A new OECD study looks at the “flip side” of enforcement actions that ended in sanctions on the supply-side of a foreign bribery transaction. OECD’s
Kathryn Gordon and Brooks Hickman share some of the insights gained from the survey.
The business community often complains during consultations with the OECD Working Group on Bribery that its focus on criminalising the supply-side of foreign bribery creates an unbalanced approach to enforcement. In their view, companies face credible enforcement risks and high sanctions if they engage in foreign bribery, while the public officials who solicit or receive bribes seem to enjoy de facto impunity.
As a policy matter, these concerns must be taken seriously. Enhancing the credibility of enforcement on both the demand side and supply side of bribery amplifies the global law enforcement system’s overall deterrence effect. Credible deterrence on both sides of the bribe transaction will make all parties more reluctant to engage in bribery, since detection and enforcement on one side of the bribe transaction is will be more likely to be followed by detection and enforcement on the other side. Balanced enforcement effectively targeting both the bribers and the public officials on the receiving end can lead to mutually reinforcing outcomes by making it more difficult for potential wrongdoers to enter confidently into bribery arrangements.
A new study by the OECD explores whether credible enforcement risks do in fact exist for public officials in the Parties to the OECD Anti-Bribery Convention. The results are based on a survey sent to the Parties seeking information on the “flip side” of 55 supply-side foreign bribery cases that had been concluded with sanctions being imposed on a supply-side participant (that is, the briber) by another Party to the Convention. In other words, for a sample of cases in which bribery is known to have taken place, were the public officials on the receiving end of these sanctioned bribe schemes also criminally sanctioned or otherwise disciplined?
The 55 sanctioned supply-side cases in the sample were concluded between 2008 and 2013. The sample was cut off in 2013 to allow the demand-side jurisdiction ample time to conclude the case against the public official(s) involved. Out of the 55 questionnaires circulated, 33 were completed. A further 10 respondents from demand-side countries could find no record of a case involving the public official(s) in question. No responses were received for 12 questionnaires.
The survey produces four main findings:
Enforcement actions targeting public officials do take place, but the rate of sanctioning is not particularly high. In the sample, at least one public official was sanctioned in only one fifth of the 55 cases surveyed. In 30 cases, an investigation was undertaken and, of these, a criminal enforcement action against one or more public officials was launched in 20 cases. Interestingly, despite the 2013 cutoff date, 11 of the cases against public officials were still pending, either at the investigative or prosecutorial stages. Thus, overall, sanctioning takes place at a lower rate than one might expect given that this is for a sample of cases in which it is known that bribery took place.
International co-operation is not a major source of detection for demand-side cases. Somewhat surprisingly, co-operation between law enforcement authorities in the demand-side and supply-side jurisdictions reportedly did not play any role in detecting allegations in the cases covered by the survey. According to the survey responses, none of the enforcement actions involving public officials were detected through direct communications with supply-side enforcement authorities. This is surprising because the Parties’ enforcement officials focused on foreign bribery can meet and communicate at the OECD Working Group on Bribery up to four times per year.
The media play a major role in the international flow of information. The media were the dominant reported source of detection on the demand side. In many cases, the media apparently accessed information posted by the supply-side enforcement authorities (mainly the US DOJ and SEC) and made it available in the demand-side country. Thus, the media not only informed the general public, but also served as an intermediary between the supply-side and demand-side enforcement authorities. This is yet another illustration of the importance of transparency and freedom of the press for effective anti-corruption enforcement.
Enforcement capacity needs to be enhanced. When public officials were not sanctioned, this was often attributed to standard problems encountered in criminal law enforcement. Examples cited include insufficient evidence (5 cases) and statute of limitations (4 cases). In one case, key documents disappeared from the ministry associated with the bribe. Finally, the machinery of justice appears to move slowly in some countries — despite the fact that the cut-off date for inclusion of cases in the survey was 2013, five cases were still pending at the stage of investigation and six at the stage of prosecution.
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The survey clearly demonstrates the importance of media access to information about concluded and sanctioned foreign bribery cases, in order to facilitate that the flow of information about corrupt schemes to demand-side jurisdictions. Thus, this finding bolsters arguments for ensuring transparency in concluded and sanctioned cases.
The survey result showing little direct communication between demand- and supply-side countries suggests that further effort is needed to reinforce international co-operation among law enforcement authorities in order to facilitate more reliable and timely transmission of information about cases. The Working Group on Bribery provides a platform for such communication and needs to be more intensively used for this purpose.
In addition, despite the relatively high levels of economic development represented by Parties to the OECD Anti-Bribery Convention, enforcement capacity needs to be further refined so as to enhance the effectiveness and timeliness of investigation, prosecution and resolution of these cases.
The full survey results can be found here.
Kathryn Gordon is a Senior Economist and Brooks Hickman is an Anti-Corruption Analyst for the OECD Anti-Corruption Division. Both are based in Paris.
This article was first published on the FCPA blog