Enforcing the Convention

Financial, Fiscal and Enterprise Affairs Directorate (DAF)

The OECD Convention may have entered into force a year ago, but many of its signatories still have to incorporate it into domestic legislation and enforce it. A rigorous process that warrants close examination. 

The fight against bribery is no easy affair. True, an important mile-stone was passed when the OECD Convention outlawing the offer, promise or giving of bribes to foreign public officials entered into force in February 1999. This is all very laudable, but what about its implementation? Certainly, there is no doubting the public show of political will. Of the thirty-four signatories, which are the world’s biggest exporters, twenty or so -- including Australia, Austria, Belgium, Canada, Germany, Japan, Korea, Mexico, Spain, Switzerland and the United States -- have already amended their laws to accommodate the obligations laid down by the Convention.

Elsewhere the parliamentary machine has been set in motion. The process may be lengthy, either because parliamentary agendas are full, as has been the case in countries such as France, or because domestic elections have made it necessary to postpone or restart debate on the bill at a later time, as has been the case in the Czech and Slovak Republics, Chile and Turkey. Moreover, different bodies have to be consulted before the text can be put before parliament, all of which adds more time to the process.

Even so, it is expected that by the end of 2000 or earlier all the countries that signed the Convention in December 1997 will have amended their legislation. Those which fail to do so, or whose legislation does not meet the Convention’s criteria, will come under pressure from their peers to put their house in order. In fact, the consequences of doing nothing could be quite damaging for credibility and business. Countries that appear reluctant to punish bribery of public officials might quite simply start losing markets, not least because companies increasingly seek to do business where bribes are not part of the deal.

Peer pressure 

At the end of the day, political commitments and conventions are meaningful only if they are enforced. To test whether they are, the OECD has adopted a system of peer review by the signatories. This procedure requires the signatories to review each other’s regulatory system and measures to enforce the principles laid down by the Convention.

Those principles are four in number: first,  imprisonment and fines for those found guilty of bribing a public official in order to obtain or retain business; second, criminal, civil or other penalties for companies that falsify their accounts in order to conceal payment of bribes; third, ending tax deductibility for commissions paid by companies to public officials in order to obtain business or another advantage (see article on Tax Deductibility); and fourth, increasing international judicial co-operation to ensure more effective prosecution of those committing acts of bribery.

So how does the peer review process actually work? Each signatory to the Convention is required to produce a progress report on the basis of a questionnaire drawn up by the OECD. The report is then examined by a working group, which meets in Paris about once every two months. Most of the experts who represent the signatory countries come from justice and finance ministries. They decide on a list of three, four or possibly five other countries to be reviewed before the next meeting. This pace is dictated by the fact that the laws of all the signatories have to be reviewed between now and the next OECD ministerial council summit, scheduled for June 2000.

Rapporteurs are appointed who present their conclusions to the working group in the light of a report prepared by the OECD. The report is a real exercise in investigation, analysis and expertise. The OECD not only peruses the national report produced by the country under review, but also analyses its statutory texts and law reports, reads the records of parliamentary and non-governmental debates, and talks to experts on all sides.

The viva voce 

Then comes judgement day, when the review takes place. It is carried out in closed session to guarantee a frank discussion. Like any other viva voce, the session begins with a presentation by the country under review of the legislative measures it has taken to comply with the Convention. The two examining countries then present their evaluation. Next, each signatory country may ask questions on specific points of legislation or procedural issues and, where appropriate, express an opinion. The experts from the country under review may answer questions, clarify their country’s position and, in short, defend themselves. It is rather like presenting a doctoral thesis, and the entire session lasts one or two hours, depending on the issues examined.

But the evaluation does not stop there. The two examining countries then write up their evaluation of the reviewed country’s compliance with the obligations imposed by the Convention. Naturally, this text is sometimes the subject of intense discussion between the reviewed country and its counterparts. In practice, the examined country tends to accept the evaluation and commits itself to make the recommended amendments. These recommendations might ask a country to look again at the way its legislation deals with a particular element of an offence, like its definition of "foreign public official", or to consider imposing criminal penalities on corporations. They might even ask the country to consider toughening the sanctions for persons found guilty of bribery. All of the evaluations will be reviewed again by the Working Group prior to submission of the summary report to OECD ministers in June of this year.

Verifying the conformity of national laws with an international convention is one thing. Actually enforcing the rules is another. Accordingly, starting later this year, teams of international experts will visit each country to meet with political, administrative, police, customs, judicial authorities and other relevant bodies to discuss enforcement. The trips, whose findings will be the subject of a report, are expected to reveal any flaws in the Convention and throw up other issues for discussion.

The fight against bribery is clearly not over by any means. But at least the question of whether the Convention works is one we may be able to answer sooner rather than later.

©OECD Observer No 220, April 2000

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