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Finding A Solution To The Public – Private Corruption Dichotomy

By on November 4, 2015 in Guest Posts, United Nations
public-private

Professor Juliet Sorensen (Northwestern University School of Law) and Northwestern Law students Michelle Kennedy and Cassandra Myers are attending the Sixth Conference of the State Parties (CoSP) to the United Nations Convention against Corruption in St. Petersburg, Russia. For more on the opening of the Conference, see here and here. Over the next few days, FCPA Professor will be publishing various posts regarding the proceedings.  

This post is from Cassandra Myers.

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In the context of the international market, anticorruption measures are a necessary component to cultivating a thriving public and private economy.

As Alexander Govorunov, the vice-governor of St. Petersburg, simply put it: “Corruption is evil . . . The whole arsenal needs to be put into work here.” During the Convention Against Corruption’s special event on partnerships between the public and private center in combating corruption, Russia outlined its strategies for becoming a world leader in bridging the private/public sector gap.

Encouraging countries to adopt legislation wherein cooperation between public and private sectors can flourish increases the anticorruption movement’s credibility and impact. The way to do this, according to the Executive Director of the United Nations Office on Drugs and Crime Yuri Fedotov, is to make anticorruption measures part of an overall management scheme to be implemented, rather than a compliance exercise to be fulfilled. Proponents aim to show the private sector that “combatting corruption is good for business,” as it lowers prices, enhances reputations among consumers, and creates meaningful competition.

A significant management program serves as the blueprint for a strong anticorruption foundation; it must include partnerships between private companies and local governments in their countries. This “joining [of] forces” entails both parties investing in strengthening and sustaining public infrastructure as well as skills development training for employees. While anticorruption initiatives are helpful, effective cooperation where all parties are invested will yield the ideal results.

For Russia, in its hope to become an example to the world and enhance its global reach, the public-private partnership plan focuses on four factors: openness, transparency, prevention of conflicts of interest, and responsibility. Oleg Plokhoy, the head of the Department on Combating Corruption of the Presidential Administration of Russia, outlined how their plan translates from the public to the private sector, noting that while corruption is “mostly associated with public servants,” it remains widespread in private business. In the current anticorruption measures, 1.5 million public employees are covered, but in the 1000 criminal cases of public corruption filed, nearly 1/3 include criminal corruption activity with a private business. This shows the pivotal need for private anticorruption measures.

By reducing the presence of conflicts of interest between public and private employees and increasing enforcement while stiffening penalties for private corruption, Russia intends to combat corruption from both the “acquaintance” route, that is, relationship-based governance, and the profit, or “thing of value” route.  Thorough conflicts checks will deter patronage, and increased criminal and administrative penalties for private businesses will make corruption less profitable and thus, less appealing to private business.

All of the speakers cited the standards articulated in Article 12 of the UNCAC treaty, which includes recommendations for better implementation and enforcement of anticorruption policies for private businesses. The Dean and Executive Secretary of the International Anti-Corruption Academy, Martin Kreutner, pointed out that “For every contract globally, [at least] 10% of the expenses go to corruption.” It’s time the parties to the convention adopted more specific resolutions focusing on the private sector. The last time any such resolutions were adopted was at the 2013 Convention Against Corruption in Panama City, Panama.

The final question broached by panelists considered just how much involvement private actors—businesses and NGOs alike—could have in the discussion and implementation of anticorruption measures. On one hand, allowing businesses to be involved in the decision-making process encourages greater accountability and responsibility in the partnerships. On the other, the practice may encourage lobbying efforts, something that the member countries may want to deter. Anatoly Vyborniy, Chairman of the Russian Chamber of Commerce for Business Security, called for more regulation of lobbying efforts, as the practice hurts mutual trust and undermines the value of high level dialogue between the public and private sectors.

The member countries will continue to foster public and private cooperation and craft solutions to that end, with Russia aiming to lead by example.

