15 March 2016, by Sue Hawley, Corruption Watch.
Last Friday, the UNCAC Coalition along with some member organisations, Transparency International, Global Witness and Corruption Watch, wrote to the OECD asking for global standards for corporate settlements in foreign bribery cases. The timing could not be more important. There is an OECD Ministerial meeting on the Anti-Bribery Convention on 16th March 2016 at which one of the issues on the agenda is how countries can use settlements to incentivise companies to self-report their wrongdoing. Several countries are looking at introducing some form of Deferred Prosecution Agreement.
Following concerns raised in the World Bank/StAR report, Left Out of the Bargain: Settlements in Foreign Bribery Cases and the Implications for Asset Recovery, settlements are now on the agenda in forums of the UN Convention Against Corruption (UNCAC). The 2015 UNCAC Conference of State Parties commissioned its inter-governmental working group on asset recovery to gather information regarding the use of settlements and look at developing guidelines on the involvement of and the return of money to affected states.
But the use of settlements raises much wider issues than asset return. In the US, where the majority of foreign bribery cases have been resolved by means of a Deferred Prosecution Agreement or Non Prosecution Agreement, such settlements are becoming increasingly controversial. Critics, including US judges and law professors, have been arguing that these agreements allow culpable individuals off the hook, fail to deter economic crime or prevent recidivism, undermine the deterrent effect of the law by shielding companies from debarment from public contracting, lack regulation or oversight, and undermine the very justice system and rule of law itself.
Proponents of settlements argue that they are necessary because corruption cases are incredibly difficult and costly to investigate and prosecute. Unless enforcement authorities encourage companies to come forward with evidence of their wrongdoing, the argument goes, enforcement rates will remain low and corruption will go undetected.
Clearly encouraging companies, who often hold all the information required as to whether wrongdoing was committed, to report their own wrongdoing by offering settlements for those that do needs to be a part of any enforcement strategy. But there are serious questions as to whether relying solely on settlements to deal with foreign bribery cases can provide real deterrence. Furthermore, unless enforcement bodies beef up their ability to detect corruption (it is worth noting that in the US less than 50% of cases are self-reported) and are willing to prosecute, there will be little incentive for companies to report wrongdoing that they could otherwise get away with. This is the chicken and egg of the current enforcement dilemma.
The letter sent last Friday to the OECD expresses concern that the use of settlements may not provide ‘effective, proportionate and dissuasive’ sanctions as required by the OECD Convention. It also urges the Working Group on Bribery to develop some best practice standards as use of these settlements spreads. The very purpose of the OECD Anti-Bribery Convention is at stake. Unless high standards for and judicious use of such settlements can be agreed on a global level, the public around the world will lose confidence that justice in relation to overseas corruption is really being done.
About Susan Hawley
Susan Hawley is Policy Director of Corruption Watch, which has just produced a report on Corporate Settlements in foreign bribery cases, Out of Court, Out of Mind: do Deferred Prosecution Agreements and Corporate Settlements Fail to Deter Overseas Corruption?