The Latest FCPA Enforcement “Tea Leaves”

TRACE attends anti-corruption conferences in part to listen to presentations by representatives from the various government enforcement agencies so that we can report back on emerging trends and other hints they may drop.  With official guidance pretty sparse, those tea leaves become more important.   Julie Coleman of TRACE provides this summary of a busy week:

“Representatives from TRACE fanned out across the globe this week to attend anti-bribery conferences on three continents.  Alexandra was in Shanghai at the excellent American Conference Institute’s 3^rd China Summit on Anti-Corruption, where she presented on effective anti-bribery training and led a workshop on tiered due diligence.  Carolyn presented on anti-corruption issues at the International Conference on Anti-Corruption, Good Governance and Human Rights in Paris.  Anne and Julie stayed closer to home, where  Anne attended the 4^th FCPA & Anti-Corruption Conference and presented on the unique challenges of doing business in the “BRIC” countries (Brazil, Russia, India and China), and  Julie attended Ethical Corporation’s 3^rd Annual Global Anti-Corruption Summit and presented on the benefits of benchmarking to create an effective compliance program.

Hank Walther, the Assistant Chief at the U.S. Department of Justice Fraud Section, appeared on three different panels in one day at Ethical Corporation’s conference, and provided his predictions about what the future of FCPA enforcement holds.  He noted that the following three trends will continue:

1.       The “Siemens Phenomena” is here to stay.  That is, the DOJ will continue to pursue large cases where the alleged misconduct spans multiple continents.  He noted that the Siemens case, with its billion-dollar-plus settlement, was not an outlier.  Hank pointed to other recent eye-catching settlements:  BAE ($400 million), Daimler ($93 million criminal penalty) and KBR ($402 million).

2.       However, the DOJ’s interest in pursuing marquee names does not mean private companies are off the hook.  Per Hank, the DOJ still likes the smaller cases.  Although the public company prosecutions grab the headlines, Hank was quick to note that more private companies have been prosecuted under the FCPA than public companies.

3.       Individuals remain squarely in the DOJ’s cross hairs.  Hank pointed out that, even as recently as four or five years ago, the DOJ rarely charged individuals with FCPA violations.  What has changed?  First, an apparent public policy shift at the DOJ has occurred.  The DOJ has come to realize that “it can’t build an enforcement regime on criminal fines alone.”  That is, if bribery convictions only impact corporate coffers, then paying bribes just becomes a cost of doing business.  If, instead, the specter of jail time is factored into the cost-benefit analysis, then the calculus changes dramatically.  Second, the DOJ has become more adept at gathering evidence in FCPA cases.  Resolutions of FCPA cases used to come about like this:  (a) a corporation uncovers an inappropriate payment,  (b) it then conducts an internal investigation and gathers its own evidence, and (c) it finally comes into the DOJ with hat in hand where a polite, if somewhat tense, negotiation ensues and a penalty is mutually agreed upon.  Now, corporate executives can expect a “knock and talk:”  awakened by a hard knocking on the front door of their home, opening the door and hearing “I’m a special agent from the FBI.  May I ask you some questions?”  According to Hank, the answer is always “yes.””

Nathaniel Edmonds (Assistant Chief, Fraud Section) spoke in Shanghai about, among other things, the Las Vegas Sting.  He fascinated the audience with his description of the many hours of footage and provided a new piece of information: the propensity of the alleged bribe-payers involved to discuss not only the deal at hand, but past deals.

So, there you have it.  The DOJ is targeting individuals as well as companies of all sizes, — and those investigations may well provide enough material for the next round of investigations.

 

TRACE UK Anti-Bribery Symposium

Yesterday, in London, TRACE conducted a full-day benchmarking symposium attended by over 60 company representatives and featuring speakers from government, the private bar and in-house legal and compliance departments.  Anne Richardson of TRACE reports the following findings:

“The TRACE UK Anti-Bribery Symposium featured discussions of the new Bribery Act and its anticipated impact on UK government enforcement and on the compliance programs of UK companies and foreign companies operating in the UK.  Several themes emerged over the course of the day.

