Executive Summary
The Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Antibribery Convention) is the most important vehicle through which the U.S. government has sought to combat transnational corruption. The Convention obligates the Parties to criminalize bribery of foreign public officials in the conduct of international business. It is aimed at proscribing the activities of those who offer, promise, or pay a bribe. For this reason, the Convention is often characterized as a "supply side" agreement, as it seeks to affect the conduct of companies in exporting nations.
This fourth annual report under the International Anti-Bribery and Fair Competition Act of 1998 (IAFCA)1 examines the continued progress that signatory countries have made in implementing and enforcing the Convention. 2 Most national implementing legislation has been reviewed in prior reports; reviews of New Zealand and Portugal - as well as amendments by other Parties to correct for deficiencies in their respective laws - are included herein. U.S. government assessments of the implementing legislation of the twenty-seven countries reviewed in prior years, as well as more comprehensive background and resource material can be found in last year's report, available at www.export.gov/tcc.
This report reiterates the important message that Parties must now enforce their national laws; most now have the legal framework in place to act on all credible allegations of bribery of foreign officials. Parties must now demonstrate the political will to accord priority to the active and effective enforcement of national laws. The U.S. government has brought fourteen enforcement actions over the past year. We will continue to work with other Parties through the ongoing OECD monitoring process and bilateral efforts to promote enforcement of the Convention and its possible further strengthening.
The report also addresses other issues identified in the IAFCA. Among these are steps taken by signatories to implement the OECD recommendation to disallow the tax deductibility of bribes and an assessment of antibribery programs and transparency in several major international organizations. Finally, the report notes that with the privatization of INTELSAT and Inmarsat, there is no intergovernmental participation, including by the U.S. Executive Branch, in these private companies and reporting on these organizations has been terminated.
Major Findings
Meaningful progress continues in the implementation of the Convention.
- As of June 7, 2002, all but two signatories had adopted laws to implement the Convention; Chile and Turkey must still complete this important task. The legislation of the two countries reviewed in this report, New Zealand and Portugal appear to generally comply with the requirements of the Convention, although we do have some concerns.
- All but one Party (Ireland) had deposited an instrument of ratification with the OECD.
- Some Parties, including major exporters Japan and the United Kingdom, have taken significant steps to correct some of the deficiencies identified by the OECD Bribery Working Group in their implementing legislation.
As reported in our 2001 report, a review of Parties' enforcement mechanisms has begun, and the OECD Working Group on Bribery has completed such reviews for Finland and the United States. These reviews have set a high standard for all of the reviews that follow. We will continue to encourage all participants in the Working Group to adequately fund these reviews and to undertake them on an expedited basis. OECD Ministers recognized the importance of these objectives in their 2002 Communique.
- The U.S. government believes that rigorous enforcement of each Party's respective laws implementing the Convention is needed to maintain the Convention as a credible multilateral anticorruption instrument. As of press time for this report, the U.S. government remains the only Party to have prosecuted cases under the Convention, fourteen in the past year.
- We are encouraged by information coming to our attention that some Parties are pursuing allegations of bribery of foreign officials and that some cases may indeed be brought. Over the next year we will continue to strongly urge Parties to address all credible allegations of bribery of foreign public officials. When information is received relating to acts of bribery that may fall within the jurisdiction of other Parties to the Convention, the information will be forwarded, as appropriate, to national authorities for action.
- We estimate that between May 1, 2001 and April 30, 2002, the competition for 60 contracts worth $35 billion may have been affected by bribery of foreign officials. Of these 60 contracts, U.S. firms are believed to have lost nine contracts worth $6 billion.
- In addition, Parties must all take preventive action when we learn bribes are being solicited in an international tender. We will seek to engage other Parties to take coordinated action when such allegations are received from affected businesses; businesses faced with bribe requests should alert their governments so that action can be taken. As appropriate, we will approach such governments to let them know our companies cannot pay bribes, will not pay bribes, and that such tenders must be decided on the commercial merits of the proposal.
- Only one OECD member country (New Zealand) has reported that it does not yet have any laws to disallow the deduction of bribes, although legislation is currently pending before its parliament. Despite important positive steps taken by the remaining signatories to disallow the deductibility of bribes, this is only a first step, and we remain concerned that the practice of tax deductibility still continues. Careful monitoring is needed to ensure that the rules are actually enforced; the United States will continue to play an active role in that effort.
The U.S. government envisages that a targeted expansion of the Antibribery Convention membership to appropriate states could help to eliminate bribery of foreign public officials in international business transactions. However, the U.S. government believes that countries whose multinational exporting firms are perceived as contributing to the problem of transnational corruption by offering bribes to foreign public officials in international business should be the primary candidates for accession.
The United States has succeeded in keeping issues related to strengthening the Convention on the agenda of the Working Group on Bribery despite a lack of support from many signatories. We will continue to press the OECD Working Group on Bribery to analyze the issue of bribes to political parties and candidates, of particular importance to the United States. These channels of bribery and corruption are covered by the U.S. Foreign Corrupt Practices Act, but not specifically covered by the Convention.
The U.S. government continues to believe that raising public awareness of the laws is another very important element in making the Convention a success. This includes informing the relevant prosecutorial authorities of the new tools they have to prosecute corruption, as well as counseling businesses and the general public about antibribery laws.
- However, based on reports from U.S. embassies and public sources of information, we are discouraged by the lack of attention being given to this very important implementation issue.
- The United States will continue to encourage other governments to increase public awareness within their countries. We will also continue to urge other governments to promote awareness of the Convention and national laws among their business communities and to encourage their businesses involved in international trade to develop and adopt corporate compliance programs.
INTELSAT and Inmarsat have completed privatization and no longer exist as described in the IAFCA. As a result, neither Inmarsat nor Intelsat Ltd. has enjoyed any advantage by virtue of intergovernmental participation since the date of their respective privatization and reporting on these entities has ceased.
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