Guest Post: UK Bribery Prosecutions and the Rule of Law

Mat Tromme, Project Lead & Senior Research Fellow at the Bingham Centre for the Rule of Law, contribute today's guest post, which is based on discussions at a recent Bingham Center-Duke Law School FCPA Roundtable:

In the latest sign that the UK’s Serious Fraud Office (SFO) it is flexing its prosecutorial muscle, the SFO recently opened a case against British American Tobacco, and in June convicted four senior executives from Barclays Bank for conspiracy to commit fraud. This adds to the SFO’s growing list of "successes," such as cases against the ICBC Standard Bank, Tesco, and Rolls Royce. It also raises some important questions (which aren't new), on the one hand about the means used to prosecute bribery, and on the other about the extent to which ongoing economic considerations such as Brexit might put an end to what appears to be good momentum.

Despite the SFO's "wins," some critics are disappointed with the Rolls Royce deferred prosecution agreement (DPA) and questioned whether the SFO is sufficiently aggressive in prosecuting corruption. This view follows concerns that the Rolls Royce case failed to meet the interests of justice and illustrates how big companies are let off the hook where the prosecution of bribery is concerned. Such concerns echo criticisms that DPAs in the United States, which pioneered their use, undermine the rule of law by letting individuals avoid prosecution, and by allowing this area of law to develop outside of the public eye and with very little judicial oversight. This leaves the lasting impression of a two-tiered criminal system by promoting a “too big to jail” culture. DPAs, it is also been argued, undermine both the deterrent effect of the law and incentives to self-report. Continue reading

The Trade-Off Between Inducing Corporate Self-Disclosure and Full Cooperation

In discussions of appropriate sanctions for corporations that engage in bribery, much of the conversation focuses on the appropriate penalty reduction for firms that self-disclose violations, cooperate with authorities, or both. Self-disclosure and cooperation are often lumped together, but they’re not the same: Plenty of targets of bribery investigations, for example, did not voluntarily disclose the potential violation, but cooperated with the authorities once the investigation was underway.

This gives rise to a problem that is both serious and seemingly obvious, but that somewhat surprisingly is hardly ever discussed.

The problem goes like this: Enforcement authorities want to encourage self-disclosure, and they want to encourage full cooperation with the investigation; they would like to do so (1) by reducing the sanction for firms that voluntarily disclose relative to those that don’t, and (2) by reducing the sanction for firms that fully cooperate relative to those that don’t. But if the minimum and maximum penalties are fixed (say, by statute or department policy or other considerations), and the penalty reductions necessary to induce self-disclosure and full cooperation, respectively, are large enough (cumulatively greater than the difference between the maximum and minimum feasible sanction), then adjusting sanctions to encourage self-disclosure may discourage full cooperation, and vice versa.

It’s easiest to see this with a very simple numerical example: Continue reading

Guest Post: How Will Nationalist Election Outcomes in the US and UK Affect Foreign Anticorruption Enforcement?

Professor Rachel Brewster of Duke Law School and Mat Tromme, Project Lead & Senior Research Fellow at the Bingham Centre for the Rule of Law, contribute today’s guest post, which is based on discussions at a recent Bingham Center-Duke Law School FCPA Roundtable:

In the past year, we have twice seen voters make a significant turn toward nationalism. In June 2016, in a move that was largely motivated by protectionist views, the UK voted to leave the EU, and in November, the United States elected Donald Trump, who campaigned on an “America First” promise. What do these developments mean for US and UK enforcement of their respective laws against overseas bribery (the Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UKBA), respectively)? Many worry that, insofar as government leaders view anticorruption laws as harming their country’s international competitiveness (a dubious assumption), then nationalistic fervor can lead to weaker enforcement. This is a reasonable concern in both countries—but a more careful analysis of the situation suggests uncertainty is greater in the UK than it is in the US.

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Can a Corporate Settlement that Names Names Be Grounds for a Defamation Suit?

A running theme in discussions—and criticisms—of government settlements with corporations in foreign bribery cases is the failure to focus adequately on individuals. Most commonly, this criticism emphasizes the alleged failure of the “supply-side” enforcers (e.g., the U.S. Department of Justice (DOJ), the U.K. Serious Fraud Office (SFO), etc.) to bring charges against the individual corporate officers and employees responsible for the illegal conduct. Additionally, though, some—including some contributors to this blog (see here and here)—have emphasized that settlements with supply-side enforcers should contain enough information on the illegal transactions that enforcement authorities in the demand-side countries (that is, the countries whose public officials took the bribes) can go after individuals under their jurisdiction. Such individuals would include, most obviously, the government officials who took the bribes, but might also include third-party intermediaries and other local agents over whom the supply-side enforcers lack jurisdiction.

The idea that the public documents in these settlement agreements ought to include a detailed discussion of the transactions, including the identities of the individuals involved, sounds like a good idea. Indeed, I think it generally is a good idea (though I confess I haven’t thought through the issue carefully). But recent news reports out of Tanzania last week highlight a potential pitfall that I confess I hadn’t previously considered: The individuals named as wrongdoers in corporate settlement agreements might sue. Are such suits viable? I have no idea. But the problem is worth considering.

Let me first lay out a brief synopsis of the Tanzania case, and then offer a few under-informed speculations about what this all means. Continue reading

Why International Double Jeopardy Is a Bad Idea

In a recent post, I argued that U.S. authorities investigating British pharma giant GlaxoSmithKline (“GSK”) should consider criminally prosecuting GSK but partially offsetting any attendant penalty in light of the $490 million fine already imposed by China. This option is only available to the DOJ, though, because it stands on one side of a crucial divide in the global anticorruption regime: the U.S. — unlike Canada, the U.K., and the European Union — does not recognize an international variant of ne bis in idem (“not twice for the same thing”) (also known as “international double jeopardy”).

Recognizing an international double jeopardy bar can have a dramatic impact on a country’s capacity to combat international corruption. For countries like the U.K., being second-in-line to target an instance of transnational bribery often means not being able to prosecute the conduct at all. (For example, in 2011, the U.K. had to forego criminal sanctions against DePuy International because the U.S. had already prosecuted the British subsidiary.) In recent years, though, a spike in the number of parallel and successive international prosecutions has inspired a small but growing chorus of commentators calling for countries like the U.S. to formally embrace international double jeopardy.

To these commentators’ credit, many of their arguments sound in basic notions of fairness: you shouldn’t punish someone twice for the same crime. But before we jump on the double jeopardy bandwagon, I want to spend a few minutes explaining why, when it comes to the global fight against transnational bribery, double jeopardy probably isn’t all it’s cracked up to be.

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