I. Introduction
International anticorruption treaties create an almost universal requirement that States sanction legal persons for the crime of foreign bribery. Yet, the vast majority of corporate foreign bribery cases are resolved via agreements between governments and accused firms. Such negotiated settlements appear to be pragmatic responses to the problem of enforcing criminal laws against powerful and complex multinational enterprises. However this enforcement practice also raises fundamental questions about respect for the goals and principles of domestic criminal justice systems. How does international law regulate such settlements and is that regulatory approach appropriate in terms of how it has been created and how it shapes State laws and practices?Footnote 1
Two examples illustrate the possibilities and problems of permitting the settlement of corporate foreign bribery allegations. For Siemens AG, settlement seemed to enable economic survival and ethical renewal. In December 2008, the engineering giant agreed to pay German and US authorities USD 1.6 billion to resolve concerns about the systematic bribery of foreign public officials and related accounting irregularities within its group.Footnote 2 Siemens subsequently committed a further USD 100 million to help fight corruption as part of its comprehensive settlement with the World Bank.Footnote 3 It spent in the range of a billion dollars more on an internal investigation,Footnote 4 and agreed to hire an external compliance monitor.
The company and three subsidiaries pleaded guilty to accounting offences,Footnote 5 international organisations imposed temporary restrictions on contractingFootnote 6 and related individuals were prosecuted.Footnote 7 However, neither the parent company nor its affiliates lost entitlements to participate in government tenders, thereby escaping possibly serious harms to their businesses.Footnote 8 Today, Siemens remains a major employer and supplier of technology around the world.Footnote 9 Though its record is not unblemished,Footnote 10 the company supports a variety of programmes against corruption,Footnote 11 and has contributed to international anticorruption forums for firms.Footnote 12
In another case, economic and political pragmatism seemed to conflict with values of impartiality and equality in the administration of justice. In 2015, Canadian authorities charged the public contractor SNC-Lavalin (and two related companies) with bribery and fraud in connection with historic Libyan works.Footnote 13 After charges were brought, Lavalin lobbied the Canadian government for a new system of deferred prosecution agreements (DPAs).Footnote 14 The amendments were passed in 2018, but the Director of Public Prosecutions refused to negotiate with Lavalin.Footnote 15 According to a Parliamentary ethics report, the Canadian Prime Minister then improperly sought to influence his Attorney General into reversing the prosecutor's decision.Footnote 16
On the PM's evidence, Lavalin's prosecution was unwarranted. Not only was the company reforming itself under new management, but its conviction could trigger its exclusion from public contracts and see its head office—and jobs—leave Canada.Footnote 17 By contrast, ‘[a] remediation agreement regime offered a way through for SNC-Lavalin, as had been the case for other large engineering firms in Europe which had benefited from this type of regime’.Footnote 18 The prime minister's apparent preference for a DPA for Lavalin indicates the perceived benefits of settlements over trials for the companies concerned. Nonetheless, Trudeau's 2019 election rivals alleged impermissible interference in the legal process,Footnote 19 whilst international commentators expressed concerns about potential violations of international anticorruption laws.Footnote 20 The corporate case concluded with one subsidiary of SNC-Lavalin pleading guilty to a charge of fraud: an individual was convicted in a related case but no other fraud or corruption charges were pursued against the Lavalin firms.Footnote 21
These examples illustrate the importance of negotiated settlements to contemporary efforts to enforce foreign bribery rules, as well as the diversity within national settlement laws and practices. Defined as ‘any agreement between a legal or natural person and an enforcement authority to resolve foreign bribery cases without a full trial on the merits of the allegations … with sanctions and/or confiscation …’,Footnote 22 ‘non-trial resolutions’ (or, in this article, ‘settlements’) are provided for in many jurisdictions.Footnote 23 According to the Organisation for Economic Cooperation and Development (OECD), they are especially common in corporate bribery cases.Footnote 24 The detail of such agreements varies as concerns the participants, scope, outcomes and oversight of the ‘deals’. Settlements may be negotiated by prosecutors or other regulatory authorities, either before or after charges have been brought.Footnote 25 They may or may not entail convictions or admissions,Footnote 26 or the publication of details about the resulting arrangement.Footnote 27 Governmental discretion to start or conclude negotiations also vary from country to country,Footnote 28 as does the involvement of courts.Footnote 29 Regardless of these differences, settlements have become the predominant means of resolving corporate foreign bribery cases across States. A 2019 OECD survey finds 91 per cent of corporate foreign bribery matters were resolved without trial;Footnote 30 at least 27 States Parties to its anticorruption treaty had some kind of non-trial resolution mechanism in place for legal or natural persons.Footnote 31
This article investigates the apparent international consensus behind the increasing use of settlement as an enforcement mode. Is there a general understanding about the balance between enforcement gains and criminal justice values in the settlement of corporate foreign bribery cases? Will the emerging international approach to settlement guide States to resolve corporate foreign bribery matters in a way that ensures the fair administration of justice, prevention of corporate foreign bribery and preservation of public resources? What might be expected from the process ahead?
After Part II has explained why this inquiry is necessary and what values it implicates, Part III examines the two most relevant sources of multilateral regulation on foreign bribery for signs of an emerging international approach to corporate settlements. These are the instruments and reports associated with the United Nations Convention against Corruption (UNCAC) and the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the OECD (OECD-ABC).Footnote 32 The UNCAC and OECD-ABC were chosen for review because they are the most relevant and most widely subscribed anticorruption treaties. Whereas the UNCAC is nearly global in scope, the OECD-ABC covers leading export nations and emerging economies that are likely to host corporate bribe-payers.Footnote 33 Moreover, performance of each convention is monitored by a special purpose treaty body through a process of peer review. These bodies, the UNCAC Implementation Review Mechanism (UNCAC-IRM), as supervised by the UNCAC Implementation Review Group, and the OECD Working Group on Bribery in International Business Transactions (OECD-WGB), regularly report their findings on State anticorruption activities. In addition, the OECD has further elaborated the requirements of the OECD-ABC in a 2009 recommendation.Footnote 34 The UN Office on Drugs and Crime (UNODC), for its part, has released a series of publications on UNCAC member State practice.Footnote 35 Investigating this material, this research probes whether and, if so, how States regulate corporate settlements in their international anticorruption treaties and related soft laws.
The remaining sections of the article address the international enforcement of these regulations. Part IV presents an analysis of OECD-WGB and UNCAC-IRM monitoring reports focusing on their treatment of State settlement laws and practices, particularly as they relate to legal persons. Part V considers what the results demonstrate about how the international approach to settlements was generated, and how that approach shapes national efforts to enforce foreign bribery laws.
II. Understanding the International Approach to Corporate Settlements
The popularity of corporate settlements is at odds with the controversy about such agreements in domestic legal systems: Are they a pragmatic adaptation to new enforcement challenges or a corruption of core principles of criminal justice?
On the one hand, governments propose settlements as an efficient and effective means of encouraging crime detection, prevention and remediation,Footnote 36 particularly by large firms. On this understanding, settlements are justified as a means of securing cooperation from corporate defendants and of securing commitments to operational reforms. Settlements are frequently conditional upon corporate self-reporting and/or assistance with investigations. Such conditions allow prosecutors to obtain valuable (and otherwise well-hidden) evidence against corporate and/or individual suspects.Footnote 37 In this way, governments may save time,Footnote 38 while also benefiting from financial penalties, disgorgement orders and/or contributions to costs.Footnote 39 In addition, agreements can require companies to undertake supervised compliance reforms or measures to help specific third parties or charitable causes. All this—and more—may be achieved without the uncertainty of trial for investors or the collateral damage of licence losses or debarments to employees and business partners.