Friday Roundup

By on October 9, 2015 in Andres Truppel, DOJ, Gray Cloud, John Ashe, Kinross Gold Corp., Siemens Argentina Enforcement Action, United Nations
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Alleged bribery at the U.N., former Siemens exec pleads guilty to long-standing charges, scrutiny alerts and updates, quotable, and for the reading stack.

It’s all here in the Friday roundup.

Alleged Bribery at the United Nations

The United Nations does much preaching about bribery and corruption, yet perhaps it should look inward as once again one of its own is alleged to have engaged in bribery and corruption.

This recent criminal complaint charges John Ashe and others with a variety of criminal offenses.  Ashe is described as having various positions at the U.N. including serving as the Permanent Representative of Antigua to the U.N. and recently serving as the President of the U.N. General Assembly.

According to the complaint, various other defendants (most of whom are alleged to be naturalized U.S. citizens, as well as a Chinese national who allegedly has a New York-based non-governmental organization) made bribe payments to Ashe in connection with a U.N. sponsored conference center in Macau, China and to influence business interactions with Antiguan government officials.

The alleged bribery is charged under 18 USC 666 (theft or bribery concerning programs receiving federal funds) on account of the U.N. receiving U.S. federal government funds.

However, Ashe is likely a “foreign official” under the FCPA given that the definition of “foreign official” includes individuals associated with “public international organizations” and the U.N. has been designated as such an organization.

Moreover, as highlighted above, the alleged payors of the bribes to Ashe are predominately naturalized U.S. citizens subject to the FCPA’s anti-bribery provisions. The Chinese national defendant is alleged to have engaged in conduct in the U.S. likely sufficient to satisfy the dd-3 prong of the FCPA.

The recent enforcement action is certainly not the first to involve bribery of a U.N. official.

As highlighted here, the Richard Bistrong enforcement action involved bribe payments to, among others, U.N. officials.

For additional coverage of the Ashe charges, see here.

Former Siemens Exec Pleads Guilty

Recently, the DOJ announced that Andres Truppel of Argentina, the former chief financial officer of Siemens S.A. – Argentina (Siemens Argentina), pleaded guilty to conspiring to violate the anti-bribery, internal controls and books and records provisions of the FCPA; and to commit wire fraud.

On social media, some commentators have tried to link the guilty plea to the recent Yates Memo.  Such an attempt is off-target as Truppel and other former Siemens executives and agents were criminally charged in December 2011.

As highlighted in this prior post from nearly four years ago, the Siemens Argentina individual enforcement action was brought after the DOJ faced much scrutiny for not bringing any individual enforcement action in connection with a bribery scheme “unprecedented in scale and geographic reach” in which there existed at Siemens a “corporate culture in which bribery was tolerated and even rewarded at the highest levels of the company.” (Those are direct quotes from DOJ/SEC).

This scrutiny occurred, among other places, during the Senate’s November 2010 FCPA hearing in which hearing Chair Senator Arlen Specter gave me this homework assignment regarding the Siemens enforcement action.

As highlighted in the prior post, despite the Siemens Argentina individual enforcement action, the fact remains that only a sliver of the conduct at issue in the 2008 enforcement action against Siemens resulted in individual prosecutions.  As alleged by the enforcement agencies, the corruption at Siemens involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe and the Americas.  As alleged (see here) “among the transactions on which Siemens paid bribes were those to design and build metro transit lines in Venezuela; metro trains and signaling devices in China; power plants in Israel; high voltage transmission lines in China; mobile telephone networks in Bangladesh; telecommunications projects in Nigeria; national identity cards in Argentina; medical devices in Vietnam, China, and Russia; traffic control systems in Russia; refineries in Mexico; and mobile communications networks in Vietnam.”

For additional coverage of the Truppel plea, see here and here.

Scrutiny Alerts and Updates

There has never been an FCPA enforcement action against a Canadian company, but recently Kinross Gold Corp (a company with shares listed on the NYSE) stated:

“In August 2013, Kinross received information regarding allegations of improper payments made to government officials and certain internal control deficiencies at its West Africa mining operations. Kinross takes such allegations very seriously and action was immediately taken in accordance with Kinross’ Whistleblower Policy. External legal counsel was immediately retained to conduct an objective internal investigation into the allegations.

