In December 2016, the United States, Brazil, and Switzerland announced that they had concluded plea agreements with the Brazilian construction firm Odebrecht and its affiliate Braskem, in which the companies admitted their culpability in extensive bribery schemes involving upwards of US$800 million in bribes paid in a dozen countries—mainly though not exclusively in Latin America—and agreed to pay approximately US$3.5 billion in penalties to the US, Brazilian, and Swiss authorities. But with the exception of Brazil, none of the countries where the bribes were actually paid were entitled to receive any compensation under these plea agreements.
In fairness, the plea agreement with Odebrecht did require the company to cooperate with foreign law enforcement and regulatory agencies in any future investigation into related misconduct by Odebrecht or any of its current or former officers, directors, employers, or affiliates. The plea agreement further required Odebrecht to truthfully disclose all non-privileged factual information, and to make available its officers, employees, and affiliates, to foreign law enforcement authorities. Additionally, under the terms of the plea deal Odebrecht consented to US federal authorities sharing with foreign governments all documents and records that the company had provided to the US authorities in the course of the investigation into Odebrecht’s violation of US law.
These well-intentioned provisions seem to have been included specifically to ensure that enforcement agencies of other countries could pursue their own actions against Odebrecht and its officers. But the plea agreements did not create a formal mechanism that enables foreign enforcement agencies to ask the DOJ, Swiss authorities, or Brazil to impose sanctions for breach of these conditions. If Odebrecht fails to fully cooperate with foreign enforcement agencies, that foreign government’s only recourse would be to try to convince (presumably through informal channels) the US, Brazilian, or Swiss authorities to sanction Odebrecht for breaching the plea agreement. But it’s unlikely that those governments will have much appetite for assessing these claims of non-cooperation. Furthermore, even if other countries do bring their own cases, the penalties imposed by the US, Switzerland, and Brazil were so high that Odebrecht simply doesn’t have the money to pay sufficient fines to other countries, at least in the short run.
The Odebrecht case may be unusual in its size, but it is not unique. It is therefore useful to reflect on whether the international community should adopt new mechanisms governing how the fines or reparations recovered in settlements of cross-border bribery cases are distributed, in order to ensure proportionality and fairness, particularly to victim nations. The most promising way forward would be to amend the OECD Anti-Bribery Convention.The Convention already requires (in Article 4) that Convention parties shall consult with each other to determine which is the most appropriate jurisdiction for prosecution, and also requires (in Article 9) that Convention parties provide, to the fullest extent possible, “prompt and effective legal assistance” to any other Convention party concerning investigations and proceedings within the scope of the Convention. But the Convention does not explicitly address other forms of cooperation, such as ensuring fairness in the distribution of monetary recoveries. The Convention should be amended to include additional language that covers this topic, as follows:
- First, the Convention should require that, to the extent possible without hampering the effectiveness of enforcement actions, a Convention party investigating allegations of foreign bribery should alert any other Convention parties whose interests are implicated, and should enter into discussions with those parties regarding a fair distribution of any fines, penalties, or other monetary recoveries that might result from the enforcement action. Furthermore, a guiding principle for these discussions should be that the distribution of the money recovered should take into account the extent to which the bribery has harmed each affected state, as well as the impact that the final outcome of the investigation will produce in each jurisdiction.
- Second, the Convention should make provisions like those that appear in the US-Odebrecht plea deal mandatory—that is, the Convention ought to require that whenever one Convention party settles a foreign bribery case, the settlement agreement must include provisions that require the defendant to fully cooperate with investigations by other Convention parties affected by the defendant’s misconduct. But this alone is insufficient: The Convention should also require that such settlement agreements include provisions that ensure the right of any other affected Convention party to file a formal request that the settlement agreement be voided for non-compliance with these mandatory cooperation requirements.
- Third, and most generally, the Convention ought to require fair and proportional reparation for the foreign bribery. This obligation further implies that any one settlement agreement ought to ensure that the fines or penalties imposed do not exhaust the defendant’s resources, leaving insufficient funds to pay appropriate penalties to other parties.
Such reforms could have a profound impact on the efficacy, efficiency, and fairness of the fight against foreign bribery worldwide, and would do much to safeguard the credibility and legitimacy of the Convention and of foreign bribery investigations. Persuading OECD members, especially leading supply-side enforcers like the United States, to embrace these reforms would admittedly be difficult, though some of these reforms might be made more palatable by incorporating appropriate qualifying language—particularly language clarifying that the obligations apply only when compliance would not hamper the effectiveness of enforcement actions. But while achieving the necessary consensus required to amend the OECD Convention is a daunting task, it should be on the agenda. Reforms like those sketched above are all the more urgent given the increasing internal pressure from domestic stakeholders in many Convention parties; these stakeholders are understandably questioning the imbalance between the fines that companies have to pay in some countries when compared to what they have to pay in the