The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions came into effect in early 1999. It was issued by the Organisation for Economic Cooperation and Development (OECD) which is an intergovernmental organisation grouping 30 countries. Parties to the OECD Anti-Bribery Convention are committed to combating the payment of bribes by their nationals (individuals and companies) to foreign public officials, including to officials in countries which are not a party to the Anti-Bribery Convention.The OECD Anti-Bribery Convention is complemented by a set of OECD recommendations which set forth general provisions aimed at deterring, preventing and combating international bribery.
Standards to fight bribery
Parties to the Convention have made bribing of foreign public officials in international business a criminal offence. As the convention is not self-executing, an enforcing law is required. This means each country transposes the agreed standards in line with its own legal tradition. The convention’s most significant provisions require parties to:
Criminalise bribery of foreign public officials in international business transactions
Provide a definition of a “foreign public official”
Set accounting and auditing standards for prohibiting the use of accounting documents for bribing.
The OECD Anti-Bribery Convention is complemented by a set of OECD recommendations which set forth general provisions aimed at deterring, preventing and combating international bribery. Countries are for instance advised to establish transparency in book-keeping and auditing practices, encourage the adoption of internal company controls as well as sound procurement rules and practices.
Practical Impacts of the Convention
The regulatory changes have important consequences. Companies may be prosecuted in multiple jurisdictions, chief executives may face extradition and onerous fines can be imposed.
The following example is an illustration of a case which was handled by more than one jurisdiction. Norway fined its state oil company an equivalent of over $3mn in 2004 for paying bribes to an Iranian government official to obtain a contract to develop the South Pars gas field in Iran. After that, the Securities and Exchange Commission (SEC) of the US began its own investigation and fined the company over $10mn in addition to forcing it to disgorge a further US $ 10 million of profits and undergo a compliance review.
Businesses, their associations and industry federations are making valuable contributions to promoting best practices. These actors play a fundamental role in developing and enforcing preventive, self-regulatory measures to eliminate malpractices and fraud. Over the last decade, a wide range of self-regulatory tools have been elaborated. Business tools to raise awareness and prevent malpractice include:
Codes of conduct
Compliance programmes to ensure that the values of the company are strongly supported by top management, staff members are trained and educated, guidance exists for situations requiring judgment, and effective information and reporting systems are established by the company.
Integrity pacts are a tool developed in the 1990s to help governments and businesses fight corruption in the field of public contracting. An integrity pact establishes mutual contractual rights and obligations to reduce the high cost of corruption in public contracting.
The UN Convention Against Corruption
The OECD Anti-Bribery Convention and the UNCAC (United Nations Convention Against Corruption) are complementary, and both provide opportunities for international cooperation in this regard. The UNCAC is the latest and broadest anti-corruption convention. With about 70 articles, the Convention provides a comprehensive framework encompassing prevention and prosecution of corruption. The UNCAC has the widest geographical coverage of all international anti-corruption instruments. According to the UN website, 140 countries are signatories and 107 have ratified it (in early 2008).
Considering the detrimental nature of bribery and corruption, it has been important to build strong partnerships among different stakeholders and economies. To this end, the OECD has worked with governments to promote anti-corruption activities.
Despite the complexities of tracking bribery, it is clear that companies will increasingly seek to reduce their exposure to illegal payments and will seek to ensure compliance to safeguard themselves from investigations, penalties, fines and unfavourable media attention.