First, the new Bribery Act has been greeted with a significant degree of uncertainty and confusion in the corporate world.  Interpretations of the act by different government speakers at recent public events have been vague and inconsistent.  With regard to the defense of adequate procedures, the business community awaits SFO guidance on the subject (which was originally to be delivered in July, but there are many rumors of delay).  At the same time, most expect the guidance to provide merely a broad outline of best practices already widely recognized and disseminated in the compliance community.

Second, the UK company attorneys, compliance officers and business managers at the event echoed the oft-stated frustration of their American counterparts when it comes to defining the parameters of acceptable business hospitality.  Companies on both sides of the Atlantic crave concrete guidance from enforcement authorities on where to draw the line with regard to gifts, entertainment or travel provided to foreign government customers.  The line between lavish and reasonable is impossible to identify with confidence, much less implement, but it is doubtful that the UK authorities will be any more forthcoming on this issue than authorities in the United States.

There is also widespread skepticism over the SFO’s voluntary disclosure and cooperation programs.  Judicial opinions in the recent Innospec and John Dougall cases call into question the SFO’s ability to enter into settlement or plea agreements with either corporate or individual defendants.  Companies considering voluntarily reporting a problem to the SFO, or individuals deciding whether to serve as cooperating witnesses, are justifiably doubtful that such actions will produce tangible benefits or true leniency when it comes to sentencing and penalties.

Finally, in response to a survey question, companies made it clear that they continue to fear investigation and prosecution by the DOJ and SEC in the US to a much greater extent than in the UK.  This presumably is driven by the shear number of cases brought by the US government and the much higher penalties imposed. (Even in multiple-jurisdictional cases involving UK companies, such as BAE and Innospec, the US-imposed penalties dwarfed those imposed by the UK).  There is also uncertainty surrounding the very future of the SFO and FSA, as the new Conservative-led government considers an agency reorganization.

The new UK Bribery Act has certainly created a lot of buzz, but it’s too soon to measure its impact.  For now, multinational companies will continue to look to US FCPA enforcement as the bellwether for evaluating corporate corruption risk and developing the necessary compliance response.”

 

The United Kingdom’s New Bribery Law

There has been a lot of buzz since the UK Parliament passed legislation on the 8^th of April that significantly reforms the country’s anti-corruption laws.  Charles Monteith, the Serious Fraud Office’s Senior Policy Advisor on bribery and corruption, kindly provides this overview of the new law:

“The UK Bribery Act (BA) passed by Parliament on 8th April 2010 has major implications for anyone doing business in the UK.

For the first time it extends UK corporate criminal liability in a similar way to the FCPA, so that a corporate is liable for the actions of those performing services on its behalf who bribe foreign public officials.  However, unlike the FCPA, the BA also makes corporates liable for the bribery of private individuals.  Corporations will be criminally liable for the actions of its servants who offer private individuals advantages in return for misconduct.

Any US or foreign corporation ‘carrying on a business’ in the UK will become criminally liable for the bribes paid by anyone performing services on its behalf anywhere in the world.  It covers all agents, intermediaries, partners and joint ventures.

‘Carrying on a business’ and ‘performing services’ are not defined under the Act. ‘Carrying on a business’ will probably entail more than the signing of one contract in the UK but something less than opening an office.

This means that a US corporate with regular business contacts in the UK will be open to prosecution in the UK for failing to prevent bribery by anyone performing services on its behalf anywhere in the world.  For example, if such a corporate were to employ a French national who enlists a South American national to obtain a contract in Africa via a bribe or illegal advantage, the corporate will find itself criminally liable in the UK for failing to prevent bribery.

