• Sharon Chau

The Law and Bribery



Summary


  • This article examines the harms of bribery, what role the law should play in stopping it and compares two different policies' effectiveness in dealing with the problem.


Context of Bribery


Bribery is an endemic problem in the world today. A crystal-clear demonstration is the recent college admissions cheating scandal in the United States, where rich parents bribed college administrators, teachers and coaches for their children to get into dream universities. The visceral reactions of injustice many people had towards the “cheating of the system” demonstrate exactly how pernicious bribery is, and the pressing need to prevent it. Bribery is “the corrupt payment, receipt, or solicitation of a private favour for official action”. It typically contains an element of deceit, and a conflict of interest between a supposed initial loyalty and a changed loyalty towards the briber (D’Andrade, 1985).


Problems of Bribery


What is wrong with bribery? Bribery violates the sanctity of duties and contracts and undermines the vitality of the institutions affected. Principally, it represents a breach of moral and legal duties. Through a bribe, the bribee's employer is deprived of the recipient's undivided loyalties. The bribee comes to serve two masters and as such is an “unfaithful servant”. This breach of fiduciary duty, when combined with active efforts at concealment becomes a crime (Turow, 1985). In legal terms, bribery violates the contract drawn with the bribee’s employer, which exchanged their freedom to act as an unemployed free agent for goods.


Practically, bribery “blights lives, undermines democracy, and distorts markets” (Yockey, 2011). Bribery has led to child labour in China, water scarcity in Spain, illegal logging in Indonesia and dangerously unsafe medicine in Nigeria (Donnelly & Kellogg, 2011). It achieves this through undermining and bypassing due process. This could look like circumventing justice when a judge is bribed to pardon a criminal, or bribing competitors to pay a markedly lower price for a bid, which result in an inefficient justice system and economic market. Bribery also decreases trust in governmental institutions and hinders their ability to function effectively. In a country with a culture of bribery, people are likely to view the police as people who have the ability to extort bribes and terrorise them rather than bastions of order. Consequently, they are less likely to report crime, provide witness testimony or cooperate with the police, which hinder the ability of law enforcement to function. Hence, bribery is morally and legally wrong while causing devastating practical harms.


The Law's Role In Bribery



If bribery is so harmful, should the law deal with bribery? To answer this question, we must first examine the role of the law and the criminal justice system. The law serves to safeguard the rights of individuals and promote the public good, and hence intervenes when someone’s rights have been violated, or when public harm has been caused. Bribery fulfils both these criteria. Violation of a contract is inherent within bribery, which diminishes the rights of at least one party. Public harm and the undermining of due process also happens in all instances of bribery. Therefore, the law should deal with bribery to fulfill its role in our society.

Other than fulfilling its role in terms of jurisprudence, legal sanctions also serve five vital purposes: deterrence, retribution, restitution, rehabilitation and incapacitation. In the instance of bribery, the law deters corrupt behaviour and encourages compliance with the law, punishes and provides retribution towards the briber and bribee, and provides restitution for victims of the bribe. Deterrence happens due to the fear of severe punishments such as fines or imprisonment. Large multinational firms contemplating the bribery of a foreign contractor would hesitate to offer a bribe due to the potential revoking of their overseas working license or damaging fines; a criminal considering the bribery of a judge would think twice due to the additional cost of potentially increased imprisonment. The law in this instance hence makes it less likely that bribery occurs in the first place. Punishment and retribution occur as well, serving justice to those committing the wrong and harmful act of bribery. Compensation of victims is also achieved. The employer whose trust and contract were violated, or the bidder who lost due to underhand bribery would be duly compensated under laws prohibiting bribery. Hence, the law should deal with bribery.


As it has been established that the law should play a role in curbing bribery, the next question is: how should the law deal with it? Two landmark pieces of legislation could inform us of what is likely to be effective - the Foreign Corrupt Practices Act (FCPA) of the United States, and the U.K. Bribery Act of the United Kingdom. The characteristics of these will be examined, and a concluding evaluation of the role of law in bribery will be drawn from the analysis.


The FCPA and Bribery Act


The FCPA was originally enacted in 1977 after the Securities and Exchange Commission (SEC) discovered that U.S. companies made bribery payments worth hundreds of millions of dollars to foreign officials and political parties, which alerted the need for legislation to prevent bribery. As for the Bribery Act, it went into effect much later, in 2011. It was passed to create a single law that would eradicate bribery at a time when worldwide efforts to eliminate bribery and corruption were growing, especially as the U.K. had no prior uniform system for preventing bribery and relied on a combination of common and statutory law.


