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Today’s guest post is from Bolaji Owasanoye, the Chair of Nigeria’s Independent Corrupt Practices and Other Related Offenses Commission, and a member of the UN High-Level Panel on International Financial Accountability, Transparency and Integrity (the FACTI Panel).
A few weeks ago, Professor Matthew Stephenson published two posts on this blog (see here and here) that offered some reactions to the report and recommendations of the UN High-Level Panel on International Financial Accountability, Transparency and Integrity (the FACTI Panel), on which I served as a member. I want to first thank Professor Stephenson for his serious discussion of the report. Critical engagement on the Panel’s recommendations is very welcome, and indeed Panel members are keen to continue engagement with researchers, policymakers, and the wider public in order to accomplish our shared purpose: strengthened systems for financial integrity. Now isn’t the time for the lowest common denominator approach but instead for governments to be ambitious and thus unlock the large resources currently being drained aggressively from public finances.
Professor Stephenson generously concluded that “the FACTI Panel has done us all a useful service by providing a document that can serve as the focus for discussion and debate over this vitally important topic.” That said, on a few recommendations he called for more detail, and on an even smaller number he found what he considered as faults with the recommendations. It is on only some of these final few, and within my own area of expertise, that I want to respond to points Professor Stephenson raised. In particular, I want to explain my understanding of the Panel’s thinking in three areas: standards for settlement in bribery cases, strengthening asset recovery, and the use of escrow accounts.
Today’s guest post is from Lucinda A. Low and Shruti Shah, respectively Acting Chair and President of the Coalition for Integrity, a U.S. based non-governmental organization focused on fighting corruption. The opinions expressed here are those of the authors, and should not be attributed to the organization..
The United States has a long history, across administrations of both parties, of showing leadership internationally in the fight against corruption. The passage and enforcement of the Foreign Corrupt Practices Act (FCPA) has served as an example for other countries to adopt their own transnational anti-bribery laws. Additionally, the United States has championed international anti-bribery efforts in multilateral organizations and worked to build coalitions to root out all types of corruption. For the last several years, however, U.S. has faltered. In order to reestablish the U.S. as a global leader against corruption, and to get its own house in order, the Biden Administration and the new Congress should embrace an ambitious agenda that includes the following elements: Continue reading
Last week a Swedish appellate court issued an opinion confirming the anticorruption community’s worst fear. The decision stems from a 2017 U.S. prosecution of Swedish telecommunications giant Telia for bribing the Uzbekistan president’s daughter. The evidence showed Telia’s then CEO and two other executives countenanced the bribery, and Swedish prosecutors promptly charged the three with bribing a foreign official. To the surprise and shock of both prosecutors and observers, all three were acquitted at a 2019 trial (here).
It was widely assumed the Stockholm Court of Appeals, the nation’s oldest and most prestigious appeals court, would reverse the trial court’s decision. Instead, in a February 4th opinion it affirmed it.
UPDATE. Chief prosecutor Kim Andrews termed the decision “offensive,” telling OCCRP in a statement that the decision means “Swedish companies can jump queues” by bribing, that Sweden “is failing to live up to its international obligations, . . . and that we leave it up to other European countries and the United States to clean up our mess.”
Former South African MP Andrew Feinstein once asked a senior Swedish official about foreign bribery. His reply:
“All bribes are illegal but if a Swedish company paid bribes in another country, I can’t say we would do anything about it.”
The Telia acquittal is the latest sign that this attitude continues to prevail. That the anticorruption community’s worst fear about Sweden is true. That to protect the export earnings of Swedish multinationals and to shield the Swedish elites who run them, the government will condone the bribery of foreign public officials no matter how egregious. Indeed, the first and still most appalling example of the lengths Sweden will go to derail a foreign bribery investigation was in a case that implicated its now prime minister.Continue reading
The OECD Antibribery Convention requires parties to impose “effective, proportionate, and dissuasive criminal penalties” on those found guilty of bribing an official of another nation. As GAB readers know, most prosecutions for foreign bribery end not with a trial but with a settlement (here). GAB readers also know that a vigorous debate has ensued on this blog (here and here) and elsewhere (here, here and here) as to whether these settlements have met the “effective, proportionate, and dissuasive” test. In response, and with the assistance of the private bar, the OECD has been developing guidelines to help prosecutors and defense counsel ensure that future settlements do.
