Internal Compliance Costs after Bribery Allegations Continue to Rise

March 21, 2013
Categories: Anti-corruption, Compliance

The U.S. Securities Exchange Commission (SEC) requires all publicly traded companies to disclose in their annual report an “overview of the company’s business and financial condition and includes audited financial statements.” With many companies releasing annual reports from 2012 in the first quarter of this year, we are beginning to get a picture of just how costly a corruption event can be for an organization. Over the past few months, several articles have highlighted the rising expenses of these corruption investigations, including professional fees and compliance costs that come with them.

First, in February, the Wall Street Journal disclosed that Beam, Inc. had spent $4.2 million in 2012 on one internal investigation of possible bribery in India. Then, on March 1st, the FCPA Professor highlighted one of the most expensive investigations to date; Wal-Mart’s inquiry into bribery allegations against its Mexican subsidiary. Wal-Mart disclosed in its annual report that it spent $157 million in professional fees and expenses related to possible FCPA violations, which equates to over $600,000 a day in expenditures.

Finally, on March 4th, Compliance Week released an article underlining the prominence of FCPA disclosures by multiple other companies. Avon had spent more than $92 million in 2012 in FCPA investigations and compliance reviews, almost $340 million in total since 2009. And Weatherford, an oilfield services company, spent over $125 million for legal and professional fees from several alleged bribery investigations.

In light of these disclosures, company executives and shareholders should be vigilant when it comes to improving corruption prevention processes within their organizations. While compliance can be costly, it is better to get a handle on your corruption risk on the front end, than face these kinds of investigation costs on the back end.  For example, Siemens’ internal investigation and ensuing compliance program cost more than the fines, penalties, and disgorgement that the company paid to the Department of Justice and SEC.

The Center for Responsible Enterprise and Trade ( offers companies a three-step process to improve not only its own management systems, but those of its suppliers and business partners to help prevent corruption. CREATe’s Leading Practices for Anti-Corruption is a cost-effective and scalable solution that involves a Self-Assessment, Independent Evaluation, and Improvement Plan to help companies minimize their corruption risks.

Read Initial Insights from CREATe’s Leading Practices for IP Protection Pilot program

E-mail to join’s Pilot Program for CREATe Leading Practices for Anti-Corruption

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