Law
Enforcement of International Anti-Bribery Laws Against State-Owned Enterprises
Quick fact
The U.S. Foreign Corrupt Practices Act (FCPA) has been used to prosecute and fine state-owned enterprises, such as when it penalized a Brazilian state-controlled oil company—Petrobras—in 2018, resulting in a $1.78 billion settlement, the largest ever at the time.
Why this is interesting
A state-owned oil giant signs a contract with a foreign minister's cousin—can international law touch it? Surprising answer: yes, even when the state itself is untouchable.
Read the full explanation
Understanding Enforcement of International Anti-Bribery Laws Against State-Owned Enterprises
Imagine a huge company that is owned by a government—like a national oil company. Such companies operate in many countries, but they are also intertwined with the state that owns them. Normally, one country cannot tell another state what to do (that's called sovereignty). But when a state-owned company engages in bribery abroad, international anti-bribery laws can step in. These laws, like the US FCPA or the UK Bribery Act, are designed to stop global corruption. They apply to companies that do business within their jurisdiction, regardless of who owns them. The key is that these laws treat SOEs as 'legal persons'—just like any other corporation—that can be held responsible for bribery. This happens even though the SOE is owned by a foreign government. So, while the state itself might be immune from prosecution, its commercial ventures are not.
A deeper explanation
The enforcement relies on the legal distinction between a state's sovereign acts (immune) and its commercial activities (not immune). International anti-bribery law considers SOEs to be 'instrumentalities' of the state, but only for commercial purposes. When an SOE bribes a foreign official to win a contract, that is a commercial act, not a sovereign act. Therefore, it falls under the definition of 'issuer', 'domestic concern', or 'any person' within the FCPA's reach. This is possible through two main jurisdictional theories: nationality jurisdiction, which covers the SOE if it is incorporated in the home country, and territorial jurisdiction, which applies when the SOE conducts a bit of business in the country. Enforcement mechanisms are powerful: regulators like the SEC and DOJ can issue subpoenas, use whistleblower incentives, and negotiate settlements that include hefty fines and compliance monitors. The OECD Anti-Bribery Convention commits signatory countries to enact similar laws, creating a global web of enforcement. This matters because it holds SOEs accountable, disrupts corrupt practices in global trade, and protects the integrity of international markets.