Earlier this month, the OECD Working Group on Bribery released its Phase 4 Report on U.S. compliance with the OECD Anti-Bribery Convention. For those readers unfamiliar with the process, this report is part of the peer monitoring system that the OECD Convention establishes for promoting adherence to the Convention. (The Convention lacks “hard” sanctions, though in extreme cases it’s possible a country could be expelled. Rather, the Convention relies on “soft” peer pressure, facilitated through the extensive and detailed investigations and reports carried out by the Working Group.) The lengthy and detailed report, produced under the leadership of experts from the UK and Argentina, assesses U.S. performance on a range of issues related to the prevention and prosecution of foreign bribery. For purposes of this post, I want to zero in on one narrow but important issue, which gets just over a couple of pages in the report: whether U.S. enforcement of the Foreign Corrupt Practices Act (FCPA) is improperly influenced by national political or economic interests.
This question is important, both legally and politically. As a legal matter, Article 5 of the OECD Convention explicitly states that decisions regarding the investigation and prosecution of foreign bribery offenses “shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.” The OECD has in the past raised concerns about Article 5 violations by other member states, including the United Kingdom, and, more recently, Turkey and Canada. More broadly, as a political matter critics have alleged that the U.S. government’s enforcement of the FCPA is biased against foreign companies, and have sometimes gone so far as to accuse the U.S. of deliberately designing FCPA enforcement actions so as to secure economic advantages for U.S. companies at the expense of foreign rivals. A particularly sensationalistic version of the claim appeared in a book written by a French executive who was convicted and jailed on FCPA charges; that book became a best-seller in China, where the view that U.S. prosecutorial decisions are made to advance national economic interests is widespread. But the notion has been around for a while. (To give one personal example, last year I had a conversation with a journalist from a leading Brazilian news organization who asked for my views on the claim, which he’d apparently heard from several Brazilian sources, that the U.S. FCPA prosecution against Odebrecht was motivated by a desire to eliminate or cripple a company that competed with U.S. firms.) The U.S. government may have further contributed to this narrative in a 2018 press release on the Department of Justice’s “China Initiative”; that press release listed, as one component of the initiative, the “identif[ication of FCPA] cases involving Chinese companies that compete with American businesses.”
While it may be that the U.S. officials charged with enforcing the FCPA have their own biases and blind spots, the strong claim that the FCPA was some kind of a neo-mercantalist/neo-protectionist tool always struck me as far-fetched. (And this is true notwithstanding the FCPA passage in the China Initiative press release, which seemed more like something that got thrown in without much thought or vetting, rather than a substantive change in policy.) And it seems that the OECD Bribery Working Group’s review team came to the same conclusion. As the report states, “the lead examiners … have found no basis to consider that any FCPA decisions have been made for improper reasons.”
That conclusion won’t stop the conspiracy theorists from continuing to conspiracy theorize, but I hope it gives legitimate media organizations and respectable commentators cause for caution before repeating uncritically the claims that FCPA enforcement decisions are based on improper political or economic calculations. Now, one must of course acknowledge that while the OECD Bribery Working Group’s reviews, though probing and relatively intrusive by the standards of these sorts of international peer evaluation mechanisms, don’t have the investigative tools to uncover secret plots or implicit bias. The report therefore can’t, and doesn’t purport to, definitively debunk claims of bias in FCPA enforcement. (Indeed, the report is careful to phrase its conclusion in terms of having “found no basis” to conclude that there’s any improper bias or influence on FCPA enforcement, rather than stating definitively that no such improper influence exists.) Still, the OECD report’s finding on this point is worth taking seriously, for a couple of reasons:
- First, while one might think that these OCED reports tend to be superficial and forgiving, that is not in fact the case. As noted above, the OECD Bribery Working Group has raised serious Article 5 concerns regarding foreign anti-bribery enforcement (or non-enforcement) in other countries, including Turkey, the UK, and Canada. More generally, the OECD Working Group on Bribery has developed a good reputation for frankness and a willingness to criticize countries’ performance in blunt terms. And the lead examiners consulted widely, including with outside parties who could reasonably be expected to be sharply critical of the U.S. government. So the non-finding regarding improper political interference can be treated as meaningful.
- Second, it’s worth noting the principal reasons why the OECD reviewers concluded that there was no evidence of improper political interference with FCPA enforcement: In addition to the reports of both government officials and outside experts, the reviewers noted the presence of internal mechanisms that ensured the participation of career prosecutors in key decisions, and the strong norms of professional integrity that would likely lead a career prosecutor to complain or resign if a political appointee insisted on a mandating a decision in an FCPA matter for an inappropriate reason. As the report noted, in other (non-FCPA contexts), career prosecutors had resigned to protest improper political interference. The fact that nothing of this sort has ever occurred in the FCPA context provides a reason to doubt such interference has in fact occurred.
I might embellish a bit on that last point to add, or make more explicit, certain additional considerations: The career prosecutors in the DOJ, and their counterparts in the SEC, are not foreign policy people, nor are they directly concerned with U.S. trade or competitiveness. Their professional identities and career prospects are bound up with “getting the bad guys”—winning cases against companies and individuals who break the law. Even the political appointees in these agencies (the ones with direct day-to-day supervisory responsibilities over FCPA enforcement) tend to be lawyers first and foremost. They’re not the sort of people who will tend to think about how winning a given case will affect U.S. competitiveness or geopolitics. They might care about securing big settlements, but that’s not because they’re trying to raise revenue for the U.S. government—it’s because a big headline-grabbing settlement amount confers high status and reputation. (A big settlement is kind of like a trophy, for better or worse.) As a matter of institutional structure, these agencies (chiefly the FCPA units at the DOJ and SEC) aren’t set up for regular input from, for example, the State Department or the Commerce Department with respect to individual cases. And if there were attempts by those other agencies, or the President, to influence the disposition of a particular FCPA case in light of diplomatic, political, or economic concerns, such intervention would be so out of the ordinary that—as the OECD Report concludes—one would expect resignations, or at least leaks to the media. But we’ve never seen any such thing in the FCPA context.
Again, nothing I’ve said, and nothing in the OECD report, disproves the possibility that the officials in charge or FCPA enforcement might be biased. They’re human beings, after all, and all of us are susceptible to various forms of bias. But the strong claims that political or economic interests have improperly influenced FCPA enforcement decisions—to a degree that would raise concerns about compliance with Article 5 of the OECD Convention—are not supported by any of the available evidence. I hope (though do not necessarily expect) that the OECD’s careful and considered rejection of that hypothesis will lead other commentators to treat claims of that nature with greater skepticism.