TRACE Releases Report on Bribe Demands in the United States

ANNAPOLIS, Maryland, December 6, 2011 -

Patterns in U.S. Compared to Patterns in Six Other Nations

TRACE released the 2011 BRIBEline United States Report today, the organization’s seventh analysis of demands for bribes reported in specific countries.  Previous reports have analyzed patterns of bribe demands in Brazil, Mexico, Ukraine, Russia, India and China.

“The United States Report is another important contribution to the prevention of bribery,” said TRACE Founder and President Alexandra Wrage.  “BRIBEline provides greater insight into what bribe transactions look like.  Companies, in turn, can shift employee training from an academic or legal analysis to a more practical, real-world discussion about what to look for and how to respond.”

The United States Report summarizes and analyzes 73 bribery demands in the U.S. reported anonymously to TRACE’s online Business Registry for International Bribery and Extortion (BRIBEline) between July 11, 2007 and November 15, 2011.  

A key finding from the United States report is the prevalence of bribe solicitations made in exchange for an undue advantage.  Over one-third of bribe demands in the United States - the highest rate among countries studied to date by BRIBEline - are premised on an improper quid pro quo, such as winning new business (25% of all reported demands), agreeing to attempt to influence a government official in exchange for a bribe (5%) or receiving inappropriate favorable treatment, such as a favorable court ruling (4%).

The United States report also reveals that the private sector (representatives of companies) account for a significant source of bribe demands in the United States, representing 21% of all reported demands.  Nevertheless, the majority of bribe demands, nearly 60%, are made by a person associated with a government, whether at the federal, state or local level, including government officials (16%), the police (14%), officials of the party in office (8%), employees of state-owned entities (7%), members of the military (5%), city officials (4%), state officials (1%) and judges and judicial representatives (1%). 

Seven of the bribes demanded by government officials were reported as originating from the Office of the U.S. President or the Office of the U.S. Vice President.  According to the anonymous bribe reporters, demands from these offices occurred between 2002 and 2007.

The United States data also reveals a pattern of demands for high-value bribes. Approximately 60% of the U.S. bribe demands reported were characterized as recurring  — that is, they were demanded more than a single time.  Some 44% of bribe demands were for amounts totaling less than $5,000; 25% were for amounts totaling more than $50,000; and over 10% were valued in excess of $500,000.  Cash was demanded in over 70% of the bribe solicitations; the remainder sought assistance with medical bills or tuition (10%); gifts, entertainment or hospitality (8%); sexual favors (7%); or special travel arrangements (3%).

According to TRACE’s comparative analysis of bribe demand patterns in the seven nations for which it has completed reports, the U.S. has the lowest proportion of bribe demands made by government officials, and the highest proportion of bribes demands by private company officials. 

“The U.S. BRIBEline data indicates that companies doing business in the United States should consider training their employees to appropriately respond to a bribe demand made by a powerful government official or business executive,” says Wrage. “While the business incentive to provide the bribe may seem compelling, especially in a difficult economy, the risk-reward ratio shifts in light of increasing international enforcement of foreign bribery laws and vigorous enforcement in the United States of its domestic bribery laws.  In addition, the consequences of a bribery investigation or conviction are significant in terms of brand and reputational damage at a time when public sentiment against perceived corporate excesses and cozy relationships with government officials is at a high-water mark.”

BRIBEline, an anonymous, online reporting system, provides country-specific information about bribe demands:  who is requesting a bribe, how a bribe is to be paid, whether a bribe is to be paid in installments and, if so, at what frequency, and what is being promised in exchange for the bribe.  The seven country reports completed to date are available at www.TRACEinternational.org.

About TRACE

TRACE is a non-profit membership association that pools resources to provide practical and cost-effective anti-bribery compliance solutions for multinational companies and their commercial intermediaries (sales agents and representatives, consultants, distributors, suppliers, etc.). TRACE provides several core services and products, including: due diligence reports on commercial intermediaries; model compliance policies; an online Resource Center with foreign local law summaries, including guidelines on gifts and hospitality; in-person and online anti-bribery training; research on corporate best practices; and Gifts & Hospitality Tracking Software.

For additional information about TRACE, visit  www.TRACEinternational.org.

Jamie Moss, newsPRos, +1-201-493-1027, jamie at newspros.com, or Jaime Baum, newsPRos, +1-847-502-3825, jsb at newspros.com