The Corruption risks Scandinavian businesses face when doing business
in overseas markets
Recent enforcement activities by the UK's Serious Fraud
Office (SFO) and FCPA are signaling a new era of relentless investigation
and prosecution of corrupt practices. The cases involve investigations for
individuals and companies such as GlaxoSmithKline, Alstom UK, Airbus Group
NV, Sweett Group and others. In this article we review the recent bribery
and corruption cases brought against Scandinavian companies.
The Transparency International Perception
index ranks Scandinavian countries as "least corrupt countries": Denmark
(1st), Finland (2nd), Sweden (3rd), Norway (5th) and Iceland (12th). However,
companies from most of these countries have been involved in corruption
scandals. Some cases are settled others are on-going for alleged violations
in overseas markets.
In the majority of the cases, the industries targeted include: Defense,
Pharma, Chemical, Oil & Gas…the activities involved include: exports,
cross-border transactions, bribing senior foreign government officials
to gain/retain business and the companies involved are partially owned
by the local government.
Local anti-corruption enforcers have been involved in some of these cases
but other enforcement agencies such the U.S. DOJ and the U.S. SEC have
brought cases against these companies including:
- In 2004, Oil Company Statoil has been found guilty of bribery and
fined 20m Norwegian kroner (£1.6m; $2.8m) for paying bribes to secure
contracts in Iran.
- Oil for Food scandal: In late summer 2005, the public was shocked
by revelations that about 20 named Danish companies had allegedly
paid money under the table in connection with contracts entered into
with Iraqi companies and authorities. The contracts had been entered
into in connection with the oil for food programme, after the UN had
relaxed the total embargo previously imposed on Iraq because of its
occupation of Kuwait.
- On 11th May 2009, Novo Nordisk (Novo) entered into a deferred prosecution
agreement for their involvement in a bribery scheme involving the
Iraq government as well as the Oil-for-Food program. Novo is a global
healthcare leader in diabetes, hemophilia, growth hormone therapy,
and hormone replacement therapy based out of Bagsvaerd, Denmark. They
have agreed to pay roughly $18 million in fines and penalties as well
as meet other conditions set by the deferred prosecution agreement.
- In July 2012, The Norwegian state controlled Statoil (70%) has been
involved a number of corruption scandals.
- In January 2014, "The Norwegian chemical fertilizer company Yara
International has been ordered to pay a fine of 295 million Norwegian
kroner (48 million U.S. dollars) for three gross corruption cases
abroad. The Yara International issued a statement on Wednesday, accepting
the fine for the bribery cases the company committed in Libya, India
and Russia. After a prolonged investigation, the Norwegian National
Authority for Investigation and Prosecution of Economic and Environmental
Crime (ØKOKRIM) has come to the conclusion that a large sum of bribe
money was paid by Yara International over a period from 2004 and 2009
to senior officials in Libya and India and suppliers in Russia, according
to the NTB report."
- In February 2014, Kongsberg Gruppen, the Norwegian defence contractor,
is under investigation by Norwegian authorities for corruption related
to sales of communications equipment in Romania from 1999 to 2008.
Kongsberg's contracts in Romania are said to total 1.4 billion NOK
(233 million USD).
- In March 2014, "Telenor, Norway's majority state-owned phone company
has been pulled into the corruption case surrounding Russian phone
company Vimpelcom in Uzbekistan, with Norwegian investigators visiting
its offices."
- Kongsberg has disclosed that it conducted an internal investigation
in 2012 to 2013 and did not find enough evidence to inform the Norwegian
authorities. According to the CEO Walter Qvam, Kongsberg "heard in
the spring of 2012 through different vague signals that there could
be suspicion that the business practice wasn't quite as it should
be in parts of the business," and so initiated the investigation with
the help of PwC.
With all these states already being through the OECD Phase 3 Evaluations
(Finland in October 2010), Iceland (in December 2010), Norway (in June
2011), Sweden (in June 2012) and Denmark (in March 2013), their respective
governments are expected to enforce local anti-corruption laws.
Recent enforcement activities by the UK's Serious Fraud Office (SFO) are
signaling a new era of relentless investigation and prosecution of corrupt
practices. The cases involve individuals and both domestic and foreign
companies such as GlaxoSmithKline PLC under investigation for possible
criminal violations; charges against Alstom UK unit for alleged overseas
bribery; Airbus Group NV employees under investigation into possible corruption
at a subsidiary; the formal investigation of survey and construction services
firm Sweett Group; the closure of the Innospec prosecution with final
two individual convictions.
It is clear, that conducting business, in regions that have traditionally
rated poorly on the global transparency perception index, it is critical
that multinationals have a robust management compliance programme in place.
In this era of increased enforcement the compliance programme must be
capable of assessing and mitigating all low, medium and high risks to
constantly demonstrating commitment to compliance.
Copenhagen Compliance is the Scandinavian representative and event partner
for the http://www.copenhagencompliance.com/2014/annual/
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