Unlike the FCPA, there is a statutory corporate defence of having ‘Adequate Procedures’ to prevent bribery.  UK Government Guidance on “How to Prevent Bribery” is expected to be published by July before the Act can be implemented as scheduled in October.

The Guidance is expected to recommend:

• a strong anti-bribery stance from the Board;
• a Code of Conduct covering hospitality and facilitation payments;
• proper enforcement and implementation of the anti-bribery strategy;
• a dynamic risk assessment and mitigation policy; and
• proper due diligence on all agents, intermediaries, partners and joint ventures.

If a corporate cannot show that it had adequate procedures to prevent bribery, this does not mean that a prosecution will inevitably be brought against them.  This will depend upon the seriousness of their culpability. Corporates will need to look at the public interest factors for and against prosecution set out by the Serious Fraud Office (SFO) on its website together with SFO guidance on self-reporting. The SFO remains the leading UK anti-corruption and bribery enforcement agency.  It has recently (under pre-existing law) convicted or settled with four major corporates, namely BAE Systems and Innospec (both jointly with the US DOJ), Balfour Beatty and Mabey and Johnson.”

 

TRACE Issues 2010 BRIBEline Mexico Report

How great are the anti-bribery compliance risks faced by companies with operations, customers or projects in Mexico?

We know public corruption exists in Mexico (and everywhere else).  And we know that Mexico has garnered the attention of both U.S. and international enforcement agencies.  A recent search of the TRACE Compendium reveals ten cases and investigations involving bribery of Mexican government officials.

U.S. enforcement agencies have brought eight cases – Crawford Enterprises, ABB/North America, Hioki, Paradigm, Pride International, Siemens, Silicon Contractors and Syncor.  Nearly all of these cases involve corrupt payments to employees of Mexican state-owned entities, with a particular emphasis on Pemex, the state-owned oil company, and Comisión Federal de Electridad, a state-owned utility company.  (Pride is the lone outlier: according to the SEC complaint, Pride made corrupt payments to Mexican customs officials to persuade them to either overlook customs violations or expedite exports).

International enforcement agencies have recently joined the fray.  The Federal Public Prosecutor’s Office in Switzerland is investigating allegations that Alstom, a French company that provides equipment and services to the energy and rail transport sectors, engaged in a widespread bribery scheme to secure public works projects in Brazil.  Alstom reportedly made over US$230 million in corrupt payments to foreign officials in Singapore, Indonesia, Venezuela, Brazil, Italy, Zambia and Mexico.  In addition, the Investigating Magistrate of Spain is looking into whether Banco Bilbao engaged in corrupt activity with officials in Columbia, Peru, Venezuela and Mexico.  And, of course, the Munich Public Prosecutor’s Office made a big splash with the Siemens investigation and blockbuster settlement.

These cases provide insight into bribery’s tail risks – prison terms and huge fines, invasive investigations and long-term reputational damage.  They also give us a look into the fairly unimaginative way companies try to disguise bribes on their books and records:  in the accounting parlance of corporate bribery, vague “commission payments” are becoming what “off-balance sheet SPVs” were to Enron.

What these cases don’t give us is a granular view of a bribe transaction.  Who are the common sources of bribe demands?  How frequently are bribes demanded?  And how much?  The BRIBEline country reports, issued by TRACE, set out to answer these questions.

TRACE today issued its BRIBEline 2010 Mexico Report.  This report presents information about 151 incidents of bribe demands made in Mexico and reported to BRIBEline as of January 6, 2010.

Key Findings from the report reveal that:

• Over 85% of the reported bribe solicitations in Mexico were made by people associated with the government, including 45% of bribes in Mexico reportedly made by the police.

• Over 55% of survey respondents reported that a bribe demand was recurring (i.e., a bribe was to be provided more than once).  Fifteen percent of those who reported receiving recurring bribe demands indicated that they had received bribe solicitations more than 100 times in a given year.

• Cash (or its equivalent) was demanded in more than 80% of the reported incidents of
bribe demands in Mexico.

