The effectiveness of the international anti-corruption legal framework in the context and practice of Colombia
| DOI | https://doi.org/10.1108/JFC-09-2019-0126 |
| Pages | 437-476 |
| Published date | 27 March 2020 |
| Date | 27 March 2020 |
| Author | Gloria Perez Torres |
| Subject Matter | Financial crime,Accounting & Finance,Financial risk/company failure |
The effectiveness of the
international anti-corruption legal
framework in the context and
practice of Colombia
Gloria Perez Torres
The Open University, London, UK
Abstract
Purpose –This study aims to investigate the impact of the enforcement of the international anti-bribery
legal frameworkin developing countries.
Design/methodology/approach –It uses the PetroTiger case to examinethe effects of foreign bribery
prosecutions in Colombia, froma bribe-receivers perspective.PetroTiger is a USA-based company that was
prosecuted for bribing public officials in Colombia. As a result, the public officials involved were also
prosecuted in Colombia for receivingbribes. This case serves to illustrate how international anti-bribery law
operates in practice and how it impacts Colombian law enforcement institutions and their capacity to
prosecute bribe-receivers. The Colombian response to the international anti-corruption framework is
examined in this studythrough the review of legislative efforts taken to address the problemsof bribery and
corruptionin public procurement.
Findings –This study finds that enforcement of foreign bribery lawsraise awareness of the situation of
corruption indeveloping countries, generate parallel prosecutionsof individuals at the receiving endof bribes
and helps developingcountries to develop technical expertise to fight corruption.
Practical implications –In practice, due to the transnational nature of foreign bribery, without
international agreements,this type of corruption in international businesswould seldom lead to prosecution.
Although the effectiveness of the enforcement of international anti-corruption law is debated, in reality,
prosecutions of foreign bribery by developed countries have more positive than negative implications for
developingcountries.
Social implications –Assist to continueefforts to deter corruption.
Originality/value –No many studies have looked at the effectivenessof anti-corruption international law
in developing countries. As indicated by Mr. Moulette Patrick head of Anti-Corruption Division at
organisationfor economic co-operation and development more researchon the effectiveness of the UN enacted
Conventionagainst Corruption, which is what this paper does.
Keywords Developing countries, AML, Anti-corruption, Anti-bribery,
Effectiveness of the enforcement of international anti-corruption law,
United Nations convention against corruption (UNCAC)
Paper type Case study
1. Introduction
On 8 November 2013, the US Federal Bureau of Investigations (FBI) filed a criminal
complaint at the District Court of New Jersey against Joseph Sigelman, the former Chief
Executive Officer (CEO) of PetroTiger Ltd. He was accused under the Foreign Corrupt
Practices Act (FCPA) of bribery of a foreignpublic official of the Colombian State-owned oil
company Ecopetrol (U.S. v Joseph Sigelman 12-2087). According to the FBI, Sigelman and
two other executives of PetroTiger, Knut Hammarskjold and Gregory Weisman, had paid
International
anti-bribery
legal
framework
437
Journalof Financial Crime
Vol.27 No. 2, 2020
pp. 437-476
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-09-2019-0126
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
US$333,500 in bribes to David Duran, an employee at Ecopetrol, to obtain a US$39m
contract. Both Hammarskjold and Weisman pleaded guilty; however, Sigelman pleaded
innocent and his trial commenced on 1 June 2015 [The United States Department of Justice
(DOJ), 2015]. The case was settled on 15 June 2015. This was after Weisman,a key witness,
admitted to have lied on the stand during his testimony (Volkov, 2015). The Department of
Justice (DOJ) offered of a settlement agreement was an admission of the bribery charges in
exchange for the little prospect of a prison sentence (Volkov, 2015). Sigelman agreed to the
settlement. He admitted thathe had conspired withHammarskjold and Weisman and others
to make illegal payments to win a contract; the DOJ on its part agreed to dismiss the other
five charges, which included illegal kickbacks, wire fraud and money laundering (Plea
Agreement Joseph Sigelman, 2015). Sigelman was sentenced to probation and to pay a
$100,000 fine and $239,015 in restitution (Reuters, 2015). A week after the bribery charges
were unsealed in the USA on 6 January 2014, the Colombian Prosecutor General’sOffice
announced a criminal investigation into the bribery at Ecopetrol against public official
David Duran, his wife, four PetroTiger employees and three other individuals (Fiscalia
General de la Nacion, 2014). The official complaint was filed by the Secretary of
Transparency of the Presidency included charges for embezzlement, undue interest in
procurement contracts and illicit enrichment. At the time of writing the case in Colombia is
ongoing.
The Colombian Attorney General estimates that corrupt activity drains US$2.1bn per
year from the country’s economy [The United States Department of Justice (DOJ), 2014].
