Chapter 5: The US, UK and Australian Approaches

Chapter 5: The US, UK and
Australian approaches
1. The OECD Convention for Combating Bribery of Foreign Public Officials in
International Business Transaction (The convention was signed on 17 December
1997 and came into force on 15 February 1999)
A key part of the OECD agenda was a focus of corruption. Surveys showed that about 70-
75% of bribery allegations involved companies from OECD members1. This was in addition
to international awareness of the harm that corruption could cause to the economy.
Corruption was recognized to discourage and/or distort domestic and international
investment. Investors avoid investing in countries that are known for high levels of
corruption. Corruption was seen to fragment loyalties and shatter confidence in public
institutions, thereby destabilizing of countries’ political and social systems. The then US
President Bill Clinton summarized the case against corruption when signing amendments to
the Foreign Corrupt Practice Act:
“We have long believed bribery is inconsistent with democratic values, such as good
governance and the rule of law. It is also contrary to basic principles of fair
competition and harmful to efforts to promote economic development2.”
The enactment by the US of its Foreign Corrupt Practice Act put pressure on the OECD,
which in 1994 recommended that its members criminalise the offering of bribes to foreign
public officials related to business transactions. In 1996 the OECD adopted another
resolution recommending members denounce laws allowing tax deduction for bribes. The
1 George, Barbara Crutchfield, Kathleen A. Lacey, and Jutta Birmele. "The 1998 OECD Convention:
An impetus for worldwide changes in attitudes toward corruption in business transactions." American
Business Law Journal37.3 (2000): 485-525.
2 Clinton, William J. "Statement by the President." Office of the Press Secretary, The White
House (2000).

OECD members thought that the best way to combat the bribery of foreign officials was a
binding convention and after lengthy negotiations the convention was signed in February
19993.
2. The OECD Anti-bribery Convention:
The OECD Convention obligates all members to enact domestic laws making the bribery of
foreign public officials a criminal offence. Article 1 states:
[E]ach party shall take such measures as may be necessary to establish that it
is a criminal offence under its Law for any person intentionally to offer,
promise or give any undue pecuniary or other advantage, to a foreign public
official, in order that the official act or refrain from acting in relation to the
performance of official duties, in order to obtain or retain business or other
improper advantage in the conduct of international business. Likewise,
complicity in any attempt or any conspiracy to bribe a foreign public official
in any form described in Article (1) is also regarded as a Criminal offence4.
In the same vein, Article (2) binds member states to affix liability to legal persons for
bribing public official abroad, while Article (3) stresses that sanctions on violators
will be “effective, proportionate and dissuasive.” It provides that in jurisdictions
where criminal liability does not apply to legal persons; such persons would be
subjected to sufficient civil penalties to ensure that any proceeds of that are
confiscated. Article (4) discusses jurisdiction issues:
[E]ach party shall take such measures as may be necessary to establish its
jurisdiction over the bribery of foreign public officials when the offence is
3 Obidairo, Simeon. Transnational corruption and corporations: regulating bribery through corporate liability.
Routledge, 2016.
4 Spahn, Elizabeth. "Implementing global anti-bribery norms from the foreign corrupt practices act to the OECD
Anti-Bribery Convention to the UN Convention Against Corruption." (2013).

committed in whole or part in its territory and each party which has
jurisdiction to prosecute its nationals for offences committed abroad shall take
such measures as may be necessary to establish its jurisdiction to do so in
respect of the bribery of a foreign public official, according to the same
principles5.
Article (5) states that the investigation and prosecution of those charged with bribing
foreign officials:
.. shall not be influenced by consideration of national effect upon the relations
with another state, or the identity of the natural or legal person involved.
Article (8), on financial books, records and disclosure reports, prohibits, ‘...the
establishment of off-the-book accounts.’ The Convention stresses the necessity for
member 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 and
11. Article 12 mandates full co-operation by member states in implementing the
Convention: [They] shall co-operate in carrying out a programme of systematic
follow-up to monitor and promote the full implementation of this Convention6.
3. Limitations of the OECD Convention:
This Convention, despite its successes in reducing bribery by the state members, has
its limitations as provided by Wayne (2000)7. There are various limitations which are
faced by the convention as compared to the US Bribery Act. The information related
to the limitation of the convention can assure that enhanced recommendation can be
5 Paulus, 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.
6 Spahn, Elizabeth K. "Multijurisdictional Bribery Law Enforcement: The OECD Anti-Bribery
Convention." Va. J. Int'l L. 53 (2012): 1.
7 Hamra, Wayne. "Bribery in international business transactions and the OECD convention: Benefits and
limitations." Business Economics 35.4 (2000): 33.

