The U.S. is the world's bribery cop. Is that about to change?
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Now, this doesn't happen very often, but back in 2011, the world welcomed a new country, the Republic of South Sudan. A nation is born. The scene in South Sudan is nothing less than electric.

After a brutal civil war that went on for decades, the people of South Sudan voted for independence from Sudan. I feel good, man. I feel good. This is the new flag that will be recognized by different world states.

South Sudan declares independence, raised the flag of the 9th of July of 2011. This is Javier Blas. He covers energy and commodities for Bloomberg. Javier was watching this vote because South Sudan has a lot of oil. And while everyone, every diplomat, everyone in Africa is celebrating this success, there are some commodity traders who are thinking, aha,

New independent country, lots of oil, they need money. We want to buy. How we get our hands on the South Sudanese oil? Javier co-authored a book called The World for Sale, Money, Power and the Traders Who Barter the Earth's Resources. He describes commodity traders as being willing to go where no one else wants to go and take risks that no one else is willing to take. So

So it wasn't surprising that some of the people going, aha, and trying to figure out how to get their hands on the oil work for one of the largest commodity trading companies in the world. Glencore. The company is based in Switzerland, but they have about 60 offices in over 35 countries. And Glencore over the years has bought and sold some hundred different commodities.

commodities. So anything that has been extracted, drilled, grown on planet Earth, probably they have their hands into it. Oil, natural gas, aluminum, copper, wheat, corn, sugar, you name it. You have almost definitely purchased something that was once bought and sold by

by Glencore, like the wheat in a slice of bread or the aluminum in a can of soda or the cobalt in an electric vehicle. Anyway, the details of what happened next are a little fuzzy, but it seems that within a few weeks of South Sudan's declaration of independence, a small group of people from Glencore flew by private plane from London to Juba, which is the capital. And they carry a special suitcase that

full with $800,000 in cash. Cash? Is this American cash? Is this euros? What is this? American dollars. Because American dollars are welcome pretty much anywhere they want to travel to. Where would that money have come from? Surprisingly, it came from Glencore itself because at the Glencore office in Switzerland, in these years, they have a cashier. They have a cash desk where...

where oil traders will go and say, I'm going on a business trip and I need some money. The traders would go to the cash desk and say...

I'm going to need a million dollars. Oh, you know what? Actually, can you make that like $10 million in cash? Because I am going on a trip and I will have some expenses. Javier says he can just imagine the conversation between the trader and the cash desk clerk as the trader explains what the money is for. Office expenses, isn't it? Yes, office expenses.

office expenses it is. Enjoy the trip. And everyone will pretend that that was the real use of the money. And everyone, of course, knew that that was not what the money was used for.

Okay, and what was the money used for? Well, the money was used to pay bribes. Bribes! $800,000 in bribes to convince some officials in the new government to give Glencore a couple of good oil contracts. They may have had some office expenses, but the bulk of those $800,000 that they took on their plane was to pay bribes immediately. And...

That was just one of many, many bribes in many countries paid out by Glencore. Bribes that eventually drew the attention of the U.S. government because it ran afoul of an American law known as the Foreign Corrupt Practices Act. And ultimately, the U.S. Department of Justice accused Glencore of years worth of bribery and corruption. Hello and welcome to Planet Money. I'm Amanda Aronchick. And I'm Erika Barrett.

The U.S. has been policing bribery all over the world for nearly half a century. But President Trump has said that this anti-corruption law is crippling American businesses. So the administration has reduced the number of investigators, killed some cases, and they're changing the rules. So does this mean that the U.S. government is bringing bribery back? And if that's the plan, is that a good idea?

Today on the show, the story of how the U.S. became the world's anti-corruption cop and how the Trump administration is ruling. This message comes from Wealthfront. Get 4% APY on your cash from partner banks with Wealthfront's cash account. Go to Wealthfront.com slash money for a $50 bonus with a $500 deposit when you open your first cash account.

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So when a couple of Glencore employees flew with $800,000 in cash from London to South Sudan, why did U.S. law enforcement even find out? The reason was in part because of a law that was passed in 1977, the Foreign Corrupt Practices Act, or FCPA.

