Does the world want to fight corruption?
Elvan Sevi Bozoğlu
Bozoğlu İzgi Attorney Partnership, Istanbul
Ata Umur Kalender
Bozoğlu İzgi Attorney Partnership, Istanbul
The most well-known provision of the Hammurabi Code is this: ‘If a man put out the eye of another man, his eye shall be put out (an eye for an eye).’ This is not the only criminal provision in the Hammurabi Code. Another states: ‘If a herdsman, to whose care cattle or sheep have been entrusted, be guilty of fraud and make false returns of the natural increase, or sell them for money, then shall he be convicted and pay the owner ten times the loss.’ The Hammurabi code describes civil liabilities as well: ‘If anyone be too lazy to keep his dam in proper condition, and does not so keep it; if then the dam break and all the fields be flooded, then shall he in whose dam the break occurred be sold for money, and the money shall replace the corn which he has caused to be ruined.’
Considering it was one of the earliest written laws in human history, its inability to distinguish criminal and civil laws or its (rightly) basic sense of justice is difficult to criticise. It has taken millennia after the Hammurabi Code for legal theory to develop into its modern form, where criminal and civil laws are regarded as separate disciplines, and where simple approaches of criminal law as retribution have been replaced with more complex systems intended to rehabilitate, with the influence of thinkers such as Voltaire, Rousseau, Beccaria or Kant.
Globalisation and cross-border crime
It was not until late 20th century when states realised cross-border crime was rapidly expanding, as international business grew and became globalised. Thus, law enforcement would also need international cooperation, leading to a multitude of international conventions and organisations. Following some major scandals and subsequent developments in United States law, anti-corruption became an early subject for international cooperation. Perhaps now, decades after the first attempts at international anti-corruption efforts, it would be fair to criticise modern states and the international regime for its failures, for example, in establishing an effective global anti-corruption framework.
International anti-corruption conventions
Following the impact of the Foreign Corrupt Practices Act 1977 (FCPA) in the US, as well as US efforts for an international treaty, the mid- to late-1990s seemed to be a turning point on the international stage. Both the Organisation for Economic Co-operation and Development (OECD) and the European Union established anti-corruption conventions in this period. Today, there are a vast number of treaties to fight corruption, such as:
- OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions;
- United Nations Convention against Corruption;
- Civil Law Convention on Corruption;
- Criminal Law Convention on Corruption;
- Inter-American Convention Against Corruption;
- African Union Convention on Preventing and Combating Corruption;
- United Nations Convention against Transnational Organized Crime and the Protocols; and
- United Nations Declaration Against Corruption and Bribery in International Commercial Transactions.
Following in the footsteps and even going beyond the FCPA, there are also an increasing number of national legislations with extraterritorial effect, such as the United Kingdom Bribery Act 2010 or the French Criminal Code as amended by the Sapin II Act. These conventions and laws are supported by international unions and organisations, such as Transparency International founded in 1993, and further by international mutual legal assistance treaties and other sources of criminal law.
The international effort and desire to prevent bribery is, of course, commendable. The states and international organisations should be praised for leaning on corruption since the turn of the century and for understanding the need for international solutions. However, at the same time, it would not be unreasonable to wonder if the current international regime is working well enough to prevent corruption and bribery across the planet.
To add some context, the recent Report on Liability of Legal Persons for Corruption Offences, funded by the EU and the Council of Europe and published in 2020, contains a top-ten list of major FCPA settlements and while eight of the biggest settlements until 2018 were from the 2010s (Petrobras, Telia, Vimpelcom, Alstom, Société Générale, Teva, Keppel Offshore & Marine Ltd and Och-Ziff), only two were from the 2000s (Siemens AG in 2008 and KBR/Halliburton in 2009). In 2019, the US Department of Justice and the Securities and Exchange Commission (SEC) collected $2.65bn in settlements of FCPA enforcement action; up to October in 2020, this figure was $2.66bn.
It is possible to argue that the highest settlement amounts being more recent does not mean global efforts have been inefficient to prevent corruption. Perhaps the explanation is that since these laws and agreements were enacted, states have needed time to establish the correct enforcement framework. It can also be said that the high amounts settled reflect the increasing influence of multinational companies in global business. There is also a case to be made that the penalties are inflated to be deterring for other multinational actors, or that the standards of settlement amounts are vague. These could all be true but, nevertheless, it is obvious that corruption is not going away and maybe it is accelerating.
There has been some criticism in recent times on the insufficiency of anti-corruption efforts, some of which were directly from the main actors of the international anti-corruption regime. For example, the European Commission’s 2014 EU Anti-corruption Report stated:
‘[…] EU Member States have in place most of the necessary legal instruments and institutions to prevent and fight corruption. However, the results they deliver are not satisfactory across the EU. Anti-corruption rules are not always vigorously enforced, systemic problems are not tackled effectively enough, and the relevant institutions do not always have sufficient capacity to enforce the rules. Declared intentions are still too distant from concrete results, and genuine political will to eradicate corruption often appears to be missing.’
It was the first and only European Commission report on the topic.
Similarly, the United Nations Development Programme reported in 2014 that ‘the lack of implementation and monitoring of anti-corruption strategies has raised questions on their effectiveness in practice’, in a report titled Anti-corruption Strategies: Understanding What Works, What Doesn’t and Why? discussing the situation in the Asia Pacific.
