Ahead of the OECD’s Anti-Bribery Ministerial meeting held last week in Paris, a number of NGOs wrote a combined Letter to the OECD expressing their concern about the effectiveness of settlement agreements as a deterrent against bribery and corruption (the “Letter”).
Research conducted by the OECD found that settlement agreements have been used to resolve bribery cases for many years, with 69% of foreign bribery cases being resolved out of court between 1999-2014. Within the UK, deferred prosecution agreements for corporate crime (DPAs) were introduced as a matter of law in 2013. In this edition, we also cover the first corporate plea bargain in France for tax fraud laundering.
The Letter calls on the OECD to consider the “lessons learned” from the use of corporate settlements to date and to adopt standard guidelines which can be used by the parties to the Anti-Bribery Convention in their efforts to prevent bribery. The authoring NGOs call for these guidelines to be based on a number of governing principles, in particular, the need for:
- Full disclosure by corporates and co-operation with the relevant authorities;
- Disclosure of the settlement terms to the public;
- Judicial oversight of all settlement agreements;
- Effective, proportionate and dissuasive penalties under the settlement agreement; and
- Companies to strengthen and monitor compliance to be a requirement of settlement.
The authors of the Letter point out that, as things currently stand, the use of settlement agreements and the underlying principles upon which they are based varies from country to country, resulting in an “uneven playing field” for the enforcement of corruption.
The OECD appears to have taken on board a number of the issues raised in the Letter as in its Anti-Bribery Ministerial Declaration dated 16 March 2016 it calls for, amongst other things, the Working Group to study good practices related to voluntary disclosure of bribery and negotiated settlements and to encourage dialogue between parties on these issues.
In the UK, the structure of a DPA and the principles that determine whether one may be granted largely reflect the best practice principles set out in the Letter. For example, the SFO and Director for Public Prosecution must be satisfied that there is sufficient public interest for a DPA to be entered into rather than to pursue a prosecution in order for a DPA to be offered to a company in any event. Then, once negotiated, the DPA must be approved by a Judge.
The DPA is also likely to contain a number of conditions aimed at the compensation of the victims and the prevention of future wrongdoing. DPAs may, for example, require the implementation of specific compliance measures and controls, possibly to be overseen by an independent monitor.
Whilst the UK therefore appears to be heading in the right direction, we recently highlighted that UK DPAs are not without their flaws. David McCluskey recently considered whether DPAs should also be available for individuals (as they are in the US) in order to ensure that individuals are able to and incentivised to speak freely to the authorities as part of the “full disclosure” and “co-operation” required for the DPA to be offered to the company. If the key individuals involved are not offered the same alternative to prosecution as that offered to the company, there is a risk that the full extent of the wrong doing may not be revealed and therefore the opportunity to get to the heart of the problem may be missed.
The imposition of strong penalties such as fines and the possible reputational damage to the company from a public settlement are likely to remain instrumental in creating the desired deterrent effect, but, in our view, greater long term benefits are likely to be achieved from measures which actively require companies to change their ways. Such measures might include the imposition of monitors who oversee the implementation and operation of compliance programmes. As the imposition of a monitor is likely to be an expensive and burdensome penalty for any company, its threat alone should encourage companies to ensure that they have adequate compliance programmes in place. The OECD has similarly called on the parties to the Anti-Bribery Convention to explore “innovative methods to combat foreign bribery”. We look forward to seeing what they come up with.