Download Double jeopardy - finding a balance in enforcement actions for

Double jeopardy - finding a balance in
enforcement actions for companies
Author: Peter Herbel, Beat Hess and Massimo Mantovani
24 Nov 2011 | 00:00 |
Peter Herbel, Beat Hess and Massimo Mantovani on the need for a balance between anti-bribery
enforcement and unfairly duplicated proceedings
Corruption is an impediment to international business, to fair competition and to sustainable
global development. Violations of anti-bribery laws must be investigated and prosecuted, and
appropriate sanctions should be levied against government officials as well as individuals and
entities found to have made improper payments to government officials. At the same time,
overlapping enforcement of anti-bribery laws by regulators in multiple jurisdictions should not
unfairly burden or penalise corporations.
The Organization for Economic Co-operation and Development (OECD) Anti-Bribery
Convention has been adopted by 34 countries, and the United Nations Convention against
Corruption (UNCAC) has been adopted by 140. Most of the ratifying countries of these
conventions also have their own anti-bribery laws, with unique scope, interpretation,
enforcement mechanisms and penalties. Further, many of these laws authorise regulators to
extend the reach of their investigations into foreign jurisdictions.
Co-operation between authorities from different jurisdictions in the investigation of international
corruption cases is a powerful tool in the fight against corruption in the investigation phase.
Thus, multinational corporations face the risk of having to defend multiple investigations –
commonly termed ‘parallel proceedings’ – in different jurisdictions (by national prosecutors or
other regulatory agencies) for the same or similar conduct. These corporations are often subject
to duplicative sanctions from different foreign authorities. In addition, a number of corporations
involved in the same illicit conduct may well face different final consequences depending on
their own jurisdiction.
Furthermore, parallel proceedings can have a negative impact on the powerful incentives that
exist to encourage corporations to voluntarily self-report misconduct. These incentives include
receiving credit for self-reporting and otherwise co-operating with regulators, as well as the
ability to resolve matters without litigation. However, with an increasing risk of having parallel
proceedings and parallel enforcements in different jurisdictions for the same conduct,
corporations may not seek to take advantage of such incentives out of fear that doing so may
trigger a parallel proceeding in another jurisdiction.
Clearly, such considerations make self-reporting a very difficult calculation for companies at the
best of times, but consider the further complication of double jeopardy. The concept is one of the
oldest and most important legal constructs in civilisation. In 533 AD, the Romans codified the
principle, which was recorded first by Athenian Demosthenes in 355 BC when he said: “The law
forbids the same man to be tried twice for the same issue.” Notwithstanding the enshrining of
double jeopardy clauses in the Fifth Amendment of the US Constitution and in the Charter of
Fundamental Rights of the European Union, the principle is substantially not applied in
international corruption cases.
It is both unfair and discriminatory to expose corporations to multiple enforcement proceedings
for the same issue. Doing so is not only overly burdensome on the corporation, but the
assessment of penalties from multiple foreign regulators stemming from the same conduct
violates fundamental principles of fairness and of the rule of law.
The enforcement actions in 2010 brought by US authorities and other foreign regulators against
the four partners (from Italy, Japan, US and France) of the so-called TSKJ consortium
incorporated in Madeira, Portugal, illustrate the double jeopardy concerns present in
international corruption cases. The case involved bribes paid by TSKJ up to June 2004 through
an UK agent to Nigerian officials to obtain construction contracts. Several consortium members
entered into settlements with the US Department of Justice (DoJ) and the US Securities and
Exchange Commission (SEC) for, in aggregate, an amount, of more than $1.5bn (£950m). Many
foreign regulators, including those in Europe, Asia and Africa, conducted their own parallel
investigations, and some but not all of TSKJ’s consortium members faced, or are still facing,
duplicative sanctions in multiple jurisdictions for the same conduct.
The TSKJ case and others like it demonstrate the urgent need for an internationally-recognised
regulatory framework that clearly and uniformly expresses a ne bis in idem principle (no double
jeopardy) to avoid multiple investigations and sanctions for the same conduct.
Of course, establishing such a framework is challenging. It would require foreign regulators to
agree on which regulator is best suited to prosecute particular bribery investigations. Certain
regulators would be forced to take a passive role in the enforcement phase, though they could
still play a vital role in the investigation phase. Considering the political considerations involved
in anti-bribery investigations, including the financial windfalls that regulator agencies receive in
fines and penalties, that may be a tough sell.
The double jeopardy issue in parallel proceedings, among others, was one of the
recommendations by the ‘B20’ group of business leaders at the G20 forum in Cannes on 3
November 2011. Specifically, on this point, the B20 report recommends to: “Enhance intergovernmental co-operation concerning multijurisdictional bribery cases in order to avoid double
jeopardy. Violations of anti-bribery laws should be vigorously investigated, prosecuted and
remedied in all affected jurisdictions. It is important, however, that enforcement authorities coordinate prosecutions to avoid, where possible, inappropriate multiple proceedings concerning
the same offence. Avoidance of duplicate proceedings could in many cases accelerate
remediation of the underlying causes of the offence. The principle contained in article 4.3 of the
OECD convention and in article 42 of the UNCAC should be ‘translated’ into a more immediate
and effective rule of international ne bis in idem to be introduced in the various anti-bribery
national acts and legislation.”
In the coming months, this issue will be further discussed in a variety of forums, including the
United Nations Office on Drugs and Crime and the Organization for Security and Co-operation
in Europe. A balance must be struck between anti-bribery enforcement and the basic legal
principle applicable to any citizen of not being subject to fundamentally unfair and duplicative
parallel proceedings. In addition, a uniform, fair and non-discriminatory international regulatory
framework will enhance the co-operation between business and authorities and will be a key tool
in the common fight against corruption.
Peter Herbel is group general counsel of Total, Beat Hess is an attorney and the
former head of legal of Royal Dutch Shell and Massimo Mantovani is general
counsel of Eni. The authors thank Leigh Dance of ELD International for her
assistance on this article.