International Cooperation and Increased Anti-Corruption Action

Mark Mendelsohn, a deputy chief in the Department of Justice Criminal Division’s Fraud Section, said at the recent Global Ethics Conference in New York that greater international cooperation is likely to be a feature of the US government’s increased action against foreign corruption.  Mendelsohn said the ‘high-water mark’ for international cooperation against corruption was the DoJ’s work with the German government which lead to engineering company Siemens AG agreeing in December 2008 to pay a total of $1.6 billion in fines.

On 1 February 2010, 56 new agreements between the US, EU and each of the EU Member States addressing extradition and mutual legal assistance took effect.  The agreements were under negotiation since the terrorist attacks in the US on 11 September 2001.  They will make it easier for US and EU enforcement authorities to investigate and prosecute violations of anti-corruption and anti-fraud statutes, including the FCPA, by companies and individuals overseas.

The agreement on extradition, for example, replaces lists of crimes which were deemed extraditable with a more flexible ‘dual criminality standard’.  Under prior extradition treaties, if a particular offence was not identified expressly in a given treaty, the individual charged could potentially defeat the prosecuting country’s attempt at extradition.  Dual criminality, however, typically requires only that the charged offence constitute a criminal act in both countries, regardless of the name given to the offence or the listing of the offence in the applicable treaty. 

According to the DoJ, the agreement on mutual legal assistance will provide for ‘prompt identification of financial account information in criminal investigations’, will facilitate ‘the acquisition of evidence, including testimony, by means of video conferencing’, and will authorise ‘the participation of US criminal investigators and prosecutors in joint investigative teams in the EU’.  This could enable prosecutors to examine witnesses personally without travelling to the host country where the witnesses reside, significantly reducing the duration and costs of transnational investigations.

Similarly, the UK is determined to strengthen international cooperation.  In its recently published UK foreign anti-bribery strategy, the UK government announced plans to increase inter-agency coordination on overseas capacity building and technical assistance to prioritise credible partner countries.  It aims to work towards closer cooperation and collective action by Overseas Missions of OECD Anti-Bribery Convention signatories to address reports of bribe solicitation by foreign public officials.  It also strives to help strengthen African anti-corruption initiatives and mechanisms, such as through the African Union Convention on Corruption and the Regional Economic Communities.

There is increasing cooperation between the US SEC and UK FSA.  At the recent fifth strategic dialogue between the two authorities, it was announced that they plan to review their existing Memorandum of Understanding, designed to promote the coordination of robust and sound supervision of cross-border financial institutions and markets.  They will also address the intrinsic links between the types and degree of risks that regulated entities assume and their corporate governance and compensation policies.

The trend that international enforcement authorities are increasingly seeking to work together to combat corruption looks set to continue.  One recent example is the extradition cases of Wojciech Chodan, a former salesperson and consultant of a UK subsidiary of the engineering company KBR, and Jeffrey Tesler, a British solicitor, who the US authorities seek to have extradited from the UK to the US.

Following a settlement between KBR and the energy company Halliburton with the US authorities, Chodan and Tesler were accused of taking part in the scheme that involved KBR to bribe Nigerian officials to secure lucrative gas contracts.  Prosecutors in the US charged them with helping to dispense bribe money and sought forfeiture from them of $130 million.

Sam Eastwood is a litigation partner and Head of the Business Ethics and Anti-Corruption Group and Chris Campbell-Holt is a researcher at Norton Rose LLP, http://www.nortonrose.com/. Chris was a member of the Secretariat of the Woolf Committee that was appointed by BAE Systems’ Board to report on BAE’s ethical policies and processes. Sam can be contacted on +44(0)20 7283 6000 or by email: sam.eastwood@nortonrose.com.

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