oecd/2007/in focus/news room

18 July 2007

TI OECD Progress report 2007: Enforcement of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Enforcement of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Download the report

Read the press release: Major exporters continue bribing abroad (versión en español / version française)

Download the TI Progress Report 2007

Introduction
See the overview table on foreign bribery prosecutions and investigations
TI recommendations on enforcement
National Chapter work around the OECD Convention
National Chapter press releases

What is the OECD Convention
How to report a foreign bribery case
Cases showing the flow of money

Links
Media contacts

Introduction

When the member nations of the Organisation for Economic Cooperation and Development (OECD) adopted the Anti-Bribery Convention in 1997, for the first time paying a bribe abroad became a crime at home.

A milestone in the fight against corruption, the convention addresses the supply-side of bribery. It recognises the fact that a large portion of the bribes paid worldwide are due to bid-rigging and corruption by OECD-based companies doing business overseas.

But a convention is only as good as its implementation. Transparency International (TI) has taken up the task of monitoring this practice. In its yearly progress report, improvements and setbacks in the convention’s enforcement are highlighted. Now in its third year, TI's 2007 Progress Report compiles findings on 34 of the 37 signatory countries of the convention.

Transparency International's national chapters are very active in promoting compliance with the convention.

See their activities here.
See the full text of the Convention and more information on the OECD on their website.
Download the TI Progress Report 2007
Download the TI Progress Report 2006
Download the TI Progress Report 2005

TI recommendations on enforcement

Selected Key Recommendations

It is essential to continue a vigorous monitoring programme, including country visits, until there is active enforcement by all signatories.
A much higher level of enforcement will be needed before the critical criterion for success – widespread recognition by international business that foreign bribery is no longer acceptable – will be achieved.
OECD must begin to utilize stronger measures to ensure compliance by governments that have not shown the political will to prosecute foreign bribery.
Prompt action by the UK government, and if necessary by OECD, is required to overcome the dangerous precedent effects of the Al Yamamah termination.

For the detailed recommendations, please click here.

TI_recommendations_OECD2007.pdf 46.10 kB

National Chapter work around the OECD Convention

G8 Countries

Transparency International’s chapters in G8 countries – Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States – highlighted the enforcement of the OECD Convention, especially calling for fulfilling past G8 commitments.

The key issue to follow-up is the enforcement of foreign anti-bribery laws and, by so doing, to show that the G8 countries are serious about countering cross-border corruption and the harm it does to developing countries. This is especially urgent in Canada, Italy, Japan and the UK, where enforcement remains negligible. Russia, not yet a party to the OECD Convention, should become one promptly, and should now look to the UN Convention against Corruption for guidance on anti-bribery prohibitions. TI’s complete recommendations for the G8 and its assessment of performance on fighting corruption are explained in detail in its G8 Progress Report, published on 5 June 2007.

TI Austria

In 2006, the Austrian chapter started discussions with its counterparts from the Ministry of Justice responsible for the enforcement of the OECD Convention to business-related public agencies and the Austrian National Assembly. Despite some developments in the private sector-related agencies, in particular the Export Guarantee Agency and the Austrian Federal Economic Chamber, progress in the implementation of the OECD Convention remained modest. In addition, the awareness and sense of urgency of the relevant state institution needs to be further enhanced. TI Austria will continue to promote the effective implementation of the Convention.

TI Canada

TI Canada is informing the Canadian public, business community and government of the importance of implementation of the OECD Convention by participating in the National Roundtables on Corporate Social Responsibility (CSR) and the Canadian Extractive Industry in Developing Countries, conducted by the Canadian Department of Foreign Affairs and International Trade, and during its recent symposium on Transparency International Business Principles for Countering Bribery. With more convictions in Canada under the Corruption of Foreign Public Officials Act, more opportunities will arise to truly educate the Canadian business community.

TI Czech Republic

The OECD Convention is among the issues covered in trainings for public officials that TI Czech Republic is carrying out. Further, as part of its Advocacy and Legal Advice Centres (ALACs) programme providing legal aid to victims of corruption, TI Czech Republic is offering the possibility of legal advice to people interested in what the Convention sets forth. The chapter also is planning to involve one of the anti-corruption requirements imposed by the Convention in a project aimed at enhancing the protection of whistleblowers.

