ETHIC Intelligence was very pleased to host its second annual international conference on Standards and Guidlines: Recent developments in Anti-Corruption Compliance on September 11, 2017 at the OECD conference centre in Paris. You can now view photos and video from the conference where experts from business, civil society and government exchanged and debated on how best to progress in the fight against corruption.
Twenty years ago, when an agreement was reached at the OECD on Combating Bribery of Foreign Public Officials in International Business Transactions, I remember the satisfaction of the signatory countries’ representatives. Finally, there was a legal instrument to combat this insidious practice. But the text was only signed by a small number of countries and the willingness of each country to prosecute its companies for acts of corruption committed overseas – acts which resulted in contracts and profits at home – was, except for the United States, largely absent.
These countries did not appreciate the determination of the Anti-Bribery Convention Working Group provided for in the Convention which, under the leadership of Mark Pieth, Professor of Criminal Law at the University of Basel, was to meet each trimester to assess the application of the Convention. Nor did they appreciate the willingness of the American government to apply the extraterritorial prong of the FCPA to prosecute foreign companies, particularly in Europe, for offenses of transnational corruption. It was these prosecutions which prompted national governments to commit to prosecuting their national companies themselves rather than abandoning them to the long arm of the American Department of Justice.
Over the past 20 years, the results from the implementation of the OECD Anti-Bribery Convention have been impressive. Specifically: nearly 350 companies and 500 individuals convicted. And, on this 20th anniversary of the Convention more than 400 investigations are in progress in 25 countries and 150 individuals are currently being prosecuted.
However, even beyond the increase in the number of prosecutions and convictions for acts of foreign bribery the Convention has had four unexpected consequences.
Ten years after the Convention, the earthquake that was the Siemens corruption affair in Europe, produced significant unforeseen consequences. The American investigation into the German industrial giant led German authorities to adapt their own methods of prosecution in order to keep up with the faster and more efficient American prosecutors.
The involvement of a law firm, Debevoise & Plimpton, as part of the investigation as well as the use of negotiated settlements by the Americans which were followed by the German authorities changed forever the way in which cases of corruption would be investigated and prosecuted. These developments were necessary to meet the specific challenges of transnational corruption investigations where the complexity and obscure nature of the offenses were major obstacles to the traditional approaches to investigation and prosecution.
Following the Italian Pattegiamento and the use of negotiated settlements in the Netherlands, the United Kingdom (2014), Brazil (2014) and France (2016) followed suit by introducing procedures designed to encourage voluntary disclosure by companies who had discovered corruption offenses.
The progressive harmonization of prosecutorial methods that we are witnessing facilitates and offers a certain coherence to the multijurisdictional investigations of transnational corruption.
This emerging harmonization remediates, to a certain extent, the fact that article 4 of the Convention (Parties are requested to cooperate in cases where a corruption offense involves more than one country), had not yet been formally utilized.
The first consequence then of the implementation of the OECD Anti-Bribery Convention was the improved harmonization of prosecutorial procedures amongst signatory countries in cases of transnational and national corruption.
2. The publication of national guidelines
Just as we are seeing a rising uniformity in national prosecutorial procedures amongst signatory states, so can we observe a more coherent international anti-corruption framework.
The second consequence of the transposition of the OECD Anti-Bribery Convention into national law is the increasing number of countries issuing guidelines – either in the form of recommendations or obligations – to companies on how to prevent and detect corruption.
With the Law Decree 231 in Italy, the Italian authorities started the tendency as early as 2001, and this was followed by the publication of Chapter 8 of the US Federal Sentencing Guidelines in the US in 2004. But it was the UK Bribery Act, published in 2011, with its notion of ‘failure to prevent corruption’ offense which really accelerated the change. The extraterritorial dimension of the failure to prevent corruption offense concerns any company which is doing business in the UK and it is coupled with an affirmative defense for companies who have implemented procedures recommended in the Guidance. The extraterritorial reach of the British law and the six principles of its complementary Guidance have become a global reference in corruption prevention.
In the wake of the UKBA the Russian (art. 13.3 FL 273 of January 2013), Brazilian (Law No. 12,486 2014 Clean Company Act), Spanish (Organic Law 1/2015, of July 1, 2015) French (8 December 2016) and Mexican authorities (GLAR 19 July 2017) have adopted guidelines either in the form of recommendations or obligations.
Even if there are differences amongst them, these guidelines are generally coherent and have a common goal: provide companies with references with which they can build their corruption prevention programs.
Thus, another unexpected consequence emerged from the exchanges on best practices within the OECD Convention’s Working Group, with its focus on transnational corruption, which encouraged signatory states to share their methods of investigation and prosecution and facilitated the publication of national guidelines by certain amongst them who wished to formalize the fight against corruption at the national level.
Because the ISO 37001 also applies to public administrations, it can be reasonably assumed that public agencies would be interested by certification
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3. An increase in national prosecutions outside the OECD zone
Even more surprising than the intensification in the fight against corruption amongst signatory nations is the growth in national prosecutions by the authorities of countries which are not signatory to the Anti-Bribery Convention.
The convictions of companies from signatory countries for acts of corruption carried out in third-party countries led to these third-party nations’ becoming more interested in corruption prevention at home.
There has been an increase in these non-signatory nations, often poorly ranked on the Transparency International Corruption Perception Index, progressively reinforcing their legislation and launching prosecutions not only of companies but also of certain public officials and political leaders. Recent examples coming out of Algeria, China or Saudi Arabia are just a few of the more significant cases.
Thus, the third consequence of the Convention is that, in addition to an increase in the number of sanctions by the 43 signatory countries for acts of transnational corruption, there is a perceptible rise in national prosecutions by nations that have not yet signed the Convention.
4. The emergence of an international standard: ISO 37001
The fourth consequence, also indirect but extremely important, is the emergence of an international standard designed by both businesses and government representatives: the ISO 37001 on Anti-Bribery Management Systems.
The publication of the ISO 37001 is the result of three complementary developments.
Finally, ISO 37001 addresses a frequent criticism of the OECD Convention which is that it only concerns active corruption and does not allow for the prosecution of corrupt public officials. Because the ISO 37001 also applies to public administrations it can be reasonably assumed that public agencies would be interested by certification… and would expect those companies answering public calls for tender to have an equal commitment to integrity and why not through certification? Not that certification is a universal panacea to corruption but because ISO 37001 certification demonstrates the willingness of top management – whether public or private – to commit appropriate resources to the detection and prevention of corruption.
At 20 years of age we are strong and believe that anything is possible. The OECD Convention is 20 and at the age of 20 it has already accomplished so much in how companies carry out their business but is capable of so much more to ensure more transparent, equitable and efficient business practices.
Philippe Montigny is CEO of ETHIC Intelligence and Chairman of its Certification Committee. Philippe has over 20 years of experience in advising companies on strategies to prevent corruption and leverage business integrity.
The compliance community must navigate amidst an ever-changing landscape of laws, recommendations, emerging corruption risks, trends in investigations and the threat of prosecution. The ambition of this blog is to bring this landscape into focus while raising compliance effectiveness from both a business and legal perspective.
Anti-corruption compliance is a major asset to companies; ETHIC Intelligence Certification of compliance programs and Validation of business partner commitments leverage this asset in a concrete way to help business.