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Obstacles to enforcement: the role of criminal law and transnational corporate bribery

Written by Guest on Sunday, 15 September 2013

Nicholas Lord, lecturer in Criminology at the University of Manchester, reflects upon the role of criminal law when responding to transnational corporate bribery.


Nicholas Lord, lecturer in Criminology at the University of Manchester, reflects upon the role of criminal law when responding to transnational corporate bribery.

National authorities face problems of ‘knowledge’ and ‘power’ when responding to trans-national corporate bribery (note the contradiction here) within current criminal law frameworks. For example, it is challenging for states to uncover and understand corporate practices that are legal, such as tax avoidance, but it is even more challenging when corporations protect information about their illegal practices, such as disguising overseas bribes. If the knowledge problem can be solved (e.g. by insiders becoming whistleblowers and being listened to or by gaining access to ‘real’ financial accounts), then having the power to subsequently influence corporate practices presents further obstacles. This blog discusses some (not all – and there are many) of these obstacles, in particular those in the following three areas:

Legal obstacles
First, then, there are legal obstacles, such as when attempting to attribute corporate criminal liability (a problem of knowledge). If we accept that organisational cultures and structures, whether intentionally or not, create conditions within which bribery can take place, then the corporate entity may be considered at fault. But attributing blame to corporations does not sit well with a criminal law geared towards individual offenders, even in states where corporate criminal liability exists – the difficulties of proving the legal responsibility of the ‘corporate mind’ in a UK context have been much discussed while there are of course legal systems where corporations cannot be criminally prosecuted (e.g. in Germany). Of course, individual prosecutions are more likely – especially in small and medium enterprises (SMEs) where the chain of liability is harder to disguise – but focusing on individuals shifts attention away from corporate cultures and structures that create environments for bribery to take place.

Evidential obstacles
Second, there are evidential obstacles (another problem of knowledge) and these are most notable in two ways:

(1) The burden of proof when attempting to prosecute a corporation criminally

(2) Obtaining evidence from other countries.

These issues have been evident in several cases to date. For example, the Oxford Publishing case indicated key material obtained through the investiga­tion was not in an evidentially acceptable format and that wit­nesses in any prosecution would be in overseas jurisdictions and considered unlikely to assist or co-operate – these obstacles are common. Even where political will and resources may be evident the usefulness of mutual legal assistance in transnational investigations varies significantly in different countries and thus hinders criminal prosecution.

Procedural obstacles
Finally, there are procedural obstacles (a problem of power) and these can be seen in prosecution policies. Conducting transnational investigations and pursuing criminal prosecutions is resource (finances, personnel) intensive and time-consuming, particularly as corporations are intelligent ‘opponents’, able to employ technical and expert legal teams to defend them. This reduces the available enforcement options – in other words, criminal prosecution is unlikely leading to the negotiation of non-criminal sanctions (e.g. civil settlements). Recent attempts by Serious Fraud Office (SFO) Director, David Green, to ‘toughen’ the SFO’s stance and reaf­firm the organisation’s role as a prosecutor may therefore prove idealistic and rhetorical given the difficulties to prosecution. Deferred Prosecution Agreements may provide a ‘get-out’, enabling the SFO to reinforce its prosecutorial role while continuing to shift towards negotiating justice – but what is the likelihood of a prosecution should the terms of a Deferred Prosecution Agreement (DPA) not be met? Minimal without formal admissions of ‘guilt’ of bribery: thus criminal prosecution may remain unlikely.

Investigators and prosecutors as well as intergovernmental organisations, accept the reality of legal, evidential, proce­dural and financial restraints to criminal law enforcement, hence the shift towards non-criminal responses. But this shift is also ideological as investigators and prosecutors suggest that much corporate, economic crime requires negotiation and per­suasion rather than criminal prosecution to encourage ‘compliance’.

But there are also wider issues. Nation-states inevitably seek to promote their own economic (e.g. risk of corporations being excluded from public contracts and being lost as providers of tax and employment) and security (e.g. counterterrorism) interests – so balancing such interests while under scrutiny from organisations such as the OECD GRECO and Transparency International is challenging but non-criminal responses seem to appease both sides. However, while non-criminal outcomes reduce the stigma for corporations, they may also fail to satisfy public demand for social fairness and justice, creating an image of such offences as wrong because they are illegal rather than morally wrong.

Given international frameworks of ‘functional equivalence’ – where outcomes are placed above means – we need to rethink how the criminal law ought to be used to deal with corporate offenders given:

i) the unlikelihood of prosecution due to three sets of obstacles above

ii.) the inevitable considerations given to national interests
iii.) ideologies of ‘negotiated justice’.

The leverage that is offered by supplementing models of control and influence of corporate behaviour needs to be fully explored.

The content of this blog is taken from the following article: Lord, N. (2013) ‘Responding to transnational corporate bribery using international frameworks for enforcement’ Criminology and Criminal Justice. Doi: 10.1177/1748895812474662. Available online here.

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Read 9739 times Last modified on Tuesday, 24 November 2015 11:47

Guest

The TI-UK blog features thought and opinion from guest writers as well as TI staff. Any opinions expressed by external contributors do not necessarily reflect the views of Transparency International UK.

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