Contracts Procured Through Bribery of Public Officials: Zero Tolerance versus Proportional Liability
67 Pages Posted: 27 Jul 2018 Last revised: 7 Aug 2018
Date Written: July 1, 2018
Bribery in public contracting is a serious problem, particularly in societies with weak public institutions. The trend in the law applicable to contracts between governments and foreign firms is to refuse to enforce contracts procured through bribery and to bar the firm from recovery in restitution. This zero-tolerance approach may have perverse consequences. Proof that a firm obtained a contract through bribery does not necessarily indicate the extent to which the firm has fallen short of its obligations to combat bribery. The zero-tolerance approach fails to take into account the extent to which the firm has not only attempted to prevent bribery but also monitored and punished employees who engage in bribery, cooperated with law enforcement authorities, and created value for the government in the course of performing its side of the contract. Less compellingly, several commentators have complained that the zero-tolerance approach dilutes governments’ incentives to prevent their officials from soliciting bribes. Subjecting bribe-payers to liability that is proportional to fault is preferable on a number of grounds.
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