A Dramatic Shift in Combatting International Corruption May Be on the Horizon

Cozen O'Connor
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Cozen O'Connor

On June 3, 2021, the White House issued a National Security Memorandum, in which President Biden identified countering corruption as a “core” U.S. national security interest. The President directed the Assistant to the President and National Security Advisor to lead an interagency review process and develop a presidential strategy that, when implemented, will significantly bolster the ability of the U.S. government to address a number of issues relating to international corruption in a domestically and internationally coordinated fashion.

In taking this step, President Biden recognized the deleterious impact that international corruption has had not only on the global financial system, but also on slowing economic growth, creating inequality, and eroding the public’s trust in government institutions. Indeed, President Biden cites international corruption as a threat to democracy itself.

The report and recommendations to the President are due in 200 days. As a practical matter, it will take time for any resulting shift in approach to enforcement to be implemented. Companies should take this time to do their own review of their compliance programs and ensure that they continue to address the company’s risk profile. At the end of the day, the potential shift in approach contemplated by the interagency review and resulting strategy should benefit companies that have strong values and robust compliance programs in place as the new approach appears to focus on the overall reduction of international corruption and making it more difficult for corrupt officials and other actors to continue down the same path.

President Biden has pledged that his administration will “lead efforts to promote good governance; bring transparency to the United States and global financial systems; prevent and combat corruption at home and abroad; and make it increasingly difficult for corruption actors to shield their activities.” With that goal in mind, the National Security Advisor has been tasked with undertaking a review and fully developing a strategy focusing on, among other things:

  • Improving the ability of key executive departments and agencies to promote good governance and combat corruption, including proposing relevant legislation to Congress;
  • Holding corrupt actors accountable and focusing on identifying, freezing, and recovering stolen assets for the benefit of those harmed by the corruption;
  • Bolstering the capacity of domestic and international institutions and multilateral bodies focused on establishing global anti-corruption norms, asset recovery, financial transparency, and encouraging open government;
  • Supporting the capacity of civil society, including the media, to uncover and expose corruption and hold leaders accountable;
  • Working with international partners to counteract strategic corruption by foreign actors to interfere in democratic processes in the United States and abroad;
  • Enhancing efforts for the United States to provide assistance to countries that exhibit the desire to reduce corruption, including establishing best practices; and
  • Promoting partnerships in the private sector and civil society to advocate for anticorruption measures and take action to prevent corruption.

The review has the potential to lead to a strategy with a three dimensional approach to combatting corruption, both domestically and internationally, with a focus not just on the bribe payer, but on the corrupt officials demanding the payments, too. Investigations would result in efforts to not simply exact fines from those paying the bribes (which go to the U.S. Department of Treasury), but to also widen the net to track and freeze assets of the corrupt officials who launder the stolen funds and return those funds to the actual victims. There is also the likelihood that corruption enforcement will be viewed as more than just your typical corporate-bribery scheme and encompass other types of corruption such as, for example, interfering in the democratic process. Undoubtedly, the spotlight will stay on good corporate governance and its overall importance in combatting international corruption.

Diversifying the parties responsible for anti-corruption enforcement may also have the long term effect of making it much more difficult for corrupt actors to operate globally. As they say, sunlight is the best disinfectant. The review is looking to develop a strategy that brings in more sunlight from the public, the media, and a diverse number of agencies that can make it more difficult for corrupt actors to hide in the shade.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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