And there's a story about how that law came into being. It all started in the 1970s when Congress began to investigate the scandal that would lead to President Richard Nixon's resignation. And there was one guy who was key to the law, a federal employee named Stanley Sporkin. That whole law started on the basis of my going home in the evening in the early 70s and watching the Watergate hearings.

Stanley investigated financial fraud for the Securities and Exchange Commission, the SEC. We are using an old interview because he passed away a few years ago. And Stanley, like practically everyone, was riveted by the Watergate hearings. It was this major television event. And there's the familiar part, burglars breaking into the Watergate Hotel and stealing information from the Democrats for President Richard Nixon, who was trying to get reelected. The committee will come to all of us.

And counsel will call the first witness. But there was this whole other part that Stanley was obsessed with. The moment happened late in the hearings. It was a series of CEOs and corporate execs being questioned about their political contributions to the Committee for the Re-election of the President, an acronym that, yes, spells CREEP. And counsel will call the first witness. Mr. Oren E. Atkins, please.

You stand up, Mr. Adkins. Hold up your right hand. Over the course of the hearings, executives from a bunch of companies testified to giving illegal campaign contributions. There were execs from Goodyear Tires and American Airlines and Ashland Oil. The moment that really stood out for Stanley was the questioning of an executive from Gulf Oil about a $100,000 campaign contribution. Did you make a contribution to the president's reelection effort? Uh...

Didn't give him $100,000. I gave him $50,000. So Stanley's background was in accounting. So as he's watching, he's wondering, where did that $50,000 come from? Then the exec says that he got it from a colleague in the Bahamas. Told him I needed $50,000, and he brought it to me. In what form was the $50,000? It was in cash.

Stanley Sporkin goes into work the next day and apparently says, how the bleep could a publicly held company have a slush fund? There should be records of this. You know, is Gulf Oil declaring this to the IRS? Do their investors know about this? What bothered me by watching that was I didn't understand how these companies were making these payments, even though they knew they were illegal payments.

Stanley was worried about the bookkeeping of it all. And he was wondering, how widespread was this? Like, do all companies have a slush fund for making illegal payments?

And as Stanley is drawing attention to the issue, there's a senator who gets interested too. Senator Frank Church over at the Foreign Relations Committee. He was worried about something else. If all of these American companies are paying contributions to re-elect the president, who else in the world are they paying? And for what? So the senator holds hearings and they find that

that not only are all of these companies making illegal political campaign contributions in the U.S., they are also paying bribes to foreign officials. One of the most dramatic admissions from the hearings was about Lockheed, the aircraft manufacturer. We were engaged in trying to compete in a foreign market and

And we competed according to the customs and the ground rules that were in effect out in those foreign markets. OK, you've answered the question by not answering the question. And I want the record to be clear. Lockheed had been paying millions of dollars in bribes to the prime minister of Japan, to a Dutch prince, to the president of Italy, all in exchange for lucrative contracts to buy their jets.

What the senator learned in his hearings was that many companies saw bribing, particularly in developing countries, as grease in the wheels. You know, a way to get important and lucrative business deals done. I think that there was fewer qualms about it then. There was this idea that bribery made things go better. You know, that it was kind of that governments were bad. And to the extent you could get government out of it with a bribe, then actually that could help market efficiency. Right.

But when these Lockheed bribes came to light, it was a huge scandal. Rachel Brewster has written about these bribery hearings. She's a professor at Duke Law School, and she actually has a Ph.D. in political science and a law degree, and she did a fellowship. Rachel, how long were you in school for? Oh, yeah. You and my mother. Sorry. She phoned right before and she asked me to ask you that. Yeah, I know. She's like, as they said, more degrees than a thermometer. Yeah.

