Author: Nyman Gibson Miralis
Subject: Foreign Bribery
Keywords: foreign bribery, enforcing foreign bribery laws, Stolen Asset Recovery Initiative, foreign public officials, asset recovery
Bribery of foreign public officials is a serious crime which has significant impacts worldwide. There are a number of issues with the way countries handle foreign bribery, as set out in a key international report.
In 2014, a collaboration of authors published the Left out of the Bargain: Settlements in Foreign Bribery Cases and Implications for Asset Recovery report.
The report was produced under the umbrella of the Stolen Asset Recovery Initiative (StAR), a partnership between the World Bank and the United Nations Office on Drugs and Crime, and is intended to identify deficiencies in the way in which bribery of foreign public officials is addressed and prosecuted worldwide.
We examine the key findings set out in the report by authors Jacinta Anyango Oduor, Francisca M. U. Fernando, Agustin Flah, Dorothee Gottwald, Jeanne M. Hauch, Marianne Mathias, Ji Won Park and Oliver Stolpe.
Increase in settlements in foreign bribery cases
Globally, there has been a recent trend of settlements (rather than final court judgments) as the preferred method for enforcing foreign bribery laws and resolving litigation or prosecutions. Although this may have many advantages – such as eliminating the significant costs of proceeding with a trial – there are numerous difficulties associated with resolving such matters by negotiated settlement.
The report found that transparency of settlement outcomes has been limited. In some instances, not all involved parties – including the country whose official was bribed – have even been aware of the investigation or settlement taking place.
The transparency of the process depends entirely on the legal requirements and arrangements of the individual prosecuting country. In Australia, for example, most negotiated settlements are confidential to the parties directly involved.
Importantly, keeping settlements behind closed doors may mean that there is little or no public knowledge of the alleged crime. This can reinforce endemic corruption by failing to acknowledge its existence or demonstrate that attempts are being made to disrupt it.
The report encourages active international information-sharing between all countries involved in specific incidents of bribery. This includes the state where the entity issuing the bribe is based or incorporated, the state where the bribed official holds public office, and any other states tangentially affected in order to maximise the prospects of successful resolution and asset recovery.
In the same vein, the report encourages all affected countries to pursue separate proceedings in their own jurisdictions, noting that the usual considerations of only being tried once for the same crime do not apply in international law.
Poor rates of financial restitution
Although there is an increasing number of prosecutions of bribery charges occurring worldwide, the report highlights that very few funds are returned to the state where the official was bribed. This is identified as the most pressing issue concerning foreign bribery worldwide.
Statistically speaking, the report notes that 395 settlements occurred between 1999 and 2012, resulting in $6.9 billion being ordered in monetary sanctions. Those have generally been imposed by the state in which the company offering the bribe is headquartered or based. However, the report observes that only 3.3% (in the order of $197 million) was returned to the state whose officials were bribed. Disturbingly, the bribed officials themselves are also rarely called to financial account.
Suggestions set out in the report for addressing this deficiency include pursuing the return of funds through international cooperation in legal proceedings, private litigation, or formal involvement in another country’s prosecution (as an interested party) by seeking specific compensation or financial recovery. It is also recommended that affected countries formally rescind or modify any contracts or other works affected by bribery, in order to restore integrity and public confidence.
Less developed countries suffer most
Unsurprisingly, the report finds that countries which can be classified as “less developed” suffer more instances of attempted and successful bribery of foreign public officials. Of particular concern, the greatest targets of bribery attempts generally include state-owned enterprises and public agencies working to provide much-needed infrastructure or protecting essential natural resources.
Perhaps due to limited legal or financial resources, the countries in which the public official has been bribed tend to be minimally involved in investigating, prosecuting and enforcing action against the perpetrators. In turn, this creates a passive and systemic acceptance of corruption at high levels.
Foreign bribery of public officials is a significant problem, resulting in less developed countries losing up to $40 billion annually in much-needed funds. As the report observes, there are various deficiencies in the way in which bribery of foreign public officials is dealt with internationally, and action is needed across the globe.
Nyman Gibson Miralis are experts in foreign bribery matters that involve multiple jurisdictional investigations. If you require assistance, contact one of our expert criminal defence lawyers