TI publishes progress report on enforcement of OECD Convention on foreign bribery

17 Sep 2012

Transparency International (TI) has published (http://www.transparency.org/whatwedo/pub/exporting_corruption_country_enforcement_of_the_oecd_anti_bribery_conventio?intEmailHistoryId=811948&intEmailListId=133&intEmailId=60099&intExternalSystemId=1) its 8th annual progress report (http://herbertsmith.vuturevx.com/edit/email_handler.aspx?id=811948&redirect=http%3a%2f%2ffiles.transparency.org%2fcontent%2fdownload%2f510%2f2109%2ffile%2f2012_ExportingCorruption_OECDProgress_EN.pdf) on enforcement of the Organisation for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention). The Convention, which was adopted in 1997, requires each of its 39 signatories to make foreign bribery a crime and is a key instrument in curbing the export of corruption, as its signatory countries are responsible for two thirds of world exports and three quarters of foreign investments.

The OECD’s Working Group on Bribery conducts follow-up monitoring work to review the parties’ implementation of the Convention’s provisions. Every year, nine or ten countries are reviewed. TI’s report is an “independent” assessment of the status of the Convention’s enforcement based on reports from TI’s national chapters in 37 of the 39 signatory countries (excluding Iceland and Russia). In the report countries are classified into four enforcement categories, namely: active, moderate, little and no enforcement.

Summary of findings

The report concludes that, whilst improvements are being made in the enforcement of the Convention, the overall level of enforcement remains inadequate. In summary, the report found that:

• seven countries, representing 28% of world exports, are listed as having active enforcement, whilst twelve countries, representing 25% of world exports, are listed as having moderate enforcement;

• there is little enforcement in ten countries, representing 6% of world exports, and no enforcement in eight countries, representing 4% of world exports; and

• three countries (Austria, Australia and Canada) have moved up to moderate enforcement – an improvement on 2011 when no countries moved up to a higher category.

Scope of the report

The report is compiled using data from each of the countries as to the number and significance of cases and investigations being instigated, whilst simultaneously taking into account the scale of the country’s exports. Cases are defined to include criminal prosecutions, civil proceedings and judicial investigations. The report defines foreign bribery cases as being those where there is alleged bribery of foreign public officials under laws which deal with:

• corruption;

• money laundering;

• tax evasion;

• fraud;

• violations of disclosure and accounting rules; and

• Oil-for-Food cases (whether prosecuted as bribery cases or for violating restrictions on doing business with Iraq).

The report also provides individual country summaries on enforcement in OECD Convention countries, as provided by TI’s national chapters.

Findings

There have been some positive changes since TI’s last report:

• Australia, Austria and Canada have moved up in classification to the moderate enforcement category. This is seen as encouraging as there were no instances of countries moving up to a higher category in the 2011 report;

• there has been a substantial increase in the number of cases brought in countries within the active enforcement category, namely the United States, Germany, Switzerland, Italy and the UK; and

• Russia and Iceland acceded to the Convention in 2011, with the Convention applying from April 2012. In a welcome move, Colombia is now a member of the OECD’s Working Group on Bribery.

TI notes, however, that the overall level of enforcement remains inadequate. Only seven countries are currently in the active enforcement category – the only category that provides a real deterrent to foreign bribery. The number of countries in the active category has remained the same for the last three years. TI estimates that for the Convention to be fully effective, active enforcement needs to be reached in a further six to ten countries.

Furthermore, TI concludes that the state of enforcement in the majority of countries with moderate enforcement is not yet at the stage where there is a credible deterrent to foreign bribery. TI encourages the follow-up monitoring programme of the OECD Working Group on bribery to continue in order to ensure that levels of enforcement will increase in the future.

The report concludes that the impact of OECD monitoring reviews tends to be better in those jurisdictions where there is high-level government support for the Convention. In order to raise the level of enforcement, TI recommends that stronger government support for the Convention be developed in countries where there is inadequate enforcement.

Recommendations

TI makes three principal recommendations to improve enforcement of the Convention:

Strengthening government support

TI considers that government leaders must reject arguments that enforcement should be relaxed in order that businesses can win foreign orders. TI also encourages governments to ensure that adequate human and financial resourcing is available to combat foreign bribery.

Active engagement for foreign bribery enforcement

In countries with inadequate enforcement, TI recommends that the OECD’s Secretary General and Executive Council should intervene actively in order to raise the level of political support in those countries.

Increasing adherence to the Convention

TI also recommends that other nations with a significant share of world exports should join the Convention as soon as possible. TI expressly recommends that China, India, Indonesia, Malaysia, Saudi Arabia, Singapore and Taiwan should become signatories to the Convention.