Going After the Bribe Takers: Step One

Last week I wrote about the gap between prosecutions for transnational bribe paying and transnational bribe taking.  Even after a bribe payer in one state has been convicted or pled guilty, most countries where the bribe was paid have shown little interest in investigating who took the bribe – an often easy inquiry given the evidence unearthed in the bribe payer case.  I also noted that in almost every instance the bribe was paid by a firm in an OECD country to a government official in a developing state.

If the demand for bribes is not curbed while the risk of prosecution for paying them remains, OECD-based firms are likely to become more and more reluctant to do business in developing states, a trend already evident in their declining share of World Bank financed contracts.  The winners: corrupt officials in developing countries and firms in nations that condone corruption.  The losers: honest firms and the citizens of poor nations, the former shut out of promising markets and the latter denied the products and services these companies offer. How to reverse the drift toward this unhappy state of affairs?

The first step is publicity.  Some bribe takers may be powerful enough to quietly kill any effort to prosecute them but not strong enough to do so under the klieg lights of public scrutiny.  Publicity will also prompt opposition parties, civil society groups, and the media to ask uncomfortable questions.  Why hasn’t an investigation been opened after a foreign company admitted bribing a local official?  Or why has an investigation languished for so long with no apparent progress?  Outlaw states like North Koreas may be immune to such pressures, but more democratic states are not.  Outside pressure can also help those in anticorruption agencies and prosecution services counter directions to refrain from opening cases.

In every bribe-paying case in an OECD country that ends in a conviction or admission of guilt the public record will show where the bribe was paid and in some instances provide sufficient detail to identify if not who took the bribe at least where he or she worked.  A local anticorruption NGO could summarize what each case reveals, and investigative reporters would have a field day trying to find out who took how much and why action has been delayed or blocked.  Civil society could regularly report the progress or lack thereof in prosecuting bribe takers.

The interests of OECD businesses and anticorruption activists are in full accord here, the businesses want a level playing field in developing country markets, the activists less corruption.  An alliance seems obvious: the businesses provide financing and some data, the activists fill in the rest of the data and the public pressure.  What is the delay?

10 thoughts on “Going After the Bribe Takers: Step One

  1. Rick,

    I’m looking forward to your next post on this, because the question I was left with, after reading the post, was exactly the question you ended with: If there are such clear opportunities for media, civil society, opposition figures, etc., to use the admissions of a bribe payer in an FCPA (or FCPA-equivalent) settlement in order to pressure the governments in the bribe-paying countries to go after the bribe-taking public officials, why don’t we see more of this already? I have a few conjectures:

    First, it’s possible that you may be overestimating how much easier an FCPA settlement makes a subsequent action against the bribe takers. In many FCPA cases the corporate defendant admits to a books & records violation (trying as hard as possible to avoid the B-word in the settlement), and even when there’s a bribery admission, it doesn’t always name names. That’s not a complete explanation, because many settlements do in fact provide detailed information about bribery schemes and transactions, but it does suggest that the number of missed opportunities may not be quite as large as it seems.

    Second, it might be that media/political pressure is not enough to secure actual convictions – for reasons both good and bad.

    That leads to a question, and I’m curious if you or others know the answer: In the cases where there’s a supply-side settlement, with admissions sufficient to identify the (likely) bribe-taking public officials, is it more often the case: (1) that journalists, activists, etc. try to put pressure on the government to take action against the bribe takers, but in the end nothing happens, or (2) that journalists and activists don’t actually do much with the information revealed in these settlement documents? Your post seems to imply answer #2, and reasonably asks why that would be the case. But what if answer #1 turns out to be the case much of the time? Does your approach to dealing with this problem depend on which of these explanations is more likely?

  2. Unfortunately, it is not always as easy as it seems. It requires a strong commitment to cooperate between the state of the bribe payer and of the bribe taker. Sometimes, evidence collected will not be shared until the prosecution in one state ends. In other instances, the evidence collected in one state will not meet the requirements of the other… These issues combined with other issues such as the relatively short statute of limitation in some countries, high costs, politics, unfortunately do not favor the prosecution of the bribe takers in those cases… However, this is indeed an interesting topic which should be further discussed and addressed.

    It also brings to mind an earlier post on the pros/cons of the expansion of the OECD Convention to other countries. The dynamics of developed/developing nations in the cooperation on the fight against corruption has been particularly discussed in the MESICIC (the Inter-American Convention Against Corruption Follow-up Mechanism) as well as within the UNCAC.

    One interesting case to be analyzed is that of former Costa Rican President, Miguel Angel Rodriguez, who was sentenced in 2011 to five years in prison for taking bribes from Alcatel, but the sentence was revoked, with a court citing statute of limitations and errors in the handling of evidence during the investigation… Food for thought…

    • Mr. Azevedo’s comment highlights difficulties in prosecution, and I think it’s spot-on. But I’m still hopeful, at least in the context of democracies, for another reason: either the bribe takers are (1) elected officials, or (2) unelected bureaucrats under the power of someone in (1). In either case, journalistic investigation could lead to evidence that’s not court-worthy, but IS sufficient for the public to punish those in (1), or demand those in (1) fire (2), otherwise the bribe-taking could be used as an opposition party in an election.

  3. Interesting post! Is it plausible to think that some of the reason activists aren’t doing as much as they could with information from settlement documents relates to the power dynamics of a wealthy (usually foreign) corporation bribing a local official?