On the other hand, settlements may distort the operation of liberal criminal justice systems and fail to prevent corporate crime. As to impact, academics warn that negotiation may not always improve compliance cultures or encourage corporate self-regulation. Scholars of law and economics caution that the preventive effect of settlements is dependent on a variety of terms within the specific agreements and conditions in legal systems more generally.Footnote 40 Legal sociologists suggest governments may rely too heavily on the private sector to design and implement compliance standards.Footnote 41 Criminal lawyers cite high rates of corporate recidivism in the US (a settlements pioneer) as a sign of the difficulties of achieving change without broader reforms.Footnote 42 As to injustice, settlements in foreign bribery matters may be seen to defer to corporate power, exacerbating existing inequalities between ‘white collar’ and ‘street’ offenders.Footnote 43 They can also allow executives to bargain for their own impunity with company wealth.Footnote 44 Conversely, settlement procedures are feared to unduly favour governments. Such is the corporate desire for resolution, it is said, that prosecutors can secure undertakings that impinge on the position of corporate managers, co-opt corporations into police work and/or encourage the company to sacrifice the individual or to waive its own privileges.Footnote 45
The controversy surrounding negotiated settlements raises important questions about the efficacy and morality of the international law against corruption. Countries have promised to outlaw corporate foreign bribery under regional and global anticorruption conventions.Footnote 46 There is political recognition that corruption impedes economic growth by damaging confidence in governance institutions, distorting the allocation of public benefits and impeding the rule of law, amongst other things.Footnote 47 The anticorruption treaties therefore seek to ensure that State Parties create inhospitable environments for corrupt operators within their jurisdictionsFootnote 48 and reduce corruption in countries whose officials solicit or accept bribes. In this way, the UNCAC and OECD-ABC require State Parties to ensure that legal entities may be held liable for acts of bribery and punished appropriately.Footnote 49 But, while the treaties touch upon some issues of criminal procedure,Footnote 50 they do not expressly broach the topic of settlements. Therefore, they leave open the relevance of such ‘deals’ for assessments of the rightfulness and the efficacy of internationally coordinated anticorruption law and practice.Footnote 51
What trade-offs are worth considering given that governments appear to endorse the use of settlements as the main enforcement mode in corporate bribery cases and the treaties do not conclusively regulate the matter? This study was conducted with two broad categories of concerns—or dimensions—in mind, one category relating to process, and the other relating to outcomes.Footnote 52 These concerns shaped this investigation of multilateral cooperation and reviews of enforcement practice.
Relevant benchmarks for the first dimension are participation and transparency. They are drawn from scholarly attempts to appraise global governance regimes concerning problems like corruption.Footnote 53 Under the heading of participation, this article describes whether and how (non-)State actors were involved in the development of the international approach to settlements.Footnote 54 As the Canadian example showed, there have been efforts to solicit stakeholder comments on proposed national settlement schemes, and concerns that such participation is skewed towards commercial interests.Footnote 55 Further, within international anticorruption organisations, there appear to be some, albeit limited, notice and comment procedures.Footnote 56 This article notes who was consulted and asked for input and how treaty bodies balanced the contributions of different actor groups. As to transparency, it was asked how well informed States (and international organisations) were in formulating their approaches to settlements, as well as how accessible and clear the emerging international approach to settlements was.Footnote 57 This procedural dimension is particularly apt given scholarly critiques of domestic corporate settlements and their standards as opaque and poorly justified,Footnote 58 as well as difficulties in ascertaining the international approach, which are discussed below.
The second dimension refers to outcomes. Do international anticorruption instruments and institutions achieve their general objectives of preventing and combating corruption with their approach to corporate settlements? The literature on corporate criminal law suggests at least three factors for assessing the functioning of particular domestic settlement laws and practices:
• Justice: Equality, fairness and legal certainty are all at issue when governments settle foreign bribery cases. Governments risk both affording impunity to economically powerful actors and incentivising economically ‘vulnerable’ companies to sacrifice their fair trial rights (or to subvert the rights of others).Footnote 59 These dangers increase when settlements are secret and/or the product of broad, unsupervised discretions.Footnote 60 It is also harder to ensure that like are being treated as like across cases when justice is privately negotiated.Footnote 61 It is thus queried whether the international approach to settlements is guiding States to protect accused wrongdoers and to maintain relative certainty and equality in national law.
• Prevention: Corporate (criminal) justice systems use strategies of deterrence, incapacitation and deference to influence managers and workers. They seek to dissuade potential wrongdoers by threatening punishment and stigmatising misbehaviour.Footnote 62 By way of structured sanctions, they encourage the development of organisational environments that make it harder or less attractive for individuals to commit crimes.Footnote 63 There are difficulties in using settlements—with their penalty discounts, private investigationsFootnote 64 and possibly unsupervised or untested recipes for reformFootnote 65—to achieve these preventive goals.Footnote 66 Thus, the international approach to settlements is helping States to manage the trade-offs and difficulties of crime prevention in their domestic laws and practices.
• Cost: Costs and benefits are difficult to ascertain and compare in this context due to the many variables that affect calculations of cost-effectiveness.Footnote 67 Nonetheless, it is clear that settlements are associated with reduced enforcement expenditures per case, and that they generate uncertainty and costs for the companies involved.Footnote 68 Therefore, our final question is whether the international approach to settlements is helping governments consider the value-for-money proposition of their corporate settlement laws and practices, to the extent this can be measured.
Part V discusses how well the current international regime stands up when considered against these various concerns.
III. Silence on Settlements in International Anticorruption Instruments
To what extent do the OECD-ABC and UNCAC themselves regulate the use of settlements in corporate foreign bribery matters? In this Part III, the treaties are read with their related instruments for provisions relevant to corporate settlements. From these, the dimensions of international anticorruption law that deals with—or neglects—State corporate settlement laws and practices are described and discussed.
Though there are no articles discussing corporate settlements per se, several on responsibility, sanctions and procedure were found. These articles provide a broad framework for domestic settlement laws and practices, and provide a point of departure for treaty body statements, as described in Part IV.
