First and foremost, we at CRI Group would like to wish you a happy new year and a prosperous 2015. We also hope that things like fraud, corruption and other adverse business practices will show a decline in the new year – but unfortunately, that is unlikely to happen. So the next best thing is to hope for more detection and swift justice.
A recent article in the New York Times suggests, however, that justice in several high-profile bribery and corruption cases has been anything but swift. In “Foreign Bribery Cases That Can Drag On and On,” Peter J. Henning examines cases in China and elsewhere that take years to resolve through legal channels. Henning writes:
It is fitting to recall a quote attributed to the famous Chinese General Sun Tzu that the “wheels of justice grind slow but grind fine” as Avon finally resolved an investigation into payments and gifts provided to government officials in China – some six years after it began.
Avon voluntarily reported itself to the Justice Department and the Securities and Exchange Commission in 2008, and last week it agreed to pay $135 million in fines and civil penalties over violating the Foreign Corrupt Practices Act. As part of the deal, the company’s Chinese subsidiary pleaded guilty to a conspiracy charge while the parent accepted a deferred prosecution agreement.
Henning also notes the Walmart case, in which company officials allegedly paid extensive bribes to facilitate business in Mexico. Apparently, the issue drags all the way back to 2005, when the company is suspected of shutting down the earliest inquiries into “questionable payments.”
Then there is the latest high-profile case: Alstom, which we wrote about last week. In short:
The scheme was discovered, however, and now Alstom is having to pay for it. Under a deal with the U.S. Department of Justice, who is prosecuting Alstom under the Foreign Corrupt Practices Act (FCPA), the company has admitted guilt and agreed to pay a $772 million penalty to the U.S.
Some of the Alstom instances in question, specifically certain contracts in Poland, stretch back to the late 1990s. The bulk of cases investigated by the U.S. Justice Dept. occurred between 2000-2011, according to news reports. This may serve as another example that efforts to enforce anti-corruption laws are moving, but very slowly.
A paradox here is the fact that business, on the other hand, moves quickly – within a just a few years, a company can change quite a bit. Executives move on to other opportunities, markets change, product lines and even the mission of the business itself might undergo a radical shift. By the time an organization is punished, the people responsible may be long gone – and perpetuating unethical acts elsewhere.
Governments need to do better at investigating cases and prosecuting them (when the facts warrant such action). Perhaps in 2015, we will see more enforcement, and it will be done in a timely manner. Yet it will still be up to corporations to be vigilant, police themselves and put anti-fraud and anti-corruption controls in place to avoid such lengthy and messy ordeals altogether.