US targets commodities and corruption Archer Daniels Midland is the first commodities trading house to be enmeshed in the US anti-bribery law. It may not be the last. The American company last week disclosed it had set aside $25m to cover potential penalties for violations of the Foreign Corrupt Practices Act (FCPA), the law that the US Department of Justice and Securities and Exchange Commission have in recent years started aggressively enforcing. Alston & Bird, the law firm, says in a client advisory that the case of ADM could be the tip of the iceberg. "Historically, FCPA "industry sweeps" - such as those that targeted the oil and gas and pharmaceutical and medical device industries - have grown from an FCPA investigation into one company that led DoJ and the SEC to explore whether there was a broader industry-wide pattern of wrongdoing." The commodities trading industry runs a high risk of dealing with corrupt officials in fragile states, according to a recent report by the Swiss government. "The awarding of public contracts, the granting of licences, the payment of royalties, the creation of monopolies, and the determination of customs policies are all procedures that tend particularly to attract incitement to bribery," the report says. However, none of ADM's rivals in agriculture, such as Bunge, Cargill or Louis Dreyfus Commodities, nor energy and metals traders such as Glencore, Trafigura or Vitol, have disclosed any similar entanglement with the FCPA. International traders must adhere to laws such as the 1977 FCPA, which bars companies subject to US jurisdiction from bribing foreign government officials to get business, and the more stringent UK Bribery Act of 2010. ADM said it is in settlement talks over grain and feed exports dating to 2008 that may have violated the FCPA. Ted Kang, an Alston lawyer and former federal prosecutor, said it is likely the discussions have educated the government about how agribusiness works, making it easier to build cases against others. "They find out where the touch points are for potential corruption, and as a result they focus on particular industries as they now have expertise," he says. The government can also pressure a target to snitch on rivals. "Companies have very strong incentives to provide information and rat out other bad actors in their industry," Mr Kang says. Corrupt dealing was not uncommon in the days before FCPA, industry executives say. One retired agricultural trader said that poorly paid government procurement officials sometimes requested cars and even tyres as a condition of doing business. This was especially prevalent in the Soviet bloc. In one unconfirmed story from the distant past, a grain vessel entered a port in Egypt "and chained to the top of the ship was a brand-new Mercedes-Benz. That's what was required," said another industry veteran. The scope for corruption may be declining as private companies take over from government purchasing agencies. But in many countries the line between public and private is blurry, with state-owned enterprises handling grain and oil imports.