The OECD Anti-Bribery Convention – successes and future challenges

Bribing public officials to obtain advantages in international business raises serious moral and political concerns, undermines good governance and sustainable economic development and distorts international competition.
For more than a decade, the OECD has played a leading role in the battle against bribery and corruption in international business. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions is the only multi-lateral anti-corruption instrument focused on the ‘supply side’ of the bribery transaction.

Countries that sign onto the Convention are required to make it a crime for companies operating within their borders to bribe a foreign public official in order to obtain, or retain, international business, such as an infrastructure building contract, an oil/gas/mining concession or a defence contract for the purchase of aircraft and helicopters.

By targeting the actions of the person or entity that offers, promises or gives a bribe the Convention contributes to building a stronger alliance among governments, businesses and citizens working towards transparent and honest business transactions.

The 38 parties to the Convention – the 30 OECD members plus Argentina, Brazil, Bulgaria, Chile, Estonia, Israel, Slovenia and South Africa – have implemented national legislation that criminalises foreign bribery. None allows companies to claim tax deductions for bribe payments and all are working hard to prevent, detect, investigate and sanction foreign bribery cases.

In implementing the Convention at the national level, signatory countries are currently investigating more than 250 cases. During the past ten years, about 150 companies – including such well-known firms as Lucent Technologies and Siemens AG, as well as individuals including corporate officers – have been sanctioned for committing foreign bribery and related offenses in host countries. Companies have paid millions of euros or US dollars in fines, and some executives have faced jail terms of up to five years.

This is remarkable; before the Convention, foreign bribery was a criminal offence in only a few countries and most companies throughout the world considered bribery a normal part of doing business.

Key provisions of the OECD Anti-Bribery ConventionThe OECD Anti-Bribery Convention requires that signatories’ foreign bribery laws apply to both individuals and companies; this is key to ensuring that companies can be held responsible for bribery, even if complicated decision-making structures make it difficult to identify the individual responsible for the corrupt act.

Bribery offences must cover offering or promising a bribe, as well as actually giving one. Foreign bribery conducted through intermediaries, and transactions which benefit third parties (such as an official’s spouse, a political party or a company in which the official has an interest) must also be included. The Convention also establishes an independent definition of “foreign public official”, which includes all individuals holding an appointed or elected legislative, administrative or judicial office; any person working for a public agency or public enterprise; and officers and agents of public international organisations.

Countries must consider foreign bribery as a crime even where the briber was the best-qualified bidder in a procurement process and would have been awarded the contract purely on merit. Criminality must also apply regardless of whether the bribe was accepted or the official provided the desired advantage – and if bribery is tolerated or even widespread in the country concerned.

Parties to the Convention are also required to:establish effective, proportionate and dissuasive sanctions for the foreign bribery offence. These must be at least comparable to sanctions for bribery of domestic public officials.

  • include jurisdiction over bribery acts committed both in the country and abroad. It is particularly important that law enforcement has the ability to investigate and prosecute foreign bribery that takes place overseas, as the offence is usually perpetrated in the foreign public official’s home country.
  • eliminate tax deductibility of bribe payments.
  • ensure that decisions to investigate or prosecute cases are not influenced by “considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved”.
  • prohibit accounting and auditing practices that make it easier to conceal foreign bribery.
  • provide prompt and effective legal assistance to other parties in investigating and prosecuting foreign bribery.

New Recommendation on Further Combating Bribery of Foreign Public Officials in International Business TransactionsThe OECD has added a new tool to its anti-corruption arsenal. On 26 November 2009, the OECD Council approved the Recommendation on Further Combating Bribery of Foreign Public Officials in International Business Transactions.

  • Protect whistleblowers who report suspected acts of foreign bribery to law enforcement officials.
    Facilitate reporting by public officials to law enforcement officials of suspected acts of foreign bribery.
  • Examine small facilitation payments to foreign officials, which are generally illegal.
  • Strengthen financial disclosures, and accounting and auditing standards to make it more difficult for companies to make unrecorded payments.
  • Work with the private sector to develop effective business ethics and compliance programmes.

The Recommendation was developed by the OECD Working Group on Bribery after an extensive consultation process that included significant dialogue with civil society, company representatives and members of the accounting and auditing profession and other key stakeholders in the international fight against foreign bribery.

The new Recommendation will significantly advance the OECD’s efforts to create a stronger, cleaner and fairer world economy.

Monitoring implementation and enforcementA key to the success of the OECD Anti-Bribery Convention is its monitoring process, based on the OECD peer review principles. This rigorous evaluation system is overseen by the Working Group on Bribery in International Business Transactions, which includes representatives of each party to the Convention.

