The following summarises TI’s commentary on enforcement efforts in a selection of key jurisdictions:
Brazil – Little or No Enforcement
There are four investigations underway in Brazil, each having started in 2012. The Report comments that while Brazil’s Congress approved a new anti-bribery law in July 2013, this contains a number of ‘ill-formulated’ provisions.
The Report highlights that in reality investigations in Brazil can last for years before conclusion, which prevents the punishment of those responsible due to the effect of limitation periods. There is no obligation in practice for individuals to report non-compliance and, coupled with the lack of whistleblower protection, this has led to lacklustre enforcement efforts.
The Report recommends that Brazil takes steps to improve the organisation and prosecution of foreign bribery and to establish incentives for reporting violations.
Netherlands – Little or No Enforcement
In 2012, one major case concluded with sanctions and three investigations were commenced. The Report comments that sanctions are currently too low for foreign bribery offences. It is critical of the lack of protection available to private and public sector whistleblowers from discriminatory or disciplinary action. Protection only extends to unfair dismissal.
However, the Report notes that enforcement in the Netherlands stands to become stronger if the draft legislation of 5 February 2013 is adopted. This legislation, which at the time of the Report was due to go before the Dutch House of Representatives, proposes to increase the punitive fines for companies found guilty of foreign bribery offences to equal 10% of annual turnover and to increase the maximum prison term to six years. In 2012 the National Independent Advice and Information Centre for Whistleblowing was established to provide independent advice to potential whistleblowers.
The Report concludes by recommending that the Netherlands pass the draft legislation and to increase sanctions for foreign bribery offences. It also recommends introducing protection for whistleblowers, and increasing awareness of the use of Dutch “mailbox companies” and their liability for activities abroad. This latter recommendation refers to companies that are registered in the Netherlands but carry out their activities abroad.
Russia – Little or No Enforcement
According to TI, there have been no known cases or investigations recently commenced, underway or concluded. In April 2013 an investigative report from Corruption Watch UK revealed allegations relating to Angola’s debt of US$5 billion to Russia.
In May 2011 Russia enacted legislation that introduced the offence of bribery of a foreign official. However, the report comments that this is ineffective due to a vague definition of active bribery and a definition of “foreign public official” that is inconsistent with its definition in other laws. Despite a Presidential decree of 5 April 2013 which introduced some minor guarantees of protection for whistleblowers from the public and private sector, the Report comments that whistleblower protection remains a serious problem in Russia.
The Report concludes by recommending that government officials and civil society must monitor the application and implementation of Russia’s new system of penalties for anti-bribery and corruption activity. TI also recommends the introduction of effective liability of legal persons to ensure that third party beneficiaries are covered by the foreign bribery offence for legal persons. Finally, the Report notes that whistleblower protection should be introduced through legislation.
Canada – Limited Enforcement
There has been a notable increase in enforcement activity in recent years. Three major cases were initiated between 2009 and 2012. One major case was concluded in 2011, and the trial of a third case was completed in November 2012. The sporadic information that has been released by the Royal Canadian Mountain Police has shown that there were 35 investigations underway as of March 2012.
The Report comments that the legislative changes introduced to the Corruption of Foreign Public Officials Act in February 2013 have remedied a number of TI’s longstanding concerns with the legislation. It comments that the only inadequacies remaining are the absence of a civil law enforcement option and the ‘cumbersome nature’ of criminal proceedings in white-collar crime cases.
The amendments to the CFPOA include the elimination of facilitation payments; the establishment of a books and records offence; and an increase in the maximum individual sentence from five to fourteen years’ imprisonment. The Report comments that these are substantial amendments which should significantly enhance the enforcement of the CFPOA.
The Report concludes by recommending that Canada introduce further amendments to the CFPOA to provide a non-criminal enforcement option.
France – Limited Enforcement
There have been eight investigations, three major cases and four non-major cases commenced between 2009 and 2011. In 2012, two investigations and one non-major case commenced and one case concluded with substantial sanctions.
