Report on OECD Convention Signed by Australia, UK and USA
Added on - 29 Apr 2020
Australia, UK and USA have signed the OECD Convention. Australia has signed theConvention on 7 June 1971; UK has signed the Convention on 2 May 1961 and USA has signedthe Convention on 12 April 1961 and USA is the first to sign the Convention. The OECDConvention purports to prevent bribery activities and its adverse economical impact. TheCommon objective with which the three nations have signed the Convention is to prevent corruptpractices like bribery. All the signatories to the Convention have signed the OECD Conventionon Combating Bribery of Foreign Public Officials in International Business Transactions. Thischapter shall discuss about the different approaches of this three countries towards prevention ofcorruption practices,which shall be explained individually.The OECD has been a driving force for preventing corruption. Surveys showed that about70-75% of bribery allegations involved companies from OECD members1. As indicated inearlier chapters, corruption discourages and/or distorts domestic and international investment.Investors avoid investing in countries that are known for high levels of corruption. Corruptionalso fragments loyalties and shatters confidence in public institutions, thereby destabilizingcountries’ political and social systems. The then US President Bill Clinton summarized the caseagainst corruption when signing amendments to theForeign Corrupt Practices Actin 1998. “Wehave long believed bribery is inconsistent with democratic values, such as good governance andthe rule of law. It is also contrary to basic principles of fair competition and harmful to efforts topromote economic development”2.The enactment by the US of itsForeign Corrupt Practice Act1977 put pressure on theOECD, which in 1994 recommended that its members criminalise the offering of bribes toforeign public officials related to business transactions. In 1996 the OECD adopted another1BarbaraGeorge, et al "The 1998 OECD Convention: An impetus for worldwide changes in attitudestoward corruption in business transactions." (2000) 37(3)American Business Law Journal485-525.2William JClinton "Statement by the President."Office of the Press Secretary, The White House(2000).
resolution recommending members denounce laws allowing tax deduction for bribes. The OECDmembers thought that the best way to combat the bribery of foreign officials was a bindingconvention and after lengthy negotiations the convention was signed in February 1999.3Distinguishing between private and public functions is in practice far from easy in thatthe Article leaves much scope for circumvention. A public function has been defined simply asany function which is carried on by a public official defined above. However it may happen thatthe public official engages in conduct which is beyond the scope of their authority. The questionin this case would be whether such functions are considered as public functions or not. On theother hand functions of private individual in connection with the public authorities also createconfusion and make it difficult to identify what kind of function is being carried out. Thus, it isnot often easy to differentiate between a Public and a private function.The OECD Anti-bribery Convention:The OECD Convention obligates all members to enact domestic laws making the bribery offoreign public officials a criminal offence. Article 1 states:[E]ach party shall take such measures as may be necessary to establish that it is acriminal offence under its Law for any person intentionally to offer, promise orgive any undue pecuniary or other advantage, to a foreign public official, in orderthat the official act or refrain from acting in relation to the performance of officialduties, in order to obtain or retain business or other improper advantage in theconduct of international business. Likewise, complicity in any attempt or any3The OECD Convention for Combating Bribery of Foreign Public Officials in International Business Transactionswas signed on 17 December 1997 and came into force on 15 February 1999. PUT THE REFERENE TO THEOECD WEBSITE NOT A SECONDARY SOURCE, EXAMINERS WOULD BE VERY UNHAPPY ABOUTTHE USE OF ASECONDARY SOURCE FOR THIS BASIC INFORMATION..
conspiracy to bribe a foreign public official in any form described in Article (1) isalso regarded as a Criminal offence4.In the same vein, Article (2) binds member states to affix liability to legal persons forbribing public officials abroad. Article (3) stresses that sanctions on violators will be “effective,proportionate and dissuasive.” It provides that in jurisdictions where criminal liability does notapply to legal persons, such persons would be subjected to sufficient civil penalties to ensure thatany proceeds of that are confiscated. Article (4) discusses jurisdictional issues:[E]ach party shall take such measures as may be necessary to establish itsjurisdiction over the bribery of foreign public officials when the offence iscommitted in whole or part in its territory and each party which has jurisdiction toprosecute its nationals for offences committed abroad shall take such measures asmay be necessary to establish its jurisdiction to do so in respect of the bribery of aforeign public official, according to the same principles5.Article (5) states that the investigation and prosecution of those charged with bribingforeign officials ‘ shall not be influenced by consideration of national effect upon therelations with another state, or the identity of the natural or legal person involved.’Article (8), on financial books, records and disclosure reports, prohibits, ‘...theestablishment of off-the-book accounts.’ The Convention stresses the necessity formember states to co-operate in their fight against bribery of foreign public officials.Mutual obligations for legal assistance and extradition are treated in Articles 9, 10 and11. Article 12 mandates full co-operation by member states in implementing the4Spahn, Elizabeth. "Implementing global anti-bribery norms from the foreign corrupt practices act to the OECDAnti-Bribery Convention to the UN Convention Against Corruption." (2013).5Paulus, Michal, and Eva Michalikova.OECD Anti-Bribery Policy and Structural Differences Inside the EU. No.2016/23. Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, 2016.
