The Organisation for Economic Co-operation and Development (OECD) Council issued a Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions (the “2021 Recommendation”) on November 26, 2021. As we reflect on 2021 in terms of US enforcement actions and policy, and the Biden Administration’s new anti-corruption strategy issued in December, some further assessment of this Recommendation seemed appropriate.
The Council’s last recommendation in this area was issued in 2009. Intervening developments and experience gave rise to the 2021 Recommendation, which was under consideration for some time prior to its issuance.
The 2021 Recommendation cannot be characterized with a single headline. It is a multi-faceted document, comprised of 31 individual recommendations divided in to 16 sections. It is broad in scope, covering the waterfront of the OECD’s historical activity in the anti-corruption arena—not just through the Anti-Bribery Convention but through some of its “soft law” instruments—as well as some important issues not previously addressed by the OECD.
The 2021 Recommendation contains the first provisions of the OECD on the so-called “demand side,” calling on its Member States to take steps to curb the solicitation of bribes. It also tackles the increasingly vexing issue of constraints posed by data protection laws on anti-corruption compliance measures. It calls for increased protection of whistleblowers and some parameters around the growing use of “non-trial resolutions” (i.e., settlements) by countries in response to due process and other concerns.
As to the waterfront of historical activity, the 2021 Recommendation seeks to increase the effectiveness of activities relating to: (1) the criminalization and enforcement of the offense of bribery of foreign public officials; (2) sanctions and confiscation; (3) international cooperation; (4) tax deductibility; (5) accounting requirements, external audit, and internal controls, ethics and compliance; (6) public procurement and other public advantages; (7) officially supported export credits; and (8) cooperation with non-members.
There are two Annexes to the 2021 Recommendation: Annex 1, directed to countries party to the OECD Convention, sets forth Good Practice Guidance on Implementing Specific Articles of that Convention. Annex 2, directed to companies and their business organizations and professional associations, sets forth Good Practice Guidance on Internal Controls, Ethics and Compliance, updating guidance previously adopted by the OECD in 2010. We will address the corporate compliance guidance in a separate alert, given its significance to companies, while this advisory will focus on the overall recommendation and implementation guidance.
Below we set out what we consider to be the key takeaways from the 2021 Recommendation, in both the areas of continued focus and the newer areas.
Key Takeaways from the 2021 Recommendation
- Proactivity in Government Investigations and Enforcement. Strikingly, the 2021 Recommendation repeatedly uses the word “proactive” in relation to law enforcement investigations and prosecutions, including international cooperation. This focus dovetails with the similar emphasis US enforcement officials have placed on their approach to bribery investigations. The Recommendation also urges that bribery cases be investigated and prosecuted “without undue delay” (Recommendation IX.i.).
- Multijurisdictional Cases. Recommendation XIX, part C, “encourages direct coordination” by the relevant authorities at an early stage in concurrent or parallel investigations and prosecutions, and puts some flesh on the bones of Article 4.3 of the OECD Anti-Bribery Convention. It not only encourages consultation among the relevant countries when more than one of them has jurisdiction over an alleged offense, but also indicates they should “pay due attention to the risk of prosecuting the same natural or legal person in different jurisdictions for the same criminal conduct.” It also encourages joint or parallel investigative teams, and cautions against efforts that would unduly impact the investigations and prosecutions of other jurisdictions. While not earth-shattering, these provisions are a welcome step in the direction of rationalizing how multi-jurisdictional cases are handled and minimizing the risks of double jeopardy and ineffective prosecutions.
- Data Protection. The principal message of the data protection sections, under Recommendation XXVI, is that member countries should ensure that compliance with such laws “does not unduly impede the effectiveness” of international cooperation in investigations and prosecutions, or of compliance programs, including due diligence. They encourage member countries to issue guidance and/or regulations that allow for processing of data in connection with due diligence and investigations. For companies increasingly struggling to reconcile the strictures of laws such as GPDR with their compliance obligations, this represents a welcome development.
- Non-Trial Resolutions. Recommendations XVII and XVIII, while encouraging the use of non-trial resolutions (such as DPAs, NPAs, and the like), which have been growing internationally, caution that such resolutions “should follow the principles of due process, transparency, and accountability,” ensure that such resolutions do not create obstacles either to enforcement by other countries or of other persons, and do not impede international cooperation. They also emphasize the need for appropriate oversight of such resolutions, but, significantly, without limiting such oversight to judicial authorities (“by a judicial, independent public, or other relevant competent authority, including law enforcement authorities”). This was an area of significant focus leading up to the adoption of the 2021 Recommendation. While it will likely not significantly impact US settlement practice, it is important as the use of DPAs and similar instruments spreads globally.
- Accounting Requirements and External Audits. Recommendation XXIII.A. requires member countries to take measures to ensure that they have adequate accounting requirements in order to combat off-book accounts and other practices designed to facilitate or conceal bribes and consider enforcement for accounting offenses. It also emphasizes (in part B.) the importance of adequate external auditing standards and external reporting requirements for auditors who discovery bribery.