The Report reiterates a comment from the UN Convention against Corruption Implementation Review and raises potential concerns about the independence of French prosecutors from the Ministry of Justice. The Report also criticises a French law known as the “blocking statute” which makes it obligatory for French companies to refuse to provide foreign enforcement authorities with information directly requested for their foreign bribery investigations. The Report comments that the sanctions for companies are too low, with the maximum sanction set at €750,000.
The Phase 3 Report prepared by the OECD Working Group on Bribery expressed concerns at the sufficiency of resources dedicated to foreign bribery investigations. In particular the Report highlights that whistleblower protection is in place for the private sector but not the public sector, and that not enough use is being made of confiscation and debarment as a means of sanctioning.
The Report comments favourably on recent legislative proposals adopted in France. A statute adopted on 27 March 2012 permits the seizure and confiscation of any asset of a convicted person, and extends the confiscation beyond the proceeds of the offence. Also, new bills were presented in January, February and April 2013. The last of these recognises the right of associations fighting corruption to lodge official criminal complaints as a civil party and requires that judicial investigations are opened, even if there is opposition from prosecutors.
The Report concludes by recommending that France significantly increase the sanctions available against companies by considering setting them as multiples of the proceeds of bribery or percentages of annual profits. It also recommends making use of additional penalties, and advocates the creation of an exception to the “blocking statute” for cases of foreign bribery investigations.
South Africa – Limited Enforcement
According to the Report, South Africa has never initiated a prosecution or concluded a case involving foreign bribery. The Directorate for Priority Crime Investigations has reported that there are currently five foreign bribery investigations underway in South Africa, one in 2010, two in 2011 and two in 2012.
The Report comments that the laws that require company record keeping are not adequate which could lead to investigations into foreign bribery allegations being hampered by a lack of reliable evidence. TI also makes the general comment that the South African criminal justice system is ‘acutely under-resourced’.
However, the Companies Act No 71 of 2008 has undergone significant revisions. Under the changes introduced to the Act, together with compulsory regulations introduced alongside it, state-owned, listed and other medium to large companies are required to set up social and ethics committees which monitor adherence to the requirements of the Act and regulations and to work within their companies to implement the OECD recommendations on reducing corruption.
The Report concludes by recommending that South Africa dedicates more resources to enforcement agencies, in particular to train staff on investigating foreign bribery offences. To further anti-corruption enforcement the Report also recommends that an independent and well-resourced anti-corruption commission be established in line with the recommendation of the Constitutional Court in its judgment in Glenister v President of the Republic of South Africa (CCT 48/10)  ZACC 6.
Australia – Moderate Enforcement
Since 2009 twenty-two investigations have been initiated including ten in 2012. Of those investigations in 2012 seven were dropped and none of the remaining investigations led to prosecution.
The Report notes that the Australian Federal Police (AFP) has undergone a restructuring of its crime operations, with a renewed focus on fraud and anti-corruption investigations. In February 2013 a Fraud and Anti-Corruption portfolio was established and this new structure is designed to bring focus and dedicated resources to foreign bribery cases within the AFP.
However the Report is critical of inadequacies in the legal framework and comments that the framework as it stands does not make it clear whether the law requires prosecutors to identify the particular official in the foreign country that was bribed in order to bring a prosecution for foreign bribery.
The Report recommends that the Federal Government should release its National Anti-Corruption Plan (which it announced in 2011) and couple this with a firm programme for reform in the area of anti-bribery and corruption. In particular the Report recommends the removal of the qualified defence of facilitation payments.
Italy – Moderate Enforcement
There were no known investigations commenced in 2012, while two were concluded without sanctions due to the statute of limitation. However a number of high-profile investigations were initiated including the ones against Finmeccanica S.p.A, AgustaWestland, and SAIPEM S.p.A.
TI highlights as a deficiency that extortion by a public official is an acceptable defence for paying a bribe under the Italian Criminal Code. Furthermore, as indicated above, a short statute of limitation is an issue for ongoing investigations. Whilst TI notes that the introduction of the Anti-Corruption Law in November 2012 has brought some positive change, including the introduction of a provision on whistleblower protection in the public sector, the Report comments that this is inadequate as it does not extend to the private sector.
