Interest Groups Press OECD about Corporate Settlements in Corruption Cases

The Organization for Economic Cooperation and Development (OECD) is preparing to meet in Paris on Wednesday, and anti-corruption groups have taken the opportunity to raise their concerns.

The Organization for Economic Cooperation and Development (OECD) is preparing to meet in Paris on Wednesday, and anti-corruption groups have taken the opportunity to raise their concerns.

In particular, these organizations are concerned with the use of government-backed deals that allow companies accused of crimes to avoid prosecution in exchange for promising to reform and paying heavy fines. Anti-corruption groups suggest this creates a pay-to-play situation that, from a de facto sense, allows wealthy corporations to ignore the law so long as they can pay their way out of any trouble.

Transparency International, Corruption Watch, and a number of other groups interested in preventing corporate misfeasance have jointly sent a letter to the Secretary General of the OECD asking it to take a formal position on the issue.

The interest groups suggest that settlement may only be appropriate, if ever, for companies that self-report wrongdoing and that anybody involved with bribes must be named and prosecuted. They also argue that any such arrangements should require judicial oversight and that records regarding compliance should be available to the public at large.

In many developed nations, including the United States, prosecutors have increasingly allowed corporate settlements to relieve their own heavy dockets and resolve claims of corporate wrongdoing without prosecution. In many such cases, the company will promise to pay a large settlement and improve its compliance with the law in exchange for relief from prosecution. If the company complies, the case is dismissed.

The interest groups, however, believe this system is folly. While government officials believe this may be a way to allow companies to self-regulate, interest groups see too many ways in which this system allows for corruption. In fact, they fear that government officials may use these opportunities to line their own pockets or, at the very least, fund their pet projects using the money gathered from the corporate fines. This, in turn, creates a self-perpetuating system in which corporate malfeasance is either allowed or, in some cases, possibly even encouraged.

Governments believe these settlements need to remain, as they help alleviate the burden on the legal system and cut down on unnecessary legal costs. They suggest that if fears of corruption persist, the use of outside monitors may be the better way to handle these concerns. A number of governments, including that in the U.S., have even formalized these arrangements by legal precedent or enacted laws.

For its part, the OECD has indicated that it does not yet have a position on the use of settlements, but would take all of the various models into consideration.