The United Nations Convention Against Corruption requires state parties to open their courts to those damaged by corruption. Under article 35, states that have ratified UNCAC must provide victims of corruption a right to “initiate legal proceedings against those responsible for that damage … to obtain compensation.” According to the United Nations Office on Drugs and Crime, virtually all 187 states parties do. Its 2017 review of the convention’s implementation found article 35 was “one of the least problematic provisions of the entire convention.” “All but seven of the reviewed states,” it reported, “have adopted measures to fully or partly implement article 35.”
The UNODC’s conclusion comes from a reading of the parties’ laws. While only a handful of states have enacted special legislation governing recovery of damages for corruption, in the remainder national authorities assured UNODC that corruption victims could recover damages “under the general principles of civil (contract or tort) law.” But research by UNODC, the UNCAC Civil Society Coalition, Transparency International, and surveys of practitioners belies these assurances. It finds that in most nations few if any corruption victims have sought damages for injuries suffered.
For a UNODC/Stolen Asset Recovery Initiative project, I seek answers to two questions. One, is the research correct? Are there really only a few cases where corruption victims have been awarded damages? My preliminary analyses of U.S. data shows only some 30 arising from public, as opposed to private, corruption; given its size, the amount of corruption, and low barriers to suit, one would expect more. What about other states, especially larger, wealthier ones?
Two, if indeed there are few corruption damage actions in any jurisdiction, what explains the paucity? Why, despite the prevalence of corruption, the damage it has wreaked, and the worldwide attention it has drawn, have so few corruption victims sought redress. I hypothesize three factors are to blame: courts’ narrow reading of legal doctrine, especially that governing causation for harm (here); shortcomings in procedure, and in some countries the threat violent retaliation.
But these are my guesses, based largely on my experience as a lawyer in a wealthy common law jurisdiction and second hand reports from those in other nations. Readers’ thoughts and comments solicited. Cases and commentary in any language Google translate reads most welcome.
In the FCPA context, it is debatable whether there are actually specific, identifiable victims in most FCPA enforcement actions. Indeed, in the words of the Deputy Solicitor General in a recent Supreme Court argument “There Really Is No Obvious Universe Of Individual Victims From An FCPA Violation.”
Moreover, in other instances in which there are “victims” other legal elements must be satisfied.
Many thanks. What a turnaround from earlier DoJ policy. I found five cases where a victim was recognized in an FCPA case, all governments that had employed the bribe taker —
• United States v. Kenny International Corp., No. Cr. 79-372 (D.D.C. 1979) (plea agreement) ( $337,000 paid to the government of the Cook Islands, the amount of financial assistance provided to a political party in return for promise it would continue a government contract with defendant if it won election).
• United States v. Napco International, Inc., No. Cr. 3-89-47(1) (D. Minn. 1989) (plea agreement) ($140,000 paid to U.S. Defense Department to be credited to Niger’s Foreign Military Sales account as compensation for bribery scheme involving Nigerian officials).
• United States v. F.G. Mason Engineering, Inc., No. B-90-29 (D. Conn. 1990) (plea agreement) ($160,000 payment plus discounts on future sales to compensate German government for bribing one of its military intelligence service officers).
• United States v. Diaz, No. 20346-CR-JEM (S.D. Fla. 2009) (plea agreement) (defendant ordered to pay $73, 824 to the government of Haiti, its fee for serving as intermediary in bribery scheme between government officials and U.S. firm).
• United States v. Green, No. CR 08-00059(B)-GW (C.D. Cal. 2010) (conviction) (DoJ sought compensation of $1.8 million, total bribes paid Thai officials; court reduced to $250,000 without explanation).
Cases are discussed in my chapter in Legal Remedies for Grand Corruption,
These are indeed interesting findings. In Peru I would guess that victims would never even try to seek damages because they think it would be a waste of time. First, corruption in general is so endemic and not necessarily properly punished. Second, the judicial system which is where in Peru these victims would need to bring their claims are corrupted as well and even when you can find a specific non-corrupt court it would take years to get a decision. Third, since victims look at a favorable decision as a very remote thing, they don’t have any incentive to pay the fees and the attorneys to bring the claim.
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