Of course, a party may volunteer to the mediator that it engaged in corrupt conduct. It is also possible that a party alleges corrupt conduct during a caucus or in the plenary. But the very nature of corruption is that it occurs in the shadows and remains hidden. Thus, it seems more likely that during a mediation, mediators learn, from the parties, certain information that can raise a suspicion of corrupt conduct.
These indirect or circumstantial signs of corrupt conduct can be obvious. But often they are very subtle, and mediators must know and understand the tell-tale signs of corrupt conduct. But what are these signs?
In my view, mediators can draw inspiration from arbitration in this regard. There, it is well established that arbitrators may be guided by so-called “red flags”, i.e. pointers that can — circumstantially — indicate some form of illicit conduct, including corruption. Over the past years, significant advances were made to identify red flags, including “specialised” red flags for corruption in international commercial arbitrations. The results of these efforts are freely available as reports, compilations, and tool kits for arbitrators.
Examples include the set of red flags for the use in arbitrations, developed by the Competence Centre Arbitration and Crime of the Basel Institute of Governance in collaboration with leading experts in 2019; the 2008 Report of the Woolf Committee, which approached the topic from the selection of third parties that assisted the parties with their contractual relationship; and the very comprehensive “A Resource Guide to the U.S. Foreign Corrupt Practices Act”, published in its 2nd edition (2020) by the US Justice Department and the US SEC.
The wide range of red flags identified includes, for example, the payment of kickbacks or disbursements that are disproportionate to the services that were provided; poor documentation; a lack of financial statements; an unwillingness to produce financial statements; payments for unexplained services; and doubtful or non-existing qualifications of an intermediary.
Arbitrators use red flags to identify suspicious facts, circumstances, and the context of the disputed transaction. However, it is not just one red flag that suffices to raise a suspicion of corrupt conduct. Rather, it is the presence of multiple flags which arbitrators connect, mosaic-like, to a certain picture, drawing inferences on which they base their suspicion. Once they hold that suspicion, certain consequences result for the arbitrator.
Using “Red Flags” in mediations
I suggest that mediators can use red flags in the same or similar way. They are a very helpful tool to identify which information can, on its own, sound an alarm; and, in combination, harden a suspicion that corrupt conduct may have influenced the underlying dispute.
The specific nature of the mediation process potentially may even help in this regard. First, unlike arbitrators, mediators are not bound by the rules of evidence and no factual proof is required in mediations. Thus, mediators may take into consideration a wide range of information, including information that would be privileged or inadmissible in an arbitration. Secondly, while mediators must treat the parties equally, are not required to follow the rules of natural justice and due process, or test or corroborate information. Moreover, mediators can talk to parties individually in caucus, providing parties with a confidential environment in which they may more readily disclose information. Thirdly, strict confidentiality and no-prejudice communications create an open environment that is conducive to parties imparting information that can serve as a red flag.
A good grasp of the various red flags is an increasingly important skill that will enable mediators to identify information that can be a tell-tale sign of corrupt conduct. Like arbitrators, they then can condense these red flags into a suspicion that corrupt conduct may have influenced the underlying dispute. As we will see, this will allow mediators to make important decisions, also to avoid – potentially significant – ramifications that may arise if they act incorrectly or fail to act entirely. In that way, the use of “Red Flags” to identify corrupt conduct in mediations serves to protect the mediator.
 The Competence Centre Arbitration and Crime, Corruption and Money Laundering in International Arbitration: A toolkit for arbitrators, Tool 1 (2019) Basel Institute of Governance, p. 7.
 The Woolf Committee, Business ethics, global companies and the defence industry — Ethical business conduct in BAE Systems plc – the way forward (2008), p. 26 and Appendix J, p. A78.
 U. S. Department of Justice and the U.S. Securities and Exchange Commission, A Resource Guide to the U.S. Foreign Corrupt Practices Act, Washington DC (2nd edition), 2020.
 See for example Sorelec v. Libya (2020) Paris Court of Appeal, cases Nos. 18.07347 and 18.02568; J Branson, R Manon ‘Why tribunals should not ignore “red flags” of corruption’, Global Arbitration Review Blog, 12 August 2020.