GAB is delighted to welcome this guest post by Peter Solmssen, a leader in this effort from the private bar, in which he describes where the guidelines project stands. As General Counsel of Siemens AG, Mr. Solmssen negotiated its settlement of foreign bribery cases with, among others, the Federal Republic of German and the United States. He now chairs the Non-trial Resolutions of Bribery Cases Subcommittee of the International Bar Association (IBA).
Work on international guidelines for the settlement of foreign bribery cases is accelerating. The IBA made its latest submission to the OECD Working Group on Bribery January 22. It there urged the Working Group to move quickly with its anticipated international guidelines on settling transnational bribery cases and to resolve those aspects of settlements that remain contentious. As described here, the IBA has been pushing the OECD to issue guidelines that will encourage prosecutors to cooperate internationally and programmatically to increase the use of settlements, or non-trial resolutions as they are formally referred to internationally.Continue reading
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.” Continue reading
For two decades governments have been signing agreements where they promise to curb corruption and halt the international flow of illicit funds. A promise, however, is only as good as the method for enforcing it, and in the case of international conventions and treaties the only method available is the peer review. Experts from neighboring or similarly situated nations review how well the government is keeping its promises, recommending ways it can do better and sometimes chastising it for breaking its promises. The theory is that threat of a bad review will put pressure on a government to live up to its commitments.
Peer reviews come in various shapes and sizes, and experience with ones has shown that some are more effective than others. At the request of High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda Financing for Sustainable Development (FACTI), Valentina Carraro, Lecturer in International Relations at the University of Groningen, and Hortense Jongen, Assistant Professor in International Relations at the Vrije Universiteit Amsterdam, reviewed the effectiveness of the peer review mechanisms of six of the most important anticorruption and financial integrity agreements:
- the Implementation Review Mechanism of the United Nations Convention against Corruption,
- the Follow-Up Mechanism for the Implementation of the Inter-American Convention against Corruption (MESICIC),
- the Organization for Economic Co-Operation and Development Working Group on Bribery (OECD Antibribery Convention),
- the Global Forum on Transparency and Exchange of Information for Tax Purposes,
- the Inclusive Framework on Base Erosion and Profit Shifting,
- the Financial Action Task Force and the Financial Action Task Force-Style Regional Bodies.
Their summary of their findings and recommendations is below. and their paper here. (Background on the FACTI and a link to its interim report recommending changes in international and domestic laws to combat corruption and stem illicit financial flows is here.)Continue reading
France Chain, Senior Legal Analyst at the OECD’s Anti-Corruption Division, provides the following announcement regarding next week’s OECD webinar on “What really motivates anti-corruption compliance?”, an event which coincides with the launch of the new OECD Study on Corporate Anti-Corruption Compliance Drivers, Mechanisms and Ideas for Change.
Since the OECD Anti-Bribery Convention came into force in 1999, managing the risk of bribery has been identified as one of the most challenging areas of compliance for multinational businesses. Major foreign bribery scandals have resulted in record-breaking fines, which has seen the field of compliance grow exponentially over the past ten years. The OECD Foreign Bribery Report revealed that over 40% of foreign bribery cases involved management-level employees either paying or authorizing bribes, with CEOs involved in 12% of cases. At the same time, companies have shown that they can play a key role in detecting and responding to corruption. The OECD’s 2017 report on the Detection of Foreign Bribery showed that 23% of foreign bribery cases that resulted in definitive sanctions over the last 20 years were detected via self-reporting by companies.
However, implementing an effective compliance program is no easy task, and the COVID-19 pandemic has further heightened the challenges. With companies under great financial pressure to recover, anticorruption compliance departments and systems are being put to the test as never before.
To help shed light on some of these challenges and show us the way forward, a forthcoming OECD study on Corporate Anti-Corruption Compliance Drivers, Mechanisms and Ideas for Change explores what motivates companies to adopt anticorruption compliance measures, and looks at how companies (including small and medium-sized enterprises) could further be incentivized to do so. The study also underlines some of the main challenges faced by companies looking to implement anticorruption programs and proposes potential solutions, including ways for governments, international organizations, and civil society to better support companies in their anticorruption efforts.
