he U.K. Serious Fraud Office may investigate bribery allegations against Formula One boss Bernie Ecclestone, according to reports from Reuters and others.
Entries in Germany (102)
This may be cheap science. But take a look at the seventeen Eurozone countries according to their rank on the 2010 corruption perception index.
Transparency International yesterday released its 2011 Bribe Payers Index.
Will investigations into H-P's former CEO's domestic conduct converge with ongoing probes into the company's overseas sales practices?
Croatia's former prime minister faces a corruption investigation. Earlier this year, Daimler admitted paying about $6 million in bribes to sell fire trucks there.
On the new CPI, America landed just ahead of Uruguay, France, and Estonia -- a neighborhood not well known for iron-fisted compliance. What's that mean for FCPA enforcement?
About half of the world's lawyers haven't heard of the FCPA. Seventy percent are unaware of the U.K. Bribery Act, and four in ten don't know about the OECD and U.N. anti-corruption conventions.
What's life like for Ousama Naaman? He's scheduled to be sentenced in December and faces up to ten years in prison. But he hopes to serve his time in a Canadian jail.
During its billion-dollar internal investigation, Siemens discovered and documented 4,283 illegal payments related to 332 projects around the world. The total value of bribes paid was at least $1.4 billion, resulting in fines and penalties in the U.S. and Germany of about $1.6 billion.
That was 2008. What has Siemens done since then about compliance?
In FY2007, it had 173 compliance staff worldwide. By FY2009, the number had grown to 598. It has now given in-person compliance training to 1,400 senior managers, 80,000 employees with "sensitive functions," and 220 compliance officers. Another 140,000 employees have completed on-line compliance training (the company has about 400,000 employees). In FY2009, Siemens fired 244 employees for compliance breaches and disciplined another 473.
A few years ago, Siemens could have received a corporate death sentence. Its crimes were that bad. And its compliance program, if you could call it that, had been subverted. But instead of a death sentence, there was that rather painless settlement with U.S. and German authorities. Some complained that justice wasn't served.
A year before the settlement, however, new CEO Peter Löscher had said: Siemens endorses clean business. Period. I am not interested in deals that can only be had through corruption.
Compliance first, profit second, he said. People believed him. So the company got a second chance and made it count.
As Peter von Blomberg, the deputy chairman of Transparency International Germany, recently said: "The case of Siemens shows that companies can be successful without corruption. Even with a compliance monitor appointed by the U.S. authorities, a much larger compliance organization, and scrutiny of every transaction, CEO Löscher just announced the best quarterly results ever."
That's why we like second chances.
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German police last Thursday raided a global pipeline-equipment supplier on suspicion of bribing foreign officials to win work.
The raid came two weeks after Eginhard Vietz, 69, the owner and managing director of Hanover-based Vietz GmbH, gave an interview to the German business newspaper Handelsblatt. Vietz told the paper his company and its competitors pay bribes in Africa, the Middle East, and Asia as a standard business practice.
Vietz GmbH supplies welding, bending, and testing gear for onshore and offshore oil and gas pipelines to customers world wide.
Mr. Vietz said his company regularly paid bribes "because there are certain countries where there is no other way to do it."
"Nobody is disadvantaged by what I am doing," he said, explaining he was only trying to keep his workers busy.
The Hanover prosecutor, Manfred Knothe, told the German Press Agency (DPA) that police raided the company's head office in Hanover and plants in Leipzig and Essen, seizing computers and files.
Knothe told DPA that "Vietz's description of the kickbacks had been so detailed that prosecutors had no choice but to investigate him on suspicion of corrupting others, an offence punishable by up to 5 years in prison."
Overseas bribery is sensitive in Germany. Since 2007, prosecutors have charged leading firms Siemens, Daimler, and MAN. Siemens and Daimler also faced FCPA enforcement actions in the U.S.
The Handelsblatt newspaper quoted Vietz as saying, "I don't feel I did anything wrong. You can't change the way the world is."
Last year, according to German press reports, Vietz accompanied Germany's economics minister on a trip to Abu Dhabi and Saudi Arabia. This year, he visited the United Arab Emirates as part of a delegation with state premier Christian Wulff, who's now Germany's president.
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In the Handelsblatt interview, Eginhard Vietz said among other things that he'd paid bribes repeatedly. In countries such as Algeria, Egypt, and Nigeria, he said it's not easy to do business without bribery. "The same goes for Russia," Vietz said.
Asked about anti-corruption laws in the countries where he does business, he said China even has the death penalty for bribery. "Nevertheless, I have experienced myself that I could only win contracts through bribes. And I also have lost contracts because a competitor paid more."