made to address the issues arising out of the limitations of the convention. Article (1)
defines the act of bribery as ‘... any person intentionally offer[ing] or give[ing] any
undue pecuniary or other advantage to foreign public official”.
a. It ignores passive bribery. The Commentary on the Convention states says that this
Convention deals only with what is in the law of some countries refered to as ... active
corruption. Active corruption involves promising to give a bribe, in contrast to
‘passive bribery’, the offence committed 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). Hence, it lacks a disciplinary action towards the
public official who commits bribery in any form and this may lead to failure in
fighting bribery8.
b. Its Article (1) definition of ‘foreign public official’ is too narrow. Since it is
limited to persons exercising functions for a foreign country, a public enterprise or to
officials or agents of public international organisations, ignoring politicians, political
parties and party members9. Corruption and bribery are common among politicians,
party officials and political candidates. This limited definition of bribery also excludes
bribes paid to officials of state owned companies. A public official is any person
holding a position of an official authority which 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 appointed10. While Article (1), says that ‘foreign public
official’ includes ‘any person exercising a public function for foreign country, for a
8 Tarullo, Daniel K. "The Limits of Institutional Design: Implementing the OECD Anti-Bribery
Convention." Va. J. Int'l L. 44 (2003): 665.
9 Pacini, Carl, Judyth A. Swingen, and Hudson Rogers. "The role of the OECD and EU Conventions in
combating bribery of foreign public officials." Journal of Business Ethics 37.4 (2002): 385-405.
10 Harms, Brian C. "Holding Public Officials Accountable in the International Realm: A New Multi-
Layered Strategy to Combat Corruption." Cornell Int'l LJ33 (2000): 159.

public agency or public enterprise’, the Commentary Article (15) to the Convention
states that:
An official of a public enterprise shall be deemed to perform a public function
unless the enterprise operates on a normal economic basis in the relevant
market11.
Distinguishing between private and public functions is in practice far from easy in
that the Article leaves much scope for circumvention. A public function has been
defined simply as any function which is carried on by a public official defined above.
However it may happen that the public official indulge in an act which is beyond the
scope of their authority. The question in this case would be whether such functions
such be considered as public functions or not. On the other hand functions of private
individual in connection with the public authorities also create confusion and make it
difficult to identify what kind of function is being carried out. Thus it is not often easy
to differentiate between a Public and a private function.
c. It omits the bribery of foreign subsidiaries. Article (2) of the Convention mentions
bribery of 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 a foreign public official shall be a criminal offence.
Although this provision may be read as prohibiting parent companies in state
members from using foreign subsidiaries as conduits for bribes, it would be hard to
implement, because legally proving the acts of legally distinct subsidiaries are
connected with parent companies would be extremely difficult12.
11 Carr, Indira M., and Opi Outhwaite. "The OECD Anti-Bribery Convention Ten Years On." (2009).
12 D'Souza, Anna. "The OECD anti-bribery convention: changing the currents of trade." Journal of
Development Economics 97.1 (2012): 73-87.

d. It ignores acts of bribery committed independently by subsidiary bodies and
disguised bribes, such as favouritism shown to relatives of foreign public officials,
both of which facilitate circumvention. So also does the Convention’s interpretation
of the phrase ‘other improper advantage in the conduct of international business’ in
Article (1). The Commentaries on 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 the
written law or regulation of the foreign public official’s country, including
case law.
In most developing countries politicians and political parties and dominant senior
public officials 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 foreign country, may facilitate bribery and so defeat the intent of the Convention.
Besides, in countries whose ‘culture’ allows such payments, the permission is usually
contained in unwritten traditions rather than written laws. Corruption is a major
obstacle for the proper development of Libya13. Widespread corruption has infected
almost all sectors of Libya and oil industry along with public procurement are among
the most hit sectors in the county by corruption. Favouritism and Bribery are common
practices in most sectors and mostly all business suffer unethical competition from
business owned by the states who also have domination in the local market. Under
Gaddafi’s rule the situation got worse in the period post revolution14. There is a
defected institutional structure to combat corruption in the county and violence along
with political instability undermines the rule of law15. The process for drafting a
13 Domoro, Omer M. Othman, and Syed Omar Syed Agil. "Factors Influencing Police Corruption in Libya-A
Preliminary Study." International Journal of Economic and Management Science 2.2 (2012): 25-35.
14 Domoro, Omer M. Othman, and Syed Omar Syed Agil. "The influence of organizational culture on police
corruption in Libya." Journal of Business and Management 2.5 (2012): 33-38.
15 Rose-Ackerman, Susan, and Bonnie J. Palifka. Corruption and government: Causes, consequences, and
reform. Cambridge university press, 2016.