Tag Archives: OECD anti-bribery convention

Civil Society to the U.S.: Repair the Damage Italy Has Done to the OECD Antibribery Convention

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Eni and Shell’s acquittal by an Italian court of foreign bribery threatens to undermine one of the major advances of the fight against corruption: the OECD Antibribery Convention. Italy and the 43 other wealthy nations parties to the Convention pledge to investigate, prosecute, and punish nationals who bribe officials of another government.  

The trial court’s acquittal of Eni, Shell, and four individuals of paying Nigerian officials over $1.1 billion in return for the rights to OPL-245, a lucrative offshore oil field, shocked those following the case. The bribery evidence on the public record was overwhelming. Rumors that the acquittal was bought immediately began circulating. When the prosecutor announced she would not to appeal the acquittal, the rumor mill went into overdrive and put the question Italy’s commitment to the Convention squarely on the international agenda.

And if a G-7 country backs away from it, how long before other parties follow? Especially when, as in Italy, one of their major companies is in the dock?

Below is a letter from a broad coalition of civil society groups, and the lawyer who represents Nigeria in foreign bribery cases asking U.S. Attorney General Merrick Garland to open a case against Eni and Shell for bribing Nigerian officials.  As the authors explain, because Eni and Shell are both subject to Foreign Corrupt Practices Act, when the allegations involving Nigeria first surfaced the U.S. had initiated an investigation. After Italy signaled it was also investigating the companies, the U.S. deferred and closed its case.  Now that Italy has utterly failed to see the case through, they urge the U.S. to pick up the ball. 

Dear Mr. Attorney General:

Urgent action required by US to defend the OECD Anti-Bribery Convention: The Department of Justice must reopen its investigation into Eni and Shell

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OECD Denounces Italy’s Failure to Enforce the Antibribery Convention

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GAB readers know that Italy has repeatedly failed to meet its obligations under the OECD Antibribery Convention (here. here, and here). That in recent high-profile cases where evidence Italian companies bribed officials of foreign governments was overwhelming, the companies, their executives, and accomplices were all acquitted.  And that civil society organizations in Italy, Nigeria, and the United Kingdom have urged the OECD in no uncertain terms to condemn the Italian government’s blatant violation of its obligation to levy “effective, proportionate, and dissuasive criminal penalties” on those who bribe foreign public officials (here).  

Last Friday, the OECD did exactly that. In a comprehensive, well-reasoned report, a model for future compliance reviews, its Working Group on Bribery in International Business Transactions fingered both the legislature and the judiciary for Italy’s noncompliance. The legislature because the sanctions for foreign bribery are too low to deter anyone or any company from paying a bribe, the judiciary for interpreting the rules of evidence in ways that almost invariably end in acquitting defendants.

Indeed, it is hard to read the Working Group’s analysis of the decisions in recent cases without concluding as I have that underneath the strained reasoning in the recent acquittals is some mix of bribery, favoritism, or threats.

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Will the OECD Whitewash Italy’s Flagrant Violations of the OECD Antibribery Convention?

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Italy’s compliance with the OECD Antibribery Convention will reportedly be reviewed this week by the OECD’s Working Group on Bribery in International Business Transactions.  The Convention’s review mechanism has been called “the gold standard” for evaluating compliance with an international agreement (here). Whether it deserves that billing will depend on what the Working Group says about Italy’s compliance.

As with all compliance reviews, the Working Group has before it a report prepared by experts from two other Convention parties documenting whether Italy has lived up to its promise to investigate foreign bribery by its nationals. From the public record alone, on which the experts were well informed (here, here, here, here, and here), it is impossible to believe their report is anything but strongly critical.

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That Corruption Infects the Italian Judiciary Is Now Undeniable

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In March 2021, a Milan trial court acquitted Italian oil giant ENI, its partner Royal Dutch Shell, and numerous individuals of bribing Nigerian President Goodluck Jonathan and pals to secure the rights to the lucrative offshore oil field denominated OPL-245. The evidence of bribery was overwhelming, including internal Shell e-mails describing the scheme and the testimony of an ENI official confirming his bosses were fully aware of it. Suspicions that someone had “gotten” to the judges immediately arose stoked by revelations of close ties between the presiding judge and ENI’s senior counsel.

