April 4 2014

 

Professor Matthew Stephenson, one of the founders of the Global Anti-Corruption blog, recently commented on our StAR publication in his post ‘What’s Left Out Of Left Out of the Bargain’. We very much welcome his insights and share his desire for further debate.

At the core of the discussion is the question of how to consider the effects of settlements in foreign bribery cases on future asset recovery efforts. Though the chapter describing the actual practices of settlements across civil and common law jurisdictions may appear a bit dry, it is critical to get the facts right, and to analyze on-going developments on the basis of practice - not theory. In addition, our experience and the feed-back we have received on the publication are clear evidence of the need to foster a better understanding of settlements, and how they relate to international law on asset recovery and to international cooperation.

This brings us to the core of the criticism by Professor Stephenson, and the central objective and message of the report. Adopting a global perspective was one of the main challenges for the StAR team – and the source of substantive debate among the team members and with formal and informal reviewers on successive versions of the draft report.

Our starting point for analyzing settlements is the UN Convention against Corruption. In particular, UNCAC Article 51, which states, “The return of assets pursuant to this chapter is a fundamental principle of this Convention, and States Parties shall afford one another the widest measure of cooperation and assistance in this regard”.  This applies not only to the mandatory return of assets that proceed from embezzlement or misappropriation (covered under Article 57.3(a)) but also to proceeds of corruption from other offenses covered in UNCAC (such as Article 16 on Foreign Bribery) and compensating victims.

Therefore, we disagree that the study does not distinguish between repatriation of assets stolen by public officials and monetary sanctions imposed in foreign bribery settlements. The study does exactly this – but through the lens of UNCAC.

We agree that the StAR study does not delve into what Professor Stephenson calls ‘the incentive structure’. This was not our objective. Further, as the report purposely adopts a more comprehensive framework based on UNCAC, discussing incentive frameworks would lead to unduly theoretical discussions, based on limited facts.

Still, we agree that examining incentives can be useful – inasmuch as one agrees on the objectives pursued. Our main message here is that the UNCAC calls for collective action - a call so far too little examined. Our analysis is that returning assets to victim countries and national anti-bribery goals can be complementary objectives – as evidenced by the practice in some jurisdictions.

To be more specific, companies that self-report currently already face the risks of enforcement actions in other jurisdictions. We believe that many of the arguments on double jeopardy do not stand up and thus doubt whether our recommendations would significantly influence the incentives for companies to self-report. In fact, US settlement agreements specifically require companies and individuals to cooperate with investigations undertaken by other jurisdictions – which we welcome and identify as good practice.

We are also doubtful that US Department of Justice prosecutors would be less inclined to prosecute if a part of the confiscated funds were returned to victim jurisdictions rather than to the coffers of the United States. Of course, we would have to defer to DOJ to answer that.  However, we note that in several past FCPA cases, victims have received restitution.  Examples include the UN Oil-for-Food related cases undertaken by the United States Attorney’s Office for the Southern District of New York, and the Haiti Telecommunications case in the Southern District of Florida. In both cases, restitution was ordered to the victims - the people of Iraq and the people of Haiti, respectively – and we have no evidence that these cases somehow weakened prosecutors’ resolve to pursue foreign bribery or that they were regarded as anything less than a success because of the restitution. We hope that greater enforcement will lead to companies not engaging in foreign bribery in the first place (rather than considering monetary sanctions as the mere cost of doing business). 

To sum up, we very much look forward to further discussions, and we agree with Professor Stephenson that one needs to consider all consequences of any recommendations- including potential unintended ones. We want the debate to identify these and ensure informed policy making, based on facts. We believe that, when considered from the perspective of UNCAC, the analysis in “Left out of the Bargain” does point out some of the real consequences of the current approaches to settlements.

 

Jacinta Anyango Oduor and Ji Won Park are among the authors of, ‘Left Out of the Bargain: Settlements in Foreign Bribery Cases and Implications for Asset Recovery’, a report by the Stolen Asset Recovery Initiative (StAR). 

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