• Sixty-five percent of all reported bribe demands made in Mexico were for amounts less than US$5,000.  On the other end of the spectrum, 6% of all reported bribe demands in Mexico were for more than $50,000.

• Almost half of the Mexico reports cited extortion as the primary purpose of the bribe demand.  For example, in these cases the bribe was demanded in order to avert harm to personal or commercial interests (23% of all bribe demands in Mexico), to receive delivery of services to which the intended bribe payor was already entitled (15%) or to receive payment for services already rendered (6%).

The 2010 BRIBEline Mexico Report is the fifth BRIBEline report published by TRACE.  Please visit www.TRACEinternational.org to view the full 2010 BRIBEline Mexico Report, as well as reports on China, India, Russia and Ukraine.

 

OECD Issues Good Practice Guidance

TRACE welcomes the practical guidance provided by the OECD in its March 3rd release of a “Good Practice Guidance on Internal Controls, Ethics, and Compliance,” which now forms Annex II to the Working Group on Bribery’s Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions initially issued on November 29, 2009.  The Good Practice Guidance was negotiated and agreed by the 38 member states comprising the Working Group and, as such, represents the first real attempt to conform anti-bribery compliance expectations across borders.  Going forward, the Working Group’s monitoring mechanism will include monitoring countries’ progress in encouraging their respective private sectors to implement the document’s principles.

As emphasized in the OECD press release, the Good Practice Guidance calls on companies and organizations to: (i) adopt a clear and visible anti-bribery policy that is strongly supported by senior management; (ii) instill a sense of responsibility for compliance with the policy at all levels of the company, as well as independent compliance structures; (iii) keep up regular communication and training on foreign bribery for all employees, as well as with business partners; and (iv) encourage observance of anti-bribery compliance measures, and disciplinary procedures to address their violations.  The document also recommends that companies implement compliance procedures specifically addressing due diligence on business partners, gifts, hospitality and travel, political contributions, charitable donations and sponsorships, facilitation payments, and solicitation and extortion.

The Good Practice Guidance also contains a section on “Actions by Business Organisations and Professional Associations.”  The section discusses the important role business organizations and professional associations can play in supporting companies’ efforts to develop and implement effective compliance programs by (i) disseminating information on foreign bribery issues, including regarding relevant developments in international and regional forums, and access to relevant databases; (ii) making training, prevention, due diligence, and other compliance tools available; (iii) providing general advice on carrying out due diligence; and (iv) providing general advice and support on resisting extortion and solicitation.  TRACE is proud to be an active member of the community of organizations supporting businesses in these crucial areas.

 

Cambodia’s Long-Awaited Anti-Corruption Legislation

TRACE’s Anne Richardson received the following update from an attorney friend currently working in Phnom Penh:

“Last month a senior Cambodian official stated that Cambodia’s long awaited anti-corruption legislation will likely be passed next month. There have been, however, a litany of statements foretelling the ‘imminent’ passage of this law since 1994, when it was first proposed. Whether this is another empty statement remains unclear, but several signs point to its passage. First, the main reason officials have been giving for delay all these years – the need for an updated penal code – is no longer present. Last year Cambodia passed a new penal code, part of which is already in force, and the rest of which will come into force December 31st. Second, the Council of Ministers has already passed the draft anti-corruption law and handed it over to the National Assembly – a significant step in the legislative process. Third, the contents of the law have remained a closely guarded secret. Indeed, the one thing that is more difficult than determining when the draft law will be passed is ascertaining what substantive protections, penalties and enforcement mechanisms the law will contain. Lawmakers have been tight-lipped about the contents of the law, refusing to release a copy of the bill and so foreclosing all public comment and debate. Proceeding in this way, of course, will  allow lawmakers to take credit for passing an anti-corruption law while ensuring the law does not infringe any ‘ongoing interests.’

