I. Introduction
In November 2021 and, given recent international events, somewhat unnoticed, the Organisation for Economic Co-operation and Development (“OECD”) adopted the 2021 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions (“2021 Anti-Bribery Recommendation”). The OECD is an international organisation, uniting governments worldwide, that has taken it upon itself to combat social, economic and environmental challenges. Since its establishment in 1961, the OECD has developed around 460 legal instruments, many of which have become international standards. OECD recommendations are not legally binding, but represent a political commitment to the principles they contain and quite often set a certain standard for national legislation.
The OECD Anti-Bribery Convention has a long tradition: It came into force in February 1999 and legally binds its parties to prosecute and impose sanctions on individuals and companies for the bribery of foreign public officials regarding internal business transactions. The OECD Working Group on Bribery monitors the OECD member countries’ implementation of the Anti-Bribery Convention.
In 2009, the OECD adopted the Recommendation for Further Combating Bribery of Foreign Public Officials (“2009 Anti-Bribery Recommendation”), which particularly focused on the supply side of bribery and contained key recommendations for preventing, detecting and investigating allegations of foreign bribery. Over a decade later and after an extensive review of the impact and updated challenges in the anti-corruption field, the OECD adopted the 2021 Anti-Bribery Recommendation, which now supersedes the 2009 Anti-Bribery Recommendation. It addresses the OECD member countries and other countries party to the OECD Anti-Bribery Convention. The 2021 Anti-Bribery Recommendation updates and expands the previous Recommendation and emphasizes the importance of continuously enforcing anti-bribery measures.
Below we have summarized the key elements of the 2021 Anti-Bribery Recommendation in order to encourage businesses to include the 2021 Anti-Bribery Recommendation when evaluating their anti-bribery procedures.
II. Key elements of the 2021 Anti-Bribery Recommendation
Whereas the 2009 Anti-Bribery Recommendation focused on the “supply side” of bribery, i.e. the business side handing out bribes, the 2021 Anti-Bribery Recommendation focuses, inter alia, on the opposite, i.e. “demand side”, as well as international cooperation, exclusion of non-trial resolutions in foreign bribery cases and incentivising anti-corruption compliance in companies as well as the protection of whistleblowers.
1. Addressing the demand side
The 2021 Anti-Bribery Recommendation includes a new section on the solicitation and acceptance of bribes by foreign officials. The 2021 Anti-Bribery Recommendation emphasises the need for more awareness of bribe solicitation (and acceptance) among relevant public officials. It recommends that member countries, inter alia, raise awareness of bribe solicitation risks and provide training to public officials posted aboard. The section on the demand side particularly mentions small facilitation payments with the recommendation that member countries review their policies and approach on small facilitation payments. Most importantly from the business side, it is recommended that companies should be encouraged to prohibit or discourage the use of facilitation payments, as they are generally illegal in the countries where they are made.
The demanding and taking of bribes by (foreign) public officials, including European public officials, is subject to sanction under the Criminal Code (secs. 332, 334, 335a). The German legislator is therefore aware of the corruption risks related to public authorities and we do not expect any changes of the law in that regard.
2. Sanctions and confiscation
As already the case in Germany, the 2021 Anti-Bribery Recommendation further encourages its member states to confiscate and freeze profits of bribes and proceeds. However, the 2021 Anti-Bribery Recommendation goes even further and recommends publishing resolved cases of bribery of foreign officials, including the main facts, the natural or legal persons sanctioned, the approved sanctions, and the basis for applying such sanctions (“naming and shaming”).
Additionally, the 2021 Anti-Bribery Recommendation states that good corporate behaviour should be promoted and rewarded by member states. Potential mitigating factors expressly mentioned are voluntary, timely and full disclosure to law enforcement authorities and full cooperation, acceptance of responsibility as well as timely and appropriate remediation.
The 2021 Anti-Bribery Recommendation aims at making the solicitation of bribes as risky as possible, including “public naming and shaming” which has been introduced in other areas (e.g. insider dealing (cf. publications of the German Federal Financial Supervisory Authority (BaFin)). While appreciating the objective of the 2021 Anti-Bribery Recommendation, public naming and shaming would result in the introduction of a further sanction, which – unlike "conventional" sanctions – cannot be appropriately quantified and might, more often than not, overstep the mark. Naming and shaming should therefore be rejected.
3. Non-trial resolutions
The 2021 Recommendation also suggests further developing non-trial resolutions, commonly referred to as settlements, which often lead to speedier results. Non-trial resolutions are based on a negotiated agreement between a natural or legal person and a prosecuting/public authority, following the principles of due process, transparency and accountability. Such non-trial agreements might have a global effect and encourage companies to agree to them, in particular to avoid proceedings and sanctions in more than one jurisdiction (double jeopardy, cf. below).