Any doubt that the verdict was tainted was put to rest when the court published its opinion justifying it. As the attached analysis by the British, Italian, and Nigerian NGOs that have pushed the case shows, the court’s “reasoning” was laughable. Two examples of many. The court wrote off the then oil minister’s sale of OPL-245 rights to a company he secretly owned as a trifle because neither he nor the government officials bribed to approve the sale objected. Equally ridiculous, the court found that a Shell briefing note reporting that part of the bribe would be in the form of political contributions simply recounted a rumor then circulating.

Between the strength of the evidence the prosecution presented and the court’s flimsy if not bizarre reasoning dismissing it, the expectation was that the acquittal would easily and quickly be overturned on appeal. That hope is not to be however.  Last week the Italian prosecutors assigned to handle the appeal announced they were withdrawing it. 

Thus ENI, Shell, and the 13 individuals named as accomplices in the payment of a $1.1 billion bribe stand exonerated. And it now clear that the rot in the Italian judiciary reaches into its once revered prosecution service.

Nor is the damage from the rot limited to Italy. Thanks to the doctrine of ne bis in idem (double jeopardy in American law), a Dutch investigation of Shell’s role had to be dropped (here).  

The last hope for justice now lies with the Nigerian judiciary. Ne bid in idem only bars EU countries from pursuing a case. A Nigerian investigation of the companies and their accomplices is underway. It is critical it continue and that the international anticorruption community do all it can to support it given what has happened in Italy.

Moreover, as this blog has urged, it is critical too that the OECD hold Italy to account for its failure to live up to its obligations to sanction Italian companies that bribe foreign officials. The ENI-Shell case must be an outlier not a precedent.

Time to Make the OECD Antibribery Convention an Antikleptocracy Convention Too

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Confiscating assets acquired through corruption is a critical part of the fight against corruption. If those who would profit from corruption know they will be denied the benefit of their wrongdoing, there is no incentive to be corrupt.

As Justin explained Monday, Russia’s invasion of Ukraine has given asset confiscation a major boost. Many of Putin’s superrich backers, oligarchs or kleptocrats, became wealthy through corrupt deals, and the seizure of their mega-yachts, mansions and other properties now located outside Russian territory offer the West a way, albeit indirectly, to pressure Putin to end the aggression. Italian, German, and other Western prosecutors are thus now aggressively invoking domestic forfeiture statutes to confiscate them.

But as the Washington Post reports today, with the help of pricey lawyers and other enablers (here and here), the oligarchs have hidden their assets inside complex legal thickets of offshore companies that make confiscation hard if not impossible. In response, last Thursday President Biden asked Congress to give U.S. prosecutors new powers to cut through this underbrush (here).

The President’s initiative is welcome. But it also invites the obvious question: Why shouldn’t other Western nations follow suit?  All are united in their opposition to the war and desire to make Putin’s associates suffer consequences. Why shouldn’t every Western state ease the task their prosecutors face to the rapid seizure of oligarchs’ assets? And indeed to the seizure of any asset corruptly obtained or unlawfully possessed found in their territory?

The most straightforward way to realize this goal would be to amend the OECD Antibribery Convention.

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Guest Post: France’s Anticorruption Turnaround–and the Path Forward

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Today’s guest post is from Valentina Lana, a lawyer and lecturer at Sciences Po, and Michel Sapin, who served in multiple senior positions in the French government, including as Minister of Finance from 2014-2017 and Minister of the Economy in 2016-2017, and who was the principal author of the Loi Sapin II, the French anticorruption law.

Since the OECD Anti-Bribery Convention entered into force back in 1999, France has been a member, and as such France committed to adopt and enforce an effective legal framework to detect, punish, and deter transnational bribery. Yet in October 2012, when the OECD’s Working Group on Bribery released its Phase 3 report on France’s compliance with its obligations under the Convention, France received very poor marks. The report emphasized the Working Group’s “serious concern[]” about the paucity of enforcement proceedings addressing foreign bribery by French entities, expressed its disappointment in France’s failure to address key legal obstacles to holding companies liable for foreign bribery, and the insufficient penalties. In short, while France had laws on the books that supposedly criminalized foreign bribery, in practice France was doing very little to make those laws meaningful in practice.

