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Disorder In The Court, Last Call

How prevalent is judicial corruption? Our source this week, Transparency International, took a close look. During 2006 it asked almost 60,000 people in 62 countries whether they or any member of their household had interacted with their country's judicial system in the past year and, if so, had they paid a bribe.

Here's what TI found: "Of the 8,263 people who had been in contact with the judicial system recently, 991, more than one in 10, had paid a bribe. In Africa and Latin America, about one in five of people who had interacted with the judicial system had paid a bribe. In Bolivia, Cameroon, Gabon, India, Mexico, Morocco, Pakistan and Paraguay the figure was more than one in three court users."

The numbers break down this way: In Africa and Latin America, 20% of the people had contact with the judicial system during the past year. Of those, 21% and 18% respectively paid a bribe. In newly independent states (Moldova, Russia and Ukraine), 8% of the people had recent contact with the courts, and 15% of that number paid bribes. In southeast Europe (Albania, Bulgaria, Croatia, Kosovo, Macedonia, Romania, Serbia and Turkey), 9% had contact with the courts and of those 9% paid bribes. In Asia Pacific, only 5% went to court, and of those 15% paid bribes. In the EU and North America, 19% and 23% respectively had contact with their judicial systems during the past year, and of those 1% and 2% respectively paid bribes.

Perceptions Matter. We've asked before if some companies approach certain places expecting to find a corrupt environment. And once there -- no matter what they find -- do they lower their compliance standards instead of raising them? We think the answer is yes. And that's why perceptions of public bribery can be as important as actual occurrences. TI's findings illustrate the point. It says the "public often views its judiciary as more corrupt than it actually is: more people around the world described their judiciary as ?extremely corrupt? than have personally been part of judi­cial corruption. . . . In 55 out of the 62 countries polled, a higher percentage of people perceived extreme judicial corruption than had paid a bribe. In 33 of the 62 countries polled, a majority of respondents described the judiciary/ legal system of their country as corrupt."

TI continues, "A majority of people in all but one African country polled (South Africa) and one Latin American country (Colombia) perceive the legal system/judiciary to be corrupt. Trailing the table are Bolivia, Cameroon, Mexico, Paraguay and Peru, where 80 per cent or more of respondents described the judicial system as corrupt. . . . The judiciaries of India and Pakistan fare badly, with 77 per cent and 55 per cent of respondents in the two countries, respectively, describing the judicial system as corrupt. . . . In all former communist countries, 45 per cent or more of the people polled described the legal-judicial system as corrupt."

What about U.S. Foreign Corrupt Practices Act compliance? Judicial corruption is a real problem. An effective compliance program will recognize it, discuss the compliance challenge openly, and draw clear lines to prohibit the practice anywhere. Compliance education and training should stress that even in the countries ranking worst for judicial bribery -- where nearly everyone thinks the courts are crooked -- only a minority of cases are actually influenced by corrupt practices. That means business people representing foreign firms should not mistakenly assume that bribery is the only way to deal with local litigation.

And beware of local legal advice. We've heard too many lawyers from high-risk countries advise foreign business clients that bribes to local judges are expected and required. Why would they give that advice? Maybe to impress clients with their stroke in the local courts. And maybe to get their hands on some black-bag money for which they won't be accountable. In every case, however, advice to pay bribes is wrong and shouldn't deter compliance. As we've said before, all foreign judges, court clerks and others associated with a country's judicial system are "foreign officials" for the FCPA. Bribing them will probably violate U.S. law and will certainly violate the local law. And that will leave an effective compliance program in ruins.

View Transparency International's 2007 Global Judicial Corruption Report here.

Full post as published by The FCPA Blog on February 20, 2008 (boomark / email).