A. The OECD-ABC read with the OECD 2009 Recommendation and Official Commentaries
The relevant OECD provisions are spread across the 1997 Convention, Official Commentaries and the 2009 Recommendation. Article 2 OECD-ABC requires State Parties ‘to establish the liability of legal persons for the bribery of a foreign public official’. The Commentaries confirm that liability under Article 2 may be criminal or non-criminal.Footnote 69 However, they do not suggest settlements as a non-criminal procedure for ascertaining guilt, nor is that possibility mentioned in the OECD 2009 Recommendation. Rather, the Recommendation deals with the relationship between individual and corporate (criminal) processes and the minimum conditions for attributing criminal conduct to legal persons.Footnote 70 Specifically, it suggests that corporate liability should be made independent of the ‘prosecut[ion] or convict[ion]’ of human perpetrators.Footnote 71 The Recommendation also encourages States to use ‘flexible’ rules to identify individuals whose conduct triggers the liability of the legal person.Footnote 72 They should permit findings of corporate liability when senior managers have failed to prevent foreign bribery with ‘adequate internal controls, ethics and compliance programmes or measures’.Footnote 73
As regards the consequences of corporate liability for foreign bribery, Article 3 OECD-ABC is the governing provision. Its default requirement is that States meet foreign bribery with ‘effective, proportionate and dissuasive criminal’ consequences.Footnote 74 In the OECD instruments, the words describing sanctions are undefined.Footnote 75 Article 3(1) and (2), however, specify that individuals must face the possibility of a jail sentence and corporations must be liable to ‘monetary sanctions’. In addition, per Article 3(3) and (4), State Parties must enable ‘seizure and confiscation’, and ‘consider … additional civil or administrative sanctions’ for foreign bribery. The Convention indicates the need for ‘comparability’ in penalties between domestic and international public bribery offences.Footnote 76 However, the treaty aims at ‘functional equivalence’ in sanctioning, not ‘uniformity’ amongst States or departures from ‘fundamental principles’ of national law.Footnote 77 Hence, States may choose ‘non-criminal sanctions, including monetary sanctions’, if this accords with the approach to corporate liability in their legal systems.Footnote 78 And, though the Commentaries and Recommendation discuss complianceFootnote 79 and public advantages,Footnote 80 neither suggests settlements as a means of incentivising improved internal controls or avoiding exclusions from public advantages, like debarments. Settlements are not otherwise mentioned as a means to achieve the required level of sanction under Article 3.
Finally, on procedure, Article 5 OECD-ABC requires the ‘professional’ exercise of discretions and prohibits consideration of ‘national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved’.Footnote 81 The OECD 2009 Recommendation tells States to be ‘vigilant’ in excluding improper considerations from investigative or prosecutorial decisions,Footnote 82 though not whether or how prosecutors should use their discretions to negotiate with companies. There is no discussion of these points in the Official Commentaries. Indeed, Article 5 itself specifies that ‘[i]nvestigation and prosecution’ will be governed generally by domestic ‘rules and principles’.Footnote 83
B. The UNCAC read with UNODC Reports on State Practice
The UNCAC contains analogous, and sometimes more extensive, provisions on responsibility, sanctions and procedure. The keystone is Article 26 UNCAC, which requires the ‘establish[ment]’ of corporate liability for ‘participation in [Convention] offences’,Footnote 84 which includes foreign bribery under Article 16. States are given the option of making such corporate liability ‘criminal, civil or administrative’ in line with their ‘legal principles’.Footnote 85 But, as in the OECD instruments, corporate responsibility must be ‘without prejudice to the criminal liability’ of human perpetrators;Footnote 86 legal persons must be ‘subject to effective, proportionate and dissuasive criminal or non-criminal sanctions, including monetary sanctions’.Footnote 87 Again, the descriptors are not further defined in the UNCAC, nor are settlements explicitly mentioned. That said, recalling the rationales for settlements, the UNODC sees corporate liability in Article 26 as a means to enhance crime prevention, insofar as firms may seek to avoid ‘costly’ criminal and reputational consequences of liability with internal controls.Footnote 88 ‘[T]emporary or perpetual prohibition (“blacklisting”) from entering public tenders or concluding acts and contracts with State agencies’ is an administrative sanction that the UNODC mentions.Footnote 89
Outside the context of legal person liability, Article 30 addresses matters of ‘[p]rosecution, adjudication and sanctions’. Most of its ten paragraphs apply only to public officials and other individual offenders.Footnote 90 However, some have broader relevance. Article 30(1) UNCAC requires States to sanction offences ‘tak[ing] into account the gravity’ of the crime. In this paragraph, the UNODC both acknowledges the UNCAC's deference to ‘national [sentencing] traditions and policies’, and sees the UNCAC as requiring comparable sanctions across economic crime types.Footnote 91 Next, Article 30(3) obliges UNCAC State Parties to ‘endeavour to ensure’ the use of prosecutorial discretions ‘to maximize the effectiveness of law enforcement measures … and with due regard to the need to deter the commission of such offences’. Here, the UNODC favours an interpretation by which ‘investigation and prosecution are … the norm’ but acknowledges the need to balance principles of general deterrence, protection of the accused and conservation of public resources.Footnote 92 Both discretionary and mandatory prosecution policies are compatible with the UNCAC if prosecutors are independent, decisions are reviewable and discretion is officially directed or guided, in its view.Footnote 93 Finally, Article 30(9) preserves the State Parties’ authority to limit liability, prosecute and punish in accordance with domestic law, and Article 30(10) promotes the reintegration of convicted persons, presumably legal entities as well as human beings.
Then, in an unusual set of provisions,Footnote 94 the UNCAC regulates ‘cooperation’ in anticorruption law enforcement. Article 37 is most relevant as it deals with the relationship between offenders and law enforcement authorities.Footnote 95 Article 37(1) obliges States Parties to ‘encourage’ the supply of information, evidence and ‘factual, specific help’ to authorities by ‘persons who participate or who have participated in [Convention] offences’. That help is supposed to ‘contribute to depriving offenders of the proceeds of crime and to recovering such proceeds’.Footnote 96 Under Article 37(2) and (3), Parties also commit to considering the mitigation of punishments, as well as the provision of immunities to those who have provided ‘substantial cooperation in the investigation or prosecution’. All such ‘collaborators of justice’Footnote 97 are to be afforded the same level of protection as (innocent) witnesses and experts per Article 37(4).Footnote 98 Under Article 37(5), States should consider entering into ‘agreements or arrangements’ to facilitate cooperation in cross-border cooperation cases. Interpreting these sections in light of State practice, the UNODC notes the prevalence of ‘plea bargaining, pre-judicial cooperation agreements and summary prosecutions’ in party States. It acknowledges that such ‘[s]implified procedures’ may provide ‘an important incentive’ for admissions amongst offenders ‘eager to avoid the negative impact on their reputation of a criminal trial’.Footnote 99
C. Summary
Neither the OECD-ABC nor the UNCAC expressly regulates the negotiated settlement of corporate foreign bribery matters. In fact, the drafters do not seem to have envisaged that settlements would become the predominant means for sanctioning corporate offenders.Footnote 100 Rather, in sometimes overlapping ways, the treaties govern the general conditions for establishing and shaping domestic settlement laws and practices, while preserving the domestic scope to elaborate rules on responsibility, sanctions and procedure.
First, international rules on corporate liability require State Parties to ensure that legal persons can be held liable for the offence of foreign bribery, preferably via the criminal law but otherwise via non-criminal tracks within domestic legal systems. The OECD 2009 Recommendation encourages States to take a broad view of the persons through whom entities may act. Without some form of liability for legal persons, there is a limited basis for State action against companies, and, therefore, a limited basis for negotiating corporate settlements. Second, in both OECD and UN Conventions, sanctions for corporations are required to be ‘effective, proportionate and dissuasive’, whether they are criminal or non-criminal in form. The UNCAC addresses the issue of gravity and the OECD-WGB recommends rules about compliance and debarment. Thus, the treaties seem to require States to prevent foreign bribery by influencing corporate calculations concerning the consequences of future behaviour. They also regulate the penalty default for negotiations. Third, provisions on prosecutorial discretions and cooperation provide a loose international limit to a State's capacity to ‘bargain’ with wrongdoers in national law. The OECD-ABC prohibits political and economic considerations, whereas the UNCAC embeds two reasons for action (effectiveness and deterrence) into national prosecutorial practice. With Article 37, the UNCAC furthermore contemplates cooperation between law enforcement authorities and suspected offenders, the UNODC reflecting the need for balance between considerations of efficacy, offence gravity and the separation of powers.