Vietz said most of the people deciding who wins state contracts are poorly paid and easily bribed. "They're only human," he said. He usually bribes the senior management in purchasing departments -- the people who make the buying decisions. "They are mostly civil servants we are dealing with in these countries, mainly at state firms."
The payments are usually funded by inflating commissions to sales agents, he said, with the money then transferred to accounts in Switzerland and then passed on as bribes. The amounts are usually between 5% and 10% of the total contract value. He said those amounts are added to the prices he charges the customers, so his margins aren't reduced. He said he's always careful in structuring the payments to comply with German tax laws.
U.S. companies, he said, claim to be particularly clean but are actually the worst. The SEC, he said, uses its authority to prosecute foreign competitors, while U.S. companies make themselves world leaders with government protection. Asked for an example, he said three years ago in Moscow, while bidding for a big contract, he knew he was 40% below the offer of his American competitors. "Suddenly, the American ambassador spoke to the customer. I did not get the job."
Handelsblatt pointed out that since Siemens stopped paying bribes, it hasn't lost work or shed jobs because of compliance. Vietz replied, "I can't speak for Siemens. Maybe a large corporation has other possibilities. But I doubt that anyone can build large plants in countries such as Nigeria without making specific contributions."
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Special thanks to a reader for sending the link to the August 10, 2010 Handelsblatt interview with Eginhard Vietz. It can be viewed here.
By Nancy Z. Boswell and Robert N. Walton, Transparency International-USA
Transparency International’s sixth annual report on enforcement of the OECD Anti-Bribery Convention, released last week, paints a mixed picture. On the positive side, it shows active enforcement in seven of the 36 countries evaluated, including the U.S, Germany, Italy and Norway. The U.K. even made the cut, despite the disappointing news last month that it is postponing the implementation of its sweeping new Bribery Act until April 2011.
Far less encouraging is the report’s finding that there is only moderate enforcement in nine countries and little to none in the remaining 20. This latter undistinguished group represents 15% of world trade and includes G8 members Canada, Japan and France.
The numbers speak for themselves, but the underlying question is why, after a dozen years, so many governments that committed to criminalize the use of bribes to get business have failed to live up to that promise. One can only conclude many of them have decided that it is not in their economic interest to do so. Motivations may vary, but these governments may see greater value in promoting the international commercial success of their country’s enterprises. If that means ignoring the Anti-Bribery Convention, so be it.
This disheartening conclusion is ominous for the countries where bribes continue to be paid, and for fair competition for those who observe the rule of law. There can be little doubt that inconsistent enforcement will allow bribery to continue unabated and may well undermine support of those countries that have followed their commitments with action. Likewise, it will hinder efforts to ensure that important emerging exporters –- notably China, India and Russia –- agree to and impose foreign bribery constraints on their companies.
Given the serious and damaging consequences of bribery in countries that can least afford it, the OECD, the governments that are complying with the convention, and those of us in the anti-corruption movement need to put more pressure on lagging countries to step up to their commitments and actively enforce the convention. Time is running out.
Nancy Boswell is the President and CEO of Transparency International- USA (TI-USA) and a former member of the Board of Directors of Transparency International (TI). She can be contacted here.
Rob Walton is TI-USA's Senior Policy Director for Private Sector Initiatives. He can be reached here.
The debate about medical ghosting has focused on the U.S. market. But could the DOJ and SEC now be looking at the practice overseas, where it might violate the FCPA?
Main Justice reported that in April, the DOJ and SEC sent letters to AstraZeneca PLC, Baxter International Inc., Eli Lilly & Co., and Bristol-Myers Squibb Co. The letters asked about business practices in Brazil, China, Germany, Greece, Italy, Poland, Russia, and Saudi Arabia.
Medical ghosting works like this. Drug companies hire outside firms to draft articles touting a drug, then retain a doctor or scientist to sign off as the author. The drug company then finds a publisher, who doesn't know the article was written by someone other than the person who signed it.
Doctors and scientists eagerly participate because publication credit increases their prestige and professional standing. And the drug-companies use the medical journal articles as "independent" proof that their drugs are safe and effective.
A Senate report released last month and quoted in the New York Times said: “Manipulation of medical literature could lead physicians to prescribe drugs that are more costly or may even harm patients."
The FCPA's antibribery provisions prohibit among other things (1) the giving of anything of value (2) to a foreign official (3) to obtain or retain business. See, e.g., 15 U.S.C. §78dd-1(a) [Section 30A of the Securities & Exchange Act of 1934].
Ghosting has those elements. Giving a doctor or scientist an unsigned manuscript for publication has real value. Doctors and scientists working in government-owned or managed hospitals overseas are "foreign officials" under the FCPA. And articles appearing to independently endorse a drug help its manufacturer obtain or retain business.
We don't know if medical ghosting will figure in any FCPA-related investigations of the drug companies. But it could.