Top 10 Bribery and Corruption Cases of 2019

There is a never-ending stream of news stories documenting bribery and corruption cases around the world. Some of those cases rose to the top of the headlines in 2019. All of the stories help illustrate the need for organisations to have proper controls in place to prevent further bribery and corruption cases popping up. A certification such as ISO 37001 – Anti-Bribery Management Systems standard can provide a comprehensive approach to mitigating bribery and corruption risk. Organisations of all sizes and industries should take steps now to ensure that they don’t end up on a future list of top bribery and corruption cases and scandals.

Here, we count down the stories we’ve chosen as the 10 most eye-popping bribery and corruption cases reported in 2019.

#10 – Juniper Networks

California-based cybersecurity firm Juniper Networks was ordered by the U.S. Securities and Exchange Commission (SEC) to pay more than $11.7 for violations of the Foreign Corrupt Practices Act (FCPA). The SEC alleges that some of the sales employees in Juniper’s Russian subsidiary “secretly agreed with third-party distributors to fund leisure trips for customers, including government officials through the use of off-book accounts.” In the settlement, Juniper did not explicitly admit nor deny the SEC’s claims – but it did agree to “cease and desist from committing or causing any violations”. (Reuters, 2019, SEC, 2019)

#9 – Alstom

Paris-based Alstom came under the attention of the UK Serious Fraud Office (SFO), resulting in a £16.4 million judgment in fines and costs for a corruption scheme. Alstom Network UK Ltd was ordered to make the payment after an SFO investigation revealed a fraudulent contract with an intermediary that was “simply a conduit for bribes”. To hide the corruption, Alstom went so far as to provide fake paperwork and fraudulent compliance checks. Three former Alstom employees were jailed in the case.

The multinational conglomerate, which serves the rail industry in locations worldwide (and formerly included interests in the power industry), has seen trouble at several units in various regions. In 2014, Alstom SA pleaded guilty in the U.S. to violating the Foreign Corrupt Practices Act (FCPA). The company bribed officials in Saudi Arabia, Egypt, Indonesia and the Bahamas, resulting in $772 million in criminal penalties. In 2016, Alstom Power Ltd pleaded guilty in the UK for corruption involving a Lithuanian power project. (WSJ 2019, FCPA Blog, 2019)

#8 – Microsoft

In Hungary, a wholly-owned subsidiary of Microsoft (aptly named Microsoft Hungry) was busted for a bid-rigging and bribery scheme, costing the corporation $25.3 million in combined criminal and civil penalties. The action was brought by the U.S. Department of Justice (DOJ) and the SEC for violations spanning from 2013 until “at least” 2015.

The scandal centered around the sale of Microsoft software licenses to Hungarian government agencies. Microsoft Hungary employees, including executives, were found to have falsely represented steep “discounts” in order to conclude deals with resellers, in violation of the FCPA. The SEC further found Microsoft’s subsidiary in Turkey “provided an excessive discount to an unauthorized third party in a licensing transaction for which Microsoft’s records do not reflect any services provided”.(Compliance Week, 2019)

#7 – KPMG

Big Four accounting firm KPMG found itself in all sorts of embarrassing (and costly) trouble over allegations that some of its former employees used stolen information to alter previous audit work – and cheated on training exams. The firm admitted to the allegations and agreed to pay the SEC $50 million to settle the charges. The case is significant as it marks the largest fine imposed on an auditor by the SEC to date.

“The breadth and seriousness of the misconduct at issue here is, frankly, astonishing”, said Steven Peikin, one of the SEC’s enforcement directors. “This settlement reflects the need to severely punish this sort of wrongdoing while putting in place measures designed to prevent its recurrence”. (Reuters, 2019)

#6 – Samsung Heavy Industries

A subsidiary of Samsung Group, South Korea-based Samsung Heavy Industries Company Ltd. (“SHI”) found itself under investigation for involvement in the Petrobras scandal. Specifically, the company was charged in a scheme to pay millions of dollars in bribes to Petrobras official in return for Petrobras chartering one of SHI’s oil drillships. Petrobras is the Brasilian state-owned energy company caught up in a major, ongoing investigation over widespread corruption.