IV. Qualified but Implicit Endorsement of Settlements by International Anticorruption Treaty Bodies
If the OECD-ABC and UNCAC only roughly regulate domestic corporate settlement laws and practices, how have anticorruption treaty bodies dealt with such deals in their compliance reports?
The international anticorruption treaties and related soft laws are intended as minimum common standards concerning state regulation of foreign bribery. The reports of anticorruption treaty bodies indicate how particular States could improve their performance under this international regime. They are significant in two ways: First, pursuant to Article 31(3) of the Vienna Convention on the Law of Treaties, OECD-WGB and UNCAC-IRM reports may be ‘subsequent practice in the application of the treat[ies] which establishes the agreement of the parties regarding [their] interpretation’.Footnote 101 On this reading, the reports do not create new obligations but assist the parties in understanding the old ones. Second, such is their political weight, the OECD-WGB and UNCAC-IRM reports could be generating changes in State opinion or practice. In this way, they could also be contributing to the formation of new international customs on corporate settlements—within the frameworks of the Conventions or otherwise.Footnote 102
This Part of the article presents the findings of a systematic review of select OECD-WGB and UNCAC-IRM reporting documents,Footnote 103 undertaken to ascertain how the anticorruption treaty bodies approach settlements, particularly with legal persons. The review indicates that the treaty bodies regard settlements as a means of increasing and improving enforcement of domestic anticorruption laws in keeping with the goals of the Conventions, while they also see a risk that settlements will undermine the prohibitionist logic of the treaties and associated principles of public law.
A. The Process of Analysis
The process of report analysis was as follows. In mid-to-late 2019, a review was undertaken of all OECD-WGB and UNCAC-IRM reporting documents published online in English concerning the 27 States that the OECD had identified as employing some form of non-trial resolution (settlement) in foreign bribery matters.Footnote 104 The analysis therefore excluded UNCAC-IRM reports in Spanish and UNCAC-IRM reports in English that the relevant State Parties had opted to keep confidential.Footnote 105 For these countries, the English language executive summaries of the reports were reviewed instead. The only countries for which the UNCAC-IRM had published neither reports nor executive summaries were convention latecomers Germany and Japan.Footnote 106 In total 181 reporting documents were assessed, 152 from the OECD-WGB and 29 from the UNCAC-IRM, published in or before September 2019.
The review process had three steps: The first was a search of all the reporting documents on the 27 countries for discussions of ‘settlement’ or related key words.Footnote 107 The text analysis software, Adobe Acrobat Pro, allowed those key words to be identified across the multiple PDF documents. The second was a process of extracting relevant passages from the reporting documents, using Adobe's list of key word references. The meanings of the passages were summarised and themes identified across the extracts. The third was a check of these results for irrelevant entries and, finally, an individual review of reporting documents of all countries which had not been picked up by the automated search.Footnote 108
Conducting this analysis, a slightly different scope of review was adopted for the reporting documents of the two review bodies. For the OECD-WGB reports, which tended to discuss settlements in more detail, it was necessary to seek out passages on settlement laws and practices that applied to legal persons, though not necessarily exclusively. Where passages on individual settlements were also captured, this is indicated in the footnotes or the text below. Conversely, the UNCAC-IRM reports and executive summaries did not tend to differentiate between corporate and individual settlements, nor between the settlement of foreign bribery cases and other cases of corruption. Therefore, it was necessary to review all comments on settlements and to indicate when corporate settlements in particular were discussed.
Finally, as a rule, all relevant examples are mentioned in the following discussion (Part IV(B) and (C)). Where this is not possible for reasons of space, the text refers to the country report(s) that best illustrated the point and further examples are given in the footnotes.
B. The Approach of the OECD Working Group on Bribery
The review indicated that the OECD-WGB has cautiously embraced settlements, citing several ways in which settlements may enhance corporate and government enforcement of domestic anti-foreign bribery laws.Footnote 109 In reports on France, Italy and Switzerland, the Working Group appears to accept that settlements may yield time and cost savings for governments and, one may extrapolate, greater efficiencies in the conduct of foreign bribery matters.Footnote 110 When discussing Brazilian and Japanese agreement procedures, the Group indicates that settlements may encourage errant companies to disclose wrongdoing to law enforcement authorities (ie, to ‘self-report’) and/or to cooperate in the investigation of their own alleged misconduct or inaction.Footnote 111 The OECD-WGB also perceived benefits of compromise in two reports on the US. In its Phase 2 review, the Group described how American plea agreements may mitigate the reputational consequences of indictment or trial for businesses, also avoiding the drain of litigation on company time and finances.Footnote 112 In Phase 3, it noted the US Government Accountability Office's view that deferred and non-prosecution agreements were popular because they ‘avoi[d] [the] collateral consequences of prosecution’.Footnote 113 Moreover, it observed that the Italian patteggiamento procedure may motivate companies to institute compliance programmes,Footnote 114 and help prosecutors avoid short statutes of limitation.Footnote 115 Finally, on several occasions, the Working Group welcomed settlement laws and practices as per se ‘valu[able]’,
‘flexib[le]’, ‘innovative’ and ‘interesting’ contributions to national foreign bribery enforcement systems.Footnote 116 Those terms are not further elaborated.
Such is the OECD-WGB's apparent confidence in settlements that the Group has sometimes called upon State Parties to extend or retain particular laws or practices. Most notably, the OECD-WGB cautioned Chile against the curtailment of the suspensión condicional del procedimiento procedure as it applied to natural persons. The change followed ‘a major controversy’ over a decision to conclude a two-year-long individual domestic bribery investigation with the settlement of less serious offences:Footnote 117
Chile's response to limit the use of SCPs [conditional suspension of proceedings] for natural persons in more serious corruption cases risks throwing out the good with the bad. Resolution of corruption cases through SCPs and ABPs [abbreviated procedures] is a vital enforcement tool. When used judiciously, it can allow justice to be served in a cost-effective manner. A clearly articulated policy on SCPs and ABPs can also encourage offenders to self-report wrongdoing, co-operate with investigations and thereby increase enforcement. The trend among Working Group members has therefore been to introduce this measure into a prosecutor's arsenal, rather than to take it away.