The monitoring process – which is unique to the OECD Convention and considered an international best practice for monitoring – motivates parties to honour their commitments to effectively enforce the Convention at the national level. All reviews are carried out by representatives of two other Working Group countries, with the support of the OECD Anti-Corruption secretariat. Because peer reviews are discussed among the Working Group delegates, they also have the opportunity to share ideas and good practices.

The first decade of monitoring has included two phases: an in-depth review of national legislation implementing the Convention, followed by a thorough examination of the structures and policies put in place to enforce these laws in practice. The second phase includes an intensive on-site visit in the review country.

The Working Group on Bribery is currently working to create a structure and procedures for the next phase of evaluations of compliance with the Convention. This third monitoring step will focus on: key cross-cutting issues; the progress made by parties on specific weaknesses identified in earlier evaluations; enforcement efforts and results; and any issues raised by changes in countries’ legislation or institutional frameworks.

ChallengesBribery of foreign public officials is a complex crime. Both bribers and bribe recipients seek to keep it hidden. Raising awareness about foreign bribery is therefore an essential aspect of implementation of the OECD Anti-Bribery Convention.

A decade after the Convention’s entry into force, however, awareness raising remains a challenge across the parties. Monitoring reports show that countries’ efforts to provide information about foreign bribery – both within and outside government – are insufficient. Many companies remain unaware that foreign bribery is illegal. The recent Transparency International Bribe Payers Survey showed that more than 80 per cent of executives surveyed in France, Germany, the United Kingdom and the United States – all countries involved in significant foreign investment and export – were “not familiar at all” with the OECD Anti-Bribery Convention. Reaching small and medium-sized enterprises has also proven especially difficult.

An inadequate level of awareness about foreign bribery increases companies’ vulnerability to bribe solicitation and public officials’ susceptibility to engage in corrupt practices. Lack of awareness also makes it less likely that law enforcement bodies, which generally have limited resources, will treat foreign bribery cases seriously.

In fact – although enforcement actions have increased each year since the Convention entered into force – the Working Group on Bribery would like to see more investigations and prosecutions of foreign bribery. Commitment at the political level is one key to ensuring that cases are treated seriously and taken forward whenever plausible allegations are raised.

The new Initiative to Raise Global Awareness of Foreign BriberyTo address the problem of lack of awareness of foreign bribery, the OECD introduced a new Initiative to Raise Global Awareness of Foreign Bribery. The initiative was launched on 9 December 2009, the tenth anniversary of the entry into force of the OECD Anti-Bribery Convention. The Initiative is designed to show that foreign bribery;

  • hurts us all, especially the most vulnerable;
  • impedes sustainable economic development;
  • hinders fair and democratic governance; and is a crime.

Plans for the three-year initiative include a worldwide media outreach campaign, a specific study on the impact of foreign bribery and model study units and resources for teaching the current and the next generation of business leaders about foreign bribery prevention.

Future of the OECD Anti-Bribery ConventionSince its entry into force ten years ago, the OECD Anti-Bribery Convention has significantly advanced the fight against international bribery.

Today’s global environment and technological progress are changing the face of business. For example, electronic transfers make corruption easier to commit and more difficult to detect.
In this environment, it is even more vital that parties to the Convention remain vigilant in continuing their individual and cooperative efforts to encourage a business environment that does not tolerate unfair, unethical and unlawful behaviour. Parties must enforce their national laws, keep up vital monitoring activities and work together across borders to combat foreign bribery.

The OECD is working to extend the Convention’s reach to new emerging economies. It is essential that key players – such as China, India and Russia – join in the efforts to combat international corruption.

As these countries conduct more business beyond their borders, the tough standards in the OECD Convention should serve as an international benchmark for their efforts to combat bribery. The OECD continues to play a key role as a driving force in the fight against international bribery. 

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Patrick Moulette

Patrick Moulette manages the work programme of the 38-country Working Group on Bribery in International Business Transactions and oversees the process of evaluating the implementation of the OECD Anti-Bribery Convention.

Patrick Moulette
Head of the Anti Corruption Division
Directorate of Financial Enterprise Affairs,
OECD
2, rue André Pascal 75775
Paris Cedex 16
France

 

T. +33 1 45 24 82 00
E. Patrick.MOULETTE@oecd.org
W. www.oecd.org/corruption/initiative 

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OECD
2, rue André Pascal 75775
Paris Cedex 16
France

T. +33 1 45 24 82 00
E. Patrick.MOULETTE@oecd.org
W. www.oecd.org/corruption/initiative