A 2019 report by the Group of States Against Corruption (GRECO), titled Anti-corruption trends, challenges and good practices in Europe & the United States of America, found that many of its members (including Czech Republic, Denmark, Germany, Hungary, Italy, Poland, Serbia, Slovakia, Slovenia and Turkey) have either failed to implement or only partly implemented GRECO’s recommendations to strengthen the prevention of corruption in respect of members of parliament. These GRECO members generally failed to fully implement GRECO’s recommendations to strengthen the prevention of corruption in respect to judges and prosecutors as well. The Czech Republic and Serbia have failed to fully implement any of GRECO’s recommendations, Turkey has failed to even partially implement over 70 per cent of the recommendations, and this rate was 55 per cent for Hungary, an EU Member State.
The OECD, meanwhile, has been publishing progress reports, reviewing the developments in signatory countries with regard to the application of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The situation has not been too different from the GRECO procedure. Turkey has received scrutinising progress reports from the OECD. Turkey was urged to clarify that all legal entities can be held liable for foreign bribery, to ensure national economic interest or potential effect of foreign bribery cases in relationships with foreign states does not prevent prosecution, or to provide measures to protect potential whistleblowers. Turkey responded that its laws comply with the OECD regime and the recommendations. It was also asked to report on ongoing prosecutions, to which Turkey responded that while there were no ongoing prosecutions, it was overseeing one investigation.
There is little that GRECO and OECD can do about non-complying states. They can give recommendations, follow-ups or send letters to responsible bodies but cannot force compliance. Even if it could, OECD members can withdraw from the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions with a notification given one year ahead of time. International organisations are composed of member states signing up voluntarily and imagining an international organisation with the power to effectively enforce compliance with anti-corruption laws is unrealistic, especially after Brexit and amid constant discussion of the EU’s influence.
There are also the inherent difficulties underlying an international regime composed of several conventions and organisations. Such difficulties are accentuated by differences in culture and legal systems. There are still discussions even around central issues and questions remain. Should legal persons have criminal liability? Should legislators emphasise personal or corporate liability? How should legal persons be held liable for the actions of their representatives? Who should be regarded as such representatives? How should multinational companies be scrutinised? How should they be judged for wrongdoing across separate jurisdictions? What about demand side bribes? Bribery in the private sector? Should facilitation payments be allowed? Who should be regarded as a public official? How should statutes be applied extraterritorially?
These questions need answering – and soon. However, it is clear that to facilitate efficient and productive application across the regions, the international conventions, as well as local laws, should be streamlined and the language used must be identical throughout. There should not be any doubt regarding what is a bribe or who is a public official, or how companies will be attributed culpability.
It is also clear that while the settlement amounts are rising in a few countries which lead anti-corruption enforcement, many others appear to have little appetite for anti-corruption investigations. This dichotomy prevents a truly international and global framework for enforcement. Anti-corruption laws and conventions should be consistently enforced in all regions of the world for their intended effects to be fully realised.
Most importantly, companies should have criminal liability just like individuals and they should be prosecuted effectively. It is apparent that multinational corporations control a bigger portion of the economy each passing day and their wrongdoing has more impact due to their growing reach. If corporations have the authority to sign agreements to employ people, to lease offices or to sell products, they should also have liability for their crimes, and it is outdated to claim companies do not have the necessary ‘will’ in light of their activities that grow more complex every day. Perhaps, even despite considerable challenges, this could be a key to enforcement in countries that currently lack sufficient enforcement.
There seems to be no end to corporate crimes even after the huge amounts paid by some of the most recognisable firms in the world. To ensure that the sanctions applicable to companies have a deterring impact, the approach must be wider than imposing monetary fines. The worst cases of bribery should be penalised with heavy penalties such as temporarily halting company activities, cancelling permits or licenses, or banning companies from tenders. If they are found to be corrupt, companies could be disallowed to merge with or acquire other companies. Multinational companies could be required to comply with comprehensive and international governance and transparency standards. Whichever approach is chosen, strict and deterring enforcement is mandatory, and that can only begin where there is political will to clean up both business and politics. There is concern regarding the potential negative impact on innocent employees or shareholders of corrupt companies, but it is time to consider the damage inflicted on economies and democracies by limitless profit-seeking.
We are living in an era where income inequality is rising in most regions of the world. Public institutions and the rule of law are made to decay by strongmen East and West, international organisations like the United Nations or the World Health Organization are frequently presented by incompetent politicians as scapegoats for crises and not a day goes by without major scandals like the Cambridge Analytica, Volkswagen emissions or Panama Papers breaking out. In this kind of atmosphere, it is critical for politics and business to become and remain free of the stigma of corruption in order for public trust in democracy and justice to be re-instituted. This can only happen with a clear anti-corruption framework that is consistently enforced throughout jurisdictions. Otherwise, it will not take us too long to devolve to ‘an eye for an eye’ again.
Hammurabi Code of Laws.
 Georgetown Law Library.
 European Union and the Council of Europe, 2020.
 FCPA Professor, 2020.
 European Commission, 2014.
 United Nations Development Programme, 2014.
 Group of States against Corruption (GRECO), 2020.
 United Nations Department of Economic and Social Affairs.