The energy and utility sectors are known for being highly regulated, especially for safety-related concerns. On top of safety risks, new challenges are posed by the current volatility in the oil and gas market. Increased geopolitical risks, reduced capital expenditure and potential budget cuts are making compliance with anti-bribery and anti-corruption a key business priority. Of the top 10 largest fines issued under the US Foreign Corruption Practices Act (FCPA), six have been paid by energy companies or companies servicing the sector.
While ABAC enforcement actions have been seen in several industries, the oil and gas sector has been subject to numerous high-profile cases. That is not because individuals or companies who operate in this sector are more corrupt or susceptible to bribery, but there are characteristics of the sector that increase the risks:
- Conducting business in emerging markets
- Frequent dealings with government officials
- Heavy reliance on third parties