The highly critical Phase 3 report served as a wake-up call for French policymakers. But it was not only this very public and embarrassing OECD criticism that prompted France to act. French companies that issued securities in the United States also found themselves targeted by the U.S. Department of Justice for alleged violations of the U.S. Foreign Corrupt Practices Act (FCPA). Many French firms and government officials bristled at what seemed like the intrusive and extraterritorial prosecutions by the U.S. government. But in high-level conversations between leading figures from the two countries, the U.S. representatives made clear their position that they were pursuing these cases, even though France might seem to have a greater interest, because France couldn’t or wouldn’t prosecute foreign bribery cases involving French companies vigorously and effectively. “We are doing your job,” was the basic position of the U.S. representatives.

There was also pressure for reform from the French business community. This at first seems counterintuitive, given that companies are generally reluctant to accept more stringent regulations. But business operators in France perceived that France needed to promote a more transparent, corruption-averse environment, in order to increase the attractiveness of France for investors and shake off France’s bad reputation as an unfair business environment where bribes would count more than skills, experience, and competence. Though one might think that French firms would care only about domestic corruption, in fact many business leaders embraced the idea that taking a stronger stand against foreign bribery—and embracing legal reforms that would elevate France to the level of countries like the US or the UK, at the forefront of the fight against transnational corruption—would help improve France’s reputation and overall business environment.

These factors contributed to an environment that enabled reformers, particularly those in the French Ministry of the Economy, to act. In 2016, the French parliament adopted a crucial set of reforms contained in a law known as the la loi Sapin II (the Sapin II Act). This broad law covers more than just the fight against corruption; it contains a range of provisions intended to improve France’s attractiveness to local and foreign investors through greater transparency and modernization of economic life. But several of the Act’s most important reforms were motivated by, and targeted toward—the fight against corruption, including transnational corruption, a fact acknowledged symbolically by the date of the Act’s adoption: December 9th, UN International Anti-Corruption Day.

Among the Sapin II Act’s key measures, three can be considered as essential to driving France’s progress on anticorruption: Continue reading →

NGOs Call Italian Judiciary to Account for Not Enforcing the Antibribery Law

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The Italian judiciary is threatening to upset the global norm against bribing officials of another nation.  As party to both the OECD Antibribery Convention and the UN Convention Against Corruption, Italy is obliged to sanction Italian companies and nationals that bribe the public servants of other nations.  Yet despite overwhelming evidence that oil and gas giant Eni S.p.A, the country’s largest company, bribed Nigerian officials to secure a lucrative oil block, a Milan trial court recently acquitted Eni and codefendant Royal Dutch (decision here.)

Acknowledging the prosecution had presented strong circumstantial evidence of bribery — what it termed “conduct implementing the agreement” to pay Nigerian officials in return for “the unlawful act of the public official” — the court nonetheless held this was not enough. Following earlier appeals court decisions in foreign bribery cases, it ruled the prosecution must also show an actual “agreement between clearly identified parties” Hence, it concluded, “even the proof of the bribe or the unlawfulness of the act committed by the official” is not enough to warrant conviction.

Officials from the U.S. Department of Justice and Germany’s Ministry of Justice will shortly review Italy’s compliance with its obligations under the OECD Antibribery Convention. The Italian NGO ReCommon, Nigeria’s Human and Environmental Agenda, and Corner House from the United Kingdom have prepared this thorough and damning critique of the decision in the ENI case and earlier ones where Italian courts have held that absent an express agreement to pay a bribe to a foreign official, defendants must be acquitted.

As the three NGOs explain in their analysis, those negotiating the OECD Convention recognized that requiring the prosecution to show an express agreement to bribe set an impossibly high hurdle. They settled instead on allowing courts to infer an agreement from the surrounding circumstances, circumstances such as those the prosecution presented in the ENI-Shell case. Indeed, American courts long ago recognized that requiring the prosecution to produce an express, written agreement to pay a bribe rendered the antibribery law a nullity.

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Italy: Safe Haven for Bribe Payers?

