As the United States continues to settle Foreign Corrupt Practices Act (FCPA) cases with corporate defendants for large sums, the issue of whether the U.S. and other “supply-side” enforcers should transfer a portion of these settlement proceeds to the countries where the bribery took place has continued to attract attention and discussion. (This question is often framed as whether the U.S. should “return” some of these settlement proceeds to the “victim countries,” but that formulation is highly misleading, both because criminal fines were never the property of another government, and so cannot be “returned,” and because in many cases referring to these countries as “victims” is problematic, to put it mildly. So I’ll refer to this as “transferring settlement proceeds to demand-side countries.”) The push for transferring settlement proceeds to demand-side countries has gotten a bit more traction over the past year, and has become something of a talking point for certain demand-side governments, especially those in Africa, along with supporting NGOs. So, for example, a Nigeria-sponsored resolution at last year’s UN Convention Against Corruption Conference of States Parties (Resolution 6/2) called for “urgent attention” to the (utterly bogus and misleading) statistic that although US$6.2 billion has been recovered through settlements in foreign bribery cases, only 3% of this amount “has been returned to States whose officials were bribed and where corrupt transactions took place, which is a key aim of chapter V of the contention,” and further called on states that use settlements to conclude foreign bribery cases to “give due consideration to the involvement of the jurisdictions … where foreign officials were bribed.” (The original proposed language was far stronger, “noting with concern the prevailing narrow interpretation of the terms ‘proceeds of crime’ in settlements … that excludes … fines in order to avoid such proceeds from being returned to States and, by so doing, using settlements to create an artificial category of victims of corruption, thereby reducing the potency of chapter V of the Convention.”) One sees this push in several of the country statements coming out of last month’s London Anticorruption Summit, especially those of Nigeria and Tanzania.
Unsurprisingly, the United States has resisted these calls. Generally, U.S. officials have done so (at least in public) tactfully and diplomatically, emphasizing the U.S. government’s commitment to helping the victims of cooperation, its willingness to work with other countries to cooperate in ongoing investigations and improve the mutual legal assistance process, etc. But I’m beginning to sense a growing undercurrent of frustration on the U.S. side, as an increasing number of demand-side countries and NGOs are making the call for transfer of settlement proceeds to demand-side governments (which, again, they often characterize as “returning assets to victim countries”) a central theme of their presentations and diplomatic efforts. (And perhaps, I should acknowledge, some of the frustration I’m sensing is a reflection of my own skepticism – see here, here, and here.) Now, when I say I sense growing frustration or irritation on the U.S. side, I should be clear that I’m speculating. Though I’ve met a few officials from the U.S. Departments of State and Justice, and Treasury who work on corruption issues, I’m certainly no insider, and nothing in the rest of this post should be interpreted is reflecting any actual conversations or statements from current or former U.S. government officials, because it doesn’t. Nor should this be taken as fully reflecting my own views, even though part of what I’m going to write below is generated by introspection.
With those caveats, I’d like to try to imagine what’s going on in the heads of U.S. government officials as they smile politely while listening to the sorts of criticisms I noted above, and when they express, in measured language, their reservations about the proposals that the U.S. transfer FCPA settlement proceeds to demand-side countries. Just for fun, and to be a bit provocative, I’ll present this as a kind of unhinged rant – the sort of thing I imagine that a hypothetical U.S. official’s id might be screaming internally, behind the polite smiles and diplomatic language imposed by her superego. The imaginary rant, in response to demands that the U.S. transfer FCPA settlement proceeds to demand-side countries, might run something like this: Continue reading