Also citing ‘[e]xperience in other jurisdictions’, the Working Group encouraged the UK to ‘pursue legislative and other efforts that could lead to greater use of [plea negotiations, deferred prosecution agreements and plea agreements] in appropriate cases’.Footnote 118 It made similarly encouraging statements in reports on Finland, Germany and Switzerland.Footnote 119
These positive sentiments notwithstanding, the OECD-WGB has expressed concern that some domestic settlement laws and practices may conflict with the terms of the Convention and/or the principles of ‘transparency’ and ‘accountability’, ‘consistency’ and ‘predictability’. First, the Working Group argues that broad or ill-defined settlement powers may enable prosecutors to be influenced by ‘considerations of … national economic interest … or the identity of the natural or legal persons involved’.Footnote 120 For this reason, Chile was asked to mention the factors prohibited by Article 5 in its prosecutorial guidelines after its 2014 Phase 3 review.Footnote 121 By contrast, the UK escaped Working Group criticism for a 2017 DPA in which the importance of Rolls-Royce PLC to British industry was considered a relevant and (internationally) permitted public interest consideration.Footnote 122 The examiners did, however, note ‘commentator’ (NGO) concerns that the Rolls-Royce case set a precedent of ‘big government contractors’ ‘escap[ing] trial and consequently avoid[ing] being debarred …’.Footnote 123 They also requested that the UK implement an earlier recommendation to enable public agencies to access and process information on corporate sanctions for corruption.Footnote 124
Second, in discussions of Article 5 or State investigation, prosecution or enforcement practices, the Working Group criticises unclear or incomplete legal frameworks concerning settlements. Sometimes the problem is excessively complex settlement laws. Brazil's Phase 3 examiners thus noted the difficulty of identifying ‘the main [government] interlocutors’ for companies in negotiating leniency agreements.Footnote 125 More often, it would seem that the problem is a lack of (written) explanation regarding the proper use of prosecutorial discretions. For example, Argentina was admonished in Phase 1bis for failing to ‘publis[h] criteria on when prosecutors should consider a collaboration agreement’ as ‘[t]his could open prosecutors to criticisms that they make decisions arbitrarily’.Footnote 126 Similarly, concerning Chile, the OECD-WGB implied that the publication of settlement criteria could improve enforcement by encouraging self-reporting and cooperation.Footnote 127 Australia had previously been asked to create a ‘clear framework’ for plea bargaining,Footnote 128 as was Estonia with reference to the concept of ‘effective[ness]’ and Article 5.Footnote 129 Even the US, praised for its ‘good’ enforcement practices,Footnote 130 was told that its guidelines on plea, deferred prosecution and non-prosecution agreements were ‘slightly uneven and indirect’.Footnote 131 The rules on DPAs were particularly obscure, being contained in a prosecution manual that made only scant reference to that procedure.Footnote 132 In general, the lack of guidance on US foreign bribery laws was a problem for small and medium-sized enterprises with more limited resources.Footnote 133
Third, the OECD-WGB implies that some domestic settlement laws and decisions may fail to achieve Article 3's goals of effective, proportionate and dissuasive sanctioning because they provide (relative) impunity to (corporate) offenders. In some reports, the issue is the size or nature of penalties that can be levied in settlements. Hence, concerning Argentina, Brazil, Canada and Latvia, the Group remarked on the low or inflexible financial penalties in settled cases.Footnote 134 Regarding Chile, it recommended that confiscation and compliance reform requirements be available in both settled and fully contested cases.Footnote 135 Otherwise, prosecutors could be forced to choose one procedure over another merely because of the available sanctions.Footnote 136 In other States, the issue concerned rewards for self-reporting. Switzerland was castigated for the low fine imposed on a disclosing company—‘The examiners note that self-reporting should not result in impunity’Footnote 137—whereas the UK was examined about the large penalty reduction provided to a non-self-reporting firm (Rolls-Royce).Footnote 138 The Working Group implied that the Rolls-Royce case was exceptional, for reasons that included the implicated senior managers no longer being with the company.Footnote 139 However, the 50 per cent discount ‘pose[d] the question whether this large reduction in the absence of a self-report may undermine the incentive for corporates to self-report in future’.Footnote 140 Other questions related to impunity concerned the impact of settlements on individual prosecutions,Footnote 141 the use of simplified settlement procedures for more serious corruption casesFootnote 142 and the weight given to debarment risks or the existence of foreign investigations.Footnote 143
Problems of sanctioning also arise with respect to settlement terms involving monitoring or remediation. Although the Working Group is disposed towards corporate monitors,Footnote 144 it expects transparency and accountability concerning their appointments and powers. This position found expression in a report on the UK, where the OECD-WGB called for ‘more guidance on when and on what terms a monitor would be sought’, as well as the publication of ‘the monitoring agreement, the reasons for imposing a monitor, and the basis for the scope and duration of the monitoring’.Footnote 145 In further Anglo-American reports, the Working Group has voiced civil society concern with monitor dependence on accused companies and lack of external supervision,Footnote 146 as well as private sector unease with the cost and scope of monitoring orders.Footnote 147 Broad governmental powers to negotiate charitable payments and/or reparations to ‘victim’ countries are similarly questioned.Footnote 148 As to the former, Chile was warned about the lack of information surrounding the choice of charitable donee, as well as the replacement of fines with donations, which carry less stigma and may be tax deductible.Footnote 149 As to the latter, the Working Group cautioned the UK to ‘ensure that payments by defendants to foreign countries benefit the people in these countries and are not lost to corruption’.Footnote 150
Fourth, the OECD-WGB calls for greater disclosure of information about the specific settlements concluded in party States. Its concern is not only that the widespread use of settlements may inhibit the development of jurisprudence on the offence of foreign bribery,Footnote 151 but that secret settlements may weaken public confidence in domestic enforcement systems and reduce the consistency, supervision and signalling effect of the sanctions found in the resulting agreements. The Working Group has, for these reasons, criticised several countries for omitting to publish the ‘(essential) elements’ of settlement decisions, such as their facts, justifications, parties and penalties.Footnote 152 In two UK reports, there seems to be a suggestion that such information should be ‘readily available’, ie, accessible on a relevant government website free of charge.Footnote 153 It was also not enough that members of the public in Chile, Italy, Switzerland and the Czech Republic could attend judicial proceedings in which resolutions were considered, or that ‘interested’ persons could request to review the decision.Footnote 154 As the OECD-WGB remarked of ‘special’ Swiss procedures, ‘guarantees [of predictability, transparency and publicity] are essential in order not to give the impression of justice being dispensed outside the courts without suitable controls’.Footnote 155 The collection of ‘statistical information’ on different enforcement modalities is also requested by the Working Group to better monitor State Party compliance with the Convention.Footnote 156
Fifth, the OECD-WGB encourages institutional checks-and-balances. Principally, the Working Group seems keen to ensure that there is an independent process of review for State settlement decisions. Addressing the problems in Chile, for example, the Working Group attributes weak public confidence in settlements, in part, to the judge's mere formal powers of review. It recommends ‘increase[d] judicial oversight of SCPs/ABPs, including the decision to use these measures and the terms of a resolution’.Footnote 157 Similar concerns arose in Argentina, the lack of (default) processes of judicial review also being mentioned in a report on Switzerland.Footnote 158 That said, there are reports in which a lack of substantive judicial review has not been regarded as problematic. For example, discussing US procedures and proposed Australian reforms, the examiners did not suggest a greater role for judges or criticise the limited judicial involvement in oversight procedures.Footnote 159
The Working Group's stance on the justice of particular settlement processes is also mixed. As a stand-alone principle, ‘fairness’ was mentioned in the Swiss Phase 4 report, in the context of concerns with the lack of information about ‘the quality of the justice done’ between offenders.Footnote 160 In the Phase 3 review of the French comparution sur reconnaissance préalable de culpabilité procedure, the examiners noted interviewee concerns with prosecutorial independence and the scapegoating of individual defendants.Footnote 161 The Working Group did not endorse those comments, however. Similarly, data protection,Footnote 162ne bis in idem (double jeopardy)Footnote 163 and the ‘fundamental rights of the Defendant’Footnote 164 are mentioned in some discussions of settlements, albeit as constraints on States’ capacities to enforce the treaty or disclose information about deals.
