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What downturn? Global anti-bribery enforcement finds a new normal

TRACE recently published its annual Global Enforcement Report, which collects summary data regarding the state of transnational anti-bribery investigations and enforcement actions around the world. One of the standout facts in the report is that the number of companies subject to enforcement actions in 2019 was notably lower than in 2018—a 19 percent drop in U.S. enforcement, and a 45 percent drop in non-U.S. enforcement. Though these decreases may seem drastic, they fit into a larger trend not out of line with what is “normal” by historical precedent.

Keeping an eye on the longer-term trends is important. Transnational anti-bribery enforcement actions are not uncommon, but they are not everyday occurrences either. Investigations can be lengthy, and cross-jurisdictional coordination can complicate timetables. The landmark Airbus settlement reached in January 2020, for example, required significant coordination between the United States, the United Kingdom and France. While the effort may have required extra diligence and time, it yielded a high return on investment.

There is no guarantee that matters will be resolved according to a regular schedule, and settlements may sometimes appear in clusters. It can be like waiting for a city bus without being able to see the schedule: An hour may go by with nothing, and then suddenly, three arrive all at once.

In short, we cannot know from a single year’s data whether enforcement activity overall is going up or down. But we can still make an informed assessment based on the dataset more broadly. Statisticians have developed a variety of techniques for smoothing out volatile time series data, finding a best-fit approximation without prior assumptions about what the overall shape should be. These can help to identify and cleanly represent the likely trends in noisy data, though they are not of much use for explaining those trends or predicting where the numbers might go next.

The following two charts show the results of applying one commonly used smoothing algorithm to U.S. and non-U.S. enforcement actions.

Abstracting from the peaks and valleys of the year-over-year enforcement data, we are in a better position to start drawing tentative conclusions. For the United States, the slowdown in 2019 does not appear as a reflection of any general downward trend, but as a normal fluctuation relative to an overall increase in activity. And outside the United States, the overall level of prosecution over the past 10 years has remained steady. The downward movement in 2019 does not signal a dramatic departure from that trend, but it will take a sustained increase in the volume of cases worldwide to start moving the trendline back upward, as has been the case in the past.

This analysis can charitably be described as cursory. The numbers on which it is based represent one of many possible methods for tallying enforcement activity, and considerable further analysis would be required to adequately judge the propriety and significance of our application of the smoothing algorithm to this particular dataset. But as a first step, it is a reminder that anti-bribery enforcement is a long-term investment, and its real value may be missed if we give undue attention to short-term results. We should maintain a similar long-term orientation with respect to our own compliance investments.

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1 Comment

  1. Beautiful, intelligent, much-needed commentary. Thanks Robert.


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