Global Corruption Roundup II

News updates from the world of corporate corruption

July 2, 2009
The International Fight Against Bribery; An interactive map examining the world's biggest corruption cases

Interactive Timeline: Corruption in the Crosshairs: A brief history of international anti-bribery legislation

With corporate bribery a common practice around the world, we check in with the latest on companies and cases in the news.

First prosecution in BAE-related case possible
After Great Britain and Sweden shut down investigations of suspected multimillion-dollar-bribes by the British arms manufacturer BAE within the last year, at least one investigation seems to be going forward. As the British Guardian reports, the Austrian prosecutor could soon indict Count Alfons Mensdorff-Pouilly for his actions as a consultant for BAE.

Mensdorff-Pouilly is suspected of having paid bribes on behalf of BAE to convince decision makers in Austria, Hungary and the Czech Republic to buy Gripen fighter jets made by Saab Aerospace. BAE was Saab's business partner and a minority shareholder. Mensdorf-Pouilly was arrested in March 2009 on money laundering charges and taken into investigative custody for a month. He had claimed in an Austrian parliamentary investigation in May 2007 that he had no connection to BAE and was not involved in the Czech Gripen fighter deal, according to several press reports. But in 2009, Gerhard Jarosch, a spokesman for the Austrian prosecutor in Vienna, told a Swedish TV documentary producer that Mensdorff-Pouilly had given false testimony according to information that has since emerged, including a report from the Serious Fraud Office in London. Jarosch added: "The suspicion still is that Mr. Mensdorff used black money to bribe decision makers, politicians, authorities in several European countries concerning their fighter jet deals." Mensdorff's lawyer, Harald Schuster, defended his client in the same documentary: "Count Mensdorff does not bribe anyone."

Count Alfons Mensdorf-Pouilly, who referred to himself as a "farmer" in the Austrian parliamentary investigation, used to be seen with the rich and famous in Austrian society. His wife, Maria Rauch-Kallat, is the former health minister of Austria. Mensdorff-Pouilly was known to invite influential politicians, among them the former Austrian Secretary of State, Ernst Strasser, and businessmen to his hunting estates in Austria and Scotland.

Fight against international bribery faces serious hurdles
Only four of the 37 countries that signed on to the OECD anti-bribery convention are enforcing it adequately, according to a new report prepared by the anti-corruption watchdog organization Transparency International (TI). "The uneven enforcement of this convention is dangerous, especially in the current global recession where businesses face acute pressure to win orders," said TI Managing Director Cobus de Swart, who emphasized that political will has to be at the center of all anti-bribery efforts. "The failure of the OECD convention would arguably be the single most serious setback to the fight against international corruption," de Swardt said. The four countries that TI lists as having fulfilled the requirements of the convention are Germany, Switzerland, the U.S. and Norway.

Swedish investigation into SAAB/BAE dropped
The Swedish prosecutor Crister van der Kwast closed three investigations into suspected bribes in export deals with the Czech Republic, Hungary and South Africa, shortly before he retired from his post. While he said in a Swedish documentary film that his findings support the suspicion that Gripen fighter jets were sold with the help of bribes, he told the Swedish television program "Uppdrag Granskning" that he "can not fully verify that Saab participated in the bribery payments." However, he said, the evidence seems to clearly point in one direction: "It is very serious, both in terms of the systematic approach and the amount. It involves hundreds of millions of Swedish crowns in hidden payments in several countries, and there is strong reason to believe that bribery also has occurred."

The British weapons manufacturer BAE was Saab's partner in the arms deals and has come under strong suspicion for participating in corrupt deals in a number of countries.
One complicating factor in this inquiry is the fact Swedish law does not allow prosecution for bribes that were paid before July 2004, because of the statute of limitations. Saab claims to have followed the laws and rules in regard to the fighter-jet deals. "The decision is completely in line with what we have always claimed," the company said in a press release.

Mark Pieth, chairman of the OECD anti-bribery working group, is concerned about the halt of the investigation. "It raises the question whether Sweden is really committed to the OECD convention," he told FRONTLINE/World. The OECD working group on bribery had criticized Great Britain last year after it stopped the investigation into BAE and suspected bribes to Saudi Arabian officials. "It is important for us to see whether the OECD convention holds up in cases of international arms deals," he says. "This is where the conventions faces the greatest threats."

Two Miami businessmen bribed Haitian telecom officials
Juan Diaz, 51, and Antonio Perez, 51, of Miami pleaded guilty to having paid more than $1 million in bribes to secure contracts and business advantages for private U.S.-based telecommunications companies in Haiti between 2001 and 2003. Diaz set up a front company with the sole purpose of hiding and laundering bribes for Haitian officials in charge of contracting at the state-owned national telecommunications company, Telecommunications D'Haiti. According to court documents, Diaz would fabricate invoices and write checks for under $10,000 to avoid Currency Transaction Reports, which are required for foreign currency transactions of more than $10,000. Diaz also pocketed $73,824 as commissions for laundering the bribes. Perez was the controller for one of the three U.S.-based companies involved in the conspiracy. The company, whose name was not released, paid more than $670,000 in bribes to Haitian officials. The bribes were paid to Telecommunications D'Haiti's ex-director general and ex-director of international relations. Diaz and Perez each face up to five years in prison and a fine of up to $250,000. The government's investigation is ongoing.