Finally, the Working Group identifies problems concerning the willingness and capacity of States to work within the rules, such as they are. In the case of Brazil, the examiners implied that they had a concern with the ability of the relevant government actors to undertake negotiations with companies in foreign bribery cases, given their resources and expertise. It therefore recommended both training and further guidance for the relevant officers.Footnote 165 Regarding Chile, the concern was political will, prosecutors appearing to have ignored ‘[instruction] to apply SCPs on an “exceptional, limited and prudent basis”’ in past cases.Footnote 166
C. The Approach of the UNCAC Implementation Review Mechanism
The UNCAC-IRM evaluations indicate a more tentative but nonetheless marked acceptance of settlements. The reviewers acknowledge that States may reject particular settlement procedures as incompatible with their fundamental criminal justice principles.Footnote 167 Further, when compared to the OECD-WGB reports, the UNCAC reviewers only rarely call for States to adopt, expand or retain settlement laws and practices.Footnote 168 However, in their commentaries on Articles 30 and 37 (and occasionally Articles 16 and 26) UNCAC, the reviewers note or describe settlement procedures amongst other practices relevant to implementation of the articles. In this way, leniency programmes,Footnote 169 plea agreement procedures,Footnote 170 non-prosecution or deferred prosecution regimes,Footnote 171 as well as out-of-court settlements,Footnote 172 summary proceduresFootnote 173 and monitors,Footnote 174 are characterised as compliant with the UN Convention. The Review Mechanism thereby seems to signal that settlements are not required, but certainly permitted and sometimes to be encouraged, as a means of realising the UNCAC's goals on prosecution, adjudication and cooperation, criminalisation and sanctioning.
In addition, the UNCAC-IRM signals to State Parties how they may modify their settlement laws and practices. In the 2013 UK report, these calls were phrased as softly worded criticisms under Article 30(1). Thus, ‘while noting again the UK's high level of compliance’, UNCAC reviewers argued Britain ‘might also consider looking more closely into the matter of out-of-court settlements involving the SFO [Serious Fraud Office], in order to ensure adequate transparency and predictability’.Footnote 175 Settling UK companies could be required to undertake monitored compliance reforms, and the SFO's settlement decisions could be uniformly subject to review by judges or another independent body in ‘sensitive cases’.Footnote 176 The reviewers also implied that ‘criteria for self-reporting’ and guidelines on publication would be desirable in the UK.Footnote 177 ‘[S]entencing guidelines under the Bribery Act’ could also be considered.Footnote 178
In other Country Review Reports, the UNCAC-IRM was concerned to ensure that prosecutorial discretions to settle are used consistently with Article 30(3). So, having noted that Slovenia permitted plea bargains, the reviewers appear to question whether prosecutorial discretions ‘were exercised to maximize the effectiveness of law enforcement measures and with due regard to the need to deter the commission of corruption offences’.Footnote 179 They ended the discussion by noting that mandatory prosecution in corruption cases was the norm.Footnote 180 South Africa likewise appears only to have been pronounced compliant with Article 30(3) after it clarified that a prosecutor's discretion was subject to review and restricted.Footnote 181 The reviewers quote South Africa to the effect that its enforcement system is robust and deterrent because it promotes ‘alternative dispute resolution, including penal negotiations … subject to the law and prosecution policy’.Footnote 182 Under other UNCAC provisions, concerning Italy the reviewers found problematic interactions with witness protection schemes and difficulties negotiating with multiple defendants.Footnote 183
Further qualifications may be read into the Mechanism's praise for certain settlement arrangements that have been, or could be, adopted in UNCAC party States. US prosecution guidelines, which administratively regulate the use of plea agreements and DPAs, are described as ‘absolutely very positive when it comes to discretion and discretionary power’, for they aim to ensure that charging power is used in the public interest, as defined, and that prosecutors do not abuse their bargaining position.Footnote 184 Latvia was similarly praised for ‘guarantees to prevent the abuse of the [prosecutorial] discretion to enter into those [plea] agreements …’ and for the supervisory role given to its courts.Footnote 185 By contrast, under Article 30(3), Israel was called on to consider ‘out-of-court settlements’ for securities offences, subject to ‘guidelines and criteria’ on the factors that may influence settlement calculations, like self-reporting.Footnote 186 For reasons of ‘transparency and predictability’, independent judicial or administrative review is recommended, as is the possibility of requiring monitored compliance reforms.Footnote 187 The fact that Israel had already considered a ‘defendant's efforts’ at cooperation, ‘repair … and compensat[ion]’ during plea bargaining contributed to that State's compliance with Article 37(1) and (2).Footnote 188 The UNCAC-IRM also appeared to approve of Dutch settlements laws and South African settlements practices insofar as they provided for victim compensation or consultation.Footnote 189 Italy's law passed muster under Article 30(1) even though its practice of plea bargaining was sometimes observed to reduce sanctions.Footnote 190 Presumably, the discount was regarded as being compensated for by other benefits of settlements.
D. Summary
The international anticorruption treaty bodies implicitly endorse domestic settlement laws and practices, but subject to series of qualifications that make reference to the treaties’ terms and (their) principles. On the one hand, the monitors embrace (OECD-WGB) and allow (UNCAC-IRM) settlements as mechanisms that contribute to the enforcement of domestic anticorruption laws. Settlements appear to offer a pragmatic way of resolving foreign bribery allegations to the benefit of both governments and offenders (companies). On the other hand, the treaty bodies are concerned that particular domestic settlement laws and practices may undermine compliance with the treaties or related principles of public law. The examiners thus seek to ensure that States observe the articles on liability, prosecution and sanction, which reflect the treaties’ goals of harmonious domestic application of international anticorruption norms. In addition, the bodies aim to promote principles of transparency and accountability, consistency and predictability in domestic settlement laws and practices. As a rule, the international monitors do not attempt to find a basis for those values in the treaty texts. Rather, they suggest that obscure, unaccountable or inconsistent settlement procedures will fail to guide business actors and fail to foster public perceptions of an unbiased and well-functioning anticorruption or settlement system. Overall, there appears to be a policy of implicit but qualified endorsement reflected in the reports of the anticorruption treaty bodies.
V. Concerns regarding the International Approach to Corporate Settlements
To what extent is this international approach to corporate settlements aligned with relevant values regarding process and outcomes? Considering the results of Part IV in the light of the concerns set out in Part II, several benefits attached to settlement-based enforcement can be seen, but there are also some substantive gaps and procedural flaws.
A. Process-Related Concerns Regarding the International Approach to Corporate Settlements
Does the international approach to corporate settlements satisfy expectations with respect to proper procedure? A first question to consider is whether the processes by which States and international organisations have formulated the international approach to corporate settlements is participatory and transparent?
