Syndicate content

How can we compensate the victims of bribery?

Jean Pierre Brun's picture

In early 2009, the U.S.-based multinational Halliburton paid $579 million to the U.S. government to settle charges it had bribed Nigerian officials to win a contract.  In late 2008 the German telecommunications giant Siemens paid $1.6 billion in fines, penalties and disgorgement of profits to the German and American governments for bribing officials. 

None of the monies paid by either Siemens or Halliburton went to the countries where the bribes were paid. Some, like Sir Richard Alderman, Director of the UK’s Serious Fraud Office feel strongly that the settlement money should compensate the victims of corruption. 

The current lack of implementation of the framework outlined in articles 55 and 57 of the United Nations Concention Against Corruption for resolving transnational corruption cases involving potential confiscation or disgorgement remedies compounds the problem.

In addition, the potential lack of coordination of international proceedings  creates the possibility that companies will pay twice for the same offense, once to the government where they are headquartered and a second time to countries victimized by their bribery.  As a result, some fear that  foreign investment could suffer as a result of enforcement of foreign corrupt practices legislation.
 

Comments

Submitted by Anonymous on
Seems difficult to compensate those people when it is next to impossible to identify those people, and realistically divide such a settlement. After all, when these companies settle for 500 million plus, they've still made several billion in profits through the venture at any rate. Perhaps it's better to, instead of attempting to compensate every individual who lost money and opportunity through these unfair bribes, enter that settlement amount into a trust built upon improving both anti-corruption efforts, as well as building up infrastructures in those communities in which the bribery was allowed to take place, through projects independent of the political system that either implicitly, or through ignorance, condoned such practices.

Submitted by Tim, Adrian and Jean Pierre on
You're right, in many cases it is impossible to identify the ultimate victims of corruption. The practice has been to compensate the state, which is the direct victim. However, there may be cases where there are individual victims can be identified: eg. individuals that have suffered because out-of-date drugs have been provided through a tainted contract. In these cases, there may be remedies under national law. UNCAC Art 35 and Art 57.3.c encourage national authorities to put in place legal mechanisms that would enable those that have suffered damages as a result of corruption to obtain compensation. We'd be interested to hear if there are domestic cases in this area in your jurisdiction. On the issue of the size of settlements and their relation to the bribe, the proceeds of bribery and damages, the practice varies between jurisdictions.I'm sure your've seen the contracting settlemetns reached in the Simens case. We're working with the OECD Working Group on Bribery on a study which seeks to complie international expereinces and identify some good practices on quantification of the proceeds of bribery. The idea of the trust is intuitively attractive. The underlying principle in UNCAC is that the proceeds of corruption should be returned to the rightful owner, the victim country. Countries can then decide how best to adminsiter these funds. Some countries have put in place trusts or autonomous funds as a means of making the management of returned assets more transparent and accountable. Countries that have engageed civil society in decisions about how to use returend assets have generally benefitted from this approach. In the end, however, the decision rests with the national authorities.

The idea of compensating victims of corruption sounds theoretically very catchy but practically very difficult. Are we talking of victim states? Communities, companies or individuals? If it is the state that suffered the consequences of an act of bribery by foreign public officials, then, it is easy for a court of law to decide on the payment of damages to the victim state. Even at this, what of the payment modalities? What if the victime country is doing nothing to practically combat bribery? Has it a right to any compensation? It may be much more difficult identifying other victims. However, proper brainstorming by experts at conferences can always throw more light. The second problem involved is that of punishing a company double: I think that if international legislation criminalizes bribery and imposes the obligation of compensating the various categories of victims, far from reducing capital for foreign investment, it will promote integrity, innovation and progress in international trade. So I think that the risk of being asked to pay for bribing on two fronts will enhance the fight against bribery and make companies sit up.

Submitted by Tim, Adrian and Jean Pierre on
The issue of whether the proceeds of bribery should be returned to countries that have failed to pursue individuals that have been involved in bribery is controversial. On the one hand, we'd all like to see this as incentive for the prosecution of the bribe giver and the bribe taker. Some countries follow this practice, returning athe proceeds of bribery recovered through fines and forfeiture on on sliding scale depending on whether the authorities in country of the bribe taker have collaborated in investigations or prosecuted and convicted the bribe taker. However, we have to be aware that it may not be possible for the authorities in the country of teh bribe taker to prosecute: eg. there may be insufficient evidence. This is something we may want to discuss during the meeting. Some comentators have suggested that global settlements might be a way of dealing with the issue of subjecting the company to multiple proscutins and settlements. The modalities of this could be extremely complex. It would be interesting to hear if participants have suggestions in this direction.