Rachel says that when all of these bribing scandals came to light, there were huge repercussions. The prime minister of Japan was forced to resign. Italy's democratic president was ousted by the Communist Party. What the senator was worried about was true. Bribing wasn't just unethical, it had foreign policy implications. It could even be a threat to national security. It

It was around this time that economists also started paying more attention to bribery. Before the 1970s, they weren't all that critical of bribing. Yeah, sure, maybe it's unethical, but it was efficient grease in the wheels. But then they started looking more closely at the data, crunching numbers about who benefited and who lost. And they were like,

Wait a minute. Bribery might help an individual company secure a deal, sure, but it did not help a country's economy. The global economy would work better if no companies were bribing. In 1977, Congress decided they wanted to do something about all of this corruption and bribery.

They pass the Foreign Corrupt Practices Act and President Jimmy Carter signs it into law. The U.S. becomes the first country to prohibit its companies from bribing foreign officials. But pretty quickly, American companies find this annoying. The U.S. Chamber of Commerce was just like,

This is going to hurt our ability to export. It's going to undermine our ability to kind of engage in the global economy. This is going to really hurt us. So at first, the U.S. government didn't really enforce the law all that often. There were only eight cases in the first decade after the law was enacted.

But over time, it became clear that there was a big problem. If the government was going to enforce the FCPA, American companies couldn't really compete with companies around the world. Not if only Americans were being held to a higher standard.

It was as if the U.S. was the only kid following the rules of the game while everyone else was cheating and high-fiving and kind of making fun of the Americans. Like, if you're just stopping the Americans from bribing, are you really helping the global economy? The problem was the U.S. couldn't just go out in the world and stop by, say, the headquarters of Sony in Japan or Volkswagen in Germany and be like, hey, no more bribing. They needed a way to get buy-in.

So then there's this big push to say other nations should be doing this too and, you

you know, kind of establish more of an international baseline. So American officials brought their idea to an international organization made up of countries with the largest, most developed economies, the OECD, the Organization for Economic Cooperation and Development. It's this group. It's based in Paris. And at the time, it included 29 countries, including Canada and Greece and Australia.

And the U.S. was like, could we all agree that bribery is bad for business? And at that time, pretty much all the major companies were based in this group of countries. Who cares if you don't have the rest of the world on your side? You've got the states where all the major multinationals are headquartered so they could control the behavior they wanted to control with only the agreement of a smaller number of states.

In 1997, all 29 OECD countries signed an anti-bribery treaty known by its friends as the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The U.S. remains the main enforcer, but other countries also set up their own anti-corruption offices and the countries work closely together. Nowadays, people like Rachel, political scientists and economists and researchers, they have done stacks and stacks of studies about bribery.

And they've come to pretty much the same conclusion, that bribery is bad for competition because it's not like the best company wins. Also, bribes enrich corrupt officials because the money often stays with a small group of elites. And bribes actually raise the cost of doing business.

That old idea that a bribe will cut through the red tape isn't actually true. Bribes can create even more red tape. Now I think there's a much greater appreciation of the fact that when you pay a bribe, government officials do not go away. In fact,

more government officials say, wait, they'll pay bribes? Oh, I see. And they're all like, we all like to be bribed. We all would like to be bribed. Yes. So once corporations are known for paying bribes, they attract more government officials from the country. So it isn't like you pay it once and you've made your deal and they go away. But actually, you pay it once and then actually the government wants to interact with you more because, you know, they know that there's a source of foreign capital there. So like a bribe isn't like a one-time thing?

I mean, I think corporations would like that, but no, government officials see it as a revenue stream. Over the past three decades, that sense that bribery is bad for governments and bad for businesses became a kind of orthodoxy. And with more international cooperation, there were more and more cases against Goldman Sachs and Siemens, Halliburton, 3M, Herbalife, and of course, Glencore. After the break...

We go back to Glencore and that $800,000 bribe to understand how an anti-bribery case gets prosecuted. And we consider the Trump administration's defanging of the FCPA.

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So, Glencore, the company that paid $800,000 in bribes to officials in the new government of South Sudan. We reached out to them for an interview, but they didn't get back to us in time.

Fortunately, though, there is a lot of documentation about their case. So we wanted to go back to it because it's closely related to the changes the Trump administration is now making to the Foreign Corrupt Practices Act, to the FCPA. One of the priorities of this administration is to make sure companies have all the tools they need to obtain and produce critical minerals. And Trump seems to be worried that the FCPA might be getting in the way.