Regarding participation, it should be noted that the treaty bodies include non-State actors in some parts of their reporting processes. But both the UNCAC-IRM and OECD-WGB are intergovernmental procedures,Footnote 191 in which only State representatives are empowered to debate and approve reports on member countries. Indeed, in Phases 1 to 3, the OECD-WGB explicitly excluded ‘business and civil society groups’ from ‘participat[ing] in the formal evaluation process, in particular, in [the evaluation exercise and] the consultation in the Working Group’.Footnote 192 Rather, both the OECD-WGB and UNCAC-IRM foresee discussions with non-State actors in the research stages of the reports. Within the OECD-WGB, from Phase 2, on-site visits were to include panels on or with both ‘civil society’ and ‘the private sector’.Footnote 193 These categories were defined (respectively) as including ‘non-governmental organisations, academics, and the media’ and ‘businesses, professionals (lawyers and accountants), and labour organisations’.Footnote 194 Governmental representatives are entitled to observe those meetings, but not to take part in discussions.Footnote 195 Within the UNCAC-IRM, inclusiveness has been a ‘long-standing concern’. When brokering the Mechanism, UNCAC State Parties failed to agree on ‘whether civil society should be allowed to attend the meetings of the Implementation Review Group’.Footnote 196 The outcome was a loose obligation on State Parties to ‘endeavour to … [conduct] broad consultations at the national level with all relevant stakeholders, including the private sector, individuals and groups outside the public sector’, when responding to the Mechanism's mandatory questionnaire.Footnote 197 Country visits are not required but, should they be conducted, ‘engagement with all relevant national stakeholders’ is encouraged.Footnote 198
Further, in each procedure, the diversity of participants is balanced against other norms, such as impartiality (OECD-WGB) and sovereignty (UNCAC-IRM). The Commentary on the OECD-WGB suggests that the Secretariat and/or the Chairperson selects the countries that serve as ‘lead examiners’.Footnote 199 At least during Phase 2, those making the appointments considered the similarities of States, in terms of their legal systems and G7 status, as well as issues of ‘geographical balance’.Footnote 200 OECD procedural documents specifically acknowledge the importance of ‘equal treatment’ (fairness) in the review process, as well as the ‘important role’ of the Working Group's Secretariat in maintaining consistency during evaluations.Footnote 201 In a multi-step process, draft reports are discussed with the State under review and debated amongst all member countries.Footnote 202 That said, OECD-WGB country reports are generally adopted with the agreement of all parties except the examined State.Footnote 203 The ‘consensus minus one’ rule prevents the State under review from vetoing the report, even if the confidential nature of the debate leaves some room for collusion amongst party States.Footnote 204 By contrast, under the UNCAC-IRM's Terms of Reference, country reports are ‘finalized upon agreement between the reviewing State parties and the State party under review’.Footnote 205 Reviewer countries are selected at random,Footnote 206 although at least one must be ‘from the same geographical region’ as the State under review and have, ‘if possible’, a similar ‘legal system’.Footnote 207 The UNCAC-IRM's general principles also require attention to States’ sovereign equality and ‘levels of development’, as well as their ‘judicial, legal, political, economic and social systems and difference in legal traditions’.Footnote 208
Finally, the OECD-WGB consults with members of the private sector and civil society annually,Footnote 209 and has conducted two public reviews of its anticorruption recommendations.Footnote 210 The most recent review invites comments on the use of non-trial resolutions to enforce foreign bribery laws, as well as on the setting of incentives for self-reporting and compliance.Footnote 211 The consultation documents cite previous submissions on settlements to the OECD—one by a consortium of non-governmental organisationsFootnote 212 and another by a group of civil society and private sector actors of which the authors were part.Footnote 213 Both groups suggested that the OECD adopt new standards on settlements. Currently, it remains to be seen whether a revised version of the OECD 2009 Recommendation will be adopted and, if so, whether the revision will include settlement-related provisions.Footnote 214 Meanwhile, the OECD has suggested some ‘good practices’ in its 2019 report, although only on isolated problems of settlement-based enforcement.Footnote 215
As to transparency, questions to be considered include how well informed the treaty bodies were when formulating the international approach to settlement, and how clear is their approach to settlement. As regards access to information, it has already been seen that both treaty bodies foresee consultation with a variety of States and non-State actors during the reporting process, the OECD-WGB being stricter in this regard than the UNCAC-IRM. In addition, both the OECD-WGB and the UNCAC-IRM emphasise the involvement of ‘experts’ in the examination procedures. For example, since Phase 2, the OECD-WGB has required reviewer countries to be represented by ‘experts’, including preferably one law enforcement official who has worked on corruption-related matters.Footnote 216 Further, countries under review are to arrange for ‘experts’ from law enforcement and other relevant areas to meet with examiners during site visits.Footnote 217 An ‘expert’ from the examined country is also to check the draft report,Footnote 218 as are all other Working Group members before the Plenary.Footnote 219 Similarly, all States within the UNCAC-IRM are to identify potential ‘expert’ reviewersFootnote 220 and to appoint such ‘experts’ to act as ‘focal points’ when they are themselves under review.Footnote 221 Reviewing experts are directed to specific sources of information when preparing to undertake their functions.Footnote 222 However, neither body formally consults other specialists or sources in determining what information is to be gathered concerning a country's performance or how that information is to be evaluated. The evaluation processes are, in that sense, informed by a broad variety of sources and significant practical experience from State Parties. They are not, however, scientifically ‘rigorous’ in the manner of other international peer review mechanisms.Footnote 223
As to transparency understood as clarity, it follows from Part III, that neither treaty body has created a document that guides country reviewers or members of the public as to the bodies’ approaches to settlement. The peer reviewers also avoid stating the source of their principles of ‘good’ domestic corporate settlement laws and practices—transparency and accountability, consistency and predictability. This lack of articulation comes despite calls on the OECD-WGB, to ‘provi[de]… regular information to the public on its work and activities’ in the OECD 2009 Recommendation and Phase 3 and 4 methodologies.Footnote 224 Such obscurity is also in sharp contrast to the Working Group's expectation that States adopt clear guidelines on domestic settlement laws and practices.
The lack of explicit international standards on settlements is even more problematic for the UNCAC-IRM, whose reports are by default confidential.Footnote 225 Most countries considered for this research had published their reports. However, the norm of confidentiality does make it important that any consensus regarding settlement is known. When the emerging norms are obscure, it is harder for governments to identify ‘good’ settlement practice under the UNCAC and for nationals to use the UNCAC-IRM reviews to hold their government to account. Finally, in both the UNCAC-IRM and OECD-WGB reports, comments on settlement laws and practices tend to be expressed in quite general terms and embedded in discussions of more general issues of sanctioning and procedure. This mode of presentation aligns with the function of the reports to review a range of issues relevant to foreign bribery control and to encourage harmonisation of domestic laws and practices. Nonetheless, it raises concerns about the ease with which States and other stakeholders may identify and follow the international expectations.
B. Outcome-Related Concerns Regarding the International Approach to Corporate Settlements
The question of whether the treaty bodies are adequately guiding States concerning the impact of settlements on their (corporate) citizens and (criminal) justice systems, beginning with the question of justice. It seeks to determine whether States are taking into account matters of fairness, equality and legal certainty in their settlement laws and practices. These concepts require procedural guarantees for persons in criminal and civil cases, parity of treatment amongst persons and a legal basis for interferences with individual rights that is itself relatively clear.Footnote 226 Here, the research has focused on the OECD-WGB reports because, as was seen in Part IV, that body tends to discuss the substantive problem of settlement in more detail than the UNCAC-IRM in its reports.
