Global Settlements

Article by Monty Raphael, Special Counsel, Peters & Peters Solicitors

Introduction

1. Overall global settlements are clearly desirable to save time and money. Delinquent businesses want to draw a line under their wrongdoing and move on. That is one approach, another is the view that global settlements are imposed by governments seeking to impose extra-territorial jurisdiction and "universal" standards. Certainly there are no universal standards, there is no global harmony in crime control, and no homogeneity of practices, concepts of criminality, jurisprudence or punishment.

2. Companies that trade globally, may bribe globally, pollute globally, price-fix globally. They can only hope that when the day of reckoning comes they will be able to negotiate with the strongest of the leading state powers in whose crosshair sights their conduct has appeared.

3. Until the day when grand corruption ranks alongside war crimes, genocide and torture and merits an international tribunal, we must make do with adapting the matrix of bilateral and multilateral treaties to this purpose. It must be borne in mind that state parties can always contract one another on a case by case basis. Again the phrase "global settlements" pre-supposes a willingness on the part of the corporate parties and, where appropriate, individuals to co-operate in this process.

4. No settlement is possible without consensuality. This requirement itself raises numerous difficulties as the state, corporation and individuals may all have different and often conflicting aspirations as to outcomes. A further complication is that state parties may wish to compete for jurisdictions, corporations will wish to maintain a competitive position to avoid debarment and, of course, individuals to avoid the most severe of sanctions, loss of liberty.

5. In the case of corruption the developed world is by no means constrained in the pursuit of punishing the supply side of corruption. However, priorities, political will, technical capacity, resources and necessary procedures all vary from country to country, even in the OECD. Add to this mix the communal views of the EU, Council of Europe and some supra-national agencies like the UN or the World Bank and you have numerous norms all vying for credibility, if not supremacy. Pragmatism and per case scenarios are all that is possible at the present time. And yet, in advising any of the parties, we as lawyers are asked to devise strategies that involve predicting likely outcomes.

   Key considerations in global settlements:

1. Corporate liability

6. Where criminal convictions carry collateral consequences in addition to fines, such as debarment, the question of corporate criminal liability becomes important. However, in some jurisdictions corporate criminal liability is not available at all. Such jurisdictions adhere to the principle societas delinquere non potest, "a legal entity cannot be blameworthy", whereby corporate delinquency is addressed by means of administrative sanctions with criminal liability limited to the responsible individuals.

7. In contrast, the USA follows the doctrine of respondeat superior whereby a corporation may be convicted of a crime when one of its agents has committed a criminal act (i) within the scope of his employment, and (2) for the benefit of corporation.

8. In the UK the picture is more complex. For some offences, a company can be held criminally liable on the basis of strict liability. For some offences which involve a fault element, a company can be held criminally liable on the basis of the doctrines of vicarious liability and delegation. For serious offences which involve a fault element, a company can only be held criminally liable if a high-ranking officer or employee of the company satisfies the fault element of the offence – the "identification" theory.

9. Austria, Netherlands, Denmark, Finland, Switzerland, France have recently introduced some form of corporate criminal liability.

2. Sanctions

10. In different jurisdictions different offences attract different sanctions. Debarment is one of the more severe sanctions posing high risk of loss of business. Needless to say the possibility of debarment will feature prominently in considerations on how to structure a settlement in multi-jurisdictional investigations.

11. Of particular concern is Public Procurement Directive (2004/18/EC) (the "Directive"). Article 45 of the Directive provides:

12. "Any candidate or tenderer who has been the subject of a conviction by final judgment of which the contracting...