Colombia’s Harsh Criminal Penalties for Corruption Are an Illusion. Here’s How To Fix That.

Whenever a new corruption scandal comes to light, many politicians instinctively react with strong punitive rhetoric, and this rhetoric often translates into action, usually in the form of amendments to criminal codes that make penalties for corruption offenses harsher. Latin America supplies plenty of examples of this (see here, here, here, and here.) Yet despite this emphasis on punishment, many corrupt politicians avoid justice altogether, and in the rare cases where they are found guilty, many end up doing only short stints in comfortable detention centers. Consider, for example, Colombia, which has unusually good public data on corruption convictions and sentences thanks to the work by the Anticorruption Observatory of the Secretary for Transparency. According to this data, between 2008 and 2017, criminal courts in Colombia have convicted 2,178 individual defendants for corruption (51.2% for bribery, 23% for embezzlement, and the remainder for other corruption-related offenses), but only about one-quarter of these convicted defendants actually went to prison. Approximately half of these defendants received suspended sentences, while another quarter were sentenced to house arrest. And of those who did go to prison, the time served was only about 22 months on average, much lower than the penalties on the books for corruption offenses. No wonder many Colombians believe the criminal justice system is too lenient.

The reason that actual Colombian sentences end up being so light, despite the penalties on the books being so heavy, is that Colombian law includes a set of provisions that allow for a variety of sentence reductions if certain conditions are met. For example, a defendant who accepts guilt can receive a 50% reduction in his prison term. Inmates may also reduce their prison term through work, with very generous terms: An inmate reduces his sentence by one day for every two days of ordinary work (8 hours of work per day), or for every four hours of work as a teacher. An inmate can also reduce his sentence through in-prison education, with  six hours of study translating into one day of sentence reduction. Furthermore, once an inmate has served 60% of his sentence, he can petition for release for good behavior. 

This excessive leniency needs to be addressed, not only in corruption cases but in all cases. Specifically, Colombia should adopt the following revisions to its criminal laws: Continue reading

The OECD Anti-Bribery Convention Should Ensure a Fair Distribution of Settlement Recoveries

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: Continue reading