Ed. Note-Yesterday we began a two part series
on the attempt by the NGO SERAP to invoke the United Nations Convention against
Corruption on certain FCPA related matters. Today we conclude our series. This
article is written jointly with my colleague, Mary Shaddock Jones. We have kept
the article's original numbering so we apologize for any confusion. Part I of
this series may be viewed here.
Reconciliation of the Various UNCAC Provisions
How do we reconcile the various Articles under the UNCAC
with the statements contained in the Nigerian Tribune? If the UN Convention
does not grant individuals a private right of action under Article 35, then why
would SERAP in the petition to the EFCC be referring to the UN Convention
against Corruption? The two UNCAC articles appear to have a different
focus. Article 35 would appear to focus on permitting the entities or
parties damaged by the bribery to have the ability to bring an action for
damages within the country in which the bribery occurred. To see how this
works, we have substituted the word "Nigeria" in Article 35 instead of "Each
"Nigeria (as a State party) shall take such
measures as may be necessary, in accordance with principles of its domestic
law, to ensure that entities or persons who have suffered damage as a result of
an act of corruption have the right to initiate legal proceedings against those
responsible for that damage in order to obtain compensation.
Article 53 would appear to focus on the ability of those
persons or entities damaged to recover proceeds or property from another "State
Party" which may have collected the proceeds or property resulting from the
corrupt act. Again, to better illustrate this premise, we have substituted the
word "Nigeria" and "United States" in Article 53 instead of "Each State Party
The United States (as a "State Party") shall, in
accordance with its domestic law:
(a) Take such measures as may be necessary to
permit another State Party (i.e. Nigeria) to initiate civil action in its
(i.e. United States) courts to establish title to or ownership of property
acquired through the commission of an offence established in accordance with
(b) Take such measures as may be necessary to permit its
(i.e. United States) courts to order those who have committed offences
established in accordance with this Convention to pay compensation or damages
to another State Party(i.e. Nigeria) that has been harmed by such
(c) Take such measures as may be necessary to permit its
courts (i.e. United States) or competent authorities (i.e. DOJ/SEC?),
when having to decide on confiscation, to recognize another State Party's (i.e.
Nigeria) claim as a legitimate owner of property acquired through the
commission of an offence established in accordance with this Convention.
It may be that SERAP is attempting to force the EFCC to
use Article 35 as the basis of an action in Nigerian courts against the
companies who have entered into settlement agreements with the U.S., U.K.
and/or Germany or Article 53 as the basis of an action in the U.S. against the
U.S., (or U.K. and/or Germany) to recoup a part of the "bounty" collected as a
means of "equalizing" the "disparity in payment of damages" as referenced in
the SERAP article. Remember- the response by the EFCC in Rasheed's
article was that ""The Economic and Financial Crimes Commission (EFCC) has
agreed to seek further damages against multinational companies found to have
violated Nigerian laws while operating the companies." Is a threat of an
Article 53 based enforcement action what is causing "ripples" in the DOJ?
It may well be so, because an action such as this would be a sea change in
anti-bribery and anti-corruption enforcement. An enforcement action based upon
Article 53 could allow a country such as Nigeria to come into a U.S. court and
seek compensation from a U.S. company which has committed bribery in Nigeria or
require the DOJ/SEC to recognize a foreign country which has ratified the
UNCAC as the "legitimate owner" of profits disgorged or fines and
penalties paid to the U.S. government as a result of a FCPA
violation. We should note that Article 2 of the UNCAC defines
"property" as "assets of every kind, whether corporeal or incorporeal, movable
or immovable, tangible or intangible, and legal documents or instruments
evidencing title to or interest in such assets". It also defines "proceeds of
crime" as "any property derived from or obtained, directly or indirectly,
through the commission of an offence". We do not believe that the
intent behind the definition of "property" or "Proceeds of crime" or of Article
53 to include U.S. fines and penalties imposed as a result of the crime.
It could, however, encompass any profits obtained as a result of the crime.
3. Supply Side Solution v. Demand Side
The US Foreign Corrupt Practices Act (FCPA) is a demand
side solution to the issues of bribery and corruption. Stephanie Conner,
writing in the FCPA Blog, has termed the FCPA as "a demand-side tool to reduce
corruption in the developing world". Hence there is no penalty for accepting a
bribe under the FCPA. The FCPA simply aims to ensure that relevant actors do
not provide monetary lifelines to the autocrats and oligarchs who will be
threatened by the advancement of their people. The U.K. Bribery Act takes this
concept a step further by making illegal both the offering and receipt of a
bribe or other corrupt inducements.
In the petition, SERAP provides a laundry list of
companies who have settled with the United States for actions arising out of
the Foreign Corrupt Practices Act, but have not either been prosecuted by the
EFCC or have entered into what is described by SEROP as "paltry"
settlements with Nigerian Government.
It may well be that SERAP is more concerned about the
EFCC extracting more money from the "supply" side of the equation based upon
announced settlement amounts with the United States than it is with prosecuting
in-country government and public officials at the local, state and federal
levels accountable for acts of corruption, i.e. the "demand" side of the
equation. If it is the latter, focusing on the demand side, we believe
that this entirely appropriate and an effective mechanism to combat bribery and
corruption. This is because the U.S, U.K. and Germany and other countries who
have enforced their own anti-bribery and anti-corruption laws, cannot win the war
against corruption on their own or even collectively through the "supply" side
of the equation. Nigeria, along with the other countries with high
corruption indexes must focus on the "demand" side of the equation.
Bribery does not exist with out both - demand and supply.
However if SERAP's Petition is simply brought to squeeze
more money out of the "supply" side, we believe this focus is misplaced
as corruption will not be defeated without as much or more focus on the
"demand" side. The sad fact is that the demand for bribes in Nigeria is
pervasive. That is why it received the score of 2.4 in the 2010
Transparency International Corruption Perceptions Index. SERAP and the EFCC
should focus on increasing the Nigerian governments' efforts to investigate and
prosecute corrupt government officials in their country who demand and accept
bribes, as the next step towards removing bribery and corruption from
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
Mary Shaddock Jones, Attorney at Law
and former Assistant General Counsel and Director of Compliance at Global
Industries, Ltd. can be reached via email at firstname.lastname@example.org or via phone
at 337-515-8527 . I can be reached at email@example.com.
This article originally appeared on kyc.360.com,
a site devoted to the Anti-Money Laundering community.
This publication contains general information
only and is based on the experiences and research of the author. The author is
not, by means of this publication, rendering business, legal advice, or other
professional advice or services. This publication is not a substitute for such
legal advice or services, nor should it be used as a basis for any decision or
action that may affect your business. Before making any decision or taking any
action that may affect your business, you should consult a qualified legal
advisor. The author, his affiliates, and related entities shall not be
responsible for any loss sustained by any person or entity that relies on this
publication. The Author gives his permission to link, post, distribute, or
reference this article for any lawful purpose, provided attribution is made to
the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2011
For more information about LexisNexis
products and solutions connect with us through our corporate site.