German authorities do not have non-prosecution or deferred prosecution agreements in their tool box so far. Nevertheless, there is a practical need for settlement options. Against this background, fines and confiscation orders are, in practice, often negotiated with investigating authorities; in the course of such a “settlement”, the companies concerned often waive possible legal remedies.
4. Tax deductibility
The 2021 Anti-Bribery Recommendation also emphasizes that bribes to foreign public officials should not be tax-deductible, which was introduced in Germany many years ago. If companies identify past bribe payments, their management is regularly obliged to correct their tax statements, sec. 153 German Fiscal Code (Abgabenordnung) – thereby being required to disclose undue payments in the past.
5. International cooperation
The newly introduced chapter on international cooperation goes hand in hand with the one on non-trial resolutions. Member states cooperate internationally in investigating and prosecuting bribery and corruption, e.g. by sharing information, entering into agreements for mutual international assistance, and even considering cooperating with countries that are not party to the OECD Anti-Bribery Convention. The 2021 Anti-Bribery Recommendation encourages the member countries to partake in a proactive approach in seeking international cooperation and expressly highlights the risk of double jeopardy in multijurisdictional cases. In practice, investigating authorities are increasingly cooperating internationally (at least in significant cases). Against this background, the regulations to avoid double jeopardy in an international context are currently inadequate.
With respect to data protection and international cooperation, the 2021 Anti-Bribery Recommendation states that data protection laws should not “unduly impede the effectiveness” of any international cooperation regarding compliance.
6. Reporting foreign bribery
With a similar aim as the EU Whistleblower Directive, the 2021 Anti-Bribery Recommendation further highlights the importance of protecting reporting persons as they often play an essential role in exposing bribery of foreign officials. It encourages the member countries to establish procedures enabling confidential and anonymous reporting including a legal framework to protect reporting persons and prevent retaliation. The German legislator will most likely implement a national law meeting the requirements of the EU Whistleblower Directive sometime this year. We assume that the German act will include a procedure for reporting all kinds of breaches of the law, including bribery and corruption – including but not limited to cases involving (foreign) public officials.
7. Accounting requirements, external audit, and internal controls, ethics and compliance
Apart from adequate accounting requirements, such as independent external audits, the 2021 Anti-Bribery Recommendation urges member states to encourage companies to implement and publicly disclose appropriate internal anti-corruption compliance measures as a whole and particularly with regard to preventing and detecting foreign bribery. This also applies to business organisations and professional associations.
Member countries should incentivise the implementation of such internal controls by considering such measures when granting public advantages, and as a mitigating factor in the context of enforcing measures combating foreign bribery and related offences. Meanwhile, corresponding control systems can often be a relevant factor in the assessment of fines.
8. Public advantages, including public procurement
Member countries should consider “blacklisting” companies that have bribed foreign officials from competing for public contracts or other public advantages. Information on such offences should be available to relevant government authorities. Such blacklisting already takes place in Germany today.
9. Update of the Good Practice Guidance on Internal Controls, Ethics and Compliance
The OECD also updated its Good Practice Guidance on Internal Control, Ethics and Compliance (“Guidance”) which is included as Annex II to the 2021 Anti-Bribery Recommendation. The Guidance addresses companies and covers good practices for effective internal compliance. It highlights the necessity to individualise the compliance programme according to the circumstances of the company, e.g. business model, sales organization and country-related risks, as well as the need for regular monitoring and re-assessment. Good practice includes, for example, a clear internal commitment to a culture of compliance, the autonomy of compliance officers, risk-based due diligence of acquisition targets and business partners and regular monitoring – all elements that any company with an adequate compliance culture should operate on.
III. Conclusion/ Comment
With the 2021 Anti-Bribery Recommendation the OECD reiterated its will to fight bribery and corruption globally and to strengthen the enforcement of measures combating foreign bribery. The OECD follows a holistic approach by addressing the member states and companies directly. It is unlikely that Germany will have to amend its laws and practices based on the 2021 Anti-Bribery Recommendation, yet we expect the 2021 Anti-Bribery Recommendation to set the tone with respect to international compliance standards. In a more and more digitalized environment, corruptions risks have been appearing in different guises and creating new challenges. The 2021 Anti-Bribery Recommendations has generally recognized this trend. Whether the recommended measures will actually lead to a noticeable reduction in corruption, however, remains to be seen.
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