“Foreign bribery continues to inflict enormous damage throughout the world. Holding culpable companies to account is an excellent start. But a complete picture of justice will only take shape once all the harm caused by these companies is adequately considered.”

Andrew Dornbierer puts his finger on the button in his foreword to our latest Working Paper: Compensating the victims of foreign bribery: UK legislation, practice and recommended reforms, by Sam Hickey.

Tackling foreign bribery: still in its early stages

A small handful of countries have achieved some success in tackling the bribery of foreign public officials committed by companies in their jurisdictions.

This success has come largely through the use of innovative settlement agreements such as Deferred Prosecution Agreements (DPAs): Typically, companies avoid prosecution by cooperating with authorities, giving up their profits and usually paying penalties to the enforcing state.

These efforts are commendable, and the penalties have often been staggering. In recent years, multinational companies such as Airbus, Glencore, Ericsson and Odebrecht have all paid billion-dollar-plus amounts to settle legal actions in jurisdictions such as the US, the UK, France and Switzerland.

What happens to the money?

Pursuing companies that bribe to win business abroad is undoubtedly a positive step towards achieving justice. But do these settlements really deliver a fair result to all who deserve it?

In fact, enforcing states mostly keep settlement monies for themselves. Negotiations rarely include the countries in which the bribery has taken place. Rarely do courts consider and actually award compensation for damages caused by acts of bribery.

This is particularly true if there are no easily identifiable victims and a straightforward, calculable amount that can be claimed.

Achieving fair compensation for victims of bribery

Through our International Centre for Asset Recovery (ICAR), we support efforts to ensure that financial “gains” arising from corruption or other financial crimes are used fairly and responsibly for the benefit of the victims and victim states. That includes not only recovered assets but also fines arising from settlements.

We asked legal scholar Sam Hickey to look into the current situation regarding compensation in the UK specifically, which is one of the few countries that actively pursue companies for foreign bribery.

His paper explores the UK’s commitment to use the proceeds of DPAs to compensate the victims of foreign bribery where feasible – and why this commitment is not yet achieving its intended results.

Recommendations for improving the DPA regime

The paper acknowledges the UK’s pioneering role in countering foreign bribery, while also providing a constructive critique of the jurisdiction’s evolving approach to compensation.

In line with this, it advances six proposals for reform that would allow the UK to deliver compensation in a greater number of cases. In brief, it recommends that the UK:

• Clearly define the responsibilities of the different government agencies involved in DPA cases and compensation decisions.
• Introduce a rebuttable presumption in favour of including compensation in such agreements. 
• Adopt a range of alternate methods for calculating the quantum of compensation, including a victim’s losses, the value of a bribe, a set percentage of fines and penalties, or the gross profit of a bribe giver.
• Adopt a formal procedure that victims, states and NGOs could use to request compensation.
• Clarify the concepts underlying compensatory practices, including the kinds of remedies available, the harm that might lead to compensation and the victims that might receive it.
• As a possible alternative, incentivise corporations to pay compensation.

Learn more

• Read Working Paper 55: Compensating the victims of foreign bribery: UK legislation, practice and recommended reforms, by Sam Hickey.
• Explore the outcomes of a joint webinar with the International Academy of Financial Crime Litigators about the role of victims in negotiated settlements for economic crimes and read the related paper examining the situation in Canada, France, Germany, Switzerland, the UK and the US.