Now, mining and the buying and selling of critical minerals are industries that are considered at high risk for bad behavior. That's because there's a lot of money to be made. Plus, there's a lot of regulation. So these are companies that have to interact with government officials all the time for permits and contracts and environmental approvals. And when you dive into Glencore's history a little, you can see how many times the company took the low road. Like the founder?

Mark Rich, back in 1983, he was indicted on 65 criminal charges. Racketeering, wire fraud, the largest case of tax evasion in U.S. history at the time. Oh, and he'd also been trading oil with Iran while the American hostages were still there. A bad look, to say the least.

By the way, he was later pardoned by President Bill Clinton. Also a bad look for Bill. To escape the charges, Mark Rich moved to Switzerland where his company was headquartered.

Writer Javier Blas says Glencore was not the first commodity trading company to set up their headquarters there. So you fly into Zurich, take the train, cross the mountains, and 30 minutes later you are in a very nice tiny town, which is a tax haven in Switzerland, full of companies like Glencore who make business trading commodities. Sure, Switzerland is known for its Alps and its chocolate and its political neutrality and also its low, low taxes.

Plus, there used to be this other Swiss delight. Until recently, when you would file your corporate taxes, you could write off any bribes. The Swiss authorities saw this as a business expense. So according to Swiss law, you could claim a tax credit. So, you know, a company would be getting everything together for, you know, the Swiss IRS, gathering their receipts from office equipment, the four-day retreat, oh, and their bribes. They'd ask the government for a tax refund every

And they'd get it. These kinds of perks might help to explain why there are more commodity trading companies in Switzerland than anywhere else in the world. And one of the ways Glencore became a target of scrutiny was by growing. A lot. They got into the mining business, went public. That forced them to be less secretive. So when they went to the cash desk and got a wad of dollars to take to some foreign official in exchange for favors...

Those transactions came across the radar of U.S. authorities. The DOJ spent years working on the Glencore bribery case. They got help from the Brazilian authorities and from the Serious Fraud Office in the U.K., which I know the name makes it kind of hard to take them seriously. We reached out to the DOJ to ask for an interview and they declined. But in 2022, they did hold a press conference about their case against Glencore. Good afternoon. Good afternoon.

I'm joined today by Assistant Attorney General for the Criminal Division, Kenneth Palit. That suitcase that went to South Sudan was just one of many, many suitcases. The scope of this criminal bribery scheme is staggering. There were suitcases of cash flying to Venezuela, suitcases to Brazil, suitcases to Nigeria. Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore paid bribes to judges to make lawsuits disappear.

Why did Glencore do it? They did it to make money, hundreds of millions of dollars.

Ultimately, the DOJ accused Glencore of paying more than $100 million to middlemen who they knew were using the money for bribes. It was very interesting reading the case because the American prosecutors were really forensic in their calculation of the bribery payment and the profit. The investigators laid out how much Glencore invested in bribes compared to how much profit they made in a particular country.

The DOJ said that, for example, over 10 years, Glencore paid $52 million in bribes to officials in Nigeria. And thanks to the contracts they secured, they made $124 million in profit. So it's a rather good investment. I mean, they more than doubled their money. An even better example cited by the DOJ was the Ivory Coast.

$4 million in bribes, $30 million in profit. They made more than seven times their initial bribe investment. I mean, you understand why they were doing it. This was fantastic business. But Javier, I feel like the point that you are making, which maybe you are making by accident, is it seems absolutely worth it to bribe. It is until you get caught. The outcome of all of this?

The DOJ required Glencore to have two compliance monitors closely watch their work for the next three years. Basically, it's like asking a police officer to move in, make sure there's no criming. And also, partly based on the size of the bribes, the company had to pay more than $1.1 billion in criminal fines and forfeiture.

Now, Glencore says they've been doing the stuff they're supposed to do. There have been two independent compliance monitors making sure they follow the rules, like keeping good records, publishing ethics and compliance reports. And they put out videos like this one with a trader talking about how committed she is to the company's integrity. You need to treat everyone with respect. You need to be fair, open, and build trust. And this is where, for me, the integrity plays a major role.

