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Liability for Passive Bribery, Waiver of Compliance Defence and Pre-Trial Resolutions: the OECD Updates the Recommendation for Combating Foreign Bribery

The revised version of the Recommendation incorporates a number of additional measures for detecting, preventing and investigating cases of bribery of foreign public officials that take account of the existing trends and new challenges in transnational bribery. The novelties introduced by the Recommendation concern the following areas:

1. Addressing the Demand Side of Foreign Bribery Cases

The most significant update of the document is the introduction of a new section on countering the receipt/solicitation of bribes by foreign public officials. It includes, in particular, the following recommendations on how to mitigate relevant risks:

  • undertake coordinated actions with other member and non-member countries, with a view to engaging on addressing the solicitation and acceptance of bribes by foreign public officials;
  • facilitate anti-bribery collective action initiatives with private and public sector representatives, as well as civil society organisations, aiming to address bribery and bribe solicitation;
  • make public and accessible domestic rules and restrictions governing gifts, hospitality, entertainment, and expenses for domestic public officials;
  • periodically review and update as may be necessary domestic policies on small facilitation payments and encourage companies to prohibit such payments in internal compliance programmes or oblige them to accurately account such payments in companies’ books and financial records etc.

As it has already been highlighted, this section of the Recommendation was developed by the OECD with the active support of the United States: one of the objectives of the U.S. Strategy on Countering Corruption is criminalisation of solicitation and passive bribery of foreign public officials (the relevant bill is under consideration of U.S. Congress). In this context, it should be recalled that, at the time, it was the United States that actively lobbied the adoption of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (hereinafter, the Convention), seeking to establish the grounds for expanding the enforcement of the FCPA and holding liable not only the U.S. corporations but also their foreign competitors. As a consequence, the inclusion of the topic of addressing the demand side of bribery in the Recommendation on the implementation of one of the key anti-corruption conventions can be a starting point for incorporating the relevant provisions in domestic legislation. Eventually, this can transform the extraterritorial imposition of sanctions on bribe takers among foreign public officials into an equally “common” measure as the existing penalties for the bribery of foreign public officials.

2. Law enforcement

The document is also supplemented with the recommendations on how to enhance the effectiveness of enforcement of anti-foreign bribery legislation, in particular, by:

  • proactively detecting and investigating foreign bribery cases, including by gathering and analysing information from diverse sources, such as the media, reporting persons, foreign public agencies, and the private sector;
  • ensuring that a broad range of investigative measures is available in foreign bribery investigations and prosecutions, such as access to financial, banking and company information, including on beneficial ownership, asset tracing, and forensics;
  • using special investigative techniques under the conditions prescribed by domestic laws;
  • ensuring that cases of bribery of foreign public officials are investigated without undue delay;
  • considering the provision of information to competent authorities by persons who participated in, or have been associated with, the commission of the crime as a mitigating circumstance;
  • promoting cooperation and information sharing among and within national competent authorities etc.

Additionally, the revised Recommendation addresses the issue of joint investigations (prosecution) in cases of transnational bribery, which is becoming ever more acute given the growing number of active “players” in the international law enforcement field (see, for instance, the discussion on the paradigm shift in France). In this context, the OECD recommends that countries coordinate their efforts in conducting joint or parallel investigations (prosecution) in order to avoid prosecuting the same natural or legal person for the same crime in different jurisdictions.

3. Sanctions

The provisions concerning the liability for foreign bribery constitute yet another new section of the Recommendation. Member countries are advised to do the following:

  • ensure that sanctions for foreign bribery are proportionate and dissuasive, including by taking into account the amounts of the bribe paid and/or the value of the profits or other benefits derived;
  • in adopting the decisions on liability/sanctions, take into account consider taking into account mitigating factors, such as voluntary disclosures to law enforcement authorities of misconduct, cooperation with law enforcement authorities, acceptance of responsibility, and timely and appropriate remediation, including the implementation or enhancement of a compliance programme;
  • ensure identification, freezing, seizure, and confiscation of proceeds of bribery of foreign public officials, develop a proactive approach to the identification, freezing, seizure, and confiscation of ill-gotten gains, develop and disseminate to law enforcement authorities guidelines for identifying, quantifying, and confiscating these proceeds;
  • make public and accessible elements of resolved cases of bribery of foreign public officials.

4. Non-trial resolutions

The revised Recommendation also contains a section centered on the use of different forms of non-trial resolution in criminal, administrative and civil cases with the participation of legal and natural persons.

In particular, it is recommended that countries:

  • adopt a clear framework regarding non-trial resolutions, including the authorities entitled to enter into non-trial resolutions, publication of elements of non-trial resolutions, and the requirement for the alleged offender to admit facts and/or guilt;
  • develop clear criteria regarding the use of non-trial resolutions including, voluntary self-disclosure of misconduct, cooperation with law enforcement authorities, and remediation measures;
  • ensure that the non-trial resolution of foreign bribery cases does not constitute an obstacle to the effective investigation and prosecution of natural or legal persons in other countries, and generally allows for effective international cooperation etc.

