Aligning Emerging Global Strategies to Combat Corporate Corruption From a “Two Thrust Approach” to a “Two Swords One Thrust Strategy” of Compliance, Prosecutorial Discretion, and Sovereign Investor Oversight in China

• Published in: The International lawyer Vol. 52; no. 1; pp. 1 - 46
• Main Author: Backer, Larry Cata
• Format: Journal Article
• Language: English
• Published: Chicago American Bar Association 2019
• Subjects: Bribery; Compliance; Cooperation; Corporations; Corrupt practices; CORRUPTION; CRIMINAL LAW; FINANCIAL SERVICES; Fraud; HUMAN RIGHTS; International agreements; International finance; Legislation; Political appointments; Principles; Public officials; REGULATION; Regulation of financial institutions; SECURITIES AND EXCHANGE; Self regulation; Sovereign wealth funds; Trends; United States. Securities and Exchange Commission; UNITED STATES; CHINA; Brazil; United Kingdom > UK; United States > US; China
• ISSN: 0020-7810; 2169-6578

1 In September 2017, the media reported that parliamentarians at the Council of Europe had been bribed by Azerbaijan to mute criticism of their government within the Council's human rights organs.2 Also in September 2017, France's financial prosecutor announced the commencement of a corruption investigation against the son of the former president of the International Association of Athletics Federations for payments to influence the choice of host cities for the largest global sporting events.3 At the same time, authorities in Brazil launched a probe into vote buying for the 2016 Olympics, a criminal offense.4 In January 2016, the Norwegian Pension Fund Global intensified its efforts to engage in more aggressive anti-corruption investment strategies.5 In December 2013, Vietnam reported that it had sentenced bankers to death in connection with embezzlement from a state owned bank.6 It's a message to those in this game to be less greedy and that business as usual is getting out of hand," said Adam McCarty, chief economist with the Hanoi-based consulting firm Mekong Economics. "The message to people in the system is this: Because some of these [perpetrators] would've had big people above them. [...]in 2017, the government of the United Kingdom adopted the Criminal Finances Act of 2017.18 In addition, the range of international agreements respecting corruption touches virtually every country on earth.19 The international community has also adopted some soft law instruments with some influence in developing customary standards of conduct and expectations in economic relations.20 In the United States, the 'Foreign Corrupt Practices Act' (FCPA) has served as a model, variations of which have been adopted elsewhere.21 The Criminal Law of the People's Republic of China prohibits "official bribery," which applies to state officials and state entities, as well as "commercial bribery," which applies to virtually everyone else.22 A great number of other states have enacted anti-bribery and corruption laws as well.23 Recent r
1 In September 2017, the media reported that parliamentarians at the Council of Europe had been bribed by Azerbaijan to mute criticism of their government within the Council's human rights organs.2 Also in September 2017, France's financial prosecutor announced the commencement of a corruption investigation against the son of the former president of the International Association of Athletics Federations for payments to influence the choice of host cities for the largest global sporting events.3 At the same time, authorities in Brazil launched a probe into vote buying for the 2016 Olympics, a criminal offense.4 In January 2016, the Norwegian Pension Fund Global intensified its efforts to engage in more aggressive anti-corruption investment strategies.5 In December 2013, Vietnam reported that it had sentenced bankers to death in connection with embezzlement from a state owned bank.6 It's a message to those in this game to be less greedy and that business as usual is getting out of hand," said Adam McCarty, chief economist with the Hanoi-based consulting firm Mekong Economics. "The message to people in the system is this: Because some of these [perpetrators] would've had big people above them. [...]in 2017, the government of the United Kingdom adopted the Criminal Finances Act of 2017.18 In addition, the range of international agreements respecting corruption touches virtually every country on earth.19 The international community has also adopted some soft law instruments with some influence in developing customary standards of conduct and expectations in economic relations.20 In the United States, the 'Foreign Corrupt Practices Act' (FCPA) has served as a model, variations of which have been adopted elsewhere.21 The Criminal Law of the People's Republic of China prohibits "official bribery," which applies to state officials and state entities, as well as "commercial bribery," which applies to virtually everyone else.22 A great number of other states have enacted anti-bribery and corruption laws as well.23 Recent reports from the global financial sector have highlighted the way in which this "two thrusts" strategy has also begun to be felt by actors in financial markets, especially by those firms that are in the business of investing in or lending to operating companies worldwide. "24 The U.S. Securities and Exchange Commission (SEC) has noted the priority to which it has given corruption cases under the FCPA; its enforcement actions suggest the preference for civil penalties as punishment for violations of the Act.25 The complex nature of the extraterritorial effects of anti-corruption measures and the weaknesses of arguments against such efforts have also been noted.26 Indeed, financial institutions, and most notably, sovereign wealth funds, have begun to more vigorously defend against corruption by building anti-corruption measures and requirements into their investment strategies as well as in their shareholding policies.27 Related to these emerging trends is another-the increasing emphasis on monitoring and compliance programs imposed formally and informally on and by enterprises.28 Governments incentivize this obligation by their willingness to enforce cooperation agreements with enterprises facing corruption probes in order to avoid criminal sanction.29 These have been advanced in the United States30 and in the United Kingdom.31 What makes this interesting is the way that governments, having created a strong tradition of respecting the autonomy of corporations even when they are subsidiaries, now seek to treat production chains as a single enterprise for purposes of corruption probes.