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OECD Reports Highlight that Belgium, New Zealand and Russia Need to Do More to Fight Bribery




by:
Annie Clarke
Antonio Suarez-Martinez
Edwards Wildman Palmer LLP - London Office

 
October 24, 2013

Previously published on October 23, 2013

The Organisation for Economic Cooperation and Development (OECD) last week released its latest reports on the anti-bribery measures in place in Belgium, Russia and New Zealand. The reports make recommendations on the implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. According to the reports, none of the aforementioned countries are doing enough to fight bribery.
 
Belgium
Belgium was criticised in the report for the “lack of priority” given to the fight against bribery, with the report highlighting the “flagrant lack of resources” and the “evident lack of proactivity” of the Belgian authorities in charge of investigating, prosecuting and sentencing bribery cases. Notably, not a single Belgian national or company has been prosecuted in a foreign bribery case to date (although six investigations are on-going as well as a prosecution in another). Particular reference is made to the fact that in May 2013, the Brussels Court of Appeal confirmed the first conviction in Belgium of natural and legal persons for the foreign bribery offence, yet none of the Belgian natural or legal persons alleged to have been involved were prosecuted.
 
The report also criticised the current legal framework for combating bribery, highlighting its inadequacies as a “serious concern”. The lack of clarification on the mens rea for the foreign bribery offence and the application of the principle of mutually exclusive liability between natural and legal persons mean establishing corporate liability is difficult. Applicable penalties were described as “not effective, proportionate and dissuasive”.
 
Further information can be found at: http://www.oecd.org/daf/anti-bribery/BelgiumPhase3ReportEN.pdf
 
New Zealand
The OECD report raised concerns about the lack of enforcement of the foreign bribery offence. Since becoming a party to the Convention in 2001, New Zealand has not launched any prosecutions out of the four allegations which have surfaced (two of those as recent as July 2013). The low number of foreign bribery allegations, which might lead to investigations and ultimately prosecutions, raised concern about the levels of awareness, reporting and detection of the foreign bribery offence. Interestingly, the report noted that outdated perceptions that New Zealand individuals and companies do not bribe may have undermined detection efforts.
 
The report suggested the need to provide practical training to law enforcement authorities on the foreign bribery offence, and enhance awareness-raising efforts. Further a number of key recommendations from prior reports which could lead to more effective prosecution, such as the broadening of the criteria for the liability of legal persons, remain unimplemented.
 
The report did however note some positive developments, in particular the efforts to encourage and facilitate whistleblowing and the establishment of a new civil asset confiscation scheme.
 
Further information can be found at:
http://www.oecd.org/daf/anti-bribery/NewZealandPhase3ReportEN.pdf
 
Russia
Whilst Russia was noted to have relatively recently adopted the Convention in April 2012, Russia has still not responded to Phase 1 key recommendations. In particular, the OECD report commented that provisions of the foreign bribery offence must be “expeditiously expanded” and the report urged Russia to “adopt appropriate legislation as a matter of high priority”. Russia has not detected, investigated or prosecuted a single instance of foreign bribery. The OECD puts this down to insufficient resources, the lack of a proactive approach towards detection and investigation, and legislative failings, for example, the failure to eliminate the defence of “effective regret” as it applies to foreign bribery.
 
This defence of “effective regret” under Article 291 of the Russian Criminal Code exonerates a bribe-giver if the bribe is extorted from him/her and then later the bribe-giver actively facilitates the detection and/or investigation of the crime, or the bribe-giver voluntarily self-reports to a competent authority. In cases of extortion, it is not required that the bribe-giver voluntarily reports to the competent authority (because of fear of further harmful consequences). It is argued by Russian investigators that the defence of “effective regret” is needed to encourage reporting of domestic corruption; the OECD stressed that this argument was not applicable to foreign bribery and recommended the law be  changed in that respect.
 
Further information can be found at: http://www.oecd.org/daf/anti-bribery/RussianFederationPhase2ReportEN.pdf
 
Comment
The OECD reports confirm that whilst progress is being made in combatting foreign bribery, there are still challenges ahead in ensuring an effective global response. As Angel Gurría, Secretary General of the OECD Working Group on Bribery, highlighted in the Group’s 2013 Annual Report: “The Anti-Bribery Convention is a powerful tool for cleaning up markets. But the Convention’s impact is only as strong as the strength of its countries’ commitment to implementing it”.

 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Annie Clarke
Antonio Suarez-Martinez
 
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