It should also be highlighted that it is for the first time that the provisions of this kind appear in an international document. They seem to be designed to encourage as many countries as possible to implement relevant mechanisms (further detail about the use of non-trial resolutions in foreign bribery cases is provided, in particular, here).

5. Reporting foreign bribery and protection of reporting persons

The section on reporting foreign bribery in the revised Recommendation is much further developed and supplemented by a new subsection on the protection of reporting persons.

In particular, the OECD deems it essential that the member States:

  • establish and implement policies and procedures by which any natural person, including public officials, can report suspicions of bribery of foreign public officials and related offences to competent authorities;
  • provide easily accessible and diversified channels for the reporting of suspected acts of bribery of foreign public officials and related offences and raise awareness of these channels and of the importance of reporting such suspicions;
  • ensure that appropriate measures are in place to allow public officials, in particular officials in public agencies that interact with companies operating abroad, including foreign representations, financial intelligence units, tax authorities, trade promotion authorities, relevant securities and financial market regulators, anti-corruption agencies and procurement authorities, to report to competent authorities suspected acts of foreign bribery and related offences detected in the course of their work;
  • encourage proactive detection;
  • ensure that competent authorities implement the legal framework for the protection of reporting persons, and investigate complaints of retaliation;
  • consider allowing for anonymous reports, and ensure the confidentiality of the identity of the reporting person;
  • afford protection to active employees, those in the recruitment process and whose work-based relationship has ended, as well as to third persons connected to the reporting person;
  • provide a broad definition of retaliation against reporting persons;
  • prohibit or render invalid any contractual provisions designed or intended to waive the protections of reporting persons etc.

6. Compliance

The revised Recommendation stresses that in adopting the measures for encouraging organisations to develop and implement internal controls, ethics and compliance programmes countries should take into account their size, type, legal structure and geographical and industrial sector of operation, and specific characteristics of domestic anti-corruption legislation of the countries where they operate.

A subsection on possible incentives for compliance programmes is integrated in the Recommendation. It includes the following recommendations for member countries:

  • consider compliance programmes in their decisions to grant different advantages, including public subsidies, licences, public procurement contracts, contracts funded by official development assistance, and officially supported export credits;
  • take into account the implementation of compliance programme by the organisation in adopting a decision on holding it liable for corruption offences. The document stresses, however, that the mere existence of a compliance programme should not fully exonerate the legal person from its liability (the so called compliance defence) with the final consideration of the measures adopted should remain the sole responsibility of judicial, law enforcement, or other public authorities.

Based on the findings of the analysis of major trends in law enforcement in foreign bribery cases over the last decade, the OECD has updated its Good Practice Guidance on Internal Controls, Ethics and Compliance annexed to the Recommendation.

In particular, the Guidance now contains the following additional measures for preventing corruption offences, including foreign bribery, which can be considered essential for an effective corporate compliance programme taking account of lessons learned:

  • development and implementation of a reporting framework including internal, confidential, and where appropriate, anonymous reporting, protection against any form of retaliation for directors, officers, employees and business partners, not willing to violate professional standards or ethics under instructions or pressure from hierarchical superiors, as well as for reporting persons willing to report breaches of the law or professional standards or ethics occurring within the company, as well as clearly defined procedures and accessible, channels for reporting;
  • periodic reviews of the compliance programmes both on a regular basis and upon specific developments, taking into account the company’s evolving risk profile, such as changes in the company’s activity, structure and/or operating model, results of monitoring and auditing, relevant developments in the field, evolving international and industry standards, and lessons learned from a company’s possible misconduct and that of other companies facing similar risks;
  • in cases of mergers and acquisitions, comprehensive risk-based targets, prompt incorporation of the acquired business into its internal controls and ethics and compliance programme, and training of new employees and post-acquisition audits;
  • external communication of the commitment to internal controls and ethics and compliance programmes.

7. Awareness-raising and training

Provisions on training and awareness-raising have been incorporated in many sections of the revised Recommendation, including:

  • training for law enforcement and prosecution officers with a view to enhancing the effectiveness of investigation, prosecution and adjudication of foreign bribery cases, as well as for all officials and private sector entities on the risks of extortion by foreign public officials;
  • awareness-raising of the risks of bribery in international business transactions also among small and medium enterprises: the document highlights that this can be facilitated, in particular, by dedicated, professional and industry-led initiatives based on the Good Practice Guidance on Internal Controls, Ethics and Compliance;
  • training of a broader target audience, including officials of foreign governments, officers of financial intelligence units, tax authorities and official development assistance agencies;
  • training of and provision of guidance to the bodies responsible for conducting assessments of compliance programmes in the framework of investigation and prosecution of foreign bribery cases, and/or the bodies that should assess corporate compliance programmes in relation to public decisions; publication of such recommendations and their availability for a wide range of organisations etc.

The responsibility for assessing the implementation of the Recommendation by the member countries in the framework of the monitoring of the Convention and for providing a general report on their fulfillment to the OECD Council every five years is assigned to the OECD Working Group on Bribery.

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