Corruption and International Enforcement
International enforcement of corruption laws is increasing but far slower than many predicted. As anti-corruption law enforcement increases, companies and individuals face the risk of a multi-jurisdictional nightmare: when a company has to pay fines in multiple jurisdictions for a single bribery scheme, or an individual may be subject to multiple punishment for the same conduct. This possibility could become a reality. Practitioners will be involved in negotiations in multiple jurisdictions to resolve a company’s liability in multiple jurisdictions. (Global cartel practitioners are already negotiating with multiple jurisdictions to resolve liability for a global cartel).
The OECD recently issued its annual report (here). Russia and Colombia are the 39th and 40th countries to join the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Together, the 40 country members account for approximately 80 percent of all the world’s exports.
Each day the press reports on countries considering or enacting new anti-corruption legislation targeting foreign bribery. The OECD maintains national chapters in 37 OECD countries.
The OECD Convention contains both anti-bribery and accounting/books and records provisions. It requires parties to criminalize the intentional offer of “any undue advantage,” directly or through intermediaries, to a foreign public official, to obtain or retain business or other improper advantage in the conduct of international business. Like the FCPA, the OECD Conventions permits facilitation payments.
The OECD Working Group on Bribery continues to conduct enforcement reviews of countries and issues public reports on these evaluations.
Countries are ranked for foreign bribery enforcement based on four categories: Active, Moderate, Little and No enforcement.
Seven countries have Active Enforcement programs: Denmark, Germany, Italy, Norway, Switzerland, United Kingdom and United States
Twelve countries have Moderate Enforcement programs: Argentina, Australia, Austria, Belgium, Canada, Finland, France, Japan, Korea (South), Netherlands, Spain and Sweden
Ten countries have Little Enforcement programs: Brazil, Bulgaria, Chile, Hungary, Luxembourg, Mexico, Portugal, Slovak Republic, Slovenia and Turkey.
Eight countries have No Enforcement programs: Czech Republic, Estonia, Greece, Ireland, Israel, New Zealand, Poland and South Africa.
The trend, however, is moving towards more aggressive enforcement. Most countries have enacted laws prohibiting bribery by individuals. Few countries have enacted criminal laws against corporations for foreign bribery. OECD noted its serious concern about several countries which have not enacted any criminal laws against corporations for foreign bribery and the difficulties which law enforcement is experiencing in sharing information across jurisdictions.
The trends show that, despite these difficulties, several countries are improving their enforcement efforts: Australia, Austria and Canada have increased enforcement and have risen to the Moderate Enforcement category. Each of the Active Enforcement countries have increased significantly the number of cases they bring each year.
The OECD continues to play a strong leadership role in the global fight against corruption. They have faced a number of serious challenges but have made great strides in the last five years in raising awareness, pressuring countries to improve their anti-bribery laws. The next five years should see significant improvements in global enforcement efforts.
Hi Micheal, as always your contributions are greatly appreciated. Although I am uncertain what the OECD Working Group on Bribery would define as an “Enforcement Program” it should be noted that the Republic of South Africa has in terms of its international obligations under the UN Convention Against Corruption enacted The Prevention and Combating of Corrupt Activities Act 12 of 2004. This Act, otherwise than in the case of the FPCA and the OECD Convention on Bribery, prohibits the making of facilitation payments. Moreover the said Act, under Section 5 contains pertinent provisions prohibiting the bribery of foreign public officials and reads as follow:
“Offences In Respect Of Corrupt Activities Relating To Foreign Public Officials”
5 (1) “Any person who, directly or indirectly gives or agrees or offers to
give any gratification to a foreign public official, whether for the
benefit of that foreign public official or for the benefit of another
person, in order to act, personally or by influencing another person
so to act, in a manner-
(a) that amounts to the-
(i) illegal, dishonest. unauthorised, incomplete, or biased; or
(ii) misuse or selling of information or material….
(b) that amounts to-
(i) the abuse of a position of authority
(ii) a breach of trust; or
(iii) the violation of a legal duty or a set of rules
(c) designed to achieve an unjust result; or
(d) that amounts to any other unauthorised or improper inducement
to do or not to do anything,
is guilty of the offence of corrupt activities relating to foreign public
officials.
(2) Without derogating from the generality of section 2 (4) “to act” in
subsection (1) includes –
(a) the using of such foreign public official’s or such other person’s
position to influence any act or decision of the foreign state or
public international organisation concerned; or
(b) obtaining or retaining a contract, business or an advantage in the
conduct of business of that foreign state or public international
organisation.
The said Act goes further laying done provisions in respect of agents and intermediaries and a few other activities relating to corruption. It is under these provisions that the Turkcell allegations against MTN in connection with the Iranian cellular operating license are currently being investigated by law enforcement agencies in South Africa.
No doubt that, as also remarked by Tom Fox of tfoxlaw, the statistics contained in the OECD Working Group on Bribery are not that accurate and often an under- or overstatement of reality. As a point of further illustrating this, the OECD Working Group ranks New Zealand as having “No Enforcement Program” yet in terms of Transparency International’s Corruption Perception Indices (CPIs) over the past few years New Zealand remains one of the countries with the lowest level of corruption incidences or at least a very low perception on the prevalence of corruption. The main question therefore is how do one reconcile this conflicting reports. Whereas one, (e.g. the OECD Report) may influence government relations, the other (e.g. TI’s CPIs) may influence investor confidence and decisions and thus FDIs into a particular country.
If a report contains information that is skewed it may have a direct adverse impact on a particular country and its economy, particularly in today’s sensitive economic markets.