Convention: ‘[They] shall co-operate in carrying out a programme of systematic follow-up to monitor and promote the full implementation of this Convention.’6Limitations of the OECD Convention:This Convention, despite its successes in reducing bribery by state members, has itslimitations as compared to the UKBribery Act2010.Article (1) defines the act of bribery as‘.any person intentionally offer[ing] or give[ing] any undue pecuniary or other advantage toforeign public official”. This ignores passive bribery. The Commentary on the Convention statessays that this Convention deals only with what is in the law of some countries referred to as ...active corruption. There is a difference between the terms’ bribery and corruption’ where briberyis a particular offence that is concerned with the practice of offering something, usually, moneyand purporting to obtain any illegal advantage. On the other hand the term’ corruption’ refers toabuse of a position of trust conducted for the purpose of gaining an undue advantage.Activecorruption involves promising to give a bribe, in contrast to ‘passive bribery’, the offencecommitted by the official ‘who receives the bribe.’ The Article (1) definition of bribery is weak,since it only deals with donors and ignores recipients (the bribed officials).7.The further problem is that the Article (1) definition of a ‘foreign public official’ is toonarrow. It is limited to persons exercising functions for a foreign country, a public enterprise orto officials or agents of public international organisations, ignoring politicians, political partiesand party members.8Corruption and bribery are common among politicians, party officials and6Spahn, Elizabeth K. "Multijurisdictional Bribery Law Enforcement: The OECD Anti-Bribery Convention."Va. J.Int'l L.53 (2012): 1.7Tarullo, Daniel K. "The Limits of Institutional Design: Implementing the OECD Anti-BriberyConvention."Va. J. Int'l L.44 (2003): 665.8Pacini, Carl, Judyth A. Swingen, and Hudson Rogers. "The role of the OECD and EU Conventions incombating bribery of foreign public officials."Journal of Business Ethics37.4 (2002): 385-405.
political candidates. This limited definition of bribery also excludes bribes paid to officials ofstate owned companies. A public official is any person holding a position of an official authoritywhich is conferred to they by the state. In other words the person holds an administrative,judicial or legislative authority in any form whether elected or appointed.9.While Article (1), saysthat ‘foreign public official’ includes ‘any person exercising a public function for foreigncountry, for a public agency or public enterprise’, the Commentary Article (15) to theConvention states that:An official of a public enterprise shall be deemed to perform a public functionunless the enterprise operates on a normal economic basis in the relevant market10.It also omits the bribery of foreign subsidiaries. Article (2) of the Convention mentions briberyof subsidiaries but only indirectly, when it states:[E]ach party shall take any measures necessary to establish that complicity in,including incitement, aiding and abetting, or authorization of an act of bribery of aforeign public official shall be a criminal offence.Although this provision may be read as prohibiting parent companies in state membersfrom using foreign subsidiaries as conduits for bribes, it would be hard to implement, becauselegally proving the acts of legally distinct subsidiaries are connected with parent companieswould be extremely difficult.11It also ignores acts of bribery committed independently by subsidiary bodies anddisguised bribes, such as favouritism shown to relatives of foreign public officials, both of which9Harms, Brian C. "Holding Public Officials Accountable in the International Realm: A New Multi-LayeredStrategy to Combat Corruption."Cornell Int'l LJ33 (2000): 159.10Carr, Indira M., and Opi Outhwaite. "The OECD Anti-Bribery Convention Ten Years On." (2009).11D'Souza, Anna. "The OECD anti-bribery convention: changing the currents of trade."Journal of DevelopmentEconomics97.1 (2012): 73-87.
facilitate circumvention. So also does the Convention’s interpretation of the phrase ‘otherimproper advantage in the conduct of international business’ in Article (1). The Commentarieson the Convention in trying to clarify the meaning of “important advantage” states in (8):It is not an offence, however, if the advantage was permitted or required by thewritten law or regulation of the foreign public official’s country, including caselaw.In most developing countries politicians and political parties and dominant senior publicofficials can influence or amend existing laws or draft new ones to serve their interests.Permitting all payments, whether justified or not, so long as they are allowed in a foreigncountry, may facilitate bribery and so defeat the intent of the Convention. In countries whose‘culture’ allows such payments, the permission is usually contained in unwritten traditions ratherthan written laws.Corruption is a major obstacle for the proper development of Libya12.Widespread corruption has infected almost all sectors of Libya and oil industry along with publicprocurement are among the most hit sectors in the county by corruption. Favouritism and Briberyare common practices in most sectors and mostly all business suffer unethical competition frombusiness owned by the states who also have domination in the local market. Under Gaddafi’s rulethe situation got worse in the period post revolution13. There is a defected institutional structureto combat corruption in the county and violence along with political instability undermines therule of law14. The process for drafting a written constitution is still under progress of the LibyanConstitution Drafting Assembly and because of the delay the legal framework is still extracted12Domoro, Omer M. Othman, and Syed Omar Syed Agil. "Factors Influencing Police Corruption in Libya-APreliminary Study."International Journal of Economic and Management Science2.2 (2012): 25-35.13Domoro, Omer M. Othman, and Syed Omar Syed Agil. "The influence of organizational culture on policecorruption in Libya."Journal of Business and Management2.5 (2012): 33-38.14Rose-Ackerman, Susan, and Bonnie J. Palifka.Corruption and government: Causes, consequences, and reform.Cambridge university press, 2016.