- Internal Controls, Ethics, and Compliance. Recommendation XXIII.D. directs member countries to take steps to incentivize compliance programs by companies engaged in international business, both in the context of granting public advances, such as subsidies, licenses, government contracts, development assistance contracts and export credits, and in the context of enforcement. At the same time, it cautions that any incentives offered in the enforcement context do “not fully exonerate” companies from liability. Subsection C of the same Recommendation also contains measures to encourage companies to develop and implement compliance programs, including encouraging business and professional associations to encourage and assist companies in this regard. Again, this is not likely to significantly affect US enforcement practices, which already seek to incentivize compliance, but may affect policy or practices by other agencies as well as in other countries.
- SOEs and SMEs. The Recommendations make clear that state-owned enterprises should be covered by measures that apply to companies, including measures incentivizing the development of compliance programs. They also seek to enhance awareness and compliance by small and medium-size enterprises. Coverage of SOEs is an important issue, given their prevalence internationally.
- The Demand Side. Although the OECD Convention itself only addresses the supply side of bribery, pressure has been growing for increased efforts on the demand side. The 2021 Recommendation breaks new ground for the OECD in this regard. Recommendations XII and XIII direct member countries to raise awareness of bribe solicitation risks, “with particular attention to high-risk geographical and industrial sectors of operation” (not defined in this document), provide training to officials posted abroad (such as diplomatic personnel) on how to respond to issues of solicitation, engage in collective action, and coordinate with others, as well as publish on a publicly available website their rules regarding gifts, hospitality, entertainment, and expenses for domestic public officials. While only a first step by the OECD, whose membership likely makes the impact of this part of the 2021 Recommendation more limited than if it were global, if it promotes additional efforts in this arena, it could prove to be important.
- Facilitating Payments. Recommendation XIV, also part of the “demand side” section, encourages countries to review their “policies and approach” on small facilitation payments, and to encourage companies to prohibit or discourage them, given their corrosive effects. Although most countries now prohibit such payments, and many company policies prohibit or strongly discourage them, the reference to “policies and approach” suggests that existing measures are not enough.
The 2021 Recommendation contains provisions on a number of additional topics not highlighted above, including provisions relating to sanctions and the freezing, seizure and confiscation of bribes, international cooperation, tax deductibility, whistleblower encouragement and protection, public procurement, export credits, and cooperation with non-OECD members.
Annex I: Good Practice Guidance on Implementing the Anti-Bribery Convention
Annex I, the Good Practice Guidance on Implementing Specific Articles of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, is directed to countries that are party to the OECD Anti-Bribery Convention. Its guidance emanates from the OECD’s monitoring program.
Notable points in Annex I include: (1) A.1: bribe solicitation should not be a defense or exception in national laws; (2) B.1: ensuring national laws make SOEs liable for bribery; (3) B.3: ensuring that national laws make companies liable in a wide range of circumstances, including when senior officials fail to prevent misconduct by lower-level persons; (4) B.5: ensuring that corporate liability cannot be avoided through restructuring or merger; and (5) C: strengthening corporate liability for the acts of intermediaries.
The 2021 Recommendation is principally intended to spur action by countries to implement the recommendations in the different areas it covers. Its impact thus depends substantially on whether such implementation occurs, something that will have to be assessed over time. While it is unlikely to significantly change the policies or practices of US enforcement agencies, it may well have an impact on other authorities and multijurisdictional cases. It may also result in more leveling of the playing field for compliance, including between state-owned enterprises and private enterprises, and limiting the deleterious effects of data protection regimes on compliance practices. Finally, whether through cooperation with non-member countries or otherwise, it may influence the development of anti-corruption standards in other arenas.
 One of the authors of this alert, Lucinda Low, provided input on a draft of the 2021 Recommendation at the invitation of the OECD Working Group on Bribery as part of an external stakeholder consultation process.
 See, e.g., Recommendations VI.ii, iii; VIII, XVI, XIX.A.x, XXI.iv.
 See, e.g., remarks of Deputy Attorney General Lisa O. Monaco at ABA’s 36th National Institute on White Collar Crime (the “Monaco Memo”), Oct. 28, 2021, at https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute. David Last, Chief of the FCPA Unit, US Department of Justice made remarks at the ACI FCPA Conference on Dec. 1, 2021 that enforcement officials at the Department of Justice are using a broad range tools to identify misconduct, including mining and using data; and Charles Cain, Chief of the FCPA Unit, US Securities and Exchange Commission made similar remarks at the ACI FCPA Conference on Dec. 1, 2021 that enforcement officials at the SEC are not “sitting there passively” waiting for cases to come in.
 See, e.g., Recommendation XXIII.c (relating to compliance programs), Annex I, B.1., and Annex II.
 See, e.g., Recommendations IV.ii, XXIII.C, and Annex II.