World Bank / U.N. Report Rightly Identifies a Problem, Yet Ends With Contradiction

World Bank / U.N. Report Rightly Identifies a Problem, Yet Ends With Contradiction

 This article was reprinted with permission from FCPA Professor

The Stolen Asset Recovery Initiative, a partnership between the World Bank Group and the U.N. Office on Drugs and Crime, recently released this report titled “Left Out of the Bargain: Settlements in Foreign Bribery Cases and Implications for Asset Recovery.”

The report addresses the “core issue of how the imposition of monetary sanctions through settlement compares to the requirements of the U.N. Convention Against Corruption on the recovery and return of the proceeds of corruption.”

This post highlights other topics, beyond the above core issue, addressed in the lengthy report.

For starters, the report is a useful resource in understanding how other nations prosecute and resolve bribery and corruption offenses as well as how settlements in one jurisdiction affect legal actions in other jurisdiction (that is double jeopardy issues).  Also informative was the section of the report detailing countries who “have taken enforcement actions against foreign companies or individuals who have bribed their public officials” In other words, carbon-copy prosecutions (see here for the prior post).

From my perspective, the most notable feature of the report was its call for greater transparency of bribery and corruption settlements.

As the report notes, “over the past decade, there has been significant progress in battling foreign bribery, with the clear trend of many cases being resolved through settlements rather than full trials.”

In the Executive Summary, under the heading “Additional Observations,” the report states:

“This study calls for greater transparency in settlements. The negotiation of settlements takes place between the authorities and implicated parties behind closed doors. One critical step would be to inform affected jurisdictions that a negotiation toward a settlement is taking place. The study shows that forms of settlements (such as Non-Prosecution Agreement, Deferred Prosecution Agreement, penalty notice, or a guilty plea) provide varying degrees of transparency. In some jurisdictions, the outcomes of settlements are publicly available, illustrating that greater transparency is possible. Most settlements are negotiated with little oversight by a judge and sometimes without any public hearing at the conclusion. The report emphasizes that once an agreement has been reached, it should not be shielded from public view. More transparency helps ensure fairness to all affected jurisdictions and parties.”

After noting that the “United States has resolved more foreign bribery cases by way of settlement than any other nation,” the report states that the U.S. has some “unique procedural features” in that non-prosecution agreements and deferred prosecution agreements are “unique even among the common law jurisdictions.”

The report notes that NPAs in the U.S. have no judicial involvement and then states that “in general, if a judge oversees the [settlement] process, the public will have more confidence in the outcome” and that “without the stamp of judicial approval, settlements may have less legitimacy.”

Elsewhere, the report notes that settlements, and the “abbreviated procedures [they contain] have also helped in no small measure to boost the enforcement of foreign bribery laws and regulations globally.”

Under the heading “reduced role of the courts,” the report states:

“The more cases are concluded by means of a settlement rather than proceeding to trial, the more the role of the courts is reduced.  In common law systems, in particular, the greater involvement of courts usually leads to greater clarification of what the law means.  But as greater use is made of settlements and guilty pleas, this clarifying role is diminished.  In a trial, issues are litigated with full arguments made on each side, permitting a judge to weigh the merits of the legal issues in light of the facts.  In common law jurisdictions, such case law plays a large role, and its effect on the development of law is considered desirable.  Moreover, in such systems, legal precedent is often binding on future cases.”

Despite the above spot-on statements on the issue of settlements, the report ends with a Conclusion section and the first conclusion is stated as follows.

“Over the past decade, enforcement actions against foreign bribery have increased.  This is a positive and welcome trend, especially since improvements in enforcement also improve the climate for asset recovery.  This progress in enforcement has largely been due to the effective use of settlements in a steadily increasing number of jurisdictions.”

From calling for greater transparency of settlements, to stating that settlements have less legitimacy, to criticizing the reduced role of the judiciary in settlements, to calling such a state of affairs “effective.”

That is quite the contradiction.

 Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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