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Sure, Non-Profits Have A Role To Play, But Being Informed, Impartial And Responsible Is Important Too

This recent guest post [1] on the FCPA Blog by the Executive Director of the U.K. Chapter of Transparency International stated that not-for-profits have an “important role” to play in “the crowded anti-bribery and compliance space.”

True, non-profits have an important role to play and previous posts (here [2] and here [3] among others) have noted the good work of certain non-profits in raising awareness of bribery and its effects and seeking to reduce bribery and corruption around the world.

However, along with this important role comes an implicit duty to be informed, impartial and responsible and this post highlights how certain non-profits in the bribery and corruption space seemingly fail these important metrics.

Let’s start with informed.

As highlighted in numerous prior posts (see here [4] and here [2] for instance) non-profits often turn out research and commentary that contain misleading, incomplete, and in some cases inaccurate information.

Let’s next focus on impartial.

As highlighted in this prior post [5] regarding Transparency International’s defense company rankings, perhaps it was just a coincidence that the only companies to receive an “A” ranking were companies that were substantial contributors to Transparency International.

Or perhaps it was not a coincidence because, as highlighted in the post, buried deep in the report one learns that contributing and/or belonging to Transparency International did indeed elevate a company’s score in Transparency International’s rankings.

Regarding the above point, a Transparency International representative stated in an e-mail to me “the methodology will be reviewed for the next iteration, and that means where changes are merited they will be made.”

Draw whatever conclusions you want from that statement, but I’ve drawn mine.

[6]

Others have also questioned Transparency International’s funding. For instance, this Corporate Crime Reporter article [7] highlighted Siemens’ $3 million donation to Transparency International. (Previously, Siemens resolved an $800 million FCPA enforcement action – the largest FCPA settlement of all-time for conduct the U.S. government termed “unprecedented in scale and geographic reach” “egregious,” “staggering,” “brazen,” and “systematic” and that there existed a “corporate culture in which bribery was tolerated and even rewarded at the highest levels of the company.”).

The Corporate Crime Reporter article quotes a “TI insider, who asked not to be identified for fear of retaliation” as follows.

“This really shows that Transparency International is not as pure as people think. Transparency International’s own policy forbids accepting money from corrupt companies. Period. Even though the Siemens bribery scandal broke in 2006, the company is still being investigated in more than 20 countries — in Europe, Asia, the Americas, Africa and the Middle East. All over the world, Siemens is still under suspicion.”

“Its reputation is the most valuable asset that Transparency International has. But its management has made the choice that taking $3 million from Siemens to support its $70 million international budget is worth the risk of damaging its reputation. That’s less than 5 percent of TI’s budget. Is this really worth it?”

“How can anyone trust TI? The world’s leading anti-corruption NGO is now taking money from one of the world’s worst corporate criminals. People need to start asking the question.”

Moreover, as highlighted in this article [8], the resignation of the head of the U.S. chapter of Transparency International followed criticisms of, among other things, “TI-USA’s fundraising and grant management” and the article states: “TI-USA had been slow to comply with a request from the Berlin secretariat to make public how much money it received from corporate donors. Some of those donors had been the subject of international bribery investigations. [A TI representative] confirmed that the secretariat had put pressure on TI-USA to be more transparent about its funding.”

For yet another article concerning the finances at Transparency International see this [9] investigation by CORRECT!V and German business daily Handelsblatt which “unearthed gaping holes in the financial reporting of Transparency International.”

Relevant to impartiality is when various non-profits or so-called civil society groups publish reports concerning the FCPA or related topics. To state the obvious, these reports are not drafted by robots, but real human beings. Dig into the details of certain of these reports and you will quickly discover that the drafters or so-called “country experts” relied upon are frequently part of FCPA (or insert whatever other similar law you want) Inc. and have vested interests in there being more enforcement of bribery and corruption laws.

Indeed, my biggest concern with many non-profits in the FCPA and related spaces is a seeming obsession with more FCPA (and related) enforcement as if more (and more aggressive) enforcement is somehow the best answer to the bribery and corruption problem or somehow always an inherent good. Instead of focusing on quantity of enforcement, how about focusing on quality of enforcement?

For instance, have you ever seen a non-profit or civil society report in the FCPA space draw attention to the failed, manufactured Africa Sting enforcement action in which countless real lives were significantly damaged and during which the presiding judge stated [10]: “This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement. […]  [W]here the government’s handling of the discovery process constituted sharp practices that have no place in a federal courtroom.”?

Have you ever seen a non-profit or civil society report in the FCPA space draw attention to the failed Lindsey Manufacturing / Keith Lindsey & Steven Lee enforcement action which again resulted in real lives being significantly damaged and during which the presiding judge stated [11] that the numerous instances of prosecutorial misconduct “add up to an unusual and extreme picture of a prosecution gone badly awry […] Charges were filed against them as a result of a sloppy, incomplete and notably over-zealous investigation, an investigation that was so flawed that the Government’s lawyers tried to prevent inquiry into it. In some instances motives, statements and conduct were attributed to them that were wholly unfounded or were obtained unlawfully …”.?

Is not ultimate outcomes in FCPA and related enforcement actions important when the enforcement agencies are put to their burdens of proof? If your only source of knowledge is non-profit or civil society reports, apparently not.

In terms of being responsible, what is one supposed to think of the following statement [12] from Transparency International that certain bribery and corruption settlements in Western countries “should also make clear to laggard governments that investing in adequate enforcement can have substantial returns.”

What I make from that statement is that TI (and other groups) prioritize quantity of enforcement (and its resulting bounties) over quality of enforcement and that governments around the world should exercise their leverage to extract lucrative settlements from risk averse business organizations. Who cares what the enforcement theory is, who cares whether the enforcement theory was subjected to judicial scrutiny, who cares about the form of resolution, there is money to be made here!

In short, sure non-profits have an important role to play in the anti-bribery and compliance space, but along with that comes an implicit duty to be informed, impartial and responsible.

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