The Report recommends that Italy enforce the existing laws on sanctions and remedy those on statutes of limitation, as well as strengthening the existing provisions on whistleblower protection in the Anti-Corruption Law.
Germany – Active Enforcement
Between 2009 and 2012 fourteen major cases concluded with substantial sanctions, five of which occurred in 2012. Since 2009 up to and including 2012, 78 foreign bribery investigations were commenced in Germany. A further 13 were opened in 2012. Germany’s Active Enforcement can be seen through a number of high profile sanctions imposed on a number of companies including MAN, Ferrostaal, Hewlett-Packard and EADS.
Despite demonstrating Active Enforcement of the Convention, Germany has not ratified the UN Convention against Corruption (UNCAC), or two Council of Europe Conventions on corruption. TI notes that this hampers international cooperation in foreign bribery cases with countries that are not a party to the OECD Convention. However, in October 2012 the Bundestag did commence the process to adopt an amendment to the Act of Regulatory Offences which will increase the maximum monetary fine that can be imposed on legal persons for offences under the Act from €1 million to €10 million.
The Report recommends that Germany ratify the UNCAC and Council of Europe anti-corruption conventions. It also recommends that Germany adopt and enforce the amendment to the Act of Regulatory Offences to increase the sanctions available against legal persons.
United Kingdom – Active Enforcement
Twenty cases have been commenced since 2009, with three major cases in 2012. Sixteen cases have been concluded since 2009 with the majority of these ending in substantial sanctions. The Report highlights concerns from the OECD Working Group’s Phase 3 Report of March 2012 including the UK’s slow progress in extending the Convention to its Overseas Territories.
The Phase 3 Report also raised concerns over the increasing use of civil recovery orders to resolve foreign bribery-related cases. This Phase 3 Report placed specific concern on the relative lack of judicial oversight compared to criminal proceedings and the lack of transparency regarding the SFO’s process of giving advice to companies and its willingness to enter confidentiality agreements. The Report also highlights the SFO’s relative lack of funding and comments that whilst more funding could be made available, this is at the discretion of the Treasury.
The Report notes that deferred prosecution agreements (DPAs) have now become part of English law under the Crime and Courts Act 2013. Also, it is noted that there have been moves to change the law relating to whistleblowers under the Enterprise and Regulatory Reform Bill which would provide a “public interest” requirement in order for a disclosure to be protected by whistleblowing law.
The Report concludes by recommending that the SFO should make more transparent the process by which it reaches settlements with companies. TI UK has also expressed concerns regarding the SFO’s available resources. Finally, TI UK also expressed concern that the UK Bribery Act’s “Guidance” to companies on procedures to prevent bribery could create loopholes concerning supply chains, joint ventures and foreign-owned companies listed on the London stock market.
United States – Active Enforcement
There were at least twenty-four investigations initiated, two cases commenced and twenty-nine cases concluded in 2012. The Report highlights no significant inadequacies in the US legal framework, but does highlight some inadequacies in the enforcement system.
The Report highlights that the US remains the most developed and active foreign bribery legal and enforcement regime in the OECD, and that the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are two of the leading anti-corruption enforcement agencies. However, the Phase 3 Report did not consider that the US had made sufficient progress on its recommendation to clarify its policy on dealing with claims for tax deductions for facilitation payments. TI USA also considers that the SEC and DOJ should make public their detailed reasons for a choice of DPA or non-prosecution agreement (NPA).
The Report comments that the production of the Resource Guide to the US Foreign Corrupt Practice Act is significant as this comprehensively reflects the effort of the SEC and DOJ for enforcing the FCPA. Whilst there has been a reduction in the number of enforcement actions against individuals and companies, the Report comments that this is a reflection of the multi-year character of FCPA cases and not a lack of emphasis on FCPA enforcement. The Report also highlights increased judicial scrutiny of settlements.
The Report makes three primary recommendations. The first is to discourage the making of facilitation payments, which remain an exception to the FCPA’s anti-bribery provisions. The second is to provide regular information to the public regarding the number of investigations underway (or where enforcement actions have not been pursued). Finally, the Report recommends that detailed reasons should be made publicly available as to the choice of a particular agreement, the duration of the agreement and how the company has met the terms of the agreement.