Whatever its substance, the law cannot reduce corruption overnight. The pattern and practice of corruption in Cambodia is rampant at all levels. From police officers who openly request and accept bribes from motorists to high ranking officials whose mansions exuberantly display ill-gotten gains, the evidence is everywhere. And all this while the majority of the people eke out a living, earning little more than a dollar a day. Sadly, corruption has been endemic to politics in Cambodia even infiltrating the language. In Khmer the verb ‘to reign’ literally translates ‘to eat the kingdom,’ and government officials have thus far lived up to the billing. The passage of an anti-corruption law would bring a glimmer of hope to the situation in Cambodia, and be a step – even if only a ceremonial one – in the right direction. Over time, and after implementing appropriate enforcement mechanisms, perhaps the daily scourge of corruption – the pervasive demands and the widespread acquiescence – can be vanquished.”

 

“Ethics” Terminology in the Compliance Discourse

A well-written anti-bribery compliance policy – or a corporate code of conduct more generally – should (i) be easy to find, (ii) be written in simple, clear language, (iii) be thorough, but not exceedingly lengthy, (iv) clearly describe the proscribed behavior, (v) delineate sanctions for breaches of the policy, and (vi) provide mechanisms for reporting potential violations and for seeking guidance and clarifications. The ideal policy will also set an appropriate and credible management tone for the organization. With regard to this latter quality, companies can take very different linguistic approaches in setting the tone for their policies or codes. One preliminary question is whether to incorporate the term “ethics” in the policy, whether in the title itself or throughout the text. “Ethics” is a broad term. It can encompass morality and personal beliefs in a number of contexts; “compliance,” on the other hand, generally addresses rules and legal liability.

Does a reference to ethics help set a better tone or make a compliance policy more effective? Or is it possible that, instead, it distracts the reader from the core focus of the policy and the many grey areas that characterize anti-bribery compliance? Does the language help or hinder the dissemination of a universal policy to a diverse, multiethnic and multinational organization? Both Sarbanes-Oxley and the Federal Sentencing Guidelines specifically use the term “ethics” – should this be construed as a prescription for corporations or are there legitimate reasons to avoid the term? Could the direct translation of SOX and the Guidelines into multinational corporate policy be misinterpreted as American moral conceit? While the target of the two documents is obviously American corporate wrongdoing, how are they interpreted abroad?

The U.S. is known for its rules-based approach to corporate governance, while Europeans generally take a more principles-oriented perspective. U.S. attorneys, whether outside counsel or in-house, are frequently accused of “American arrogance” when interacting with company personnel or their counterparts overseas, both in the context of investigations and in more benign settings. The choice of language in an anti-bribery compliance policy or code of conduct – usually an employee’s first introduction to a company’s compliance program – makes a difference. Does the use of “ethics” terminology support or impede the message?

This posting asks more questions than it answers. Readers are invited to share their thoughts and comments.

 

When Is A Nigerian Local Tribal Leader A Foreign Official Under the FCPA?

Sharie Brown, Chair of DLA Piper’s FCPA Practice, recently traveled to Lagos to conduct FCPA and anti-corruption training there. This question arose in the course of her training and we know that others operating in Nigeria struggle with it.

*           *            *

“For many, overseas business travel to developing countries can create excitement and a bit of angst about the unknown adventures and experiences to come; this is even more so where Nigeria is concerned. I relished the opportunity to return to Lagos to conduct FCPA and international anticorruption training for Nigerian companies, particularly because several officials from state-owned and controlled banks, and the national oil company and its subsidiaries (as well as local private company executives) had signed up for the two-day anticorruption training session.

But even before that training began, we learned some lessons from our Nigerian hosts about issues to consider in applying the FCPA’s definition of “foreign government official” in Nigeria. Perhaps there are comparable issues to be examined in other countries where formal, informal, religious, cultural and tribal positions are a part of the business, investment, and social framework.

