And a middleman for a middleman of the Italian energy company ENI allegedly made repeated trips to a Nigerian hotel room and handed over briefcases containing millions of dollars in U.S. currency to a government official. But paying the balance of the alleged $5 million bribe in the local currency was more problematic — the local bills were so bulky that the bagman allegedly had to deliver them by the carload.
These alleged schemes have come to light as part of an escalating effort by U.S. law enforcement officials against companies that engage in bribery abroad. Just last week, federal authorities announced they had charged IBM with corruptly pursuing contracts in Asia.
In recent years, the Justice Department and Securities and Exchange Commission have filed an increasing number of foreign corruption cases, charging companies such as Tyson Foods, General Electric, Alcatel-Lucent and Daimler, the maker of Mercedes-Benz cars and the former parent of Chrysler.
The cases reach from Latin America to Africa, Asia and the Middle East, involving contracts worth billions of dollars. Together, they suggest that illicit payments often tip the scales of global business — sometimes with the blessing of top corporate executives.
Corruption imposes “an enormous tax” on international business, said Lanny A. Breuer, head of the Justice Department’s criminal division, referring to the added costs companies must bear. “And because of that tax, jobs are lost” and “honest businesses lose business opportunities,” Breuer said.
Some U.S. companies have said that the Foreign Corrupt Practices Act (FCPA) of 1977 holds them to a higher standard than their overseas competitors — and that it can carry a price.
“[W]e operate in many parts of the world that have experienced governmental and commercial corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices,” Diebold, an Ohio-based company whose products include automated teller machines, said in a recent regulatory filing.
Foreign companies that are not subject to the U.S. law “may be more likely to engage in activities prohibited by the FCPA, which could have a significant adverse impact on our ability to compete for business in such countries,” Diebold said.
The law also applies to foreign companies whose securities are traded in the United States.
Congress prohibited overseas bribery in the post-Watergate era. As a result of SEC investigations, hundreds of U.S. companies had admitted distributing money to foreign politicians, government employees and political parties, according to the Justice Department. The practice had been so accepted in the global marketplace that nations such as Germany, one of the world’s most developed countries, had allowed their companies to count foreign bribes as tax deductible.