Earlier today, the Department of Justice announced that construction conglomerate Odebrecht SA and its affiliate Braskem SA have pleaded guilty to their maintenance of an elaborate bribery scheme which paid out approximately $788 million in bribes to government officials around the world since 2001.

To facilitate its massive bribery scheme, Odebrecht established its “Division of Structured Operations,” which federal prosecutors dubbed the “Department of Bribery.” The Division of Structured Operations operated on its own floor and used its own communication and computer networks. Code names and secure emails were used by those requesting bribes, bribe recipients, and financial institutions to make payments out of a ‘shadow budget.’ The shadow budget, which accounted for and tracked all bribe payments in complex spreadsheets, was comprised of funds funneled by Odebrecht into off-shore entities and then back into the Division of Structure Operations.

Under their respective plea agreements, Odebrecht and Braskem agreed to pay, at least, a combined $3.5 billion in penalties.  Odebrecht agreed with the DOJ that $4.5 billion would be an appropriate criminal fine, but has claimed that is unable to pay a fine of that amount.  Accordingly, the plea agreement states that Odebrecht will pay at least $2.6 billion, however, an ongoing review of Odebrecht’s ability to pay may result in Oberbrecht paying an amount closer to $4.5 billion. Braskem will pay approximately $957 million in criminal fines.  Brazil, where both of the companies are headquartered, will receive 80% of the fines and the United States and Switzerland will each receive 10%.  Notably, Oderbrecht was credited with 25% reduction in the fine sought based on its cooperation with investigators. Braskem was credited with a 15% reduction based on its partial cooperation.

This blockbuster plea agreement highlights the growing trend of global enforcement. While few companies will ever consider implementing a bribery scheme of the magnitude Odebrecht’s, even small acts to grease the wheels create a slippery slope and companies of all sizes must take precautions — through compliance and training programs — to make sure that a culture where bribery is condoned and supported never begins to gain momentum.

In a recently released report, TRACE International, an international anti-bribery business association, ranked 199 countries based on the risk of encountering bribery within the country’s public sector.

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Go to Interactive Map (credit: TRACE International)

The TRACE Matrix’s rating are based on four core domains: business interactions with government, anti-bribery laws and enforcement, government transparency, and capacity for civil oversight.  As part of the part of the business interactions with government domain, the report examines the extent to which business must interact with government officials and weight of regulatory burden which may increase the number of bribery opportunities as well as the reported expectation of businesses that they will have to pay a bribe somewhere along the way.  As part of the second domain, the report considers both enacted anti-bribery laws as well as the actual level of enforcement of any anti-bribery statutes. Government transparency is measured by indicators such as the public availability of government budgets and conflict of interest training conducted with civil servants.  Finally, the civil oversight domain examines the freedom of the press and social development.

Topping the list of least-bribery-prone countries were: (1) Sweden, (2) New Zealand, (3) Estonia, (4) Hong Kong, and (5) Norway.  The United States ranked 20th on the list, just behind Australia and Luxembourg and just ahead of Mauritius and Latvia.  Nigeria was ranked the most bribery prone country with Angola (198) and Yemen (197) rounding out the bottom three.

Assessing the potential risk of conducting business or routing supply chains through certain countries is the first step in managing potential liability under the Foreign Corrupt Practices Act. Even in the least risky countries, training and compliance programs are a necessity. However, in high risk countries, trainings must be tailored to anticipate the level of bribery and other corruption pressures which officers and employees will face with regularity.