Transparency International (TI) does good work in raising awareness of bribery and its effects and seeking to reduce bribery and corruption around the world.
Yet, every time I read TI’s annual progress report on OECD Anti-Bribery Convention enforcement (see here for the recently released report), I find myself asking the same question: does TI (and other civil society groups) view more “enforcement” as an inherent good regardless of enforcement theories, regardless of resolution vehicles, and regardless of outcomes?
The answer appears to be yes, as the progress report focuses on the quantity of enforcement actions with little to no discussion of resolution vehicles or the outcomes of those enforcement actions (i.e. quality).
Of course the U.S. is going to have strong quantity of enforcement numbers because of the DOJ’s (and now SEC’s) invention and use of non-prosecution and deferred prosecution agreements. At present, these resolution vehicles are not used elsewhere, but not surprisingly are desired elsewhere because they lead to more quantity of enforcement.
Would “lagging” governments (that term is used multiple times in the TI report) shine in the eyes of TI if those “lagging” governments came up with resolution vehicles that largely bypassed the judicial system?
Would “lagging” governments shine in the eyes of TI if those “lagging” governments manufactured cases through sting operations – even if those cases were dismissed by the judge after stating that the cases appear “to be the end of a long and sad chapter in the annals of white collar criminal enforcement.”
As to the U.S. enforcement data itself in the progress report, it is presented in a materially different format than the enforcement data from the other countries. It takes some footnote reading, but “the methodology used to compile enforcement statistics for the U.S.” was as follows.
“For the United States portion of this report, investigations are counted as “initiated” in the year in which an FCPA investigation is first publicly disclosed (for example, in press reports or a company’s securities filings). Investigations not disclosed in public sources are not counted. Cases are counted as “commenced” for the purposes of this report when an enforcement action results in ongoing judicial proceedings not involving a settlement; for example, a criminal indictment filed by the DOJ against one or more individuals, or an unsettled civil complaint filed by the SEC. Where a case “commenced” names multiple defendants under a single docket number, it is counted as a single case“commenced”. Where complaints or indictments are filed against multiple defendants under separate docket numbers, they are counted as separate cases “commenced”. “Cases concluded” include settlements between companies and individuals and the US DOJ and/or SEC, as well as criminal and civil judicial proceedings resulting in final judgment. Parallel settlements between a company and DOJ and SEC are treated as separate “cases concluded”; a settlement between a single US enforcement agency and more than one corporate entity in a corporate group is also counted as a single “case concluded”. Cases concluded are counted as “major” if they result in more than $25 million in criminal fines, civil penalties or disgorgement (for companies), or if they result in a prison term for an individual. Cases concluded against companies are counted in the year in which the settlement was reached and approved by a judge (for criminal and civil settlements), or finally ordered (for administrative settlements). Cases “concluded” against individuals are counted in the year a plea agreement or civil settlement was reached with the DOJ or SEC and publicly announced, or a final verdict reached by a presiding judge or jury.”
I’ve read this description three times and it still leaves my head spinning. Is there anything wrong with the simple ”core” approach to keeping FCPA enforcement data - an approach even the DOJ endorses?
Enforcement statistics aside, while the TI progress report bears all the hallmarks of the work of a non-profit, non-governmental organization and is portrayed as an “independent assessment on the status of enforcement,” the fact is, the progress report is an ad hoc compilation of scattered data assembled and opinions expressed by just a few people in their respective countries.
To TI’s credit, this is made transparent in the progress report. The report states: “as in years past, this report is based on information provided by national experts in each reporting country responding to a questionnaire.” Elsewhere, the report states: “The following country reports summarize the assessments by TI experts of enforcement of the Convention in their countries.”
In the case of the U.S., the TI experts were three people (one senior partner and two associates) at a law firm with a vibrant FCPA practice. In other words, the U.S. country report and its discussion of “inadequacies in legal framework,” “inadequacies in enforcement system,” the FCPA Guidance, Morgan Stanley’s so-called declination and other topics are merely the opinions of three people.
Regardless of the deficiencies in the TI report, kudos are in order for the recommendation in the report to “ensure the fairness and public credibility of settlements, [and to] make all settlements subject to court approval.”
However, the supporting text states: “a substantial number of foreign bribery cases are settled through negotiations between prosecutors and the accused companies and individuals. This is an understandable development in view of the complexity, cost, delays and uncertainties of litigation.”
It may be understandable, but is this a welcome development?
Show me a rule of law principle that suggests charging someone (whether a legal person or natural person) with a crime ought to be easy, cheap, quick and certain?
These issues, along with quality of enforcement, is where the focus ought to be. Not quantity of enforcement.