Description:

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.