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Entries in GRECO (2)

Monday
Mar162009

Paris Pulls The Plug On Enforcement

We're trying to stay calm today but it's not easy. We just learned why France -- the largest country by area in the European Union and second largest by population, possessor of the world's fifth biggest economy, a founding member of the European Union and the United Nations, a permanent member of the Security Council and member of the G8, NATO, and the Latin Union (whatever that is) -- why that France, isn't prosecuting any foreign public bribery. Here's the story. But be warned, it isn't pretty:

GRECO -- the Council of Europe's Group of States against Corruption -- was founded ten years ago to monitor compliance with the Council's anti-corruption standards. It does that by studying the members' existing laws and practices, publishing reports that evaluate their efforts, and recommending how they can improve their performance. We talked about it in a post in June 2008 (here).

We hadn't thought much about GRECO since then, until this email showed up over the weekend: Dear FCPA Blog -- My father just forwarded me an article in which I thought you might have an interest. It relates to recent French legislation limiting prosecutorial authority over French companies' acts of bribery overseas. Regards -- Pete from DC.

Regular readers will know that when Pete from DC speaks, we listen. And sure enough, Pete (and his dad) were right. The article they sent said GRECO has just issued a report critical of French anti-corruption laws. And the GRECO report itself says, "France has severely restricted its jurisdiction and its ability to prosecute cases with an international dimension, which, given the country's importance in the international economy and the scale of many of its companies, is very regrettable."

The problem, according to GRECO, is that anti-corruption offenses committed abroad can only be investigated by French authorities at the request of the foreign prosecutors and following a complaint from the victim or his or her beneficiaries, or an official report by the authorities of the country where the offense was committed. And for good measure, French law also prohibits the prosecution of French companies for bribing French officials overseas. Taken together, GRECO says, the laws amount to "exceptional guarantees" to French companies that they won't be prosecuted for bribery abroad. As we said, it isn't pretty.

Even the normally placid GRECO is slapping its forehead over this one. It said France's legal system is fairly effective in combating corruption, but it wondered "why, despite the economic weight of France and its close historical links with certain regions of the world considered to be rife with corruption [the former French colonies in Africa], it has not yet imposed any penalties for bribing foreign public officials."

This story first appeared in the EUobserver on March 13, 2009 here. Our thanks to Pete from DC (and his father) for sending it to us.

A copy of the Third Evaluation Round / Report on France, Adopted by GRECO at its 41st Plenary Meeting (Strasbourg, 16-19 February 2009) can be downloaded here.
_________

A key part of GRECO's report, Paragraph 90, says this:

It appears to the [GRECO Evaluation Team] that . . . France applies other limits to the application of the principle of jurisdiction based on nationality. [O]ffences committed abroad can only be prosecuted at the request of the state prosecution service and must be preceded by a complaint from the victim or his or her beneficiaries, or an official report by the authorities of the country where the offence was committed. In the absence of such a complaint or report, the French authorities are unable to prosecute the offence, and this was confirmed by the persons the team met and the legal theory supplied. The victim's complaint is unimportant in practice because according to legal theory in French law it is usually the foreign state that is concerned. An official report is therefore a precondition of criminal proceedings. The report must be issued by the foreign government, its prosecution service or an investigating judge. The police authorities have no competence in this matter. . . .

Certain persons confirmed that it is difficult to apply these provisions on jurisdiction, particularly when the perpetrator is a legal person. As indicated earlier (see paragraph 76), there have been no convictions so far for bribing foreign public officials, despite the fact that France is a major commercial and industrial power, which raises questions as to whether the obstacles in the way of recognising jurisdiction could possibly dissuade prosecutions. Legal theory has occasionally stressed that acts of corruption committed by French persons abroad cannot be prosecuted, thus offering French companies "exceptional guarantees". . .

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Tuesday
Jun032008

Unintended Consequences

Crooked officials and those who bribe them cripple economies and ruin lives. So all sincere efforts to reduce public corruption and deliver clean government deserve praise. At the same time, not all anti-corruption initiatives are equal, and good intentions can sometimes produce bad results. With that in mind, we want to take a quick look at the programs run by the Council of Europe's "Group of States against Corruption," also known as GRECO.