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That a nation with the third-largest economy in the European Union and the eighth-largest in the world would be countenancing bribery in today’s world seems beyond the pale. Yet an analysis of recent case law and record of convictions shows just that.  Done by the Italian NGO ReCommon and submitted on a confidential basis to the OECD’s Working Group on Bribery, it concludes that it is “nigh on impossible to obtain a conviction in Italy for international corruption.”  

The group’s conclusion rests not only on Italy’s dismal record of convictions of Italian companies and nationals for bribing foreign public officials, but decisions in three recent cases. All raise a virtually insurmountable hurdle to a conviction for bribery. In any case. No matter whether the bribe-taker is an official of a foreign government or of the Italian government. In all three, courts have ruled that to prove bribery, the prosecution must show there was an express agreement to bribe.

In today’s world, just how many businesses send a letter to an official saying “I will pay you X in return for your providing the company Y”? As an American Supreme Court justice observed some 40 years ago, were the law to impose such a requirement, it could be easily frustrated “by knowing winks and nods.” Yet an express agreement to bribe is exactly what Italian judges now demand to convict bribe-takers and payors. Why has the Italian judiciary, historically one of the most renowned in the civil law world, decided to frustrate the prosecution of bribery cases?

Italy’s compliance with the OECD Antibribery Convention will shortly be reviewed by peer nations. It simply cannot be found in compliance so long as its courts require an express agreement to bribe to find defendants guilty. The OECD reviewers should follow ReCommon’s analysis, which in the public interest is revealed here, and condemn the recent turn in Italian law making the nation a safe haven for bribery.

Is Italy Backtracking on the Fight Against Foreign Bribery?

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Press reports, informed commentary, and the recent acquittal of ENI and Royal Dutch Shell despite overwhelming evidence they bribed Nigerian officials provide alarming evidence that Italy’s commitment to curbing foreign bribery is waning.

That commitment was never that strong to begin with. Although bound by the OECD Antibribery Convention to investigate and prosecute foreign bribery cases, in 2011 the OECD Working Group on Bribery found Italy had done little to comply. In the decade since ratifying the convention, only a few dozen cases had been brought, almost all against individuals for small-time bribery, and most had ended in acquittals. This dismal record was not surprising, the Working Group observed, given no one had been trained on how to investigate foreign bribery cases, and no public prosecutor’s office specialized in such cases.

The one bright spot the Working Group found was the Milan office of the public prosecutor.  It had aggressively pursued foreign bribery cases, opening by far the lion’s share of cases, including all those where a corporation was involved. Its future is now in doubt.

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Something Is Rotten from the State of Denmark

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In this year’s Corruption Perception Index (CPI) rankings, Denmark yet again topped the list (tied with New Zealand) as the world’s cleanest country. But the CPI has well-known limitations—including the fact that it focuses on corruption within countries while excluding how country’s nationals behave abroad. And in this latter context, Denmark performs rather poorly. Danish companies have faced numerous credible allegations of paying bribes worth hundreds of millions of dollars in dozens of countries (see, for example, here, here, here, here, here, here, and here). Several of those countries have been sanctioned by the World Bank and the European Union. Yet Danish companies have largely escaped suffering any consequence within Denmark for their corrupt practices abroad. Of the thirteen major allegations of foreign bribery brought in the last decade by Danish authorities against Danish companies, several closed without adequate investigation, and none resulted in any prosecution. No wonder that Denmark’s last report card on from the OECD’s Anti-Bribery Working Group—released in 2015—found Denmark’s performance in enforcing its laws against foreign bribery to be deeply wanting. Yet six years and many public commitments later, Denmark has done very little (other than publishing a three-page “How to avoid corruption” pamphlet) to address its shortcomings in this area.

So, what’s stopping the “least corrupt” country in the world (at least, according to the CPI) from tackling its foreign bribery problem? If allegations of foreign bribery are widespread and credible, why have Danish companies continued to enjoy effective domestic impunity? There are two ways to answer this question, one of which focuses on the legal deficiencies in Denmark’s criminal code, which make it hard for prosecutors to bring winning cases, and the other of which focuses on the reasons why Denmark hasn’t changed these laws, notwithstanding critical commentaries and advice from organizations like the OECD.

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