That was where things were left with Glencour. That is, until Trump took office earlier this year and started changing the rules. He has made no secret of his feelings towards the Foreign Corrupt Practices Act, the FCPA.

Years ago, before he was president, he actually called into the CNBC show Squawk Box to complain about it. Every other country goes into these places and they do what they have to do. It's a horrible law and it should be changed. I mean, we're like the policemen for the world. It's ridiculous. And now his anti-FCPA stance is aligning with another priority for this administration, making sure that the U.S. can acquire the critical minerals it needs.

The evidence for this is tucked into an executive order that President Trump issued back in February about the FCPA. The order says that the president's foreign policy is inextricably linked with how competitive American companies are abroad. Here's the next part, and this is the part that matters. Quote, quote,

American national security depends in substantial part on the United States and its companies gaining strategic business advantages, whether in critical minerals, deep water ports, or other key infrastructure or assets.

I think he's very much thinking of China. We called up James Koukios to help us understand this new guidance because he's been interpreting FCPA laws for most of his career. He was a prosecutor for the Department of Justice, and now he is a lawyer at Morrison Forrester, a law firm known delightfully as MoFo. And you were delighted. And James says that Trump is probably thinking about how to compete with China.

And so I think his theory is that, you know, we need access to those ports. We need access to those critical minerals.

If we do not pay bribes like China does, we will lose those things to China. China is not a member of the OECD, the international group that oversees anti-corruption rules around the world. And the Chinese government does not seem to be all that worried about Chinese companies paying bribes to foreign officials. That seems to have happened in the Congo to get cobalt and in Namibia to get lithium. Trump has long been of the view that

When it comes to global economic competition, all gloves should be off and we should be able to fight fire with fire or bribes with bribes. So since his executive order, there are a lot fewer people working specifically on FCPA cases. The Trump administration closed about half of its investigations.

Last week, the DOJ issued a new memo that is supposed to provide further guidance as to when to enforce the FCPA. At a very high level, there's not that many changes. Like, prosecutors have always

always had a lot of discretion. If James was prosecuting a case, he would think about scale. Was it a serious crime? Was it a big bribe? Was the person who was bribed a low-level official or a high-level official? James says that part hasn't changed. But what has changed is that now prosecutors are supposed to ask themselves, what was the reason for the bribery? And what was the impact? Did U.S. businesses suffer any harm as a result of the bribery?

Did U.S. national security suffer any harm as a result of the bribery? And if the answer to those is yes, then these are cases that we are more likely to bring in FCPA enforcement action than if the answer is no. Which is a big change. The rules that the U.S. and our partners in fighting bribery have agreed to follow explicitly say that those are not good reasons for deciding which companies to go after.

Like the point is that bribery is bad. It's a crime. So law enforcement should go after the companies that are being bad, even when there might be economic or political reasons to ignore the crime. Of course, this memo just came out. So it is to be seen exactly how the changes play out. As for Glencore, a couple of months ago, the Trump administration canceled Glencore's compliance monitoring more than a year early.

This was very unusual. DOJ always reserves the right to end monitorships early if the purpose of the monitorship has been accomplished. But it rarely, if ever, happened before. For whatever reason, the government decided that Glencore's compliance seemed good enough that they no longer needed to have a police officer living inside of their house.

Maybe the Trump administration decided that if a company is buying and selling critical minerals to the U.S., that there's no need to look too closely at what the business is up to.

Today's episode was produced by Willa Rubin and fact-checked by Emily Crawford with help from Willa. It was edited by Marianne McCune. It was engineered by James Willits. Alex Goldmark is our executive producer. Some of our additional footage today comes from Al Jazeera. Special thanks to the Securities and Exchange Commission Historical Society and also to Maria Arbatskaya, Elizabeth Kassens, William Garrett, Michael Kavanaugh, and Mike Kalert.

I'm Amanda Aronchick. And I'm Erica Barris. This is NPR. Thanks for listening. ♪

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