Danish pharmaceutical company Novo Nordisk is fined $18 million for illegal payments during the Iraqi Oil-for-Food Program
Novo Nordisk used a classical scheme to kick back money to the former Iraqi regime under Saddam Hussein. To obtain contracts with the Iraqi ministry of health to supply insulin and other medicines, Novo Nordisk inflated the price quote by ten percent before submitting it to the United Nations to be approved under the Oil-for-Food Program. The extra ten percent was then kicked back to Iraqi health officials and recorded as commissions in Novo Nordisk's books. Between 2001 and 2003, these payments amounted to approximately $1.4 million. Novo Nordisk accepted a fine of $9 million as part of a deferred prosecution agreement. The agreement requires the company to implement strict compliance measures to prevent further wrongdoing and to cooperate fully with the U.S. Department of Justice's ongoing Oil-for-Food Investigation. The company was fined an additional $9 million in criminal and civil charges by the Securities and Exchange Commission.

Novo Nordisk is not the first pharmaceutical company implicated in the Oil-for-Food Scandal. In late 2007, the Dutch company Akzo Nobel (later acquired by Schering-Plough) agreed to pay $3.8 million as part of a settlement with the U.S. Department of Justice.

The Oil-for-Food Program was designed to alleviate human suffering during the economic sanctions imposed against Iraq after the invasion of Kuwait and to allow Iraq to sell oil for food and humanitarian aid. The program was later investigated by former Federal Reserve chairman Paul Volcker who found that about 2,200 companies had made suspicious payments of up to $1.8 billion to the former Iraqi dictator. The U.S. Department of Justice continues to investigate these cases.

U.S. military man is charged with soliciting bribes in Iraq
Joselito Domingo, 45, was a project manager for the U.S. Army Corps of Engineers in Iraq and Afghanistan. According to the complaint filed in the Northern District Court of Illinois, he supervised several construction projects in and around Kirkuk from 2005 to November 2008. These projects -- with contracts estimated to be worth between $50 and $100 million -- included oil pipeline barriers, water projects, schools and roads. Domingo was in charge of evaluating proposed projects and processing payments -- a position he allegedly abused for personal gains. When a contractor submitted a bid for a city park in Kirkuk, Domingo allegedly asked for a bribe of $50,000, which he later reduced to $40,000 when the contract volume was smaller than expected. Domingo was arrested when he left a Western Union Office after collecting $4,770 that he believed was sent to him by the contractor who was, in fact, cooperating with the F.B.I. and the U.S. Department of Defense throughout the investigation.

Companies are increasingly concerned about foreign bribery
Seventy-five percent of high-level managers and executives reported increased concern over possible violations of the anti-bribery provisions of the Foreign Corrupt Practices Act, according to a survey by the consultancy Deloitte Financial Advisory Services. The survey addressed 216 senior professionals from companies with revenues ranging from $100 million to more than $1 billion. Ninety-four percent of the participants were especially worried about bribery occurring in Russia and the Commonwealth of Independent States, 92 percent expressed concerns over bribery when doing business in China and 91 percent were concerned about corrupt payments in Africa and the Middle East. More than half of the respondents said their companies had renegotiated contracts or cancelled potential investments when the proposed deal lacked transparency, included unusual third party arrangements or used agents to help obtain business.

Transparency International released its 2009 Global Corruption Barometer
The anti-corruption watchdog organization Transparency International has asked citizens of 69 countries, including Argentina, Georgia, Nigeria, Uganda, the United States and Zambia about their everyday experiences with corruption in the private sector as well as in political institutions. People around the world were invited to submit their stories, views and experiences regarding corruption via email, on Twitter or Facebook in addition to scheduled surveys.

share your reactions


Jonathan Lewis - Clarksville, Ohio
What happened to the rule of law in Great Britain? There's evidence of corruption but we're not going to prosecute because we're afraid of where it might lead and the possible outcome? What kind of message does selective prosecution send? This stinks to high heaven just like the release of the Lockerby bomber. I guess only the poor and those without connections are subject to the rule of law. Shame on the government of the U.K.

Joe Henderson - saint louis, MO
I'm currently enrolled in a legal environment for business class. The laws in the U.S. and several other countries seem to have enacted the OECD and operated within accordance within their own countries laws as well. However, the lines seem thin between bribes and facilitating payment. Really, its the same thing, "expedite performance," laws relie on interpretation and "bribes" are the same as "grease", or "facilitating payment."
Also, if anyone can give me information where "bribes" are legal, (i.e.,=what country) I would greatly appreciate the information, because I will receive an A in my course. So, I could assume that it is illegal in all 180 countries, or continue researching the topic. Thank you for the information provided and the additional support.

Cody Badgett - New Athens, IL
Great journalism - this is such an interesting story. We do indeed live in a world of shadows and rumors; and you guys are the flashlight shining light on things some people (for obvious reasons) do not want to be exposed! Keep up the fantastic reporting!

jeffrey milstead - murrieta, CA
If you're guilty, then put them behind bars! Enough is enough! Can anything be done without BS motives? Vote all politicians out of office that don't truly represent the people.

Craig Keller - Springfield, Missouri
From Lima, Peru. If the US is doing a good job with bribery I hate to see how bad the rest of the world is. For instance, look at the mining industry from coal. (Oh yeah that was a campaign contribution not bribery). And then look at your own program on gold mining some years ago. Canada may want to take a look at Pascua-Lama.


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