The Organisation for Economic Co-operation and Development (OECD) this week lauded U.S. enforcement authorities for continuing to be at the forefront in the global fight against corruption and offered only minor suggestions for improvements, like enhancing whistleblower protections and being more transparent in settlement agreements in foreign bribery matters.
The Phase 4 monitoring report on the United States by the 44 member countries of the OECD Working Group on Bribery evaluates and makes recommendations on the United States’ implementation and enforcement of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. It also details the United States’ challenges and progress in this regard, particularly regarding enforcement of its main anti-bribery law, the Foreign Corrupt Practices Act (FCPA). The long-awaited report follows a year-long peer review, including interviews with the public and private sector, media, and civil society experts.
“Most U.S. corporate compliance programs have long been focused on FCPA concerns and are quite sophisticated. Nothing in these (OECD) recommendations, to the extent implemented, should necessitate major programming changes by compliance executives.”
G. Scott Hulsey, Attorney, Kobre & Kim
“OECD’s Phase 4 report affirms the United States’ leading role in global anti-bribery enforcement,” says G. Scott Hulsey, an attorney at Kobre & Kim. “Highlighting the United States’ track record of successful enforcement over the past decade, OECD’s report recommends the refinement and enhancement of existing policies and procedures, rather than wholesale changes. The report’s recommendations can be broadly categorized as calling for making reporting easier, being transparent about enforcement and remedies, and tackling recidivism—all of which align with existing U.S. trends and objectives.”
Since the OECD Working Group’s Phase 3 evaluation in 2010, the United States has “further increased its strong enforcement” of the FCPA, “maintaining its prominent role in the fight against transnational corruption,” the OECD said. According to the Phase 4 report, between September 2010 and July 2019, the United States brought 156 cases under the FCPA or related offenses, resulting in the conviction or sanctioning of 174 companies and 115 individuals for foreign bribery and related FCPA offenses. This is a notable increase from the 88 companies and 71 individuals the United States convicted or sanctioned between 2002 and 2010, since the Phase 3 report.
In the Phase 4 report, the OECD pointed to increased U.S. enforcement activity as resulting from “a combination of enhanced expertise and resources to investigate and prosecute foreign bribery; the enforcement of a broad range of offenses in foreign bribery cases; the effective use of non-trial resolution mechanisms; and the development of published policies to incentivize companies’ cooperation with law enforcement agencies.”
The OECD praised the United States for other good practices as well, including the Department of Justice’s “reliance on several theories of liability to hold both companies and individuals responsible for foreign bribery, and the United States’ successful coordination that has allowed multi-agency resolutions against alleged offenders in FCPA matters.” Furthermore, through joint conferences and peer-to-peer training, the United States has further helped foreign partners build their capacity to fight foreign bribery and, thus, has enabled law enforcement authorities of these countries “to better investigate and sanction prominent foreign bribery cases,” the OECD added.
Foreign bribery sources
The report further breaks down in detail the sources of bribery cases resolved by the Department of Justice. “Despite commentary, and sometimes criticism, that U.S. anti-corruption enforcement passively relies far too heavily on matters coming to them—whether by way of a whistleblower or self-report, for example—the report provides a helpful statistical breakdown demonstrating that roughly 50 percent of the cases originate in just the opposite way—from the enforcers’ own law enforcement techniques and investigative work or through follow-up on media mentions,” says Sandra Moser, a partner at Morgan Lewis and former chief of the Department of Justice’s Fraud Section.
According to the OECD report, 30 percent of the Justice Department’s concluded foreign bribery cases resulted from voluntary self-disclosure; 20 percent from whistleblower reports; another 20 percent from referrals from foreign and civil authorities; and 15 percent each from media reports and the agency’s own law enforcement activities (information provided by cooperating defendants and other sources, such as the review of suspicious activity reporting by financial institutions).
In addition to praising the United States’ progress, the Working Group also offered the following—albeit, minor—recommendations on where U.S. authorities can still improve:
- Consider ways to enhance protections for those who report suspected acts of foreign bribery by non-issuers and enhance guidance about those available protections depending on the competent enforcement agency to which they report.
- Consider having the Securities and Exchange Commission consolidate and publicize its policy and guidance on how it enforces the FCPA with a view to further harmonize the U.S. approach to fighting foreign bribery.
- Continue to evaluate the effectiveness of the Corporate Enforcement Policy, particularly in terms of encouraging self-disclosure and of its deterrent effect on foreign bribery.
- Continue to address recidivism through appropriate sanctions and raise awareness of its impact on the choice of resolution in FCPA matters.
- Make publicly available whether a non-prosecution agreement or a deferred prosecution agreement with a legal person in a foreign bribery matter has been extended or completed, as well as the grounds for extending a DPA.
“Most U.S. corporate compliance programs have long been focused on FCPA concerns and are quite sophisticated,” Hulsey says. “Nothing in these recommendations, to the extent implemented, should necessitate major programming changes by compliance executives.”
For other countries’ anti-corruption enforcement efforts, however, the report holds a wealth of helpful information. “United States’ enforcers recognize the international reach of the OECD’s work, the report itself, and the value of the ever-increasing number of cooperative working relationships it has fostered with foreign authorities,” Moser says. “In many ways, the report serves as an explication of certain best practices effected by the United States, and which U.S. enforcers understand may well serve as a model for other nations with less mature frameworks.”
Under standard procedure, the United States has two years—until October 2022— to submit a written report to the Working Group on its implementation of the OECD’s recommendations and its enforcement efforts. This report will also be made publicly available.