Bribery and Corruption: Navigating the Global Risks.

• Author: Sweeney, Paul

The United States Justice Department now ranks violations of the Foreign Corrupt Practices Act as second only to fighting terrorism. Consider the widely publicized actions taken against Panalpina Group, a Swiss shipping and logistics company with a U.S. subsidiary that ponied up $82.5 million in fines to the U.S. government in 2010 to settle charges of violating FCPA.

As it shipped drilling rigs and oil services equipment into an array of countries, including Nigeria, Angola, Russia, Brazil and Kazakhstan, Panalpina reportedly made illegal payoffs to foreign officials. The bribes allowed Panalpina to routinely breeze through customs without experiencing delays, paying duties, undergoing inspections or complying with local laws.

Panalpina consciously engaged in illegal activities. The company was charged with disguising its oil company billings to conceal the true nature of the bribes. Panalpina invoiced clients for what it characterized as fees for, among other things, "local processing," "special intervention and handing" and "commissions."

The oil companies went along with the charade--and it cost them, too. Seven multinational energy companies paid $237 million in fines and disgorgement to settle charges brought under FCPA by the U.S. Securities and Exchange Commission.

The energy industry is particularly vulnerable to engaging in such illegal behavior. Many of the countries where petroleum companies extract "black gold"--such as Iran, Iraq, Venezuela and Nigeria--are ranked among the worst by Transparency International, a watchdog organization that publishes an annual Corruption Perception Index.

Ernst & Young partners in the fraud and investigations practice, Brian P. Loughman and Richard A. Sibery plain these developments in graphic detail in Bribery and Corruption: Navigating the Global Risks, their exhaustively researched, timely and important guide to building understanding about--and guarding against--temptations to...