Submitted by FOLIVI Assiongbor on
I/INTRODUCTION THE MATTER OF CORRUPTION CONCERNING MULTINATIONAL OR FOREIGN COMPANIES OPERATING IN LOW DEVELOPPED COUNTRIES, IS ONE OF THE MORE CRITICAL. FOR A LONG TIME THIS CORRUPTION RELATED TO INTERNATIONAL CONTRACTS HAS BEEN TOLERATED AND EVEN ENCOURAGED BY MOST POWERFUL COUNTRIES IN THE WORLD WICH WANTED TO INCREASE THEIR CASH-FLOW AND OFFER JOB TO THEIR CITIZENS. HOWEVER THE DIFFERENT TREATIES AND CONVENTIONS SIGNED THE LAST YEARS, MITIGATE THIS KIND OF CORRUPTION. NEVERTHELESS, THOSE CONDEMNABLE PRACTICES GO ON. THEY EXPLAIN FOR A GREAT PART THE INCREASE IN DIFFICULTIES OF LOW DEVELOPPED COUNTRIES WHICH WASTE MUCH MONEY IN THOSE TRANSACTIONS. THOSE MULTINATIONAS HAVE BEEN COMPELLED TO REPAY THE BRIBES RECEIVED AND TO PAY FINES. THE QUESTION IS TO KNOW WHERE SHOULD BE PRESERVED THE MONEY RECOVERED AND THE FINES PAID. I WOULD LIKE TO PROPOSE THE FOLLOWING MEASURES: II/CREATING A INTERNATIONAL COURT OF ARBITRATION FOR TRANSNATIONAL CORRUPTION I THINK ONLY ONE INSTITUTION SHOULD BE ENTRUSTED WITH THE INTERNATIONAL CORRUPTION CASES. THOSES CASES COULD NOT BE PROSECUTED NEITHER BY THE JUDGES FROM FIRMS'S COUNTRIES NOR BY THE ONES FROM VICTIMS'S COUNTRIES. THE PROCEEDINDS TAKING AGAINST THE FIRMS MUST BE LEAD BY A NEUTRAL AND INDEPENDANT INSTITUTION. I PROPOSED THAT ONE COURT OF JUSTICE OR ARBITRATION MAY BE CREATED WITH THE ASSIGMENT OF SEARCHING FOR THE CORRUPTION FACTS WITHIN MULTINATIONALS AND THEIR BRANCHES, INVESTIGATING THEM AND TAKING ALL PEOPLE IMPLICATED TO COURT EITHER MULTINATIONALS MANAGERS AND THEIR REPRESENTATIVES IN THE VICTIMES COUNTRIES AND THE LOCAL ACCOMPLICES FOR INSTANCE, A FRENCH-BASED MULTINATIONAL, IN 1996 AND 2003 IS SUPPOSED TO HAVING BRIBED A ARAB COUNTRY,S OFFICIALS TO WIN A GAS-FIELD EXPLOITATION. IN 2007, THE GENERAL MANAGER OF THE COMPANY HAS BEEN SUBJECTED TO A CUSTODY AND AN INQUIRY. HOWEVER, THE FRENCH JUDGE IN CHARGE OF THE INQUEST WHO CARRIES OUT THE SEARCHE IN MARCH 2006 AT THE FIRM,S HEAD OFFICE HAS BEEN CONFRONTED WITH "THE FONDAMENTAL INTEREST OF THE NATION PROTECTION" AND YET SWISS OFFICIALS HAVE DISCOVERED 60 MILLIONS EUROS SUPPOSED TO BE TRANSFERRED TO AN ACCOUNT. SO THE COURT WILL HAVE TO RECOVER EMBEZZLED FUNDS AND FINES. THIS WILL BE PAID IN ONE WAY HOW CAN BE USED THESE FUNDS? CREATING A FUND TO SAFEGUARD VICTIMS OY BEYOND-BORDER CORRUPTION INTERESTS ACCORDING TO ME, THE RECOVERED FUNDS SHOULD NOT BE PAID TO COUNTRIES THAT HOUSE THE HEAD OFFICE OF IMPLICATED COMPANIES. FIRST VICTIMS ARE THE STATES WHO PAID FOR THE PLANS. BUT IF FUNDS ARE RETURNED TO THE THEM, THESE ARE RISKING TO BE EMBEZZLED AGAIN FOR OTHER AFFECTATIONS. I SUGGEST FIANALLY THAT THE FUNDS MAY BE TRANSFERED TO A SPECIAL ACCOUNT OPENED BY THE SAFEGUARG FUND. THIS ACCOUNT SHOULD BE MANAGED BY THE UNITED NATIONS SO THAT TO FINANCE PROGRAMMES IN THE FRAMEWORK OF THE MILLENIUM OBJECTIVES FOR DEVELOPMENT, IN THE VICTIM COUNTRIES AND THE OTHERS. NO PRESCRIPTION TO PRESERVE INTEREST OF THE VICTIMS AND DUE TO THE COMPLEXITY OF THOSE CASES, THERE WILL BE NO PRECRIPTION FOR THE INTERNATIONAL CORRUPTION OFFENCES A. FOLIVI

