory services. With a shared mission to advance commercial transparency, TRACE International and TRACE Incorporated provide companies with one complete anti-bribery and third party compliance solution. For more information, visit www.TRACEinternational.org.

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