The Costs of Foreign Bribery
Bundles of cash passed under the table. Foreign agents handing over gold bars and Mercedes-Benz to a US senator. Australian miners allegedly paying bribes in Africa to secure critical minerals.
These are just a handful of examples of bribery from Australia and around the globe.
Yet Trump’s February 10 executive order pausing the Foreign Corrupt Practices Act for 180 days, and possible dismantling, of the FCPA, is deeply shocking and risks opening the door to foreign bribery.
Australian companies doing business in the US, or with US companies or intermediaries, are now more exposed to the risk of foreign bribery. Because of the international reach of the FCPA, the pause will have a negative impact on efforts to combat bribery globally too.
In turn, Australia’s new laws are more important than ever.
But with some wrongly arguing that foreign bribery is just the cost of doing business, it’s critical that we ask what the true costs are.
For many, it can be a matter of life or death.
Take one example in Papua New Guinea (PNG). In 2023, it appears that an allegation of bribery to secure a lucrative $600 million contract upgrading PNG’s ports led to the brutal murder of an up-and-coming PNG public servant and the destruction of many villages in PNG’s highlands.
Foreign bribery also harms our most vulnerable. In Uganda and Poland, social welfare officers and court officials accepted bribes from an US adoption agency. These bribes were paid for recommending children be placed in orphanages, for steering adoption cases to “adoption-friendly” judges, and for obtaining favourable guardianship orders.
This scheme facilitated the trafficking of more than 30 Ugandan girls and boys and many in Poland. Many of these children had parents. Despite this they were still sent to the US – only to be returned when the scandal was uncovered.
The suffering caused to both trafficked children and their families is immeasurable.
Another infamous case in Nigeria, Shell was involved in a bribery scandal for access to oil which deprived Nigerian people of over US$1.1 billion as the money lined the pockets of corrupt officials instead of the national budget.
But what about the costs to companies?
In 2024, under the FCPA the average sanction was US$141 million.
Investment bank Goldman Sachs – investigated by at least 14 regulators for its role in the 1MDB scandal – reached a global settlement agreement with authorities in the United States, the United Kingdom and Singapore. The cost? They paid US$2.3 billion in penalties and US$606 million in disgorgement – or the profits that were deemed to stem from their involvement
Airbus agreed to pay combined penalties of more than US$3.9 billion to resolve foreign bribery charges with authorities in the United States, France and the United Kingdom arising out of their scheme to use third-party business partners to bribe government officials. At the time, Transparency International noted the absence of plans to share the penalty payment with the countries where the company was paying bribes, including Colombia, Ghana, Indonesia and Sri Lanka.
In Australia, under section 70.2 of the Criminal Code corporations can face fines of up to $31.3 million, or three times the value of the benefit gained from the foreign bribery. Where the benefit can’t be calculated, they can be fined 10% of their annual turnover.
Compliance fees post-conviction or trial, and remediation costs, can also be eye-wateringly high.
Companies can also lose access to credit. One analysis shows organizations involved with foreign bribery reduces access to credit by 9.2%
Shareholder value can also take a hit. In 2023, a dual US and Australian listed company, Atlantic Lithium, lost 30% of its shareholder over a week after allegations of ‘textbook corruption’ to acquire a mining license in Ghana by paying bribes to politicians.
Last year, in another example involving mining licenses, BHP, the owner of Oz Minerals, agreed to cough up $9.3 million in response to charges Oz Minerals’ associates had engaged in foreign bribery in Cambodia.
Other costs include lower staff morale and higher HR costs to recruit and retain staff. There is also no guarantee that paying a bribe will result in a company winning business. It creates an expectation of ongoing payments and once a company becomes involved in illegal activity it creates the possibility of extortion.
Foreign bribery impacts us all, including business’s balance sheets and reputations. With Australia’s new laws in place, now is the time for corporate Australia to re-commit to leading anti-bribery and corruption controls and ensuring they have adequate procedures to prevent foreign bribery taking place.
Collective action is also important to combat foreign bribery. This includes forums like Transparency International Australia’s business integrity programme and the Bribery Prevention Network.
International cooperation is also key. The UK, France and Switzerland’s new alliance to combat international bribery and corruption is a strong example. Other countries like Australia could also consider joining the new taskforce which will strengthen ties between these countries leading to greater collaboration on cases and sharing of expertise.
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