In recent remarks to the New York business community, you complain that vigorous enforcement of the Foreign Corrupt Practices Act has had little effect on corruption levels “in many areas of the world.” The blame, you argue, lies with other nations which don’t enforce their antibribery laws. When companies from these nations seek business in a third state, they are free to, and too often do, bribe their way to commercial success. Indeed, as you explain, their repeated success provides the states where they are headquartered an incentive not to enforce their antibribery laws.
Using the prisoners’ dilemma game, you show that bribery will only be brought under control when all countries with firms that do business in foreign states agree to crack down on the payment of bribes. And you promise that whenever you speak to counterparts in these countries, you will try to persuade them of the value of “common, cooperative enforcement strategies.” But while the prisoners’ dilemma paradox underscores why all countries where firms that may pay bribes are located must enforce their antibribery laws, it obscures another important step in the global fight against corruption. One that the Commission can do much to advance.
The hypothetical you develop to illustrate the prisoners’ dilemma aspect of the enforcement of national antibribery laws assumes the countries where bribes are paid are helpless, so laced with corruption they cannot enforce their laws against bribe taking by their officials. A 2018 OECD report, however, shows this is not the case. In 20 percent of the cases where a bribe was paid, the OECD found one or more bribe recipients were sanctioned by the government which employed them. The sample was, to be sure, quite small, but it nonetheless shows that states where bribes are paid are not helpless.
The report’s more important finding was the lack of cooperation between authorities in states pursuing bribe payers and authorities in states where the bribe was paid. In no case where a bribe payer was prosecuted did the OECD find the country’s authorities learned of the offense from authorities in the country that had convicted the bribe payer. The most common way enforcement agencies in the bribe recipient’s country had learned about the case was through the media.
The first thing the Commission and the Justice Department, its partner in FCPA enforcement, should do is ensure that authorities in the country where the bribe was paid are alerted when it successfully concludes an FCPA case. The second thing the two should do is keep track of what those authorities do with the information. Have they opened an investigation? Has anyone been charged? Convicted? The third thing the two should do is ensure all this information is publicly available.
A running tab on what a country has done when the United States, or another state for that matter, has determined that an individual or firm bribed one of the country’s officials can help spur action. Legislators, audit agencies, the political opposition, and civil society organizations in the bribe recipient’s country can then ask what authorities are doing about the case and advocate for action when none is being taken.
The World Bank gathered and reported such data from 2010 to 2017. Whenever an investigation disclosed evidence that a company or national of a state was involved in corruption in one of its projects, the Bank “referred” a file with the information it had gathered to the state’s law enforcement authorities. Each year the Bank then reported what the authorities had done with the referral, and while the most common entry was the Bank “is unaware of any action by authorities,” over time entries reporting the officials implicated had been removed from office or prosecuted grew. (That after the Bank received complaints disclosing action taken on its referral reports it stopped revealing what authorities did with the information is likely a sign of the program’s effectiveness.)
Chairman Clayton, there is no reason why the SEC can’t launch a similar effort with FCPA cases. You could then urge your counterparts in other nations to follow, collecting and publishing their own data on what actions countries where a bribe was paid have taken. You were quite right to tell your New York audience that bribery will only be curbed when all states enforce their antibribery legislation. Were the SEC to take the lead in advancing the modest steps proposed here, it would move the world closer to realizing that objective.