The Organization for Economic Cooperation and Development’s report on U.S. anti-bribery efforts released their Phase 3 Report on the United States.
In its report, the Working Group commended the United States for its engagement with the private sector, substantial enforcement, and commitment from the highest levels of the U.S. Government. In addition to the recommendation on facilitation payments, it also made recommendations that include the following on ways to improve U.S. enforcement:
- Consolidating publicly available information on the application of the FCPA, including the affirmative defence for reasonable and bona fide expenses;
- To increase transparency, making public, where appropriate, more information on the use of Non-Prosecution Agreements (NPAs) and Deferred Prosecution Agreements (DPAs) in specific cases; and
- Ensure that the overall limitation period applicable to the foreign bribery offence is sufficient to allow adequate investigation and prosecution
The phase 2 evaluation happened in 2002. The report notes that since 2002, the US has prosecuted 71 individuals and 88 enterprises, criminally and civilly, for transnational bribery. They also achieved record penalties for FCPA violations and note the $800 million penalty against Siemens.
They also note more than 150 criminal and 80 civil ongoing FCPA investigations. There may be some double counting since some involve parallel civil and criminal cases.
One focus of the report was the facilitation payment exception under the FCPA. The private sector representatives that spoke to the OECD complained that the scope of the exception was unclear. The DOJ countered that there is sufficient guidance and had never received a request for an Opinion Procedure Release on this issue. In the end the OECD noted that the US position to allow facilitation payments is counter to the OECD position.
One theme that pops out from the report is the the United States may no longer be the leading the charge on international corruption. In several ways, the FCPA does not meet the higher standard the OECD’s Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions. The UK Bribery Act is likely to take the top spot once the government starts enforcement.
The OECD certainly encouraged the expansion the FCPA.
They don’t like the facilitation payment exception. The DOJ confirmed that facilitation payments may be tax deductible in the United States where they are properly classified as ordinary and necessary expenses, because they are not illegal under the FCPA. Of course, for an expense to be deductible, it must be an ‘ordinary and necessary expense.’
They also don’t like that non-issuers are not subject to the FCPA’s books and records provisions. They think it should be expanded to cover companies based on their level of foreign business.