Submitted by Tim, Adrian and Jean Pierre on
The idea of an international court to deal with corruption, and international corruption in particular, has been raised in the past. I suspect that the opportunity has passed. When negotiations for the Treaty of Rome establishing the International Criminal Court were underway, the idea of adding economic crimes against humanity was discarded fairly early on. That's not to say that intertnational arbitration should be discounted. There are mechanisms in place to deal with trade and investment issues and they're regulalry used. These could be a forum for dealing with corruption in these business activities. Both parties have to agree to participate in the arbitration process, but still this could be a useful forum for victim states to secure remedy. To our knowledge this mechanism has only rarely been used. We'd be interested to hear from participants if this an area that for further development. On the prescrioption, we sympathise - when we look at the time its taken to deal with Marcos, Duvalier and Abacha asset recovery cases prosecutions and statues of limitation could be a real constraint. That said, in the end the prosecription and statue of limitation are a matter for the national authorities. UNCAC Art 29 encourages countries to put in place a long statute of limitations for the commencement of proceedings.

In the original post Theme 2 "The current lack of a single mechanism for resolving transnational bribery cases compounds the problem" and the related posts in this thread, there is no mention of Lesotho's fully successful prosection of foreign construction companies, nor of the World Bank's support in debarring these companies. Note that former World Bank president James Wolfensohn said at a World Bank/IMF meeting in 2004: "On the (Nigeria) question of will we take action against Halliburton, the basis on which we can blacklist companies-- and we have blacklisted 180 of them--is that they have been guilty of problems in our projects, and if Halliburton is involved in any one of our projects and is proven to have been corrupt, then, within the context of that project, we would blacklist them. Now you will recall that we had to wait until the Acres international case in Lesotho was taken through the Appeals Committee in the Supreme Court, but the moment that it got through the legal process, we blacklisted Acres, which was a surprise to many. We are not afraid of blacklisting, but we have to have a reason to do it." It seems to me that the mechanism for transnational action was tested and established by Lesotho. Transparency International and its Water Integrity Network agree that : "Several points of importance for future bribery prosecutions were set as precedents by these trials, including: • Bribery – It was ruled that a crime is committed at the point the agreement is made. The mere offering of a sum of money to a public official, and the acceptance of it, is sufficient to start legal action. This makes the prosecution of the crime easier. • Financial Transparency – Access to the Swiss banking records of the accused was a major component of successful prosecution • Jurisdiction – Since the impacts of the crime were felt in Lesotho, jurisdiction was ruled to be in that country." http://www.waterintegritynetwork.net/images/stories/CIS/CIS_Lesotho.pdf The Lesotho outcome showed that the offended country has jurisdiction in imposing and collecting fines and that the WB can take disciplinary action. Elsewhere in this thread it is pointed out that the corporations home countries do not hand over fines to the offended State, and that the UN Convention against Corruption articles 55 and 57 are not implemented. It is also a fact that States protect their corporations. This being the case, the effective mechanism is not a global office such as the ICC, but a local action by the offended country followed by WB sanction against the offending entities.

Submitted by Lucien Peters on
The wheel does not need to be reinvented, although the WB is often very good at that: The ICC in The Hague already has a "Victims Compensation Fund" which, although targeted at an audience other than the victims of forced bribe paying, could serve as a model for a similar mechanism in this context. Lucien Peters Manassas VA 20111

Add new comment

Plain text

  • Allowed HTML tags: <br> <p>
  • Lines and paragraphs break automatically.
By submitting this form, you accept the Mollom privacy policy.