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« Resource: Hughes Hubbard Winter 2013 Alert | Main | KPMG pays €7 million to settle Dutch bribery case »
Tuesday
Jan142014

Ireland's implementation of the OECD Anti-Bribery Convention: Could be better

Seasoned observers will recall how, over a 20-year period, a succession of long-running corruption inquiries have consistently revealed that certain players in Irish business and government circles appear to have been ethically challenged.

Set against that backdrop is the OECD's Phase 3 Working Group's report on Ireland's implementation of the OECD Convention on Combating Bribery of Foreign Public Officials, published last month and well worth the read.

The report noted that the Irish public had been sensitized to corruption in the domestic public sector due to the more recent and highly publicized 'Mahon Tribunal' that took 15 years to conclude.

Consistent with a lack of any meaningful domestic enforcement, the Working Group's observation that Ireland had not prosecuted a foreign bribery case in the 12 years since its foreign bribery offense came into force and was investigating, on a rather desultory basis, one case and assessing three others should have caused little surprise.

The Working Group acknowledged the extenuating circumstances of the financial crash and the IMF bailout, but it pointed out that Ireland had treaty obligations under the Convention and that there was an urgent need to reorganize foreign bribery law enforcement resources in a credible manner.

The government and other non-governmental organizations may have been fully involved with the Working Group -- but the same could not be said for the private sector. Apart from three business associations and professional bodies, it was noted that only one private-sector company and no representatives of individual accounting firms deigned to turn up to Working Group meetings.

The Working Group did note some positive legislative and ethical achievements, but these were largely overshadowed by the failures, identified by way of recommendations. Some of them are summarized below:

  • To consolidate and harmonize the foreign bribery offenses in order to comply with Article 1 of the Convention.
  • To reform corporate liability for the foreign bribery offense, despite Phase 2 recommendations that they be reviewed 'on a high-priority basis.'
  • To raise awareness in the private sector about the importance of adopting effective internal controls, ethics and compliance measures. There was a suggestion that any awareness or training was largely attributable to the UK's Bribery Act of 2010.
  • To implement the Working Group's Phase 2 recommendation to provide for the liability of unincorporated legal persons for the bribery of foreign public officials.
  • To make the detection, investigation and prosecution for bribery of foreign public officials a priority.
  • To provide adequate levels of resources for investigating, and, in particular, detecting cases of the bribery of foreign public officials in accordance with the Convention.
  • To take concrete and proactive steps to establish a territorial link in relation to foreign bribery allegations involving Irish companies and individuals.
  • To harmonize current whistleblower protections, 'which are confusing and exist in a plethora of statutes.' (This might be addressed by a proposed bill.)
  • To ensure that foreign bribery is always a predicate offense for money laundering, without regard to the place where the bribery occurred.
  • To carry out the Phase 2 recommendations that external auditors report all suspicions of foreign bribery to management and, as appropriate, to corporate monitoring bodies, regardless of whether the suspected bribery would have a material impact on financial statements. (The importance of audit controls was highlighted in KPMG's settlement in a Dutch bribery case.)
  • To inculcate private sector interest in ethics.

The OECD's Working Group reports offer a valuable exercise in ensuring that the implementation of anti-bribery legislation amounts to more than mere window dressing.

At some point, however, the OECD may have to consider showing a little more teeth to countries that 'cock a snook' to the Convention by failing to implement its monitoring recommendations or comply with their treaty obligations.

_________

Alistair Craig is a commercial barrister practicing in London.

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