TRACE International – Compliance Building

How To Pay A Bribe

A thick envelope arrived in the mail from Trace International, the firm of anti-bribery compliance experts. The title caught me off guard: How to Pay a Bribe. I would have thought Trace would be focused on how to stop bribes.

Then, of course, I read the subtitle: Thinking Like a Criminal to Thwart Bribery Schemes. It’s a learning tool to help compliance practitioners identify the signs of a bribery scheme.

This is the third version of this book, collecting stories about the inner workings of bribery schemes.

The first chapter is prophetic look at banking in Panama and the law firm Mossack Fonesca. This seems obvious with the release of the Panama Papers. But if you look at the publication date, the book was sent to the printers and released before the Panama Paper were released. The chapter’s author Ken Silverstein pulls no punches. “Panama has been run by assholes for more than a century.”

Richard Bistrong tells his story as convicted bribe payer. He tells his missteps as he sunk into a pit of corruption.

The chapter authors describe various methods used to pay bribes and different mechanisms to move corrupt money. The goal is teach the reader how to avoid the pitfalls and identify potential problems. In the end it is full of practical advice on how to discover, deter and defend against corruption.

New Anti-Bribery Compendium

Trace International has launched an online, fully-searchable database containing summaries and analyses of international anti-bribery enforcement actions and investigations in the U.S. and throughout the world. The Trace Compendium summaries are searchable by name or by numerous other criteria, including year, substantive criteria, enforcement authority, and enforcement result.

Want the actions involving officials in Thailand?
You can see the actions involving Thailand Officials.

Want the actions from the Tokyo District Public Prosecutors Office?
You can find the actions from the Tokyo District Public Prosecutors Office.

Want all the cases involving property development?
You can search for the cases involving property development.

It’s a fantastic resource if you are looking at bribery and corruption cases.

References:

The Trace Compendium
Trace Launches Anti-Bribery Compendium from the Wrage Blog

Approaching the Sphinx: The DOJ’s Opinion Release Procedure under the FCPA

Alexandra Wrage of the WrageBlog shares her experiences using the Department of Justice’s opinion release procedure under the Foreign Corrupt Practices Act: Approaching the Sphinx: The DOJ’s Opinion Release Procedure.

Ms. Wrage takes us through the experiences of TRACE International in obtaining FCPA Opinion Procedure Release 08-03.

The opinion release procedure for the Foreign Corrupt Practices Act is fairly unique for a criminal law. You can ask the government if your proposed action is potentially criminal.

Data on Bribe Demands in China

An anonymous online survey by TRACE International found that, of those business people visiting China who were asked for more than one bribe, almost 20 percent reported that they had been solicited more than 100 times.

TRACE set up an online bribe-reporting system that allows people to file reports in different languages about bribe demands. The first report by its online system (called BRIBEline) covered data it collected in China from July 2007 to June 2008.

Eighty-five percent of the bribes were solicited by someone tied to the Chinese government. That includes
- 11 percent requested by a Communist Party official
- 11 percent by a police officer
- 11 percent by someone in the court system and
- 52 percent by officials from another government branch.
Seventy-three percent of people who reported being asked for a bribe in China said they were asked more than once.
The bribe requests ranged from less than $20 (3 percent) to more than $500,000 (6 percent), with 22 percent of them asking for more than $10,000. Some 12 percent asked for gifts, entertainment or hospitality, while 4 percent asked for more business, and 3 percent requested sex.
Fifty-four percent of the demands were to induce action to which the business was entitled, such as timely service or avoidance of some kind of trouble.

Bribery’s Broken Windows

Alexandra Wrage of TRACE international wrote Bribery’s Broken Windows (.pdf) for the Q1 edition of Ethisphere. She tackles the credibility issue with allowing facilitating payments to low level officials, but saying “no” to senior ranking official. She advocates that the companies should prohibit payments at all levels.

She looks to the New York subway system’s Clean Car Program which is in turn based on the Broken Windows theory of James Wilson and George Kelling.

Once one window in a building is broken, the rest will be broken soon after. The broken window, left unrepaired, is a sign to the world that no one cares. If no one cares, there is no risk in breaking the rest of the windows. People are better behaved and less prone to escalating criminal activity when they see that their petty acts are addressed promptly and decisively.

Doesn’t it seem likely that this would hold true of petty bribery, too? If officials face “zero tolerance” for the smallest inappropriate demands, if both companies and enforcement agencies declare even the five and ten dollar demands an intolerable abuse of official power, won’t it be more difficult for a culture of corruption to flourish? Otherwise, low-level govern-ment officials will look at the broken windows and assume that no one cares.

TRACE and FCPA Opinion Procedure Release 08-03

The Summer 2008 newsletter from TRACE International provides some more background on FCPA Opinion Procedure Release 08-03. TRACE points out that this release was the first time that the DOJ has approved the payment of a specific dollar amount to government officials.

Legal Expenses

Mark A. Srere and Amy J. Conway-Hatcher of Morgan, Lewis & Bockius LLP wrote Legal Expenses for The Recorder (CAL LAW). The article compares the results of U.S. Department of Justice and SEC investigation against Lucent with FCPA Opinion Procedure Release 08-03.

Lucent spent millions of dollars on hundreds of trips for Chinese government officials over a three year period. The trips were primarily sightseeing and leisure activities, including Disneyland, Niagra Falls and the Grand Canyon. Lucent also labeled the attendees as “decision-makers” who could help award new business to the company. See The FCPA Blog’s post on Lucent.

TRACE International under FCPA Opinion Procedure Release 08-03 was merely paying out of pocket costs for journalists to cover the company’s news stories. Local journalists got lunch money and local transportation costs. Out-of-town journalists got some extra travel expenses and more meals.

TRACE tied the payments to expenses directly related to the “promotion, demonstration or explanation of the company’s products or services” and were reasonable in amount. Lucent failed both of these tests under 15 U.S.C. § 78dd-2(c)(2)(A).