The treaty bodies address some justice-oriented concerns in their comments on settlements, without being comprehensive or acknowledging the normative basis of those factors. For example, the OECD-WGB points repeatedly to problems of legal certainty and equality when it chastises States for their ill-defined settlement procedures or broad prosecutorial discretions.Footnote 227 However, in making these criticisms, the body tends to cite Article 5 OECD-ABC,Footnote 228 as well as the need for transparency and accountability, predictability and consistency, in settlement laws and practices.Footnote 229 As regards transparency and accountability the Working Group is concerned with the adherence of States to the terms of the Convention and the achievement of its equal enforcement goal. As regards predictability and consistency, it raises principled concerns, though by reference to criteria that are less demanding than those of legal certainty or equality as developed in domestic legal systems or, at the international level, in human rights jurisprudence.Footnote 230 The Working Group also justifies its reliance on principles, at least partially, on pragmatic grounds: States need to maintain public confidence in domestic enforcement systems, including systems that allow for settlements, and enable the efficient use of settlement processes that are available.Footnote 231
In addition, the monitors equivocate on the importance of institutional checks-and-balances, which are also linked to concerns about fairness, equality and legal certainty. As noted in Part IV, the OECD Working Group sometimes seems intent on ensuring that there is an independent process of review for States’ settlement decisions. At other times, it fails to raise concerns that substantive (judicial) review is lacking in national settlement laws or practices.Footnote 232 Hence, it appears out of step with domestic legal argument which seeks to prevent the risk of unaccountable executive discretion through the rule of law.Footnote 233 Furthermore, the Working Group acknowledges concerns that individuals may be unfairly impacted by negotiations between prosecutors and companies, but fails to endorse those concerns or to incorporate them into its country-specific recommendations. Again, this appears to be an inadequate response to the concerns expressed in the literature concerning the impact of settlements on the rights of individual lower-level employees.Footnote 234 Finally, the examiners acknowledge the interaction between settlements and the fundamental rights of the defence. However, this concern is configured, not as a matter of criminal procedure or human rights, but as a constraint on the capacity of States to enforce foreign bribery laws or disclose information about particular deals. Consequently, the Working Group misses the opportunity to engage with well-known problems of defendants who waive their privileges to benefit from the speed, certainty and savings of settlement options. Similar critiques could be made of the UNCAC-IRM.
As to prevention, how are the treaty bodies guiding States in the use of settlements to control corrupt behaviour? As shown in Part II, settlements can enhance the enforcement of foreign bribery laws by encouraging corporations to disclose wrongdoing, cooperate in investigations and police themselves against future breaches. Equally, settlements may undermine the deterrent effect of corporate criminal laws by providing a private, non-punitive response to corporate wrongdoing that has fewer institutional guarantees against abuse by governments. In Part IV, it was seen that the OECD-WGB explicitly accepts that settlements produce time and cost savings for governments, and encourage self-reporting and cooperation.Footnote 235 It also acknowledges that low financial penalties in settlements may undermine the OECD-ABC's sanctioning goal, as may large discounts for disclosure, or enforcement regimes that only permit compliance commitments through negotiation.Footnote 236 On occasion, the Group remarks on the problem of loose regulations for settlements in general and for corporate monitors, charitable donations and reparations to victim States in particular.Footnote 237 Even the relationships between corporate settlements, individual prosecutions and debarment regimes feature in its analysis.Footnote 238 The UNCAC-IRM echoes at least some of these concerns in its comments on the need for guidelines on self-reporting and respect for the principle of deterrence in domestic law.
Nonetheless, the treaty bodies do not expressly acknowledge the tension between cooperative and coercive regulatory goals in domestic settlement laws and practices. Therefore, the international monitors also fail to guide States expressly on how to balance the risks and rewards of compromise in particular cases. Some implicit guidance might be found in the references to values such as accountability and transparency, consistency and predictability, which are peppered throughout the reports. However, those principles arguably lack the precision needed to moderate the high risks of settlement for governments and firms. Moreover, to the extent that they direct State behaviour, these principles would come down to a requirement of disclosure of each State Party's approach to moderating regulatory objects in its settlement laws and practices. In other words, the principles of accountability and transparency, consistency and predictability are not geared to result in cross-country guidelines on the substance of domestic non-trial resolution procedures. Perhaps for this reason, both sets of non-State actor submissions on settlements encouraged the OECD-WGB to adopt explicit international guidelines on matters such as self-reporting, the gravity of sanctions and the effect of settlements on individual prosecutions.Footnote 239 The NGOs also ‘urge[d] the WGB to ensure that … [any revised OECD] Recommendation is grounded in, and reviewed regularly against, a solid evidence base about what is effective in achieving genuine deterrence’.Footnote 240
Lastly, the research considered how the international approach to corporate settlements helps governments to consider the cost-effectiveness of their corporate settlement laws and practices. Here too there was a lack of guidance for States. For example, cost savings are cited as a point in favour of settlement mechanisms in the OECD-WGB reports,Footnote 241 although neither treaty body evaluates whether particular domestic settlement laws and practices achieve cost savings for governments. At most, they comment on the quantum of sanctions in specific settled matters. This omission is perhaps understandable given the difficulties of calculating financial costs and benefits of settlements over trials. Nonetheless, it is a significant gap given the place of resource considerations in justifying settlements within the OECD-WGB and both Conventions’ explicit preference for dissuasion and proportionality in sanctioning. There are also difficulties in using settlements to achieve a case resolution function, given the privacy or indeterminacy of the outcome involved.Footnote 242 It could be asked how a system that deviates from its core functions of a domestic foreign bribery sanctioning system, as envisaged, could be regarded as economical.Footnote 243
C. Summary
This Part has reviewed the international approach to corporate settlements with respect to the process- and outcome-related concerns identified in Part II. Regarding process, there is State and non-State participation in reporting processes, as well as the contribution of professional knowledge to these forums, albeit to differing degrees in the different bodies. The scope of the ‘expert’ pool was also questioned, along with the clarity of the statements on settlements and the uncertain opportunities for review of the emerging settlement standards. As regards outcomes, it was found that States were receiving some, but not enough, guidance on the just, preventive and cost-effective use of settlements. In the absence of further international guidance, there is reason to question whether the international approach to settlements will achieve the treaties’ fundamental enforcement goals.
VI. Conclusion
The popularity of settlements in foreign bribery matters is a challenge to the international law against corruption, as expressed in the UNCAC and OECD-ABC. States justify negotiation with companies by citing enforcement efficiencies and prospects for corporate survival. However, commentators warn against the corrosive effects of deal-making, noting the reduction of penalties and the unequal and/or uncertain administration of corporate (criminal) justice. The penalisation of corruption is a fundamental premise of global anticorruption regulation, including when malfeasance occurs in an enterprise. Therefore, if States’ criminal laws are weakened, the treaties’ approach to corruption should also suffer. Do international instruments and reports broach the challenge of settlements and, if so, how is that approach to be assessed?
This article set out to identify, describe and discuss international anticorruption law as it regulates domestic corporate settlement laws and practices. It has shown that neither the UNCAC nor the OECD-ABC expressly addresses settlements, the OECD 2009 Recommendation also neglecting this aspect of domestic law and practice. Instead, the international instruments create and moderate the conditions for negotiating foreign bribery allegations with treaty provisions on corporate liability, sanctions and procedure and, in the case of the OECD, supplementary recommendations on the implementation of these terms. The systematic review of OECD-ABC and UNCAC country evaluations then showed that monitors tend to regard settlements as a means of implementing the treaty provisions on criminalisation, enforcement and sanctions. The examiners suggest qualifications drawn from those articles and principles of public law, however sourced. The OECD-WGB, in particular, suggests a broad range of conditions relating to the design and implementation of domestic settlement laws and practices.
The qualified endorsement of corporate settlements seems sensible, insofar as it both permits and contains the impulse for negotiation. However, this while the international approach to settlements is broadly transparent and participatory, there are also reasons to question its procedural adequacy. Additionally, there were several principled and pragmatic difficulties with settlements that the treaty bodies had overlooked. Thus, the overall conclusion to be drawn has an irony to it: the international anticorruption bodies call on States to adopt an approach to settlements that is in line with the conventions and (therefore) transparent and consistent, predictable and accountable. Yet, the treaty bodies themselves do not follow a comprehensive, clear or reviewable set of norms on domestic corporate settlements laws and practices.
