Foreign bribery is a serious crime which can be prosecuted not only under Australian law, but also under the laws of foreign countries.
Whilst seeking a conviction through a trial may be the expected avenue in dealing with offenders, non-trial resolutions have become increasingly common in enforcing the bribery of foreign public officials and related offences.
In a recent study, the OECD explores the use of settlements and non-trial agreements by parties to the Anti-Bribery Convention. The key findings presented have important implications for companies and individuals who may be exposed to foreign bribery risks, including through the actions of business associates.
OECD Anti-Bribery Convention
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention, or the Convention) states that “all countries share a responsibility to combat bribery in international business transactions.”
Australia is one of the 44 countries Party to the Convention and contributes to the joint global effort to enforce anti-bribery laws and combat this activity.
What is a non-trial resolution?
Non-trial resolutions (commonly known as “settlements”) refer to a wide range of mechanisms such as sanctions and confiscation which may be used to resolve criminal matters without a full court proceeding, based on an agreement between an individual or a company and a prosecuting or another authority.
In some systems a prison sentence may still be imposed, however entering into a non-trial resolution may lead to a reduced sentence.
Where appropriate, non-trial resolutions can also be used in administrative or civil proceedings, typically against individuals.
The report provides 5 key findings on the use of non-trial resolutions to combat foreign bribery, amongst countries Party to the OECD Anti-Bribery Convention.
Non-trial resolutions have been the primary method of enforcing foreign bribery
Of the 890 foreign bribery resolutions analysed since the entry into force of the Convention, 78% were concluded through non-trial resolutions including monetary sanctions, confiscation and imprisonment.
The remaining 22% of enforcement actions were resolved by a conviction as a result of a trial.
In some countries, the use of non-trial resolutions allowed for the first-ever foreign bribery resolution, whereas previously corporate liability could not be adequately enforced through traditional methods.
The study predicts that we may therefore see an overall increased enforcement of the foreign bribery offence due to the use of non-trial resolutions, which have become the preferred means of resolving these cases.
Increased use of coordinated multijurisdictional non-trial resolutions
Over the past decade there has been a steady increase in non-trial resolutions reached with authorities in multiple countries, sometimes among up to three Parties to the Convention.
This close international cooperation aids investigations and prosecutions in a way that may not have been possible in cases involving trials.
Differences in the level of sanctions and penalties imposed
A wide range of sanctions and penalties may be imposed as part of a non-trial resolution including monetary penalties, deferred prosecution agreements (DPAs), confiscations and civil/administrative actions.
Some resolution systems do not impose penalties other than confiscation. In systems where punitive sanctions are available, the ways in which the sanction is reduced also varies significantly. Some countries have a maximum sentence that can be imposed through a resolution, whilst others ensure a percentage reduction.
Monetary penalties in these cases can also vary greatly, with the highest penalty reported as USD 3.23 billion (a coordinated resolution between Brazil, Switzerland and the US) and the lowest penalty of CHF 1 (resolved through Switzerland’s Simplified Procedure).
Large amounts of money have been confiscated from legal persons
Confiscation from non-trial resolutions relating to legal persons amounted to EUR 6.1 billion, nearly 90% of the total.
Approximately 60% of this amount was accounted for through imposed civil or non-criminal actions, whilst DPA-like resolutions were responsible for almost 20%.
Challenges exist in assessing effectiveness of sanctions imposed
The study shows that assessing whether “effective, proportionate and dissuasive” sanctions have been imposed on those who engage in foreign bribery non-trial resolutions presents a number of challenges.
A key challenge is determining whether the sanction would have been substantially greater if imposed after trial, which may have uncovered information influencing the level of sanction imposed.
Despite these difficulties, and the potential for non-trial resolutions to enable companies to avoid the harshest consequences of a foreign bribery conviction, large multi-jurisdictional resolutions have to date permitted higher global combined financial penalties than through trials.
Non-trial resolutions may be both a blessing and a curse for companies and individuals facing foreign bribery charges. Whilst allowing the potential for reduced sanctions, these resolution systems are also leading to increased enforcement of the foreign bribery offence and the imposition of significant financial penalties.