TI France

TI France is concentrating on advocacy work at the national level, as well as raising awareness of the OECD Convention within the French business community. The chapter has given public statements calling on French authorities to implement the Convention on specific issues such as the Volcker Commission Report on the misuse of the UN Oil for Food programme. TI France is in regular contacts with French authorities to address OECD Convention implementation and doing advocacy work in the context of the G8. Besides organising various public conferences aimed at the private sector, TI France has given lectures in various private sector forums to promote TI’s recommendations, and published a vade-mecum to help small and medium enterprises to prevent corruption related to legal and business risks. In addition, it as undertaken surveys on the French private sector’s best practises to prevent corruption. Also, TI France works with large companies promoting anti-bribery programmes.

TI Germany

Transparency Germany is convinced that the strict implementation of the OECD Convention is of high political importance and that it should be seriously enforced by the German Federal Government and the German Länder. In 2006, TI Germany asked the Federal Government, the Länder and industry to look for the full implementation of the Convention. Also, on the basis of the OECD Guidelines for Multinationals, that set social, environmental and anti-corruption standards for multinational enterprises, TI Germany lodged a complaint with the German Federal Ministry of Economics and Technology (BMWi) against 57 German companies for allegedly paying US $11.9 million in kickbacks in the United Nations’ Oil for Food programme in Iraq.

TI Ireland

TI Ireland has put the OECD Convention on the political agenda through a sustained media and public information campaign since 2005. Press releases have been issued to coincide with the release of TI’s last report on Ireland’s compliance with the Convention, and a number of opinion pieces have been written by the chapter and published in The Irish Times and Ireland’s leading business magazine Business and Finance. A great deal of media coverage has been secured through print, web and radio over the past year. Most attention was given to the OECD’s Phase 2 implementation report on Ireland in March 2007, which was highly critical of Ireland’s efforts to tackle international bribery. A parliamentary committee briefing was delivered on the Convention in 2005, while the chapter has continued to be in close contact with government departments on the issue. The Irish chapter has stressed the importance of the Convention to the integrity of Ireland’s aid programme in Ireland, international security as well as Ireland’s international reputation for tackling corruption.

Special attention has been paid to the financial, legal and reputational risks posed by corruption to Irish exporters. From February to July 2007, TI Ireland launched a pilot series of workshops for both Irish exporters and Irish development agencies. The workshops were financially supported by Irish Aid and were used to introduce both non-profit and business representatives on initiatives such as the OECD Convention, the TI Business Principles for Countering Bribery, TI’s work on Construction and Engineering and the TI’s Poverty and Development Programme. TI Ireland has also delivered training to junior diplomats at the Irish Department of Foreign Affairs on legal developments arising from this and other related initiatives and has been invited to provide continued training to other government agencies and business. Whether addressing government, business or charities, TI’s Irish chapter has continued to stress the importance of tackling the supply side of corruption.

TI Mexico

The enforcement and monitoring of international anti-corruption conventions in Mexico is one of the strategic priorities of Transparencia Mexicana (TM). TM recently launched a website on the anti-corruption conventions that have been ratified by the Mexican government: the OECD Convention, the Inter-American OAS Convention and the UN Convention. The website provides general information related to the conventions putting particular emphasis on the channels they offer for civil society participation and the results obtained to date. The chapter has participated in all three annual TI Progress Reports on OECD Convention Enforcement. While an external liaison to respond to the Report’s questionnaire was contracted for the first two reports, the third was completed by experts from the chapter itself. On all three occasions, consultations were carried out with government officials and experts to corroborate the reported findings. For more information please visit: http://www.anticorrupcion.org.mx.

TI Slovakia

To promote the OECD Convention, TI Slovakia has developed the project Anti-corruption Minimum, with the aim of creating recommendations for political parties in the fight against corruption in cooperation with experts from different fields. These recommendations have been provided to political parties before elections in 2002 and 2006 with the result that many of TI Slovakia’s proposals were incorporated in the parties’ election programs. TI Slovakia also has promoted establishing the liability of legal persons for the bribery of a public official in new criminal code. However, the proposal was rejected by members of Parliament in 2005.

