How Should Responsibility for Regulation Be Allocated?

The OECD paradigm’s expansive approach to jurisdiction has advantages in terms of effectiveness and legitimacy, but, by inviting multiple enforcement agencies to intervene in individual cases, it creates space for disagreement, conflict, and redundancy. Previous chapters have shown that reasonable people can disagree about which conduct or actors to target and what sanctions to impose. There also is a risk that collective action problems will compromise effectiveness or efficiency. Some of these dangers can be avoided by assigning enforcement authority to an international organization such as a multilateral development bank, or even a new international anti-corruption agency, but the problems of legitimacy are likely to remain. When hard cases arise, the views of people who will be most greatly affected by the decision, namely, the inhabitants of the country governed by corrupt officials, ought to be given significant weight.

The Birth of Modern Transnational Bribery Law

This chapter traces the development of modern transnational bribery law in the United States. After a brief discussion of the U.S. Supreme Court’s decision in Oscanyan v. Arms Co., it traces the evolution of domestic anti-bribery law in the United States through the twentieth century. It then discusses the Watergate investigation and scandals involving companies such as Lockheed and United Brands that led to enactment of the U.S. Foreign Corrupt Practices Act of 1977. The historical record sheds light on the moral and economic motivations behind this landmark legislation. Subsequent amendments to the FCPA and related statutes, such as the Sarbanes-Oxley Act, are also discussed.

Criteria for Evaluation

This chapter sets out the criteria for evaluation of transnational bribery law. The UN Convention against Corruption suggests that the law ought to address the problems posed by bribery effectively and efficiently in a manner compatible with due process. Legitimacy and fairness are also potentially relevant. In order to apply these precepts, the chapter considers the nature of the problems posed by bribery, how to measure the progress in mitigating those problems, and then defines the concepts of effectiveness, efficiency, due process, legitimacy, and fairness. Effectiveness can be defined in many different ways depending on whether one focuses on impacts on victims, wrongdoers, and potential victims or wrongdoers. These distinctions correspond to three traditional objectives for legal regulation, namely, compensation, condemnation, and prevention. It is also necessary to distinguish impacts on fellow nationals and foreigners.

The Modern Regime

Modern transnational bribery law has spread beyond the United States and has developed into a complex, decentralized, dynamic, and global “anti-bribery regime.” These developments were prompted by lobbying on the part of the United States and members of civil society. The emergence of the new regime was marked by the adoption of the OECD Anti-Bribery Convention and the UN Convention against Corruption, as well as several other international instruments. This chapter describes the legal instruments that underpin the regime. It also surveys the institutions that implement the regime and the efforts that have been undertaken to monitor levels of enforcement, the incidence of bribery, and the impact of transnational bribery law. It concludes by asking whether the current anti-bribery regime qualifies as an example of global experimentalist governance.

How Should Transnational Bribery Law Be Enforced?

There currently is significant divergence in enforcement of transnational bribery law, and there is little ground for believing there ought to be complete convergence. U.S. enforcement agencies have taken the lead in defining the OECD paradigm’s approach to enforcement and other enforcement agencies have begun to follow. The recent enforcement actions against Odebrecht S.A. are cases in point. The recommended approach favors vigorous investigation and severe sanctions, all aimed primarily at achieving deterrence, and ultimately prevention, with compensation and condemnation as secondary objectives. These methods and objectives are vulnerable to several potent critiques: there might be alternative ways of achieving deterrence, there might be alternatives to deterrence as a form of prevention, and prevention should not be pursued without regard to the associated costs. These objections challenge the effectiveness, efficiency, legitimacy, and fairness of the OECD paradigm’s approach to enforcement.

When Should Organizations Be Liable for Transnational Bribery?

When should organizations, as opposed to individuals, be the targets of sanctions for transnational bribery? The OECD paradigm calls for the net of liability to be cast widely, not only over individual perpetrators but also over the organizations they represent, and perhaps also over companies that own, merge with, or acquire those entities. There have even been moves to sanction states whose officials have solicited or accepted bribes, including by barring recovery of compensation from the bribe payer. Organizational liability is typically justified as a way to induce private regulation, which is presumed to be relatively effective and efficient. However, the effectiveness of self-regulation is contingent on factors such as the presence of complementary legal institutions and expertise. There are also questions about its expense and legitimacy.

What Is Bribery?

How should bribery be defined for the purposes of transnational bribery law? This chapter begins with a motivating example from Haiti, a paradigmatic case of transnational bribery. After reducing the transaction to its essential elements and explaining the justifications for prohibiting similar transactions, we turn to the tremendous variety of ways in which the scope of prohibitions on transnational bribery can be expanded or narrowed by defining, or redefining, each of the elements of a paradigmatic bribe. Topics covered include: the physical elements of the offense, defenses, whether bribery of public officials merits distinct legal treatment, and whether bribe payers and recipients ought to be treated differently.

Introduction

This chapter introduces the concept of transnational bribery law, as well as the associated anti-bribery regime, and describes both the dominant approach to its design and an important critique. Transnational bribery law is defined by four questions: What types of conduct should be targeted? Which actors ought to be considered complicit? What sanctions ought to be imposed? Who should bear the benefits and burdens of imposing those sanctions? The dominant approach to these questions can be called the OECD paradigm. That paradigm generally presumes that legal institutions outside the state whose official has been bribed ought to prohibit a broad range of conduct, target a wide range of actors, impose severe sanctions, and involve as many agencies as possible in enforcement. The anti-imperialist critique challenges the OECD paradigm in terms of effectiveness, efficiency, fairness, due process, and legitimacy. An inclusive experimentalist approach offers a way to reconcile these competing views.

Imperial Anti-corruption Law

This chapter traces the history of transnational bribery law to its antecedents in two landmarks trials from the Roman and British empires: Cicero’s prosecution of Verres and the impeachment of Warren Hastings, former Governor General of India, led by Edmund Burke. Both prosecutors rejected what Burke called geographical morality in favor of the relatively cosmopolitan view that corrupt practices ought to be condemned regardless of where they take place. The trials demonstrate both the potential benefits of this kind of legal initiative and the challenges associated with allowing politically partisan actors to prosecute cases on behalf of foreigners based on complex financial transactions in remote locations in the context of a large organization. The chapter concludes with a brief discussion of transnational aspects of British and French anti-corruption law and bribery law in the postcolonial era.

Concluding Thoughts

This chapter proposes a path to reconciliation between the OECD paradigm and the anti-imperialist critique. The premises are that: (1) transnational bribery is a significant problem, but (2) reasonable people can and will disagree about the appropriate legal responses. Left unresolved, those disagreements threaten to compromise effectiveness, efficiency, fairness, legitimacy, and due process. This implies that architects of transnational bribery law ought to develop mechanisms that reduce the scope for disagreement about appropriate legal interventions, identify reasonable disagreements that ought to be tolerated, and offer a legitimate process for determining how to overcome disagreements that stem from unreasonable objections.