Mammoth Year for Bribery Fines Continues as J&F Investimentos Agrees to $280m FCPA Settlement
23 Nov 2020 10:54 am by Mark Dunn
The Brazilian parent company of meatpacking conglomerate JBS has agreed to pay more than $280m in fines to settle charges it violated the principal US anti-bribery and corruption law. J&F Investimentos was charged with breaching the US Foreign and Corrupt Practices Act (FCPA) by using US-based bank accounts, shell companies and an apartment in a bribery scheme involving funding from Brazilian banks.
Brian Rabbitt, the US Assistant Attorney General, said the company’s highest executives “used US banks and real estate to pay tens of millions of dollars in bribes to corrupt government officials in Brazil in order to obtain hundreds of millions of dollars in financing for the company and its affiliates”. The company’s leaders previously admitted to spending around $150 million to bribe more than 1,800 Brazilian government officials to secure $1.3 billion in loans from the Brazilian Development Bank and Brazilian pension funds.
This fine is just the latest in a landmark year for bribery enforcement. In the first half of 2020 alone, $2.45 billion fines were issued for bribery under the FCPA. But bribery and corruption enforcement is becoming increasingly active outside the US, too. For example:
- Earlier this year, the French aerospace company Airbus agreed to pay £3 billion in penalties following investigations in the UK, France and the US. It admitted paying bribes on an “endemic" basis to land contracts in 20 countries.
- The UK’s Serious Fraud Office has entered into a Deferred Prosecution Agreement with Airline Services Limited, after admitting it failed to prevent bribery arising from its use of an agent to win three contracts worth over £7.3 million to refit commercial airliners for Lufthansa.
- The Malaysian subsidy of Goldman Sachs was fined $2.9 billion for paying bribes to government officials in Malaysia. The settlement was made with regulators in Hong Kong, Singapore, the UK and the US.
- Imam Nahrawi, a former sports minister in Indonesia, was jailed for seven years after being found guilty of taking over $1 million in bribes to approve sporting grants.
The companies receiving these fines have not just suffered legal and financial penalties, but also reputational and strategic damage. Given the extra strains placed on businesses by COVID-19, these companies now face additional, unwanted challenges as they try to recover from the economic downturn.
How should companies manage ABC risk?
The most important step for companies looking to mitigate bribery and corruption risk is to understand the level of risk posed by business partners, suppliers and other third parties. There are two main ways to do this: access to relevant data to assess the level and types of third-party risk they face and use of technology to filter the most useful insights from high volumes of that data.
Organisations can enhance their risk management workflows with data and technologies to suit their specific risk considerations. Download our data and technology showcase to look at five risks in particular:
- Regulatory risk—Companies need to establish if a third party has previously faced enforcement action for bribery and corruption.
- Business integrity risk—A key compliance step when assessing a prospective third party is to establish that they are who they claim to be and legally exist in the relevant jurisdiction.
- Key person risks—Companies need to understand if a third party is controlled by or associated with a PEP, because their public positions mean greater exposure to bribery risk and regulatory scrutiny.
- Ownership risk—In the wake of the Panama Papers and subsequent document releases, companies face more pressure to identify the Ultimate Beneficial Owner of entities to avoid inadvertent associations with corrupt activities.
- Country risk—Building relationships with third parties in a new market raises the risk of bribery and corruption when a country has a higher level of entrenched corruption.
How can Nexis Solutions help?
Our flexible technologies and vast content universe—alone or in combination—allow organisations to implement effective due diligence and third-party monitoring with customisable, off-the-shelf solutions or by delivering relevant datasets into in-house risk management applications:
- Nexis Diligence™ helps to conduct risk-aligned due diligence on business partners, suppliers or other third parties across a world-leading content set spanning news, company, regulatory and legal sources and use the Report Builder to maintain a clear audit trail.
- Nexis® Entity Insight helps to establish on-going monitoring across critical third parties and get an at-a-glance view of emerging risk from a convenient dashboard that lets you drill down to the data behind the visualisations.
- Nexis® Data as a Service lets companies use flexible APIs to tap into our unrivalled content universe to enhance your risk management workflow and drive meaningful insights.
Download our brochure on anti-bribery and corruption risk management today
Learn how Nexis Diligence, Nexis Entity Insight and Nexis Data as a Service can help you to address ABC risks