This has a direct negative effect on economic growth and poverty alleviation in developing
countries such as Colombia. This is because investment to promote growth has a negative
effect in the long run if the projects chosendo littleto enhancelong-term growth and poverty
reduction (Aidt, 2011). Routinebribery of officials means that roads are not built, schools lie
in ruin and basic public services go unprovided (Breuer, mentioned in Stevenson and
Wagoner, 2011). Transnationalbribery, in particular, is very worrying because Colombia is
highly dependent on international businesses and corruption affects business and the
investment climate (Rose-Ackermanand Truex, 2012;Harchard, 2014). For example, it was
estimated that in 2011, foreign corporations invested US$11,900 in Colombia’s mining
companies, which accounts for 4.5 per cent of Colombia’s GDP and 24.8 per cent of the
country’s exports (U4 Anti-Corruption Resource Centre, 2013;OECD, 2014). However, even
though the mining boom has the potential to bring economic growth, transnational
corruption jeopardizes the positive effects of foreign investment. According to a report by
the OECD, the extractive sector has the highest risk of corruption(19 per cent), followed by
the construction and transport sectors (15 per cent each) (2014). As a matter of fact, large
numbers of mining permits have been given to multinationals without the mandatory
requirements, which has led to a black market for permits sold at high prices (Gravgaard,
2011). Furthermore, althoughthe law requires that a percentage of the royalties from mining
are to be reinvested in the producing regions, little information about the investment made
exist (Cook, 2013).
In considering the damaging effects of corruption, especially in developing countries,
several international organisations such as the UN, the Organisation of American States
(OAS) and the Organisation for economic co-operationand development (OECD) have taken
up the matter of corruption and bribery. The UNs enacted Convention Against Corruption
(UNCAC) in 2005. The UNCAC has the widest scope as it calls on states to implement
effective measures against both national and transnational corruption in regards to both
bribe-givers and bribe receivers. The 1997 OECD Anti-Bribery Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-
JFC
27,2
438
bribery Convention), on the other hand,deals only with transnational bribery from the bribe
giver’s perspectives. At the regional level, the OAS Inter-American Convention Against
Corruption was the first international convention to address the issue of corruption and
bribery of foreign public officials and the need to facilitate cooperation between states to
fight corruption (OAS, 2011).
Nearly two decades after the introduction of the first international anti-corruption
conventions, a question arises as to what has been their impact. Although most countries
have adhered to one or anothertreaty, it is not always known to what extent they have taken
measures to adapt theirlaws, enforce them and raise awareness amongst the publicin a way
that can change unethical corruptbehaviour. While it cannot be denied that prosecutions for
foreign bribery after the passage of the OECD Convention in 1997 have increased, the
question is to what extent, that is, contributing to a decline in corruption especially in
developing countries.
On the one hand, countries like the USA have been very proactive in prosecuting
corruption. The most recent example is the indictment of officials of the International
Federation of Association Football (FIFA) who reside in different countries in the World.
They have been accused of bribery and corruption in relation to the adjudication of
commercial contracts and in the bid to host the World Cup (Blake, 2015). According to
reports, the USA is leading the enforcementwith 333 individuals and 111 entities sanctioned
between 1998 and 2012. It is followed by Germany, with 40 individuals and 75 entities and
Hungary, with 26 individuals and zero entities (OECD Working Group on Bribery, 2014).
These prosecutions have contributedto businesses worldwide now accounting for the risks
of paying bribes to win contracts (Stevenson and Wagoner, 2011). Moreover, the public is
also reported to be more aware of the negative effects of corruption(NORAD, 2011). On the
other hand, the biggest enforcers are alsoperceived to have less corruption: Germany scores
best as it is ranked 12, ahead of the USA ranked17, whereas Colombia, for example, is raked
94 (Transparency International,2014a, 2014b). Thus, developing countries struggle more
with corruption (NORAD, 2011). Although developing countries such as Colombia are
signatories of international anti-corruption conventions, this has not made them less
corrupt. In fact, Colombia is perceived to be more corrupt now than 15 years ago
(Transparency International, 2014b). Identifying this gap, it has been suggested that
enforcement of transnational anti-bribery laws by developed countries is likely to have
significant direct and indirecteffects on developing countries (De Simone and Zagaris, 2014;
Davis, 2009). However,there is a lack of studies focussing on the enforcement of anti-bribery
legislation in developing countries. As a result, little is known about the effects of foreign
bribery laws in developingcountries, especially from a bribe-receiverperspective.
This article investigates what has been the impactof the transnational anti-briberylegal
framework in Colombia by examining the PetroTiger case. Using a socio-legal approach,
this study will examine the investigation and prosecution of bribery offensescommitted by
PetroTiger officials to illustrate how international anti-corruption law operates in practice
and within the context of Colombia from the bribe-receiver perspective. In the first part, I
examine the international legal framework that governs bribery and corruption
investigations. Subsequently, I look at the situation of corruption in Colombia and the
legislative efforts taken to address the problems of bribery and corruption in public
procurement. In the second part, using the PetroTiger case and building upon De Simone
and Zagaris (2014) and Davis (2009) previous work on the effects of the enforcement of
foreign bribery laws in developing countries, I explore the effects of transnational anti-
bribery prosecutions. I evaluate the implications these have on domestic investigations
against the bribe-receivers and Colombia’s law enforcement institutions. I also examine
International
anti-bribery
legal
framework
439
To continue reading
Request your trial