India Remains Corruption Hotspot As U.S. Enforcement Recalibrates

Forbes

13 hours ago

Earlier this month, the United States Department of Justice (DOJ) declined to prosecute Boston-based Liberty Mutual Insurance Company, closing an investigation into bribery by its Indian subsidiary but requiring the company to 'disgorge' nearly $4.7 million in profits, which will be given to the U.S. government.
The decision is significant for two reasons.
It is the first public Foreign Corrupt Practices (FCPA) resolution since the Trump administration's early-2025 pause on such cases. Trump's DOJ grounded its decision in its recently revised Corporate Enforcement and Voluntary Self-Disclosure Policy ('CEP'), providing clear criteria for the government to decline to bring charges against a company.
Second, it underscores the simple reality that India continues to be a high-risk jurisdiction for businesses operating there in terms of corruption—and no changes in Washington have made the risks go away altogether.
The Bribery Scheme
The Liberty Mutual case reflects the Trump administration's unique approach to FCPA prosecutions. According to the DOJ, Liberty General Insurance paid roughly $1.47 million to officials at six state-owned banks in India over a five-year period in exchange for customer referrals, disguising the payments as marketing expenses and routing them through third parties. The scheme generated more than $9 million in revenue.
Liberty Mutual discovered the problem during an internal investigation and disclosed it to the DOJ in March 2024.
Doing so proved decisive.
The DOJ emphasized that Liberty Mutual's early reporting was critical to its decision not to prosecute. The Department described the company's cooperation as 'full and proactive.' Its remediation included a thorough root-cause analysis, a reorganization to strengthen legal and compliance resources and new restrictions on how employees use messaging applications for business purposes. The Department cited all these factors in its decision.
By declining prosecution, the DOJ avoided bringing criminal charges against the company. But by requiring disgorgement, it signaled that foreign bribery still carries real costs, even in an enforcement environment where prosecutions appear to have become more selective.
FCPA Enforcement Under Trump II
Liberty Mutual's is the first case decided under the Trump administration's revised enforcement guidelines. In June, Deputy Attorney General Todd Blanche announced that tghe DOJ would focus FCPA cases on conduct that had implications for U.S. national security and competitiveness or involved serious transnational crimes.
The early-2025 pause in foreign bribery cases, combined with new enforcement criteria, led many to assume the FCPA was dormant, if not dead, under the Trump administration.
That assumption was misplaced.
The Liberty Mutual resolution shows the Department of Justice is still pursuing corporate misconduct abroad, even as it recalibrates how those cases should be resolved.
What has changed is the path to resolution. The updated Corporate Enforcement and Voluntary Self-Disclosure Policy now gives companies clear guidelines: disclose early, cooperate fully, remediate credibly and avoid aggravating circumstances. Then criminal prosecution can be taken off the table.
But the DOJ's insistence on disgorgement makes equally clear that declinations are not exonerations. Companies will still surrender profits earned through the misconduct, preserving deterrence while rewarding transparency.
Corruption Risks In India
This matters in markets like India, where corruption is structural and persistent. India ranks behind only China and Brazil in the number of corporate FCPA resolutions since 2015, spanning sectors from insurance and healthcare to defense and infrastructure.
That reality has not changed even if Washington's approach to enforcement has.
The Liberty Mutual case is the latest reminder of the structural challenges of operating in India. The company joins a long list of companies whose Indian operations have triggered U.S. enforcement.
In 2011, spirits company Diageo paid more than $16 million to settle charges that its Indian subsidiary made illicit payments to Indian government officials.
In 2012, Oracle paid more than $2 million to settle charges that its Indian subsidiary structured transactions with phony vendors to create slush funds for potential bribes.
In 2017, Mondelez resolved allegations that its Indian unit used a consultant to bribe government officials for licenses.
In 2018, Stryker Corporation paid a penalty related in part to misconduct in India, where improper payments were disguised as discounts and marketing expenses.
The nature of the Indian market puts companies at risk. State-owned entities dominate critical sectors of the economy from banks and insurers to energy and healthcare.
That means routine business dealings often involve individuals classified as 'foreign officials' under the FCPA, greatly expanding exposure.
Business development is frequently referral-driven, creating incentives to curry favor with gatekeepers at public institutions.
Heavy reliance on intermediaries makes oversight challenging and regulatory complexity adds further pressure, encouraging the temptation to make improper payments.
These risks are not theoretical: they are embedded in the operating environment. That is why India repeatedly appears in enforcement dockets and why it remains a priority jurisdiction for compliance and risk officers.
What It Means for Business
The practical message of the Liberty Mutual case is twofold.
First, FCPA enforcement is alive under Trump. It may look different with fewer prosecutions and more reliance on disgorgement and voluntary disclosure incentives, but companies cannot assume that risk has vanished. The DOJ has shown that even amid political skepticism about the statute, it will still act where misconduct is clear.
Second, India continues to pose serious corruption risk to companies operating there. Special, locally informed compliance controls are indispensable. These include deeper due diligence on intermediaries, close scrutiny of marketing and promotional spending and rigorous oversight of referral arrangements with public-sector actors.
Without these, companies operating in India continue to confront a perilous environment in terms of the temptations of corruption—and the risk of getting caught.