It was founded in 1999 to monitor compliance with the Council of Europe's anti-corruption standards. GRECO does that by studying the members' existing laws and practices, publishing reports that evaluate their efforts, and recommending how they can improve their performance. Then it checks back to see how they're doing and, with the member's permission, publishes its findings for the public to read.

All that sounds good. Third-party reviews, peer pressure and plenty of accountability. But when you look at GRECO's country reports, there's something fishy.The same recommendations show up again and again. For example, GRECO tells both Azerbaijan (#150 on Transparency International's 2007 Corruption Perception Index) and Iceland (#6 on the CPI) to do more training of public officials in ethics and anti-corruption awareness. The language used for both countries is nearly identical. And the report on Moldova (#111 on the CPI) warns that public-sector transparency has to be increased. That's good too, but it loses its punch when you read that Switzerland (# 7 on the CPI) needs the same medicine. Albania (#105 on the CPI) should develop standards for public servants moving to the private sector, GRECO says. Good idea, except that the message is the same for squeeky-clean Denmark (#1 on the CPI).

Our concern, you might have guessed, is that GRECO appears to approach all of its 44 member States with the same checklist. The impression given is that fighting corruption is a matter of changing this law, adopting that code of conduct, or imposing this training module. True enough, those steps might help, but only in a country already committed to fighting public corruption. On the other hand, where leaders take a cynical view -- where they line their own pockets with kickbacks and bribes and let their subordinates do the same -- GRECO's approach provides cover for the bad guys to hide behind. Here's the problem: corrupt regimes can implement GRECO's technical recommendations and periodically announce great progress in the battle against public sleaze. Do this, check. Do that, check . . check, check, check. Meanwhile everyone can still be stealing the silverware.

With all institutions and organizations -- as with individuals -- the difference between compliance and lawlessness is a matter of intent. Any law, rule or regulation can be ignored, avoided, bent or broken to achieve a corrupt purpose. And no amount of legal reform, ethics training or transparency will make a dent if attitudes don't change. But when attitudes do change, when leaders decide to clean things up, they can do it practically overnight. Singapore (#4 on the CPI) has amazingly simple anti-corruption legislation. But its leaders are committed to cleanliness and the result is easy to see. Neighboring Indonesia (#143 on the CPI) has layers of laws, rules and regulations aimed at public corruption. None of it works because the attitude at the top is inconsistent, to put it kindly.

So it's fair to ask this question: Is GRECO spending its time and public funding wisely? Do Azerbaijan and Switzerland really need more rules regulating gifts to public servants? According to GRECO they do. But will a ban on fruit baskets ever turn Azerbaijan's culture around? At the same time, does the absence of gift-giving rules really threaten the integrity of Swiss bureaucrats? Perhaps, just maybe, GRECO would do better to ditch the checklist and, in countries where public corruption is really a problem, work on attitudes instead.

The people at GRECO would say they're already changing perceptions. They'd say their evaluation visits, recommendations and public reports focus local and international attention on the need for anti-corruption initiatives in all member countries. That to pick on just the Azerbaijans and not the Denmarks would create an atmosphere of bullying and intimidation, draining both GRECO and its parent, the Council of Europe, of their moral authority.

There's some truth to those arguments. But in Germany, Italy and France, for example, attitudes toward domestic and international public corruption changed over the past decade -- helped along by an uncompromising antibribery message from the OECD. Those countries reformed their tax codes, which helped, and started enforcing anti-corruption laws already on the books. Prosecutions, convictions and punishment deter crime more than anything else. Most importantly, however, the leaders of Germany, Italy and France showed the political will to find, catch and incarcerate wrongdoers. That's an ingredient that can never come from an outsider's checklist.

GRECO members -- 43 European countries and the United States -- are right to fight public corruption. It's a scourge that destroys hope and robs people of their futures. Its proper place is in the dustbin of history. But GRECO and its parent, the Council of Europe, might want to ask themselves whether their approach, though well-meaning in all respects, though thorough and even-handed, is really the right path to less corruption in some of its more troublesome member States.

Visit GRECO's website here.

View Transparency International's 2007 Corruption Perception Index here.