The official launch of this study will take place on September 23 (one week from tomorrow), with a webinar panel discussion on What really motivates anti-corruption compliance?” to take place on September 23 from 15:00 to 16:30 Central European Time (9:00 am to 10:30 am U.S. East Coast time). You can register for the webinar here. The panel will bring together:
- Axel Threlfall, Editor-at-large, Thomson Reuters (moderator)
- Anna Hallberg, Minister of Foreign Trade and Nordic Affairs of Sweden (opening remarks)
- Jeffrey Schlagenhauf, OECD Deputy Secretary-General (opening remarks)
- France Chain, Senior Legal Analyst, OECD Anti-Corruption Division (presentation of key findings from the Study)
- Alma Balcázar, Co-founder and Principal of GR Compliance SAS and Member of the International Council of Transparency International
- Andrew Gentin, Assistant Chief, Fraud Section, Criminal Division, United States Department of Justice
- Corinne Lagache, Chair, Business at OECDAnti-Corruption Committee, and Senior Vice President, Group Compliance Officer, Safran
- Caroline Lindgren, Head of Legal and Local Compliance Officer of Sweco Sverige AB
Those attending the webinar will be able to submit questions through the chat during the live discussion on Zoom. The session will be recorded and subsequently posted on the OECD Anti-corruption and Integrity website.
The resolution of foreign bribery cases through some type of out-of-court agreement has spread from the United States to other OECD nations. The latest figures show that close to 80 percent of foreign bribery prosecutions by OECD nations have been settled short of a full trial on the merits. Settlements free prosecutors to pursue additional violations, but there is the ever-present risk the defendant will get off too easy, that the settlement terms will not deter the defendant or others from continuing to bribe officials of a foreign government.
The OECD’s Working Group on Bribery in International Business Transactions is now developing standards to ensure that settlements will provide the “effective, proportionate, and dissuasive criminal penalties” the OECD Antibribery Convention mandates. As it proceeds, it will find Negotiated Settlements in Bribery Cases: A Principled Approach, a new volume from Elgar edited by anticorruption scholars Tina Søreide and Abiola Makinwa, an invaluable guide. In 12 chapters, the cross-disciplinary, multinational group of experts the editors assembled review the use of settlements in the United States, the experience of other nations and the World Bank with settlements, ways to judge whether a settlement serves the public interest, and recommendations for gauging whether a particular settlement passes the public interest test. Continue reading
As regular GAB readers have likely figured out, I’m not terribly good at providing timely “hot take” reactions to news items—I’m too slow and get too distracted with other things, and by the time I weigh in on some recent development that caught my eye, I’m usually a couple of news cycles behind. So it will be with this post. But I did want to say a bit about the mini-controversy over comments a couple weeks back from Larry Kudlow, the Director of the White House National Economic Council, about the Trump Administration’s views on the Foreign Corrupt Practices Act (FCPA). For those who might have missed the reports, here’s the basic gist:
A forthcoming book about the Trump Administration includes the story (which had already been reported multiple times) that back in 2017, President Trump had vigorously complained to then-Secretary of State Rex Tillerson that the FCPA put U.S. companies at an unfair disadvantage and ought to be scrapped or drastically altered. (Tillerson, to his credit, pushed back, and no action was ultimately taken.) Several pre-release commentaries on the book focused on this anecdote (see here and here), and a couple weeks back a reporter asked Kudlow about it. Kudlow responded, “We are looking at [the FCPA], and we have heard some complaints from our companies…. I don’t want to say anything definitive policy-wise, but we are looking at it.” When pressed for details, Kudlow said, “I don’t want to say anything definitive policy-wise…. Let me wait until we get a better package [of reforms].”
Kudlow’s comments triggered a great deal of critical reaction, including statements supporting the FCPA from civil society organizations like Transparency International and the Coalition for Integrity. These statements were forceful but measured, mainly emphasizing the benefits of the FCPA. Some other media reactions were more impassioned, playing up the narrative that the Trump Administration was planning to push for the legalization of (foreign) bribery (see here and here). That latter strain in the commentary, in turn, provoked pushback from other analysts, who saw Kudlow’s remarks (and perhaps also the President’s own statements and actions in this area) as no big deal (see here and here).
My own take is somewhere in the middle. On the one hand, we shouldn’t exaggerate the significance of Kudlow’s remarks. But neither should we dismiss them as meaningless or harmless. Continue reading