Since the focus of our anticorruption training in Lagos was on public corruption, I discussed with local business leaders and lawyers in pre-conference meetings the different types of officials in Nigeria that could trigger the FCPA, local law and other anticorruption rules and laws. I generally explained that a foreign government official under the FCPA included: a) any person holding any level of legislative, administrative or judicial office or a foreign government or any of its departments, agencies or divisions; b) any person acting on behalf of a foreign government, including a state agency, or state owned or controlled enterprise, business or organization; c) any official or agent of a foreign public administration or publicly funded organization; d) any official or agent of a foreign political party; e) any officer or agent of a public international organization; f) and close family members and relatives of any of those listed above.

The case of Nigeria illustrates how challenging it can be to determine whether officials fall into these categories. Both the country’s federal structure and ethnic composition contribute to a complex system of leadership at both the national and local level. Nigeria is divided into 36 states and the Federal Capital Territory, all of which have their own governments. The states are further subdivided into over 700 local area governments, which are responsible for a range of functions including tax collection, licensing, and population registration. In addition, the country contains over 250 distinct ethnic groups, or tribes. Although most of the population is generally drawn from three groups (Hausa, Igbo, and Yoruba), each state is comprised of numerous tribes, with some chiefs having significant local power and influence.

As one local business person observed, a local “chief” may serve as an unofficial advisor to community members, as well as elected and appointed officials. Sometimes one must effectively “go through” the advisor in order to have issues addressed by the elected or appointed public officials.

Some local rulers or leaders are recognized as a result of traditional tribal rules, ancestry and custom. Others become local leaders because they enjoy the support of the local community based on their good works, community service, and reputation. Still others may be appointed a local leader by elected or appointed government officials. In certain circumstances a tribal leader or chief may actually be paid on a monthly basis for services by a governmental entity within Nigeria. Thus, the types of local leader/chief functions and interrelationships are based on a combination of community mores, tribal traditions, and (sometimes) government appointments. Since I am American, and I do not live in Nigeria, I recognize that there are levels of complexity that I am incapable of understanding from my discussions over the last week in Lagos. Yet, as an FCPA practitioner, I recognize that companies and individuals covered by the FCPA still need some guidance on how to approach the issue of whether these local leaders or tribal chiefs should be considered foreign government officials under the FCPA.

I have developed below a list of criteria for consideration of the issue; others may be able to think of other criteria, as well.

First, test for the possible inclusion of local tribal leaders and chiefs as foreign officials in business dealings by specifically asking about this category of persons during your FCPA due diligence involving Nigeria. If you do not ask the question, you may never learn that someone is a chief or local tribal leader.

Second, determine the specific functions of the particular local tribal leader or chief. Is the function purely ceremonial- – where the leader gives blessings at weddings, funerals and births? Is the leader or chief authorized to perform and approve marriage, divorce, or adoption proceedings? Is the approval of the leader or chief required to be obtained before any construction, road, or building plans are executed?

Third, determine if the local leader or chief is a key advisor or associate for an elected or appointed government official, or party candidate, party official or other foreign government official. Is the local leader or chief acting on his own, or as an agent of the foreign government official? Will the foreign government official exercise decision making power in the absence of the approval of the local leader or chief, etc.?

Fourth, determine if the local leader or chief receives compensation for serving as a recognized local leader or tribal chief . Who pays the compensation – a government entity? Members of the local community? How is that compensation paid, and how much is paid? How is the compensation determined and what is the amount?

Fifth, assuming that there is no formal compensation, is there an informal, yet firm expectation that a gift, money or patronage payment will be made to the local leader or tribal chief at the beginning of each visit or meeting? What is the basis for the gift or payment? How much is usually given? Is the gift or money provided for advice, approval or for making a decision (whether approved or disapproved)?

