Trends in multi-jurisdictional enforcement of anti-corruption in the global petroleum industry

Abstract

Abstract The global petroleum industry has been much maligned over the past 10–15 years for its involvement in foreign corrupt activities due to well-publicized instances of US-led prosecution for bribery of foreign public officials. Among the high-profile cases include the infamous Technip, Snamprogetti, Kellogg Brown & Root, JGC (TSKJ) conspiracy bribing Nigerian officials of the Bonny Island LNG terminal to the far-reaching Odebrecht/Petrobras Brazilian Lava Jato and more recent global Unaoil bribery scandals. What these cases and others have in common is the incidence of ‘multi-jurisdictional’ prosecution for foreign bribery rather than simply prosecution by US authorities as occurred prior to 2005. Through detailed quantitative analysis, we show how this multi-jurisdictional enforcement is a petroleum industry trend. The financial and reputational risk in terms of both likelihood and impact of a foreign bribery event has increased dramatically over the past 10 years. Despite this increased risk, we found little evidence of a risk-based compliance approach among industry participants. We show that the current practice of limiting liability is not an efficient risk-based approach towards corruption compliance and is not likely to meet new anti-corruption compliance guidelines by international regulators. Our research examines a possible cause-and-effect model behind this heightened corruption risk. We profile and describe the nature of the top 10 petroleum industry multi-jurisdictional bribery cases. We then provide a display of a corruption event’s drivers, consequences, and barriers in the form of a risk-based ‘bow-tie’ diagram. Finally, we recommend ways the industry can move towards a more risk-based corruption compliance approach.