Vol 9 - No. 1





Failure to Fully Enforce a Ban on Foreign Bribery
CORRUPTION: The Big Fish Slips Away


BERLIN - If you thought bribery was a synonym for under-development, you had better read a new report by Transparency International (TI), the global civil society organisation leading the fight against corruption.

The majority of the world’s major exporting countries, nearly all of which belong to the developed world, are failing to fully enforce a ban on foreign bribery, according to a report published June 23.

This is in stark contrast to 1997 when the OECD (Organisation for Economic Cooperation and Development) Anti-Bribery Convention came into force. It was then considered a historical and much needed leap forward in the fight against corruption worldwide.

The rich countries of the world committed to bring their house in order, deal a major blow to supply side corruption and give the fight against poverty worldwide a real chance to succeed.

Because most major multinational companies are based in OECD Convention countries, the Convention was hailed as the key to overcoming the damaging effects of foreign bribery on democratic institutions, development programmes and business competition.

The Convention now has 38 parties.

Bribery of a foreign public official is defined in the OECD Convention as the attempt “to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, 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.”

The present report, titled the '2009 OECD Anti-bribery Convention Progress Report', is the fifth of its kind by TI, and covers 36 of the 38 signatories of the Convention. The 72-page document reveals that only four out of 36 countries evaluated are actively enforcing the Convention to which they are party. There is "moderate enforcement" in 11 other countries and "little to no enforcement" in 21 countries.

Countries actively enforcing the Convention are: Germany, Norway, Switzerland and United States.

Moderate enforcement is being done in Belgium, Denmark, Finland, France, Italy, Japan, Republic of Korea, the Netherlands, Spain, Sweden, and United Kingdom

The findings show little or no enforcement in Argentina, Australia, Austria, Brazil, Bulgaria, Canada, Chile, Czech Republic, Estonia, Greece, Hungary, Ireland, Israel, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia, South Africa, and Turkey


The key conclusions which flow from these findings are:

• The Convention is still far from achieving the goal of ending bribery in international business transactions. During the five years that TI has published annual progress reports, enforcement has increased from eight to fifteen countries.

However, there are great disparities in levels of enforcement even among the largest exporters. Germany and the United States each have more than one hundred cases, while the United Kingdom has four and Japan and Italy have two each. The disparity in levels of enforcement shows how far there is to go.

• Enforcement in the 11 countries with moderate enforcement has not reached a high enough level to provide effective deterrence against foreign bribery. Companies in the 21 countries with little or no enforcement will feel even less constrained, and many are not even aware of the Convention.

• The present situation is dangerously unstable. Unless enforcement is sharply increased, existing support will erode and the Convention will fail. Danger signals include the United Kingdom’s termination of the BAE case, claiming that national security concerns overrode the commitment to stop foreign bribery.

This was a grave blow to the Convention because it opened a loophole that other governments could also exploit. Other examples include efforts to eliminate the the role of anit-corruption commissions and investigative magistrates.

• This risk of backsliding has grown more acute during a time of worldwide recession when competition for decreasing numbers of orders has intensified greatly.

• In sum, the Convention is at a critical juncture. Proponents of the Convention must press hard for greater enforcement. Otherwise, proponents of corruption will prevail and the Convention will go into reverse.


The report says: "Based on the reviews conducted by TI chapters, we are convinced that the principal cause of lagging enforcement is a lack of political will." In countries where there is committed political leadership, the OECD’s outstanding monitoring programme has helped improve laws and enforcement programmes.

However, in the absence of political will, even repeated monitoring reviews have little effect. Lack of political commitment can take a passive form: failure to provide adequate funding and staffing for enforcement. It can also take an active form: political obstruction of investigations.

So the report highlights that whether through antiquated bribery laws, outright political obstruction of investigations, lack of adequate funding for prosecutors or curtailing the powers of investigative magistrates the OECD Convention is facing grave challenges.

Another major obstacle, according to the report, is the use of national security considerations as a reason for not prosecuting foreign bribery. It is essential to reaffirm that the Convention does not permit national security exceptions.


The report does not leave it at finding flaws. It has a set of recommendations addressed to OECD Secretary-General Angel Gurria; the OECD Council at Ministerial Level; the OECD Working Group on Bribery; and to the governments of the parties to the Convention.

• The Ministerial should exercise regular oversight to ensure that the Convention succeeds in meeting its objectives. This should include a review of annual reports from the Working Group on the status of enforcement. Such reports should cover foreign bribery cases brought by each party to the Convention, as well as the number of investigations underway.

• The Secretary-General should meet with the Justice Ministers of laggard governments to reach agreement on steps for achieving active enforcement. Failure to take such steps should result in suspension of membership in the Convention.

• Governments should assign responsibility for foreign bribery cases to specialized staffs with adequate resources. Experience has shown that investigating and prosecuting foreign bribery cases is extremely challenging and time-consuming work, and that it is unrealistic to expect overburdened local prosecutors to bring such cases. It is encouraging that many governments have already organised specialised staffs.

• The Ministerial should adopt a declaration reaffirming the broad scope of Article 5 of the Convention and making clear that claims of national security exceptions violate Article 5. This is important to ensure that the action of the United Kingdom in the BAE case does not become a precedent.

• The Ministerial should encourage accession to the Convention by China, India and Russia. To achieve a level playing field all major exporters should play by the same rules. It is encouraging that South Africa and Israel have joined in the last two years.

• It is essential that the Working Group begin Phase 3 of its monitoring programme by the end of this year. Top priority should be given to conducting country visits to ensure that deficiencies in laws and enforcement programmes, as identified in prior reviews, are corrected. To keep pace with changes in forms of corruption, increasing attention needs to be devoted to combating indirect forms of bribery such as the use of intermediaries, subsidiaries, contractual and joint venture partners.

• The Working Group should conduct annual meetings with prosecutors to obtain their views on how to overcome obstacles to enforcement. Recent meetings with prosecutors were very productive and such meetings should become a regular practice.

• The Working Group should, as soon as possible, begin to address unresolved issues and potential loopholes in the Convention and national implementing legislation, including bribe payments to political parties, lack of corporate criminal liability, inadequate statutes of limitations, and private-to-private corruption.

“Political will must be at the heart of efforts to deliver on anti-bribery,” says Cobus de Swardt, managing director at TI. "Especially in the current global recession when businesses face acute pressure to win declining orders. Accelerated enforcement is needed to ensure fair competition." 


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