Correction to This Article
This article incorrectly said that the insurance company Aon had received a subpoena from securities regulators over questionable payments it allegedly made to foreign officials. Aon said that it received an informal, voluntary request for information and that it was cooperating with the probe.
Page 2 of 2   <      

U.S. Targets Bribery Overseas

Lawyers involved in the cases attribute the growth spurt to a steep increase in companies that are turning themselves in to prosecutors when employees or auditors flag questionable overseas payments. Companies that cooperate with prosecutors are supposed to receive leniency -- an incentive for them to come forward. One was Tyco International, which last year agreed to pay $50 million to settle a civil case over cash and gifts its Brazilian and South Korean employees lavished on authorities to win construction and water business.

Cheryl Scarboro, an associate enforcement director at the Securities and Exchange Commission, said regulators increasingly seek not only corporate fines but also the big-dollar profits that companies earn on contracts awarded because of bribes.

Yet the high costs of investigating and the trouble of gaining access to documents and witnesses overseas can complicate a company's decision to blow the whistle on itself.

Engineering giant ABB paid a $16 million fine to settle government charges, but at a conference in Paris a company executive estimated the total cost of the scandal was far higher because its own investigation ate up more than 44,000 hours of lawyer time, said Alexandra Wrage, president of TRACE International, an Annapolis nonprofit that provides anti-bribery services.

Thomas Schmidt, a spokesman for ABB, based in Zurich, said the company's investigation of suspect payments by a former subsidiary was "a very lengthy and costly exercise" that involved intense effort by a team of outside lawyers and accountants.

Increasingly, businesses may make a different calculation: choosing to take matters into their own hands by firing culpable workers and stepping up oversight of international units rather than bringing the problem to the government, which may not have sufficient resources to uncover far-flung corrupt payments without a nod from company insiders, said analysts who study the issue.

Daimler, the German company whose Mercedes unit is under scrutiny, took numerous steps to strengthen its accounting practices and hand over information to the U.S. and German governments after problems came to light, according to SEC filings. Several executives have been dismissed and one who worked in a Nigeria-based division committed suicide as the probe intensified.

Dieter Zetsche, the company's chief executive, said Daimler had invested "a huge amount of money" and management attention on the issue. "We are really going through every small corner of this company on a global basis," he told Washington Post reporters and editors at a meeting yesterday. Zetsche declined to put a price tag on the cost of the investigation, for which the firm has hired lawyers at Skadden Arps in the District, but said, "It's big. It's big."


<       2

© 2007 The Washington Post Company