Settling with Justice
Settlements in cases of foreign bribery cases are big news and growing. More and more countries are allowing these procedures, and their law enforcement agencies are using them forcefully in their efforts to combat foreign bribery. The FCPA, which came into law in the US over thirty five years ago, has paved the way for many other countries to adopt similar legislations, in line with far reaching international agreements such as the OECD Anti-Bribery Convention. These are very welcome developments, which should continue unabated.
The 2003 UN Convention Against Corruption – to which almost 170 countries have become party to - has created an environment for a radical and universal change in the international landscape of anti-bribery legislation. Actual enforcement is making a difference, as illustrated by the rapid growth in settlements by companies and individuals who have contravened the law and have to face the consequences - without going to a full trial. The figures are telling: over the past decade a total of US$ 6.9 billion has been imposed in monetary sanctions through settlements - which is clearly good news in the fight against corruption.
But in the midst of this positive development, there are a number of troubling concerns (from the perspective of the countries affected by corruption). Research by the UNODC/World Bank Stolen Asset Recovery Initiative in our new report ‘Left Out of the Bargain’has revealed that those countries whose officials have been bribed are most often unaware of the settlements, and receive very little of the moneys involved. Of the US$ 6.9 billion, nearly US$ 5.8 billion came about when the countries where the settlement took place – mostly major financial centers - were different from those of the allegedly bribed foreign public official.
StAR’s analysis of 395 cases reveals that only about US$197 million, or 3%, was returned to the countries whose officials allegedly received bribes.
We welcome the significant commitment on the part of the countries where settlements took place to go after those who are paying bribes in international business transactions. At the same time, the limited amount returned seems to show little concern for those who suffer most harm from corruption, the ordinary people of the countries where officials were bribed. The real impact of these bribes is inflated public contracts, unfinished or inefficient projects, and more. The people in the countries where the bribery took place are, in effect, being punished twice. In the first instance, because the critical public services and activities affected by the bribes are likely to cost more and deliver less. Secondly, they are being deprived of any compensation resulting from a settlement.
Chapter V of the UN Convention against Corruption - which most settling countries have signed up to – is clear in its Articles about the mandatory return of the proceeds of embezzlement and related money laundering. But it also sets clear expectations for other criminal activities covered by the Convention (including bribery) by recognizing in particular the right to compensation for damages and calling for effective international cooperation. The issue of settlements is inexorably tied to asset return to those hurt through the act of foreign bribery.
So what can and should be done? There is much room for improvement. Currently over 80% of cases are settled in just one jurisdiction, without the involvement of the country whose officials were bribed. No legal barrier justifies this fact.
‘Left Out of the Bargain’ recommends a number of measures that settling countries could take to significantly improve the current situation. These include: developing a clear legal framework on settlements; improving transparency when and where they are taking place; proactively transmitting case information to affected countries while informing them of their legal options; and permitting their courts to recognize the claims of affected parties. At the same time, the countries where the bribery has allegedly occurred should also do more, notably: investigating the bribe takers and givers; exploring options for asset recovery more aggressively; pursuing mutual legal assistance as well as civil actions where possible; and in civil law jurisdictions, becoming a ‘partie civile’ to a legal action.
Holding to account those who engage in corrupt activities is essential. Recent developments are proof that enforcement can work, and the avenues to fight foreign bribery have grown impressively. Time has now come to bring even more justice, by increasing the attention in compensating those who have been harmed in the affected countries. As highlighted by StAR’s recommendations, better justice can be achieved through systematic attention to asset return in settling countries, and proactive action by affected countries to pursue their rights. This combination should ensure that where enforcement against foreign bribery occurs, no-one is ‘left out of the bargain.’