In March and December 2014, and July 2015, Kinross received subpoenas from the United States Securities and Exchange Commission (the “SEC”) seeking information and documents on substantially the same subjects as had previously been raised. In December 2014, Kinross received similar requests for information from the United States Department of Justice (the “DOJ”).

Kinross is fully cooperating with the SEC and DOJ and continues to diligently pursue its own internal investigation, which, over the course of the past 25 months, has not identified issues that Kinross believes would have a material adverse effect on the Company’s financial position or business operations. Our internal investigation is ongoing, and additional issues or facts could become known as the investigation continues.

It is important to note that the SEC subpoenas expressly state that: “This investigation is confidential and nonpublic and should not be construed as an indication by the Commission or its staff that any violation has occurred, nor as a reflection upon any person, entity or security.”

Kinross is committed to operating in accordance with the highest ethical standards and conducting business in an honest and transparent manner that is in compliance with the law. Kinross has a longstanding culture of ethical conduct and accountability consistent with its Code of Business Conduct and Ethics and related anti-corruption compliance program.”

Quotable

Informed by my prior experience as an FCPA lawyer in private practice, I have long pinned one of causes for the inexcusable long duration of FCPA inquiries on the high attrition rates at the DOJ and SEC’s FCPA Unit.

Since leaving the DOJ, Paul Pelletier (former Acting Chief and Principal Deputy Chief of the DOJ’s Fraud Section and currently a partner at Mintz Levin) has offered an informed voice on the long duration of DOJ FCPA inquiries.  (See here for instance).

Commenting on the Yates Memo in this recent FCPA Blog guest post, Pelletier writes:

“To avoid delay in the efficient and timely prosecution of business entities, implementation of the formal requirements of the Yates Memo will require the deft and even hand of prosecutors, both experienced in investigating and prosecuting complex corporate white collar crime and trained in the methods of real time prosecutions. This unique experience and specific training are required and essential.

From 2002 through 2010, the average Criminal Division tenure of a Fraud Section prosecutor exceeded 5 years and according to the OECD’s most recent Foreign Bribery Report, during that same time frame, the average duration of a foreign bribery investigation measured from the last act of the offense to resolution was approximately 3 years. Commentators have noted an increasingly high and troubling turnover rate in the Fraud Section since 2010, radically altering the average tenure of Section prosecutors. Moreover, since 2010 the average investigatory duration of foreign bribery matters has doubled to more than sixyears.

Whatever explanation may be offered for these jaw dropping statistics, the practical effect is that most FCPA investigations will be passed from prosecutor to prosecutor, almost certainly leading to unnecessarily protracted investigations—perhaps an exclamation point which highlights the critical consequences to FCPA investigations flowing from implementation of the Yates Memo, absent a root cause cure.

Given the formal requirements of the Yates Memo, no matter how good the prosecutors’ intentions or how noble their cause, without the DOJ’s commitment to sustained and focused training combined with a similar effort to retain prosecutors with the experience essential to the success of the endeavor, corporations (including employees and shareholders) caught up in the throes of an FCPA investigation, if they choose to cooperate, are likely to be forced to suffer the untold and unwarranted costs and disruptions of seemingly interminable investigations. That should not be the consequence of DOJ’s renewed focus.”

For the Reading Stack

This recent Wall Street Journal Risk & Compliance Journal article states:

“The Justice Department’s Foreign Corrupt Practices Act unit is focusing its enforcement efforts on quality rather than quantity. Spokesman Peter Carr said after years of handling smaller cases coming from corporate self-reporting, the unit is now putting more at stake and going after blockbuster cases. Initiatives to boost foreign corruption enforcement personnel and resources are being used to go after that high-profile wrongdoing, Mr. Carr said. Many of those programs began years ago. His comments came in response to news that the Department’s anti-bribery efforts were eclipsed by the Securities and Exchange Commission in the third quarter. “The department several years ago handled more cases based on self-reporting by companies, and as a result of that we saw more resolutions, but smaller cases,” Mr. Carr said in an email. “We are currently focusing on bigger, higher impact cases, including those against culpable individuals, both in the U.S. and abroad, and those take longer to investigate and absorb significant resources, but there are a lot of cases out there. In fact, the department is increasing its FCPA resources, and the three new FBI squads focusing on this issue are now staffed and operational.” […] “Our investigations of FCPA cases are as robust as ever, and the resources we dedicate to FCPA cases continue to grow.  These are sophisticated cases that can take years to investigate,” Mr. Carr said. “The number of public announcements about filed cases or resolutions will vary over time, but our commitment to FCPA cases is strong.”

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A good weekend to all.

Checking In With Richard Alderman

By on June 24, 2014 in Deferred Prosecution Agreements, Enforcement Competition, Guest Posts, Jurisdiction, OECD, Serious Fraud Office, United Kingdom, United Nations, Voluntary Disclosure

Richard Alderman is the former Director of the United Kingdom Serious Fraud Office (“SFO”).  Since leaving the SFO in April 2012, Alderman has remained active in anti-corruption projects.

In this Q&A, Alderman discusses certain of these projects and offers insight on the following issues:  the current international enforcement climate including multi-jurisdictional issues; voluntary disclosure; DPAs; and a compliance defense.

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In April 2012, you left the SFO.  What have you been doing since?

I have been working with some international institutions and NGOs dealing with anti-corruption on the front line. This is what I wanted to do because I had met a number of individuals who inspired me. Recent examples are the Convention on Business Integrity in Nigeria and an initiative by the Egyptian Junior Business Association aimed at the vibrant SME sector in Egypt. I have also had the privilege of meeting individuals involved in the radical transformation of the procurement practices of Moscow City Council.

How do you see the current international corruption enforcement scene?

We have moved on from where we were a few years ago when there were only a few states that took action in these cases. Examples of issues now are-

  • How do we deal with the interests of the different states that want to enforce the law?
  • What will be the impact of more enforcement by demand states (including demand states that are also supply states)?
  • When will law enforcement agencies uncover and prosecute corrupt companies that have no intention of complying with global rules?
  • How do we get the proceeds of settlements back to the demand states?
  • Can a system of incentives be devised to reward companies with top quality anti-corruption systems?

In current enforcement era, multiple sovereigns may have jurisdiction over the same alleged conduct.  What issues do you see regarding multi-jurisdictional enforcement?

This is becoming a key issue. I prepared a detailed report for the UNCAC conference in Panama in November 2013 that covered these and other issues.

Companies are undoubtedly at risk here. If we look at violations first, different states can prosecute for the same violation. The company’s only protection is the principle of double jeopardy but this is interpreted in different ways in different states. For example it is not an issue for the US because the US does not recognise foreign convictions and acquittals for this purpose.

This will become a particular issue when one of the enforcing states is the demand state. Why should such a state be prevented from taking action in its own courts because of a resolution elsewhere? We can expect national sovereignty issues.

Companies can also seek to exclude a state with a wide concept of double jeopardy by reaching a settlement with another state and then pleading double jeopardy in the first state. I have seen this.

The issue also arises with asset forfeiture. I do not understand how multiple states can confiscate the same asset or profit. Once the money has been paid to law enforcement somewhere then any further disgorgement is actually a criminal fine.

What about global settlements?

I am very much in favour of these. I know from my own experience that they are very difficult to bring about. The international mechanisms in Article 47 of UNCAC and Article 4(3) of the OECD Convention should be used to discuss how the different enforcing states should work together and how a global settlement should be structured. Neither mechanism has yet been used for this purpose but they are available. Enforcing states will be nervous but these mechanisms will be vital as more and more states start to enforce the law.

Do the recent Libor settlements have any implications for global settlements in corruption cases?

These settlements have been very remarkable. A UK prosecutor cannot however enter into such an agreement if there are criminal pleas in the UK. This is because the senior judge in the Innospec case said that it was wrong for the SFO to discuss the penalty to be paid by the company even if the penalty was subject to the overall approval of the court.

