The fight against global corporate graft needs to aim higher

IN 2020, Airbus settled prosecution for a string of bribery offences in some 20 countries by paying a whopping 3.6 billion euros (S$5.1 billion) in penalties to anti-graft agencies in France, the United Kingdom and the United States. The sanction imposed as part of a deferred prosecution agreement still stands as the largest global foreign bribery settlement on record. As a three-year probation period expires, the deal also still stands as a symbol of how developed nations are using corporate plea bargains to bolster their own coffers while rarely seeking justice for victim states.

Now Indonesia has decided to play hardball. Despite having contributed to the UK’s investigation with evidence of kickbacks to state-owned airline Garuda, Jakarta was left out of the Airbus settlement. So officials are refusing to share information gathered in a separate investigation into Bombardier unless they are included in any eventual plea bargain.

It was only a matter of time before such protests emerged. Many countries are dissatisfied with how the Organization for Economic Cooperation and Development’s (OECD) convention on foreign bribery is being enforced. Since the convention was adopted in 1997, the focus of anti-corruption efforts has been on offenders rather than victims in countries where the crimes occur.

In practice, a handful of developed nations in the global north pursue bribery actions against multinationals because they have the resources and clout to so. This means they can end up profiting from the harm done by their companies, largely in developing economies, through fines imposed in secretly negotiated plea bargains.

A study in 2021 by the United Nations Office on Drugs and Crime found that less than 1 per cent of the monetary sanctions imposed after non-trial settlements had been returned to affected countries.

Mark Pieth, who for 24 years led the OECD’s working group on bribery, believes those states most actively enforcing the convention also see the rules mainly as tools to prevent unfair competition. “If you are going after corrupt companies, you are doing it not because it harms development, but because you don’t want your competitors to gain an advantage,” he says.

According to the OECD, the US, the UK and Germany are among the keenest enforcers of the global anti-bribery convention, and they have used “non-trial resolutions” for between 79 and 96 per cent of their cases. Enforcing countries give many reasons for keeping the funds: victim states may be riddled with corruption, so there is a risk of the money being misused; actual victims are hard to identify; and the damage is difficult to quantify.

But none of these excuses really stack up. There are mechanisms to monitor funds going to high-risk states. Just ask the World Bank or the International Monetary Fund (IMF) how it is done. And where individual victims cannot be identified, what about acknowledging the damage that such corruption inflicts on citizens in the victim state? Finally, how convenient is it that anti-graft agencies are able to calculate a settlement but incapable of quantifying the bribes paid or the damage done?

It is good that big developed nations with well-resourced anti-corruption agencies are pursuing corporate crime across the globe. And it is fair that they be recompensed. But the more that anti-graft agencies resort to non-trial solutions, the more they should consider the views of those to whom the harm has been done. That said, there are some encouraging signs of change. Transparency International’s Gillian Dell says France marked an “important step” when it recently passed a bill to ensure that funds confiscated from corrupt foreign officials should not be banked, but instead returned to victim populations through co-operation and development programmes. The UK was a pioneer in enshrining the principle that compensation or asset repatriation to foreign victims should be considered in every case.

But global practice on how to involve and compensate victims in corporate plea bargains is still piecemeal and incoherent. International agreement is needed – not just to incentivise more countries to pursue corruption at home, but so settlements deliver a fairer outcome and corporate offenders recognise the damage corruption inflicts. Without that commitment, the keenest enforcing nations should not expect victim states to help chase down wrongdoers, if the result of their efforts is simply to make a rich country richer. FINANCIAL TIMES