Identification and Quantification of the Proceeds of Bribery

Identification and Quantification of the Proceeds of Bribery

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Author(s):
OECD
Publication Date :
30 Mar 2012
Pages :
70
ISBN :
9789264174801 (PDF) ; 9789264175389 (print)
DOI :
10.1787/9789264174801-en

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This study focuses on the identification and quantification of the proceeds of active bribery in international business transactions. Public and private organisations alike have long recognised that bribery of public officials is harmful to good governance, economic development and competitive conditions. Confiscation and recovery of the proceeds derived from foreign bribery are key elements in the international framework to fight corruption of public officials.

Chapter 1 introduces the international legal framework for the treatment of the proceeds of active bribery and catalogues the legal remedies available in various jurisdictions, and how these remedies may interact. Chapter 2 defines five principal types of proceeds of active bribery and analyzes how they may be quantified. Each system is illustrated by examples from countries using such methods, as well as commentary on some practical challenges linked to the calculation of proceeds. Chapter 3 offers a compilation of case summaries to illustrate the principles covered in the preceding chapters.

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    Foreword and Acknowledgements
    Confiscation and recovery of the proceeds of bribery are key elements in the international framework to fight corruption. The two key international legal standards are the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention) and the 2005 UN Convention against Corruption (UNCAC).
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    Preface
    The fight against corruption has become a truly global effort. A vast majority of the world’s governments have pledged to criminalize the offering, promising or giving of bribes and to facilitate the confiscation and recovery of proceeds of corruption. They have done so by ratifying the United Nations Convention against Corruption and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
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    Introduction
    This study focuses on the identification and quantification of the proceeds of active bribery in international business transactions. Public and private organisations alike have long recognised that bribery of public officials is harmful to good governance, economic development and competitive conditions. Confiscation and recovery of the proceeds derived from foreign bribery are key elements in the international framework to fight corruption of public officials.
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    The legal framework for the treatment of proceeds of active bribery
    The OECD Convention Article 3 requires that "bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties." Each Party must also "take such measures as may be necessary to provide that the bribe and the proceeds of the bribery of a foreign public official, or property the value of which corresponds to that of such proceeds, are subject to seizure and confiscation or that monetary sanctions of comparable effect are applicable." Under commentary 21 of the Anti-Bribery Convention, proceeds of bribery are defined as "the profits or other benefits derived by the briber from the transaction or other improper advantage obtained or retained through bribery."
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    Identifying and quantifying proceeds
    This Chapter considers the different types of proceeds of active bribery, namely: (a) proceeds from contracts obtained through bribery; (b) business authorisations, permits or licenses to operate; (c) expenses or losses avoided; (d) expedition of delays; and (e) gains from using lax internal controls and inaccurate or incomplete books and records. Each type of proceeds could be identified and quantified by using different methods depending on the legal framework, e.g. confiscation/disgorgement, damages or restitution. The quantification methods are illustrated through case examples. The Chapter ends by considering some practical challenges posed by factors including the time period and the interest rates used to calculate proceeds, agent fees, administrative costs, indirect benefits, partial transactions, and the bribe payment(s). More detailed summaries of most of the illustrative cases can be found in Chapter 3.
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    Case summaries
    The purpose of this Chapter is to provide case studies and examples of quantification of proceeds in cases of active bribery. It is not meant to provide an exhaustive catalogue of cases involving identification and quantification of the proceeds of active bribery. The case studies draw from official sources (e.g. court documents) or, where the information is confidential, cases which have been "anonymised", i.e. the names of companies or individuals have been deleted. Anonymised cases may also contain features drawn from one or more actual cases.
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    Conclusion
    As exemplified by the relatively small number of cases, limited to a handful of jurisdictions, the potential for use of measures to confiscate the proceeds of active bribery has still to be fully realised. This study has aimed to demonstrate how the technical challenges of identifying and quantifying such proceeds can be addressed, and that the process is neither too complicated nor too costly for widespread use.
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