The United Nations High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda Financing for Sustainable Development (FACTI) will recommend reforms to tax and anticorruption laws, asset recovery rules, beneficial ownership disclosure requirements, and other international norms to staunch the outflow of illicit funds from developing nations and speed the return of corrupt monies held abroad. A link to the panel’s interim report and instructions for submitting comments is here.
As explained in an earlier post, the panel’s recommendations will draw on background papers commissioned by the United Nations Department of Economic and Social Affairs, the panel’s Secretariat. A link to the papers is here.
Dr. Abiola Makinwa of the Hague University of Applied Sciences authored a very fine one analyzing trends In the investigation and prosecution of foreign bribery cases (here). Her summary of the paper is below.
Current Trends in Foreign Bribery Investigation and Prosecution
My paper examines systemic issues, such as lack of political will, profound information asymmetries, and the overarching general insufficiency of traditional criminal punishment as a response to the ‘true costs’ of corruption. I draw attention to Article 39 of the UN Convention against Corruption which calls for cooperation between national authorities and private sector entities as an integral aspect of anti-corruption enforcement. In practice, such cooperation between alleged offenders and prosecuting authorities may result in an agreement or resolution that reduces eventual sanction or penalty. These agreements are variously referred to as non-trial resolutions (NTRs), negotiated settlements, or structured settlements.
I show in the paper how the use of NTRs in foreign bribery cases is spreading across jurisdictions and is dramatically changing the face of anti-corruption enforcement. While NTRs may be a pragmatic, new mechanism to overcome the limitations of traditional criminal prosecution of foreign bribery, they must not be seen as a get-out-of-jail card or lead to the decriminalization of the grievous crime of foreign bribery. Nonetheless, it is clear that NTRs provide a development-friendly response to foreign bribery enforcement by overcoming historic impunity and lack of enforcement. The most important “development dividend” of NTRs, is, in my opinion, the fact that NTRs shift the focus of anti-foreign bribery enforcement to corruption prevention.
There are 4 KEY arguments that support countries buying into NTR regimes for anti-foreign bribery enforcement.
- The Need for New Efficiencies: Self-reporting and co-operation with authorities is required as a pre-cursor to entering into an NTR. This can help to overcome the profound power and information asymmetries that handicap the best efforts of national authorities to detect and establish corporate criminal or administrative liability for acts of corruption that occur in secret, complex, multi-layered, multi-jurisdictional transactions.
- The Need to Encourage Corruption Prevention: Rather than focusing on historically weak attempts to punish corruption after bribes have been paid to foreign officials and are already doing their work to undermine political, social and economic progress, countries should encourage socially valuable, corruption prevention behaviour by issuing explicit guidelines of what will constitute eligibility for an NTR in their charging policies. There is also a need to build-in a ‘nudge’ towards compliance by adopting international standards for emerging NTR frameworks, and robust management systems, such as the global ISO 37001 Anti-Bribery Management Standard. In addition, technical capacity is built by bolstering the education and training of a professional cadre of anti-foreign bribery enforcement experts, and also in the use of new technologies for anti-bribery management and corruption prevention.
- The Need to Give Corruption Dispute Settlements a Human face: NTRs provide an opportunity to address the ‘damages gap’ where the ‘ultimate victims’ of corruption are often left out in the cold in corruption cases. Fledgling provisions for victim’s compensation, as well as, including funding for anti-corruption initiatives as a ‘line-item’ in NTRs should become global practice. This will give a great boost to funding of anti-corruption reform and programs.
- The Need to develop a Demand-Side NTR Process: Collaboration between supply-side and demand-side prosecutors can create new synergies and lead to the establishment of a demand-side NTR process where the incentive for compliance is not contingent on successfully prosecuting and punishing acts of foreign bribery, but rather, on the extent to which the facilitators and bribe-takers cooperate with demand-side prosecuting authorities.
There are legitimate criticisms of the emerging global NTR framework with respect to rule of law considerations and recidivism. These much be seriously addressed and require judicial oversight and the engagement of civil society to prevent NTRs from themselves becoming vehicles of impunity.