According to the DOJ, SHI conspired to pay commissions, including some of that money for bribes, to Brasilian intermediaries beginning 2007 and continuing until 2013. The amount topped $20 million. SHI admitted to the charges and entered into a three-year deferred prosecution agreement with the DOJ. As per the agreement, SHI will pay 50 percent of the total penalties to the U.S. and the remaining 50 percent to the Brasilian authorities. (Lexology, 2019)

#5 – Fresenius Medical

Fresenius Medical Care AG & Co. KGaA (based in Bad Homburg, Germany) agreed to pay $231 in penalties for bribing doctors and public health officials in at least 17 countries. Fresenius is the world’s largest provider of dialysis equipment and services. It will make the payments to the DOJ and SEC to settle violations of the FCPA in various countries and continents, including Africa, the Middle East and Europe.

According to the SEC, in some locations, Fresenius failed to train employees or conduct due diligence on agents, and “in many instances, senior management actively engaged in corruption schemes and directed employees to destroy records of the misconduct”. Fresenius paid about $30 million in bribes “using sham consulting contracts, falsifying documents, and funneling bribes through a system of third party intermediaries”. (FCPA Blog, 2019)

#4 – Walmart

Retail giant Walmart is alleged to have engaged in corrupt payments to governments and officials around the world for more than 10 years, according to an agreement reached with the DOJ and SEC. Walmart will pay $282 million to settle the charges that it violated the FCPA in an effort to open new locations in various countries and jurisdictions around the world. Notably, Walmart’s Brasilian subsidy pleaded guilty to breaking U.S. federal law – but allegations included cases in Mexico, China, India and other locations.

Federal regulators said Walmart looked the other way as subsidiaries on three continents paid millions of dollars to middlemen who helped the company obtain permits and other government approvals from July 2000 to April 2011. (The New York Times, 2019)

#3 – TechnipFMC

London-based TechnipFMC was charged with making illicit payments to advance the company’s interests in Iraq and Brasil. The company paid a $296 million settlement to the DOJ for the two bribery schemes. In Tuesday’s enforcement action, the DOJ said the charges against TechnipFMC “arose out of two independent bribery schemes: a scheme by Technip to pay bribes to Brazilian officials and a scheme by FMC to pay bribes to officials in Iraq”.

The SEC alleged that from 2003 until at least 2013, Technip conspired with Singapore-based Keppel Offshore to pay $69 million in bribes, disguised as “commission payments” passed in part to Petrobras – as well as more than $6 million in payments to the Workers’ Party in Brazil and to Workers’ Party officials. In Iraq beginning in 2008 and continuing until at least 2013, FMC bribed at least seven government officials “through a Monaco-based intermediary company”, the DOJ said. (DOJ, 2019)

#2 – Ericsson

Number two on our list is Swedish telecom giant Ericsson. The company paid a blockbuster sum of more than $1 billion (U.S.) to the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) for “violating the anti-bribery, books and records, and internal controls provisions of the FCPA.”

According to the DOJ, the corruption scandal spanned 17 years and at least five countries. It involved high-level executives and was geared toward increasing Ericsson’s profits. Ericcson allegedly used slush funds to bribe officials in various countries including China, Vietnam, Indonesia and Kuwait.

In China, for example, Ericsson subsidiaries paid millions in bribes that were ultimately delivered to officials, including about $31.5 million for services that were never performed. (DOJ, 2019)

#1 – Unaoil

And finally, number one on our list: The massive Unaoil scandal continued to make headlines. Four businessmen pleaded guilty in London courts in 2019, admitting that they were involved in paying millions in bribes. According to investigators, the illicit payments were made to officials in nine different countries over a span of 17 years. As part of the scheme, participants were alleged to have engaged in widespread money laundering and attempts to destroy evidence.

It is alleged that two of the key players in the scandal made millions of dollars in bribe payments to government officials in Algeria, Angola, Azerbaijan, the Democratic Republic of Congo, Iran, Iraq, Kazakhstan, Libya and Syria. Fallout continues from the massive Unaoil case, which some have said is the largest bribery scandal in history. The family business from Monaco is alleged to have systematically corrupted the global oil industry, paying our millions of dollars in bribes for big-name companies including Samsung, Rolls-Royce and Halliburton. (The Guardian, 2019, The Age)

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CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence,  third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training