One consequence of the new UK DPA system is that the UK enforcing authority can enter into these discussions if what is being discussed is a DPA rather than a traditional prosecution. It will be up to the judge to decide if this is the right way forward.

The result is that UK prosecuting authorities will not be able to participate in global settlements in the future unless there is a DPA approved by the court. I see this as an issue that will be increasingly important in the UK.

Do you still favour corporate self-reporting of conduct that could implicate bribery and corruption laws?

Yes. I remain a keen supporter of self-reporting. This has however become more difficult for companies. There are two main reasons. These are-

  • No enforcing state has set out its policy on when it will refer the self-report to another state.  A company considering a self-report therefore has to think about the other states that may see the report (and whether employees are at risk). We need a proper understanding of what enforcing states should do. This needs to be publicly available and agreed by the UN and the OECD.
  • Even if the report is not passed to another state, that other state is likely to see media reports of the resolution and the admissions made by the company and decide to start its own action. There is an increasing risk of these follow up cases.

Should companies carry out their own investigations when alerted to alleged instances of improper conduct?

My experience is that major global companies take these allegations very seriously and want to see what happened. There is an issue about whether the company should self-report immediately or whether it should carry out some preliminary work to satisfy itself that there is something in the allegation. The expectations of enforcing authorities can vary here. My view has always been that the company should be satisfied first that there is something that requires detailed investigation.

I am in favour of companies carrying out their own investigations with agreement from the enforcing state about scope, milestones and regular updates. I know that some enforcing states will also want to carry out their own independent investigation. I understand the reasons for this but it means that the authority is spending its scarce resource on a case where the company is willing to cooperate and not on the more difficult cases where the company has no intention of self-reporting and cooperating. As I see it there is too little action by enforcing authorities in finding such companies and dealing with them.

Recently the U.K. adopted DPAs.  How do you feel about DPAs and what are the issues as you see them?  What issues do you see regarding DPAs?

I have always been in favour of DPAs as one tool available to prosecutors. My experience was that the UK was in a poor position in global cases with international resolutions with the traditional criminal justice tools. I saw two main advantages of DPAs. These are-

  • They can form part of a system of incentives to encourage companies to self-report and cooperate and to improve compliance.
  • They enable prosecutors to discuss global resolutions without contravening the Innospec case.

I know that the FCPA Professor has expressed considerable public opposition to DPAs. I agree that they need to be transparent and that the judges have to be fully involved. I also agree that we still need to see the traditional full prosecution with debarment in suitable cases. This could be where the company is systemically corrupt and has no intention of abandoning corruption. I want to see more of these cases being pursued by enforcing states.

The full prosecution should be part of the toolkit of the prosecutor. There should be other tools for other types of case. It is notable that the only states that have made a sustained attack on corporate corruption over the years have either not used traditional prosecution or have used it sparingly and have also used alternatives. This is significant although it seems to me to be insufficiently appreciated.

Should corporate compliance be a defence to a bribery or corruption offense or merely mitigate the potential fine and penalty amount?

I remain in favour of the compliance defence. The Bribery Act offence is an excellent model in this area. I have seen how much impact this had on companies and the scale of the improvement made in their anti-corruption work. There are a number of other states that have compliance as a defence.

There is however an issue that is going to be increasingly relevant in those states that have compliance as a defence. The public wants to see the offence produce results in terms of criminal convictions. So far there do not appear to be any in the states with a compliance defence. There will be a question about whether compliance as a defence is right or whether the US approach with compliance as mitigation is to be preferred because of the results achieved. We can expect a lot more on this. It may be one of the issues to be considered in the recently announced UK review of the effectiveness of the enforcing institutions.

You have talked publicly about sanctions and incentives for companies as it relates to bribery and corruption offenses.  Can you elaborate on this issue?

Alternatives to traditional prosecution together with self-reporting and cooperation are important incentives in the area of violations. There is though a wider issue that is not sufficiently recognised and discussed. This is whether there should be more general incentives to companies that have brought about an excellent standard of anti-corruption compliance.

