Corruption Risk Assessment Lessons to Be Learned from Getax Ocean Trades Bribery Resolution

On June 28, a Singapore court fined a Singapore-incorporated shipping company, Getax Ocean Trades, SG$80,000 (US$58,711) for paying SG$27,000 in bribes to Ryke Solomon, a Member of Parliament of the Republic of Nauru.  Nauru reportedly derives its main revenue from phosphate mining, and a government corporation, the Republic of Nauru Phosphate Corporation (Corporation), controlled phosphate mining, sales, and exports.  In 2010, according to representations made to the court, Amit Gupta, an executive of phosphate exporter Getax Australia (for which Getax Ocean Trades serves as the logistics arm), emailed Solomon to express Gupta’s interest in advancing his family’s business interests with the Corporation. On February 4, 2010, Solomon responded, requesting at least SG$30,000 to fund his re-election campaign in Nauru.  On February 18, 2010, Gupta asked a Getax Ocean manager to transfer SG$20,000 to Solomon’s bank account in Australia.  The court-imposed fine split the difference between Getax Ocean Trades’ request for a SG$60,000 fine and the prosecutor’s request for a SG$100,000 fine.

Compared to various recent Foreign Corrupt Practices Act resolutions involving eight- and nine-figure penalties and multiyear bribery of foreign officials, such as Credit Suisse and Société Générale, the Getax Ocean Trades resolution is wholly unremarkable.  Compliance officials, however, should regard it as a test case for reviewing their country risk ratings and methodology.  While companies often use Transparency International’s Corruption Perceptions Index (CPI),  which currently covers 180 countries and territories, or the TRACE Bribery Risk Matrix, which covers 200 countries, they need to remember that neither the CPI nor the TRACE Matrix covers all recognized countries and territories (including Nauru).  Thus, companies doing business in smaller countries may need to double-check their risk assessment methodologies to confirm that it covers all of those countries.

In those rare cases in which a country with which a company is doing or seeking to do business is in neither the CPI nor the TRACE Matrix, that company will need to resort to other due-diligence measures to conduct a meaningful risk assessment.  Although the public record does not indicate whether Getax Australia or Getax Ocean Trades conducted any risk-assessment process for its dealings with Nauruan officials in 2010, a mining company conducting a negative-news search today on Nauru, for example, would find multiple indications of corruption risk, such as stories reporting on alleged bribery of the Nauruan President and Justice Minister by Getax and the Australian Federal Police’s investigation of Getax and Nauruan bribery.  The essential point is that companies must ensure that their risk-assessment process, however structured, will timely capture information on bribery and corruption risks pertinent to the companies’ current and projected business in all jurisdictions.

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