IE 11 is not supported. For an optimal experience visit our site on another browser.

U.S. intelligence uncovers record overseas bribery

Foreign companies bribed their way into obtaining $37 billion in overseas commercial contracts over the past year, according to a recent Commerce Department report based on information that officials say was gathered largely through electronic eavesdropping.
/ Source: NBC News

Foreign companies bribed their way into obtaining $37 billion in overseas commercial contracts over the past year, according to a recent Commerce Department report based on information that officials say was gathered largely through electronic eavesdropping.

THE LITTLE NOTICED document, entitled “Addressing the Challenges of International Bribery 2001,” states that “the U.S. government has received reports indicating that the bribery of foreign public officials influences the awarding of billions of dollars in contracts around the world. For example, in the period from May 1, 2000 to April 30, 2001, the competition for 61 contracts worth $37 billion may have been affected by bribery of foreign individuals, and of these contracts, U.S. firms are believed to have lost nine, worth approximately $4 billion.”

U.S. intelligence officials and officials at the Commerce Department and other federal agencies have long acknowledged that most reports of overseas bribery have come from communications intercepts by the National Security Agency (NSA), America’s electronic eavesdropping organization. A senior Commerce Department official confirmed last week that the NSA still works vigorously to intercept suspected bribery cases. Another Commerce Department official declined to comment publicly.

“What I can tell you is that the information came from a variety of sources, including embassy reporting, NGO (non-government organization) reporting, and reports in the press,” said Stephen Jacobs, a deputy assistant secretary in the Commerce Department’s International Trade Administration.


The Commerce Department report follows a similar one entitled “Fighting Global Corruption,” produced in May by the State Department, that gave a more historic perspective. Using the same data — including information gathered from eavesdropping — it stated that “from 1994 through early 2001, the U.S. government learned of significant allegations of bribery by foreign firms in over 400 competitions for international contracts valued at $200 billion.” Both reports are required annually by Congress. U.S. companies have long been prohibited from giving bribes to win overseas contracts.

Among the information contained in the Commerce Department report is that 30 percent of the instances of bribery found by the United States took place in Asia, and that in some cases the bribes amounted to “millions of dollars,” according to Jacobs.

U.S. databases, again aided by eavesdropping and other intelligence, also found that over the past 15 years, firms from 53 countries have offered bribes and officials from 112 countries have taken them.

“Firms that were alleged to offer bribes won nearly all the contracts in the deals for which we have information on the outcome,” the Commerce Department report stated. “When companies alleged to offer bribes lost a competition for a contract, it usually was to other firms alleged to have offered bribes.”

In spite of anti-corruption efforts — most of them in good faith by developed countries — Jacobs added “there does not appear to be a diminution” of instances or bribery.

Moreover, he said that industries where U.S. companies could be expected to win big contracts — telecommunications, construction and transportation — are precisely the industries where bribery is most prevalent.

Still, spying on overseas corporate communications, even to uncover bribery, has led to heavy criticism, particularly in Europe, over what is viewed as U.S. violation of privacy. The European Parliament has just finished a study of the so-called “Echelon” spy system, officially the part of NSA’s operations that intercepts communications satellites, but which has now become code for NSA’s worldwide eavesdropping network.


The Commerce Department report was released on June 29. Five days later, the European Parliament began discussing a resolution to condemn U.S. eavesdropping. A draft prepared by Torben Lund, a European Parliament member from Denmark, states that “U.S. intelligence services do not merely investigate general economic facts but also intercept detailed communications between undertakings, particularly where contracts are being awarded, and they justify this on the grounds of combating attempted bribery.” Lund added that such interception “poses the risk that information may be used for the purpose of competitive intelligence-gathering rather than combating corruption.”

And Duncan Campbell, author of the original 1999 European Union report on Echelon, said it’s time for Washington to stop spying on corporations and start cooperating with law enforcement worldwide.