There was a Recommendation by the OECD in 2009 encouraging states to look at public procurement, licenses, aid funding and export credits as a way of recognising companies with the highest standards of anti-corruption. There has been little progress on this although a few states have introduced some initiatives.

I am very much in favour of this. For example the citizens of a state will benefit if a company that meets very high standards is successful in a public procurement exercise and companies with a poor anti-corruption approach are not. If those companies with a poor record decide that they have to reform then that is a benefit to everyone.

I see this as one of the key issues in anti-corruption that will become increasingly prominent in the coming years. It has great potential to make a difference.

World Bank / U.N. Report Rightly Identifies A Problem, Yet Ends With Contradiction

By on December 12, 2013 in Asset Recovery, Deferred Prosecution Agreements, Non-Prosecution Agreement, United Nations, World Bank

The Stolen Asset Recovery Initiative, a partnership between the World Bank Group and the U.N. Office on Drugs and Crime, recently released this report titled “Left Out of the Bargain:  Settlements in Foreign Bribery Cases and Implications for Asset Recovery.”

The report addresses the “core issue of how the imposition of monetary sanctions through settlement compares to the requirements of the U.N. Convention Against Corruption on the recovery and return of the proceeds of corruption.”

This post highlights other topics, beyond the above core issue, addressed in the lengthy report.

For starters, the report is a useful resource in understanding how other nations prosecute and resolve bribery and corruption offenses as well as how settlements in one jurisdiction affect legal actions in other jurisdiction (that is double jeopardy issues).  Also informative was the section of the report detailing countries who “have taken enforcement actions against foreign companies or individuals who have bribed their public officials” In other words, carbon-copy prosecutions (see here for the prior post).

From my perspective, the most notable feature of the report was its call for greater transparency of bribery and corruption settlements.

As the report notes, “over the past decade, there has been significant progress in battling foreign bribery, with the clear trend of many cases being resolved through settlements rather than full trials.”

In the Executive Summary, under the heading “Additional Observations,” the report states:

“This study calls for greater transparency in settlements. The negotiation of settlements takes place between the authorities and implicated parties behind closed doors. One critical step would be to inform affected jurisdictions that a negotiation toward a settlement is taking place. The study shows that forms of settlements (such as Non-Prosecution Agreement, Deferred Prosecution Agreement, penalty notice, or a guilty plea) provide varying degrees of transparency. In some jurisdictions, the outcomes of settlements are publicly available, illustrating that greater transparency is possible. Most settlements are negotiated with little oversight by a judge and sometimes without any public hearing at the conclusion. The report emphasizes that once an agreement has been reached, it should not be shielded from public view. More transparency helps ensure fairness to all affected jurisdictions and parties.”

After noting that the “United States has resolved more foreign bribery cases by way of settlement than any other nation,” the report states that the U.S. has some “unique procedural features” in that non-prosecution agreements and deferred prosecution agreements are “unique even among the common law jurisdictions.”

The report notes that NPAs in the U.S. have no judicial involvement and then states that “in general, if a judge oversees the [settlement] process, the public will have more confidence in the outcome” and that “without the stamp of judicial approval, settlements may have less legitimacy.”

Elsewhere, the report notes that settlements, and the “abbreviated procedures [they contain] have also helped in no small measure to boost the enforcement of foreign bribery laws and regulations globally.”

Under the heading “reduced role of the courts,” the report states:

“The more cases are concluded by means of a settlement rather than proceeding to trial, the more the role of the courts is reduced.  In common law systems, in particular, the greater involvement of courts usually leads to greater clarification of what the law means.  But as greater use is made of settlements and guilty pleas, this clarifying role is diminished.  In a trial, issues are litigated with full arguments made on each side, permitting a judge to weigh the merits of the legal issues in light of the facts.  In common law jurisdictions, such case law plays a large role, and its effect on the development of law is considered desirable.  Moreover, in such systems, legal precedent is often binding on future cases.”

