A new UK policy establishes a commitment to providing victims of overseas bribery with compensation; however, important questions remain that will impact implementation.
By Stuart Alford QC, Nathan H. Seltzer, Joseph M. Bargnesi, Laila Hamzi, Clare Nida, and Christopher M. Ting
The UK’s Serious Fraud Office (SFO), the Crown Prosecution Service (CPS) and the National Crime Agency (NCA) have released a joint statement in support of compensation for overseas victims of bribery, corruption, and other economic crimes. As set forth in the General Principles, which were published on 1 June, the UK enforcement agencies have committed to consider whether victim compensation is appropriate in “all relevant cases,” including those resolved by prosecution, a deferred prosecution agreement (DPA), or a civil settlement. Both aggrieved governments (and their instrumentalities) and corporates facing potential bribery-related inquiries should therefore be aware that the UK government will very likely at least consider victim compensation in any bribery resolution; however practical questions remain that will impact implementation.
In cases resolved through prosecution, the General Principles stipulate that the CPS and SFO will seek remedies under the Proceeds of Crime Act 2002 or the Powers of Criminal Courts (Sentencing) Act 2000 for compensation. In cases resolved with DPAs or through civil settlement, the agencies agree to seek compensation as part of the agreement with the accused.
The General Principles provide that the agencies will work with other government ministries including the Department for International Development, the Foreign Commonwealth Office, the Home Office and Her Majesty’s Treasury to identify potential victims overseas, asses the case for whether compensation is appropriate and, if so, craft a transparent compensation plan.
Notably, although the General Principles reflect an increased commitment to providing compensation in cases of bribery, the UK has provided compensation on at least five occasions in cases of overseas bribery since 2014. For example, in its prosecution of the former Secretary of Transport and Public Works in Macao, the CPS ensured that approximately £28.7 million was returned to the Macao Special Administrative region. Additionally, smaller sums have been paid directly to the governments of Tanzania and Kenya (for £4.9 million and £349,000, respectively) as compensation for bribery schemes that targeted these nations. In a separate case, £4.4 million recovered for corruption in Chad was provided to the Department of International Development for investment into projects to alleviate poverty in Chad.
The policy landscape, and certainly what actually happens in practice, has been less clear on the other side of the Atlantic. The US serves as an important reference point as the trend towards increased multi-jurisdictional enforcement continues. On the one hand, US law is generally favorable to victim compensation; a 1996 federal statute makes restitution mandatory in criminal prosecutions brought under a wide variety of federal laws. In addition, the US Attorney’s Manual, which sets forth policies and procedures to be followed in federal criminal prosecutions, provides that, in conducting plea negotiations, prosecutors should consider “requesting that the defendant provide full restitution to all victims of all charges contained in the indictment or information, without regard to the counts to which the defendant actually plead[s].”
Nevertheless, and despite the number of enforcement actions under the US Foreign Corrupt Practices Act (FCPA), only a small collection of bribery cases in the US have involved victim compensation. The restitution statutes do not directly apply to the core FCPA statute and only apply when the case includes a conspiracy or other charge under Title 18 of the United States Code, such as money laundering. In addition, many FCPA cases are resolved with deferred prosecution agreements or non-prosecution agreements, which do not trigger the mandatory restitution provisions. Interestingly, the US authorities have from time to time been reluctant to consider foreign governments “victims” of bribery offenses entitled to restitution. For instance, in one contested case, a state-owned enterprise from Costa Rica sought compensation in US court for being the victim of a bribery scheme. The US Department of Justice argued that the Costa Rican government entity was in effect a “co-conspirator” in the bribery scheme and not a “victim” entitled to restitution. Accordingly, restitution has been provided to foreign governments only in a small minority of FCPA cases.
While the General Principles appear to put the UK out in front of the US in establishing a framework for compensating victims in bribery cases, open questions remain. For instance, the government’s factors for assessing whether a case is suitable for compensation or the compensation amount remain unclear. Further, the UK has not yet clarified how it will address facts if it believes the foreign government is arguably not blameless in the misconduct.
Regardless, already in the US and now in the UK, companies will need to consider how restitution or compensating victims may impact a negotiated resolution, including whether doing so provides an opportunity to fully resolve, as part of a global resolution, any civil claims a foreign government may have.
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