NTR driven corruption prevention ex ante is better than cure by criminal trial ex post as it is profoundly difficult to redress the vicious cycle of corruption, the governance dysfunction, as well as, other consequences of corruption, that are set into motion by the foreign bribe-giving. This reality is especially devastating in developing countries, and, is made even more urgent in a world reeling from the devastating effects of COVID19. It is hoped that the FACTI Panel will initiate a policy framework to leverage NTRs for the sustainable development agenda, and, in addition, set into motion the groundwork for demand-side NTRs.
GAB | The Global Anticorruption Blog 
While FACTI’s recommendations are geared towards staving off corruption in developing nations, I wonder to what extent the US (namely the Trump administration) would be found to be in violation of these new guidelines. The reporting on Trump’s tax returns seems to indicate that the US may not meet FACTI’s new tax law recommendations or beneficial ownership disclosure requirements.
*This comment is an excerpt from a paper written for a Law School consortium on Global Corruption
As Dr. Makinwa noted, corporations must have compliance programs that meet certain criteria to be eligbile for a NTR. The very fact that a private actor is seeking leniency for a corrupt act when an internal compliance program was already in place goes to show that these frameworks are not preventing or deterring corruption.
Although U.S. prosecutors retain discretion, the use of NTRs empowers corporations. So long as they abide by a set of pre-existing rules, corporations remain intact. Financial sanctions and penalties have not proven to deter companies from engaging and profiting from foreign bribery schemes. These deferred prosecution agreements are offered almost exclusively to corporations. In turn, this tells the public that corporations are too big to jail, and too big to fail. The proliferation of NTRs diminishes, and even “erodes the rule of law.” Dr. Makinwa addresses issues regarding recidivism. She presents that education and training encourages compliance and prevention over recidivism. I am not persuaded by this. Compliance programs are a preqrequsuite for NRT eligibility. Yet, 63% of (38 ) repeat offender corporations have received at least two DPAs or NPAs. After this, these repeat offenders were prosecuted. More than half of them plead guilty to subsequent crimes. The very existence of repeat offenders severely undermines the integrity and deterrence power of NTRs.
We are not seeing this widespread use of NTRs in the developing world. Ironically, it is here that NTRs would be most useful in breaking the “vicious cycle of corruption.” They have great potential at bringing reform and increasing and political efficacy and participation.
However, it will take a lot of work to actualize upon this potential. Offenders do not have much incentive to settle or self report “in a system that is generally unable to bring cases to a conclusion.” For example, in the Czech Republic, no corporation or individual has been sanctioned under a foreign bribery offence. The state believed that alleged offenders lack interest in the procedure because they expect and hope for acquittals. This lack of enforcement nullifies any perceived risks of sanctions or collateral consequences for foreign bribery. In turn, this neutralises the benefits that an alleged offender can obtain from an admission or agreement on guilt.
Other mechanisms must be strengthened for NTRs to be viable in the developing world. In order to proliferate the use of NTRs, many states must strengthen their foreign bribery enforcement mechanisms. This may take some time, however cooperative multijurisdictional efforts seem to be a helpful way forward. Once this occurs, we may see offendors seeking NTRs because they offer many practical benefits for the state. These include increased efficiency, lower costs, and cooperative efforts across different affected states. There are numerous benefits private parties as well. They avoid jail, reputational damage, and reduced fines
The lack of remedies for victims is alarming. Dr. Makinwa’s points on a damages gap and third party beneficiary clauses are very persuasive. Sleeping third party beneficiary clauses give victims a voice. This point resonated with me because in many instances, money is not enough. Victims deserve to have their voices heard during these disputes and resolutions. Requiring this in government procurement contracts furthers enhances trust and efficacy in the system because parties would have to name beneficiaries of the contract. These procurement agreements are lucrative, yet they affect the public at large. Today, it is necessary to “give bribery a human face” as Dr. Makinwa suggests. This is particularly important in the United States, where the Department of Justice is concerned protecting consumer welfare. By holding corporations accountable in this way, this indicates that they are not above the law as NPAs and DPAs suggest they are.