Despite the above spot-on statements on the issue of settlements, the report ends with a Conclusion section and the first conclusion is stated as follows.

“Over the past decade, enforcement actions against foreign bribery have increased.  This is a positive and welcome trend, especially since improvements in enforcement also improve the climate for asset recovery.  This progress in enforcement has largely been due to the effective use of settlements in a steadily increasing number of jurisdictions.”

From calling for greater transparency of settlements, to stating that settlements have less legitimacy, to criticizing the reduced role of the judiciary in settlements, to calling such a state of affairs “effective.”

That is quite the contradiction.

Safeguarding Against Corruption In The Context Of Sporting And Other Major Public Events

By on November 27, 2013 in Guest Posts, Sporting Events, UN Convention Against Bribery, United Nations

Note:  Professor Juliet Sorensen (Northwestern University School of Law) and Northwestern Law students Akane Tsuruta and Jessica Dwinell are attending the Fifth Conference of the State Parties (CoSP) to the United Nations Convention against Corruption in Panama City, Panama.  See here for a live feed of the States Parties’ discussions.

This post regarding the proceedings is by Jessica Dwinell.

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News broke yesterday that oilfield services company Weatherford International agreed to pay $253 million to settle federal charges in the United States, including FCPA charges in which an allegation by the SEC was that Weatherford funded a trip to the 2006 World Cup for two officials from a state-owned Algerian company. At the same time, members of the United Nations Office on Drugs and Crime (UNODC), the Global Alliance for Integrity in Sports and the OECD were gathering at the fifth CoSP to the UNCAC to present on the importance of safeguarding against corruption in the context of sporting events.

As Nicola Bonucci (Director for Legal Affairs of the OECD) explained, “sport events are sport, but sport is also a . . . business,” and a highly lucrative one at that. Unfortunately, though hosting public and sporting events can serve as a great honor for a country, many major events also breed corruption.

Alexey Kronov (the Head of the Expert Group on Anti-Corruption for the Department of Public Administration and Russian G20 expert) outlined three factors that create the corruption-prone environment surrounding major sporting events. First, countries or regions who want to host events often feel pressure to “overcome other bidders,” a pressure which can lead to bribe offers or solicitation. Second, after winning a bid, the host country controls significant funds to build infrastructure, creating numerous opportunities for public abuse for personal gain during the procurement process. Third, sporting events are unique in that all projects must be completed by a specified time; where the opening of a transnational tunnel can be delayed, the start of the World Cup games cannot. The Executive Summary to the UNODC report, “A Strategy for Safeguarding against Corruption in Major Public Events,” similarly suggests that the high risk of corruption “is largely because such events involve significant resources and large amounts of funds as well as complex logistical arrangements within very tight timeframes.”

Representatives from Russia (set to host the Winter Olympics in 2014) and Brazil (the host of the World Cup in 2014 and the Summer Olympic games in 2016) provided information on measures their respective governments have taken to prevent corruption surrounding their upcoming major events, including efforts to undertake extensive risk assessments, audit event budgets and project proposals to ensure accurate price projections and quality designs, creation a public website detailing project expenditures to increase transparency, and conduct periodic on-site visits.

Such measures are a step in the right direction; however, Mr. Bonucci suggested several additional steps that could further decrease corruption in sports. For instance, Mr. Bonucci stressed the need for a multi-stakeholder approach, an approach of utmost importance given the constant interaction between government officials and private companies during the procurement process. Further, he recommended that the global community establish clear international standards, which include provisions detailing conflict of interest disclosure requirements, and complete transparency.

Olajobi Makinwa (Head of the Transparency & Anti-Corruption Initiatives for the UN Global Compact) stated that “it is necessary to keep sports clean because people look up to sports heroes.” Sports offer hope, break down barriers and provide role models. Sporting events can also prove crucial for morale building. A mishandling of funds, however, can quickly derail any positive advances. Though further research must be done, transparency, multi-national and multi-stakeholder approaches appear key to combating corruption in the context of sporting events.

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