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 invAC Scandinavia small brochureestigation 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.
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