TRACE: U.S. bribery enforcement declined in 2020

The United States saw a record-setting dollar amount in fines under the FCPA last year, primarily led by a $2.9 billion global settlement agreed to by Goldman Sachs for its role in the 1MDB scandal. During a conference in December, former acting Assistant Attorney General Brian Rabbitt of the Department of Justice’s Criminal Division estimated $3.21 billion had been paid to the United States through anti-bribery penalties on the year, with $7.76 billion in fines levied globally.

However, there was a drop in the number of foreign bribery enforcement actions in the United States last year, while figures elsewhere in the world largely held steady compared to 2019, according to TRACE.

“The fact that more countries are opening more investigations into possible transnational bribery occurring within their own borders is a promising sign that enforcement authorities globally are building investigative capacity and taking anti-corruption seriously,” said TRACE President Alexandra Wrage in a press release. “We expect that this momentum toward accountability will only increase as a result of the ongoing global health crisis. Enforcement authorities have repeatedly emphasized that the pandemic isn’t an excuse for lapses in anti-corruption compliance.”

Compliance and risk professionals who want to better understand which industries are most susceptible to a bribery investigation or enforcement action often turn to the GER as a helpful resource to help guide their companies’ risk-based due diligence efforts. The report provides a global glimpse into all known enforcement activity—investigations, enforcement actions, and declinations—over the last 44 years, following enactment of the FCPA.

Data from the GER is based primarily on cases and investigations tracked in the TRACE Compendium, which summarizes enforcement activity “involving the alleged bribery of government officials that crosses at least one border,” according to TRACE. “Neither the TRACE Compendium nor the 2020 GER include matters involving domestic companies bribing domestic government officials.”

Findings from the 2020 GER, broken down by industry and region, are discussed in more detail below.

Investigations by industry. According to the report, and consistent with previous years, the extractives industry experiences the highest number of bribery investigations, both globally and specific to the United States.

It’s not particularly surprising extractives faces the most scrutiny, given countries rich in natural resources also tend to be hotbed areas for bribery and corruption. Heightening this risk is that many of these are dominated by state-owned entities, where interactions with foreign government officials are commonplace.

Behind extractives (20 percent of investigations) in the United States, financial services (17 percent) is the second-most investigated sector, followed by manufacturers/service providers (16 percent). Outside the United States, extractives still represents 20 percent of all probes, followed by engineering/construction (17 percent) and aerospace/defense/security (15 percent).

Enforcement by industry. From an enforcement action standpoint in the United States, extractives (18 percent) is on the receiving end of the most discipline concerning alleged bribery of domestic and foreign officials. Next is manufacturers/service providers (15 percent) and aerospace/defense/security (12 percent), with healthcare and transportation/communications not far behind.

Excluding the United States, extractives again leads the way in enforcement (24 percent). Engineering/Construction is second (18 percent) and manufacturers/service providers third (13 percent). These industries were followed by aerospace/defense/security and financial services.

Bribery investigations of foreign officials by country. According to TRACE, there were 321 investigations in total concerning alleged bribery of foreign officials being conducted by authorities in 37 countries as of the end of 2020. The United States was conducting 125, representing 39 percent of all ongoing investigations.

European countries currently account for slightly less than half of all investigations, at a total of 153. The Asia Pacific region accounts for 9 percent, followed by the Americas (excluding the United States) with approximately 3 percent, the Middle East with approximately 1 percent, and Africa with less than 1 percent.