Earlier this week the OECD released a report titled “OECD Foreign Bribery Report – An Analysis of the Crime of Bribery of Foreign Public Officials.”
The Report “endeavours to measure, and to describe, transnational corruption based on data from the 427 foreign bribery cases that have been concluded since the entry into force of the OECD Anti-Bribery Convention in 1999” by the 41 signatory countries to the OECD Convention. From this universe of cases, the Report then attempts to calculate several statistics.
Calculating statistics across 41 countries with different legal regimes, different ways of prosecuting cases, etc. is a monumental task.
It is also a task that yields statistics that are not very reliable or meaningful, particularly given certain of the methodologies and assumptions made in the Report.
For starters, the report itself notes as follows. “This report is peppered with unknown data, ranging from 2% to 36% depending on the particular data set. Many of the concluded cases did not contain all the information needed to make a full analysis and were also not publicly available.”
Second, the report “does not examine foreign bribery related offenses such as accounting.” It is a bit unclear what this means, but if it means that FCPA books and records and internal controls cases only are not included in the dataset, then this is a significant limitation because actual charges in an FCPA enforcement action are often based – not solely on the conduct at issue – but other factors such as voluntary disclosure, cooperation, collateral effects, etc. In short, several FCPA enforcement which could implicate the FCPA’s anti-bribery provisions do not as a technical matter.
Third, and as noted in footnote 11 of the report, “in the case of the United States, sanctions imposed by the Securities Exchange Commission (US SEC) and Department of Justice (US DOJ) are counted separately.” Given that U.S. cases comprised approximately 1/4 of the total cases examined, this creative counting method is hugely significant.
Consider just 2013 FCPA enforcement in which there were 9 core corporate enforcement actions (ADM, Bilfinger, Weatheford, Diebold, Total, Ralph Lauren, Parker Drilling, Stryker and Phillips). Yet if one counts DOJ and SEC actions separately, as did the OECD, notwithstanding the fact that most DOJ and SEC enforcement actions were based on the same core conduct, the number dramatically jumps to 15 corporate enforcement actions in 2013. In other words and using just one year, one can clearly see how creative FCPA enforcement action counting methods dramatically changes the denominator for every statistic calculated.
One statistic that has generated much media attention from the OECD Report (see here and here) is the finding that 53% of foreign bribery cases involved corporate management or CEOs. However, the OECD Report – as noted in footnote 36 – defines “management” to mean senior level management, executives at the board level, directors and lower level management and states that “case data was insufficient to distinguish between these categories.”
To be sure in the FCPA context, certain enforcement actions have involved senior executive conduct and/or board conduct, but the vast majority of FCPA enforcement actions do not involve senior level management and a frequent allegation in such enforcement actions is that no one at the parent company resolving the enforcement action was aware of or participated in the alleged improper conduct. To the extent there was a management level employee (and “title inflation” surely seems to be used in many FCPA enforcement actions) involved in the alleged improper conduct, the individual was employed by a legal entity (such as foreign subsidiary) separate from the entity actually resolving the enforcement action.
Because the OECD Report was “prepared with the aim of assisting the OECD Working Group on Bribery in International Business Transactions and the G20 Anti-Corruption Working Group in their efforts to combat transnational bribery,” it was imperative that the statistics in the Report be reliable and meaningful.
Based on the above information, you can decide for yourself whether this is the case.
Despite the statistical deficiencies of the OECD Report there are several “preliminary conclusions” in the report worthy of highlighting.
For instance, as to the long timeframes involved in foreign bribery cases, the report states “it is essential that law enforcement authorities undertake efficient and effective investigations to avoid unnecessary delays.”
As to settlements, the predominate vehicle by which foreign bribery cases are resolved, the report states that “settlement procedures should respect the principles of due process, transparency and consistency.”
As to compliance programs, the report states that there is “scope for greater incentivizing preventative anti-bribery compliance programs …”.
DOJ Assistant Attorney General Leslie Caldwell delivered this speech in connection with the release of the OECD Report.