Countries whose officials are bribed by foreign firms seldom recover the assets looted as a result, even when the firms reach costly settlements in their own country rather than face trial, a new report says
BOGOTA (Thomson Reuters Foundation) - Billions of dollars in settlements from foreign bribery cases are not being returned to the country in which the bribery took place, making it harder to seek the recovery of assets and punish corrupt officials, a report by a group set up by the World Bank and the United Nations has said.
Over the past decade, countries have increasingly turned to settlements - defined as any procedure short of a full trial – to resolve foreign bribery cases, resulting in billion dollar fines being imposed on foreign companies and employees involved in bribing a country’s public officials.
“Significant monetary sanctions have been imposed with hardly any of the respective assets being returned to the countries whose officials have allegedly been bribed,” said the report by the Stolen Asset Recovery Initiative (StAR), a U.N. Office on Drugs and Crime (UNODC) and World Bank project which aims to recover assets stolen by corrupt leaders and officials.
The StAR report, published on Wednesday, examined 395 foreign bribery cases across the world that ended in settlements between 1999 and mid-2012. It found those settlements, which took place in a different country from that in which the bribery was alleged to have happened, resulted in nearly $6 billion in fines against companies and individuals. Only 3.3 percent of this, $197 million, has been returned or ordered to be returned to the countries whose officials were bribed or were accused of accepting kickbacks, the report said.
“The overwhelming majority of the jurisdictions harmed by foreign bribery are in the developing world and the vast majority of the settlements involve state-owned enterprises and public procurement contracts, including projects that range from tens to hundreds of millions of dollars in infrastructure and natural resources sectors,” the report said.
Settlements, which are often negotiated in secret, are seen by companies as a way to avoid often lengthy trials and the bad publicity that would follow a bribery scandal involving one or more of their employees.
Where a settlement is reached outside the country where graft took place, it is harder for that country to punish corrupt officials and recover stolen assets, the report said.
“Outside of the home countries of the bribe payers (where many of the cases are settled), those countries whose officials were bribed or allegedly bribed have struggled to bring prosecutions against either the public officials in question or the foreign bribe payers,” it said.
“In the vast majority of settled cases, the jurisdictions whose officials were allegedly bribed have played little role in the settlement process, providing them limited opportunity to recover any of the proceeds of such settlements,” it added.
PROMOTING ASSET RECOVERY
Punishing people who offer public officials bribes and those who accept kickbacks is an important part of the fight against graft worldwide, the report noted. This in turn involves stepping up efforts to ensure assets are recovered during a settlement process and returned to their rightful owners, while compensating people affected by corrupt practices.
“We also call on countries whose officials were allegedly bribed to intensify their efforts to investigate and prosecute corrupt officials, and use all avenues to become parties to settlements,” Jean Pesme, StAR's coordinator, said in a statement on Wednesday from Panama City, where more than 164 state signatories of the U.N. Convention against Corruption (UNCAC) are meeting this week.
“Countries who have suffered harm from foreign bribery also need assistance to improve their prospects to trace and recover assets,” Pesme said.
Recovering assets looted through corruption is a key way to strengthen developing countries’ economies. Between $20 billion and $40 billion a year are estimated to be removed corruptly from developing countries and stashed in safe havens abroad, the report said.
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