Compare and Contrast of Policies



Many similarities can be seen in these two pieces of legislation. Both state that intent is necessary and sufficient to constitute the crime of bribery. The FCPA requires “corrupt intent” when making the payment. The Bribery Act similarly requires an “intent to influence” as well as the intent to gain a business advantage. Actions that are illegal under the FCPA include "the offer or promise of a corrupt payment" without completing the transaction as does the Bribery Act, so the bribe does not have to result in a contract to violate the law. Hence this demonstrates the emphasis in both pieces of legislation on stamping out all attempts at bribery. Both also offer important caveats and clarifications of actions that do not fall under the the label of “bribery”. The FCPA allows a defence when the payment or offer was a “reasonable and bona fide expenditure, such as travel and lodging expenses”. More bluntly, it states that the FCPA “shall not apply to any facilitating or expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental action”. This clearly demonstrates tolerance for payments for expediency. The Bribery Act also states it is a defence for [the commercial organisation] to prove that it had in place adequate procedures designed to prevent persons associated with the organisation from undertaking such conduct. In addition, the Bribery Act Guidance states “The Government does not intend for the Act to prohibit reasonable and proportionate hospitality and promotional or other similar business expenditure intended for these purposes”. From this, we can see how the FCPA and Bribery Act are anxious not to hinder ordinary business transactions and create a chilling effect on the economic environment.


Despite the similarities, a crucial difference remains. The method of legal recourse is different in the FCPA and Bribery Act. The FCPA allows for criminal and civil penalties as well as fines and injunctions, primarily enforced through “monetary fines, penalties, and incarceration”. In contrast, the Bribery Act is purely a criminal statute. Punishments for violating the Bribery Act also include suspension or debarment, as well as imprisonment and unlimited fines. The FCPA model appears to allow more pathways for people to invoke the bribery law, and has led to more successful lawsuits.


The Functions of the Law


A few observations on how the law should deal with bribery can be drawn from the FCPA and Bribery Act. The law should, first and foremost, set a clear definition of what constitutes bribery. Apart from the broad legal definition, it should be defined as follows: P is bribed by R if and only if (1) P accepts payment from R to act on R's behalf, (2) P's act on R's behalf consists in violating some rule or understanding constitutive of a practice in which P is engaged, and (3) either P's violation is a violation of some official duty P has by virtue of his participation in that practice or P's violation significantly affects the interests of persons or organisations whose interests are typically connected to that practice (Philips, 1984). This clear legal definition can ensure that actions fulfilling all the criteria are duly punished, and those which do not fulfil all three can be rejected fairly.


The second feature of an effective law against bribery is having clear caveats for the actions that do not constitute as bribes, and extenuating circumstances even when bribery is committed. In this, the features of both the FCPA and U.K. Bribery Act can be incorporated. Businesses and individuals should not be impaired by being banned from regular hospitality payments, such as a salesperson promising tickets to a football match or other benefits for his customers. A facilitation of normal services should also not be included as bribery. At the same time, corporations should not be punished if they had had precautionary measures against bribery and had not cultivated an environment where bribery was tolerated. This ensures that businesses who might have had no role in a single instance of bribery by an employee are immune from blame. It also encourages businesses to be more vigilant in creating a workplace that has zero tolerance for any form of corruption. Hence caveats and extenuating circumstances prevent throwing sand in the machinery of business transactions, avoid punishment for innocent actors and encourage an active role in preventing bribery.


The third characteristic of the law should be enforcement. This includes punishments and legal recourse. Punishments should be reasonably stringent to effectively deploy deterrence - large fines, imprisonment for individual negligence and suspension of permits should be used for corporations. Imprisonment and fines should also be used for individuals. In order to be effective, punishments need not be overly harsh - there merely needs to be enough certainty that they would be enacted to create fear towards committing the crime. To reference the model of FCPA in the U.S., both criminal and civil proceedings should be allowed for charges of bribery. The government should provide all the support people may need to bring charges against offenders, including public defenders, legal aid and legal advice. The government should also be vigilant and conduct spot-checks on corporations, or closely monitor any suspicious laundering of money that might suggest bribery. Ensuring strong enforcement is crucial in achieving any benefits the law might have.


Conclusion


In conclusion, bribery is wrong because of how it betrays trust and violates duty, how it breaks signed contracts and how it undermines the functioning of and trust in institutions. The law should intervene in bribery by setting clear definitions of what bribery constitutes, and adequately punishing and enforcing sanctions to provide deterrence, punishment and compensation for necessary parties involved. As the FCPA and U.K. Bribery Act have shown, effective legislation and legal intervention can result in lowered amounts of corruption and bribery. The problems caused by bribery, such as police who extort bribes and threaten terror, professors who take “donations” and favour certain applicants, and judges who let criminals free because of personal benefits can all be minimised - but only through effective legislation and legal sanctions. With universal legislation against bribery, we can hope to see a world where there is accountability and due process for all actions, and where people are not unfairly disadvantaged by their inability to pay a bribe.

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