TI UK

TI(UK) has been monitoring the UK’s implementation of the OECD Convention since the UK signed in 1997 and made provision in legislation for the Convention’s enforcement in 2002. TI UK made inputs into the Phase 1, Phase 1bis and Phase 2 Evaluations of UK enforcement by the OECD’s examiners. We also expect to make an input into the special review that OECD examiners are due to undertake by March 2008. TI UK has for many years pressed for reform of UK anti-corruption laws along the lines recommended by the OECD. It is now contributing to the Law Commission’s study of corruption law reform. The Commission is expected to make its recommendations in 2008. TI UK has also been helping to increase awareness of the OECD Convention among the UK’s business community, working together with the FCO, the International Business Leaders Forum, Business in the Community and the UK Network of the UN Global Compact.

TI USA

TI-USA continued its campaign to press the US and other OECD member governments to enforce their foreign bribery laws and to support continuous monitoring to ensure that governments live up to their commitments. TI-USA leadership pressed for action in meetings with senior officials at the Departments of State, Justice and Commerce and urged the Deputy to the President and National Security Advisor for International Affairs to support a strong G8 Summit statement reaffirming the leaders’ commitment to enforce the Convention.

TI-USA coordinated a national chapter G8 Progress Report aimed at generating publicity for increased enforcement and serving as a ‘call to action’ for the G8 to do more. Like the OECD Progress Report, the G8 Progress Report underscored that Canada, Japan and the UK had not yet adequately enforced their anti-bribery laws.

Related National Chapter press releases

En Argentina, el control sobre los sobornos extranjeros se mantiene como una deuda pendiente
Buenos Aires, 19 de julio 2007

Transparency International welcomes Garda investigation into suspected deals with Saddam
Ireland is seen as having made the least progress on foreign bribery
Dublin, 19 July 2007

Deutsche Strafverfolgung bei Auslandsbestechung defizitär - aber besser als im Vorjahr
German prosecution on foreign bribery deficient - but compared to last year improving
Berlin, 18 July 2007

UK-Saudi Al Yamamah Defence Programme
Statement by Transparency International (UK)
London, 13 June 2007

Transparency International Germany Files Complaint against 57 German Companies over UN Oil for Food Scandal in Iraq
Berlin, 05 June 2007

What is the OECD and what is the OECD Anti-Bribery Convention?

The Organisation for Economic Cooperation and Development (OECD) was founded in 1961 by the governments of twenty industrialised countries. Its headquarters are in Paris, and have about 2500 staff. Today it includes 30 member countries.

The mission of the OECD is to support market economies in their sustainable economic growth. Over the years, the organisation’s focus has broadened and now includes more than 70 developing and emerging market economies.

Corruption is a serious obstacle to political stability and economic growth, and has therefore become an important item on the agenda of the organisation. Paradoxically, a significant portion of bribes changes hands in developing countries. Large firms from industrialised countries aim to secure their overseas markets by making costly presents to public officials, offering payment to win a bid or to go around environmental regulations. This gives them an unfair advantage over those companies who do not have the money to pay a bribe.

To address this supply-side of bribery, the OECD in 1997 drew up the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, in 1999 it entered into force. Almost 10 years on, 37 countries have ratified the agreement and expressed their commitment to put an end to their companies bribing abroad.

To fulfil the convention's requirements, national laws need to be amended in order to criminalise the act of bribing foreign public officials, financial and human resources have to be provided to ensure professional investigation and prosecution of corruption allegations. Complaint procedures have to be put in place and whistleblowers need to be protected both in the public and private sectors. Governments have the responsibility to ensure that their companies do not make illegal payments when doing business abroad.

The willingness of all parties to seriously and jointly end corruption is critical. Strong monitoring, as is done through the OECD Working Group on Bribery's country reports, is needed to ensure compliance with the convention's provisions.

Transparency International has developed its own independent monitoring to complement the OECD's work. TI's progress reports compile information on the steps taken to fight overseas corruption. The 2007 report includes findings from 34 of the 37 ratifying countries provided by experts and government officials through TI national chapters.