“It is apparent from the new reports that the ‘leveling the playing field’ policy of using U.S. intelligence services alongside other resources to detect alleged cases of bribery continues, full on.” Campbell continued: “But European countries have now served clear notice that detecting and preventing bribery is not the legitimate business of intelligence agencies. It’s the job of law enforcement agencies.”

The United States claims that is happening. “In fact that is what we do,” said Jacobs, the Commerce Department official. “Commerce is not an enforcement agency. When we find information we pass it along to authorities.”

Other European critics have noted that in some intelligence community documents, Washington lumps bribery together with other legal practices. One 1994 letter from the CIA to the Senate Intelligence Committee defined “questionable business practices” that it tracks as not only bribery but “insider information and disinformation to limit the ability of U.S. firms to compete for international contracts.”

The U.S. has repeatedly denied it passes on intelligence to U.S. corporations for competitive advantage, but has publicly acknowledged its role in tracking overseas bribery.


The most revealing comments about the connection between the intelligence community and the effort to combat international bribery came in 1995, when then-CIA Director R. James Woolsey first disclosed how the policy worked while speaking to the Center for Security and International Studies.

In an answer to a question about whether the CIA was involved in economic espionage, Woolsey noted, “We collect intelligence on those efforts to bribe foreign companies and foreign governments into, for example, awarding an airport contract to a European firm rather than an American firm.”

“And when we find out about those — and we do a fair amount of the time — we go not to the American corporation that’s competing, but the Secretary of State. And he sends an American ambassador to see a president or a king, and that ambassador says, ‘Mr. President,’ or ‘Your Majesty, your minister in charge of construction is on the take, and you have a lot going with the United States, and we don’t really take kindly to your operating that way.’”

“And so rather frequently what happens — not always — is that the contract is rebid, sometimes the American corporation gets a share of it, sometimes the whole thing is done right, sometimes not.”

Woolsey recently repeated his claims in both a Council on Foreign Relations forum and on the op-ed page of the Wall Street Journal. In the most recent open testimony on the subject, last year before the House Permanent Subcommittee on Intelligence, current CIA Director George Tenet denied the United States “targets foreign companies to support American business interests” but admitted that when Washington found that foreign countries were trying “to deny U.S. businesses a level playing field,” that information is passed on to “other government agencies responsible for enforcing U.S. laws.”


During Woolsey’s tenure at the CIA, the agency regularly reported on its successes, noting in Congressional testimony that in 1993 and 1994, the U.S. intelligence community had helped U.S. firms win $16.5 billion in overseas contracts by alerting the governments in third world countries that ministers and others were “on the take.” Among the U.S. companies that have benefited are Raytheon, Boeing and Hughes Network Systems, according to public testimony. The intelligence community has clamped down on the release of such data since then although officials admit such activities continue.

In fact, Commerce Department documents obtained by NBC News show just how heavily the CIA was involved in the overall advocacy effort. In one August 1994 meeting to discuss how U.S. companies could win contracts from Indonesia government agencies, five of the 16 people present were CIA officers and one of those suggested that the agency receive “background information” on who were the “primary competitors known to the group for these projects.”

The data in the current report indicates the level of overseas bribery has risen to what appears to be record levels. While the United States does not provide annual figures on corruption every year, it has on occasion done so. In 1999, then-Commerce Secretary William Daley said in a speech that, during the previous year, the United States had determined that some 60 “major international contracts” valued at $30 billion went to the biggest briber. And last year, the State Department stated that between 1994 and 2000, the United States had determined that “the outcome of 353 contracts valued at $165 billion may have been affected by bribery”—an annual average of 59 contracts and $27.5 billion.

Moreover, the U.S. intelligence community maintains and continually updates a top secret database of international bribery, which, according to the State Department report entitled “Battling International Bribery 2000,” “lists foreign firms on which credible information exists indicating that they have been engaging in activities that would be prohibited by the [Organization for Economic Cooperation and Development] Convention (outlawing international bribery).”

“The practice is global in scope with firms from over 50 countries implicated in offering bribers for contracts in over 100 buyer countries” between 1994 and early this year, the State Department report said.

Robert Windrem is an investigative producer for NBC News.