Sixth, it may be prudent to obtain a local law opinion on whether the local leader or tribal chief would be considered to be a government official under local rules, based on the function, title, and responsibility of that person in the community. The answer may be different depending on the functions and activities associated with the local leader or tribal chief. The fact that the local law does not consider the local leader or tribal chief to be a government official would not be dispositive of the issue under the FCPA. Rather, that local opinion would provide an important component in your analysis of whether the local leader or tribal chief, along with the other considerations reflected in the above six paragraphs, is a foreign official under the FCPA.

While the above discussion is not intended to be exhaustive of the factors that may determine whether a local leader or tribal chief is a foreign official under the FCPA, application of these criteria could help your clients or your company avoid making a costly mistake by not understanding the powerful, recognized functions that exist in overseas local communities based on ethnicity, culture, tribe, geography, ancestry, religion, and community service. In Lagos, we learned from our local conference audience about this important issue.”

 

Cost-Effective Anti-Bribery Compliance Strategies: Training Tip #2

Those conducting anti-bribery training often worry that they aren’t speaking to their audiences’ real concerns. They fear that employees will sit politely through two or three hours of training annually, convinced that the person presenting doesn’t really understand the local challenges and so can’t propose solutions. There are simple steps that can be taken to increase interaction with participants.

Because of the sensitive nature of anti-bribery training, many employees are reluctant to ask their questions in front of their colleagues. Most employees we’ve asked say they would prefer to pose their questions anonymously. It can be effective to offer two chances to ask questions. First, pass around cards and ask everyone to write one question that they hope the training will answer. At an appropriate break about half-way through the training, ask them to write a question based on what they’ve heard so far. The first round should be mandatory. Prior to the second round it can be helpful to give examples of the sorts of questions that usually come up: specific hospitality scenarios, like how to respond to the arrival of an uninvited spouse, or how the company expects employees to respond to requests for favors for customers, like contributions to favorite charities. By making the examples very practical, presenters can encourage employees to ask about the specific dilemmas they face. If the presenter is unfamiliar with the market, a call should be scheduled with management in advance to discuss recent trends or idiosyncrasies.

Although we hear a lot about regional differences and cultural sensitivities, the fundamentals of anti-bribery compliance don’t vary much. On the other hand, the details do. To the extent that a presentation incorporates rich local detail, it will resonate with its audience and elicit the sort of follow-up questions that can be enlightening for presenter and audience alike.

 

Anti-Bribery Enforcement in Estonia: An Equivocal Process

Tallinn was abuzz about bribery this week. Perhaps that’s overstating things, but at meetings there yesterday, people were keen to discuss the prosecution and conviction of former Environment Minister, Villu Reiljan.

Just last week, Reiljan was found guilty of demanding bribes in exchange for favorable treatment on a real estate deal. It seems that as Minister of the Environment, he was able to sway the outcome of the auction of a valuable building. His accusers claim he demanded a bribe; he countered by claiming there was no conclusive evidence he did so, and that he was being targeted for political reasons.

He was brought down by recorded conversations from wiretaps performed by the elite “Defense Police”, a group organized initially to catch Russian spies yet bearing the authoritarian marks of police groups of the days when the Soviet Union dominated the country.

If the prosecution was heavy-handed, the sentence was light. He was sentenced to 27 months’ imprisonment, but with immediate eligibility for parole. He has resigned from his ministerial position, but remains on the government payroll while he pursues an appeal.

The minister’s conviction might start to break down the widespread assumption that anti-bribery laws don’t apply to senior politicians. Everyone we spoke to agreed that bribery is less prevalent than it was during the economic problems of the 1990s and the Soviet occupation before that.

On the other hand, the minister’s sentence will do little to dispel the sense that the courts and the Estonian business community retain a “country club” atmosphere. With just 1.3 million people—and half of them living in Tallinn—the country has a tiny business elite and readymade networks for those determined to skew the system. This remains a country where the most fashionable way to conduct business is to take a customer boar or moose hunting in Estonia’s pristine forests.

Anti-bribery enforcement in Estonia is not out yet of the woods.