13 October 2009
Dragnet Draws Tighter in Global Fight Against Corruption
Washington — The United States was once the only country with a law making it a crime to bribe a foreign official.
Now many countries have such laws, investigators and prosecutors from different countries cooperate closely, and two international conventions make their work easier.
For decades after Congress and then-President Jimmy Carter made it a crime to bribe foreign officials and politicians to secure business, the United States was alone in this anti-corruption fight. Some executives complained that the Foreign Corrupt Practices Act of 1977 — enacted in the wake of a global scandal over bribes that Lockheed Aircraft Corporation paid to sell fighter jets — forced them to compete in overseas markets with one arm tied behind their backs.
Instead of repealing the law, Congress directed the executive branch to get other nations on board so bribery would no longer be regarded as a cost of doing business. Those efforts bore fruit in 1997, when the Organisation for Economic Co-operation and Development (OECD) adopted a tough Anti-Bribery Convention. It went into force in 1999.
It took several years for countries to ratify the convention and bring their criminal statutes into line, but today 38 nations have done so, including eight non-OECD countries (Argentina, Brazil, Bulgaria, Chile, Estonia, Israel, Slovenia and South Africa). With those added to the entire roster of OECD nations, parties to the convention represent not only most of the major entities in the world’s economy, but the homes of many multinational corporations.
“We were completely alone for 20 years. We were the only country with a statute that criminalized conduct that was regular business practice in a lot of other jurisdictions,” recalled Mark Mendelsohn, who oversees U.S. Department of Justice efforts to fight international corruption. Now he calls the effort to criminalize business bribes “a global initiative.”
The even broader United Nations Convention against Corruption (UNCAC) went into force in 2005 and has been ratified by 138 nations, but monitoring compliance is still a work in progress. Five Group of 20 (G20) countries (Germany, India, Italy, Japan and Saudi Arabia) have yet to ratify that convention.
Crime or no crime, unscrupulous business executives still use bribes to secure contracts, crooked leaders loot public coffers, and dishonest politicians and “public” servants line their pockets. Such problems are not confined to poor countries; even some of the wealthiest have difficulty mustering the political will to enforce laws and secure sufficient resources for watchdogs and prosecutors.
But those on the front lines say the dragnet is being pulled tighter in the battle against kleptocracy. Success stories include these:
• Pavlo Lazarenko, a former Ukrainian prime minister, was sent to prison for nine years and fined $10 million by a U.S. judge in San Francisco in 2006 for money laundering, wire fraud and transporting stolen goods. Authorities are still trying to recover more than $100 million he is suspected of stealing during two turbulent years (1996–97) at the top.
• Earlier this year, a court in Las Vegas sentenced two former managers of Bank of China to more than 20 years in prison for financial fraud, racketeering and other crimes. The two and an accomplice stole close to $500 million from the state-owned bank and fled to the United States.
• It took 18 years, but the Philippines in 2004 got back $624 million that dictator Ferdinand Marcos had stashed in Swiss banks.
• U.S. authorities in Miami froze $110 million in bank accounts traced to a notorious public corruption case in Italy. The laundered money was part of a windfall reaped by heirs of industrialist Angelo Rovelli, who bribed Italian judges to rule in his favor in a business dispute.
The Siemens AG case, in which the engineering giant agreed to pay German and U.S. authorities $1.6 billion for bribing public officials around the world to win huge contracts, was the product of a jointly choreographed probe begun after the aggressive Munich Public Prosecutor staged predawn raids in 2006 on the homes of dozens of Siemens executives.
Barbara Stockinger, spokeswoman for the Munich prosecutor, said that after requesting mutual legal assistance, German authorities worked closely with their U.S. counterparts (including prosecutors from the U.S. Department of Justice, FBI agents and Securities and Exchange Commission investigators) to build their cases and wrap them up simultaneously in December 2008. The teamwork proved “exceptionally productive,” Stockinger said.
“It was a real partnership. It wasn’t just responding to formal requests,” Mendelsohn said. “It was a landmark in international cooperation.”
Mendelsohn’s office now enjoys similarly close partnerships with several other countries’ prosecutors. And that’s the way it should be, he said. “The Justice Department cannot police the entire world. We need the German authorities, British, French, Japanese and everybody else to do their part.”