    The bribe taker is a crucial part of the corruption chain, but perhaps activists and organizations — particularly the locally based ones — don’t view the incentives and trade-offs facing the corporation and the local official as equal. Maybe they (consciously or not, rightly or not) assign blame differently. This point is not necessarily of any legal consequence, but may help explain why activists who are fully integrated into local society focus attention on the wealthy foreign actor rather than the local bribe taker.

  4. Matthew, I think the reason not much happens in the countries where bribe takers reside after a bribe payer has admitted to bribery may be more a question of not knowing about the bribe-paying case than either answer you suggest: 1) activists pressure the bribe recipient’s government to act but it does not, or 2) activists know about the case but don’t do anything with the information. The press releases usually don’t say much beyond company X admitted to paying a bribe or bribes in country A, and by the time they get re-written into news stories or short media reports they say even less.

    To be sure, an enterprising journalist or activist — with a fast internet connection and a subscription to PACER, the U.S. government’s system for accessing federal court filings — could learn a great deal more about the details of the case. But that would take not only a connection and a subscription but time and effort to sort through what, even to someone in the U.S., can be some lengthy and confusing documents. Go to the documents issued in the Siemens case to see what I mean. My suggestion is to spoon-feed the information to civil society and journalists. In a past life I was in contact with reporters for the U.S. prestige media and spoon-feeding them was certainly in order.

    Also remember that the project I suggest is not about the actual conviction of someone for taking the bribe a foreign company admitted to paying. It requires only that action be taken – an investigation be opened or perhaps a parliamentary hearing be held. My impression from reading news accounts in several of the bribe recipient countries in the wake of the resolution of a bribe paying case is that nothing happens.

    Luiz, I know about the problem of evidence sharing. Authorities in the countries prosecuting the bribe payer are reluctant during the course of their investigation to disclose information to authorities in the country where the bribe was paid — for reasons both good and bad. But I have yet to read the plea agreement and supporting documents in an FCPA case that didn’t provide law enforcement in the country where the bribe was paid enough information to at least begin an investigation. Remember too that in many plea agreements in the U.S. the bribe payer is required to cooperate with investigators from other countries.

    Michael, I have got to think that a company would not admit to an FCPA violation, or to a violation of a similar statute in another OECD country, unless it actually did pay a bribe. And that would mean it would have records and witnesses who could testify to payment. So one would think that if authorities in the state where the payer lived pressed, they could come up with evidence sufficient for a court proceeding.

    Addar, like Matthew and Luis you raise a series of interesting empirical questions. Questions that we will only know the answer to if someone actually picks up on my suggestion. I would think that if a powerful international NGO were to create a master list of cases and issue reports on a regular basis charting each country’s progress in following up on bribe paying cases the power dynamic would be different. My own, perhaps biased exposure, to activists in states where bribes are paid is that they really, really resent the bribe taking – more so, or at least equally –with the payment of bribes.

    • Interesting. If your hypothesis is right, then it might present a great opportunity for an organization like Transparency International — with a global reach and many national chapters — to take the lead. For example, TI-USA or TI-UK could make a point of following closely settlements under the FCPA and the Bribery Act, respectively, reading through all the documents, and then forwarding the relevant information to TI chapters in the demand-side states, who could then spoon-feed the info to local journalists, opposition figures, etc.

      Any readers out there from TI interested in giving this a try? If Rick’s right, then it seems like this is an opportunity to take advantage of the organization’s global reach to have a real impact, at least in some cases.

      But I guess I’m still a bit skeptical that these supply-side settlements don’t generate more action on the demand side is not a lack of sufficient information about the cases.

  5. This is a very interesting discussion. I believe there are two other explanations for why not much happens in the countries where bribe takers reside after a bribe payer has admitted to bribery–both regarding prosecution and activism.

    First, regarding prosecution, as Michael Pierce alluded to, there is often no political will to open prosecutions or hearings as these cases often involve public officials with powerful political ties. In many developing countries that don’t have well-established judicial systems, prosecutors can be easily bought off making it hard for cases to be brought. In addition, prosecuting an anti-corruption case is often complex and requires resources as well as legal skills. In many developing countries, prosecutors do not have these skills because of the rarity of bringing official anti-corruption charges and because of a lack of training in this area.

    Second, regarding the lack of activism about bringing these cases, I think this has to do mainly with apathy. Unless corruption has been unusually egregious, people living in societies where corruption is part of their daily lives may not actually be outraged to see evidence of something they already know published in the newspapers. The vastness of the problem, and recognition of the limits of official prosecution/hearings, may also be discouraging factors.

  6. I think one interesting thing missing from this discussion is this: oftentimes the original enforcement authority is eager to share the relevant evidence and information with the foreign enforcement authorities. The U.S. government, for instance, generally will gladly share evidence with foreign enforcement authorities through an MLAT request or comparable mechanism (assuming such sharing does not compromise a sensitive ongoing investigation). Additionally, meetings of the OECD Working Group on Bribery plenary sessions and other organizations like GRECO often provide back-channel opportunities for authorities to share intelligence and information across borders.

    The problem in my mind isn’t one of sharing evidence or information (at least for the leading prosecutors of transnational bribery); instead, the problem is on the receiving end: either the message is getting lost in translation or the demand-side countries just don’t want to hear it. To see more demand side prosecutions, the mechanism of how this information is provided to foreign enforcement authorities (and to whom it is communicated) may need to be reevaluated, and further efforts will have to be made to convince countries to prosecute bribery on the demand side.

  7. Pingback: Can A Corporate Settlement That Names Names Be Grounds For A Defamation Suit? | Anti Corruption Digest

  8. Pingback: China Should Go After Bribe Takers in FCPA Cases | GAB | The Global Anticorruption Blog

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