Transparency International's national chapters are very active in promoting compliance with the convention.

See their activities here.
See the full text of the Convention and more information on the OECD on their website.
Download the TI Progress Report 2007
Download the TI Progress Report 2006
Download the TI Progress Report 2005

Reporting foreign bribery cases under the OECD Convention

In foreign bribery cases, information and evidence about bribery comes from the reports received by law enforcement authorities or from persons with access to relevant information, whether in the country of the bribe-payer, of the foreign official receiving the bribe, or elsewhere. It may not be clear to those with this crucial information where or even how reports can be made of such illegal activities. Easily accessible information on how and where to report foreign bribery needs to be made widely available by OECD Convention countries.

Here are the two main steps that need to be taken to report foreign bribery in many of the countries party to the OECD Convention:

The first step for a person reporting information on bribery is to find the relevant office in the country of nationality of the accused person or seat of the accused company.

The second is to determine the appropriate format and to include the appropriate information. In order to improve the credibility of the reporting, it is important to include: the names of persons or companies involved; nature of the alleged behaviour (without trying to classify the crime); dates of alleged behaviour; any evidence the person reporting is aware of; any news reports; whether the case is being investigated in the country where it occurred; information about how the person knows about the crime; and any other relevant information.

In all of this, language barriers may well prove to be significant, unless assistance is provided by the country where reports are made.

For information about reporting in specific countries (in alphabetical order) click here:

Reporting_Bribes.pdf 115.93 kB

Cases showing the flow of money

Some of the cases in the report show how foreign bribery, which is prohibited by the OECD Convention, works. In this particular case the employees of an Italian company are charged with paying bribes in Abu Dhabi, Oman and Qatar, as well as with accepting bribes – in their own function as "foreign public officials" of a state-owned company – from sub-contractor Siemens employees.

At the same time, Siemens employees are charged because they made payments to those Italian employees. This money went into bank accounts in a fourth country.

Enelpower case

Allegations of bribery by employees of the Italian company Enelpower SpA in connection with construction contracts for power and desalination plants in Abu Dhabi, Oman and Qatar were investigated in 2003. The three contracts that Enelpower obtained, collectively exceeded EUR 1 billion in value. Local consultants had assisted Enelpower to secure the contracts, after which the company subcontracted to Germany’s Siemens AG to supply gas turbines and to France’s Alstom to provide boilers. The Italian government has de facto control of the Enelpower SpA and officers of the company are considered “public officials” for purposes of Italy’s national anti-bribery laws.

Following internal audits and a tip from a confidential informer, the Italian authorities charged two senior Enelpower officers with foreign bribery for allegedly paying officials in Abu Dhabi, Oman and Qatar to secure the contracts, through a local consultant. They also were charged with accepting payments from subcontractors, including Siemens AG and Alstom, who had transferred more than EUR 6 million into the foreign bank accounts of these officers.

Separately, Siemens AG and Alstom were charged in Italy with bribery of Italian officials for allegedly paying the two officers to win the subcontracts. In 2004, a Milan court took the extraordinary measure of banning Siemens AG from selling gas turbines to the Italian public administration for a one-year period for its part in the corruption scandal.

German authorities initiated a criminal prosecution against two former Siemens managers for paying kickbacks to officials of Enelpower SpA. In mid-May 2007, the court found that the ex-finance chief at Siemens' power generation unit had approved a EUR 6 million payment to win orders. A two-year suspended prison sentence for bribery and breach of fiduciary duty was imposed. A consultant to the company at the time of the offence was given a nine-month suspended sentence for aiding the bribery. The court ordered Siemens, which was not accused, to give up EUR 38 million of the gains it made from the sales. Siemens said the decision had "no basis in law or in fact" and it would appeal.

Source: http://www.nationaldefensemagazine.org/issues/2006/August/EthicsCorner.htm; Italy: Phase 2 Report on the application of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 1997 Recommendation on Combating Bribery in International Business Transactions, 29 Nov 2004, Page 25-26; BBC News, 13 March 2007; Reuters, 13 March 2007; Spiegel Online 14 March 2007

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