ten_years_oecd/2007/in focus/news room

19 November 2007

Tenth anniversary of the OECD Convention: stronger action needed

Ten-year anniversary of the OECD Convention

21 November 2007 marks the ten-year anniversary of the adoption of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions by member states of the Organisation for Economic Cooperation and Development (OECD).

Commonly known as the OECD Anti-Bribery Convention, the Convention was the first international treaty that required the world’s leading industrial nations to make bribery of foreign officials a crime. It entered into force in 1999.

The adoption of the Convention – ten years ago – was a major step forward. However, its promise has not yet been realised due to a lack of political will on the part of a majority of signatory countries.

The Convention has to date been ratified by 37 leading industrial nations, which together represent about 70 percent of the world’s exports. The Convention recognises that bribery by OECD-based companies doing business overseas plays a significant role in undermining economic and political systems worldwide. By addressing the “supply side” of international corruption, that is, the bribe-givers, the Convention is intended to eliminate the distortions and damage done by cross-border bribery to international trade and investment, especially in developing countries.

On the occasion of the tenth anniversary, Italian Prime Minister Romani Prodi and OECD Secretary General Angel Gurría are hosting Ministers and others officials from signatory countries for high level and expert meetings in Rome, Italy to discuss the fight against corruption. TI’s Chair, Huguette Labelle will deliver a speech at the event – her message from the TI movement: this is not a time for celebration. Although some significant achievements have occurred, the Convention suffers from too little enforcement.

A convention in trouble

A decade after its adoption, the OECD Convention is at a crossroads with more than half the signatory countries having taken little or no action to enforce the prohibition against foreign bribery. Additionally, a dangerous and unjustified precedent for avoiding enforcement has been set by the United Kingdom. The UK recently invoked national security to terminate an investigation into widely-publicised foreign bribery allegations involving one of the country’s largest defence contractors.

TI Progress Report on OECD Convention Enforcement

Transparency International’s (TI) annual Progress Report on OECD Convention Enforcement provides an overview of the status of OECD Convention enforcement in signatory countries, including data on prosecutions and investigations. TI’s 2007 Progress Report on OECD Convention Enforcement shows that while there have been positive improvements to measures such as whistleblower protection, complaints procedures, increased public awareness, etc., inadequate enforcement in many signatory countries is still the reality.

Although there was an increased number of investigations and prosecutions for example by French, German and United States authorities, neither Japan nor the United Kingdom brought forward a single serious foreign bribery prosecution, despite their positions as two of the world’s leading exporting countries.

Moreover, TI’s 2007 Progress Report found that only 14 out the 37 countries party to the Convention had taken any substantial enforcement action at all.

The enforcers are: Belgium, Bulgaria, Denmark, France, Germany, Hungary, Italy, Korea, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United States.

The non-enforcers include: Argentina, Australia, Austria, Brazil, Chile, Czech Republic, Estonia, Finland, Greece, Iceland, Ireland, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia and the United Kingdom.

To read more on the 2007 Progress Report, please see TI’s July 2007 In Focus.
For further analysis on OECD Convention enforcement, see Heineman and Heimann article
Visit the OECD website to read the full text of the Convention.

BAE case

In December 2006, the UK Serious Fraud Office (SFO) dropped its investigation into a series of high value arms agreements between BAE Systems (formerly British Aerospace) and the government of Saudi Arabia, commonly known as the Al-Yamamah deals.

The investigation originally focused on allegations of false accounting and bribe payments made by BAE Systems to Saudi officials via off-shore companies. The press reported the existence of a so-called "slush fund”, which channelled over £1 billion to a Saudi prince, with payments of £30 million paid every quarter for at least 10 years.

In terminating their investigation of BAE Systems, UK officials cited the need to “safeguard national and international security” and to balance the need to maintain the rule of law “against the wider public interest”. Further explanation was provided by then Prime Minister Tony Blair, who said the Saudi government had threatened to cut off intelligence sharing should the investigation continue.

The UK Government’s action to terminate the BAE Systems investigation on the grounds of national security created a dangerous and unjustified precedent, endangering the OECD Convention. Action must be taken to close this loophole.

For latest on BAE corruption allegations, see the Guardian’s BAE Files.
To read more about national security as an exception to legal requirements, see an article by Rose-Ackerman.

Prompt action is needed

Prompt action is needed to ensure that OECD Convention parties live up to their commitments. The current lack of political will in enforcing the OECD Convention is jeopardising not only the Convention itself, but also the wider anti-corruption effort. Industrialised countries cannot credibly call on developing nations to improve their governance and anti-corruption performance when the developed world is itself failing to stop cross-border corporate bribery.

In October 2007, the TI Annual Membership Meeting comprised of national chapters in 81 countries, called on the OECD and countries signatory to the OECD Convention to:

Take action at Ministerial level to ensure that lagging governments comply without further delay
Maintain a vigorous monitoring programme until there is active enforcement by all signatories
Prevent the use of national security considerations as a reason for not prosecuting foreign bribery.

Read the full text of the TI AMM Resolution on the OECD Convention.

Corporate bribery — a crime with global consequences

Cross-border bribery and money laundering are too often features of international business.Multiple cases show that multinational companies are willing to resort to criminal and corrupt behaviour to secure overseas markets, disregarding the harm done in the countries where the bribes are paid. Strong enforcement is needed to deter illegal practices often deemed “a necessary evil”.

TI’s 2007 Progress Report includes information on investigations or prosecutions of foreign bribery allegations against the following companies:

Alcatel, France (Telecommunications)
BAE Systems, UK (Defence)
Baker Hughes, USA (Oil and Gas Sector)
Enelpower SpA, Italy (Construction)
Siemens, Germany (Telecommunications)
Statoil ASA, Norway (Oil and Gas Sector)
Titan, USA (Telecommunications)
Total SA, France (Oil and Gas Sector)

See also TI USA expert´s report, containing information on 67 cases.

Recent news reports of foreign bribery allegations:

Norwegian Scancem in Ghana, April 2007
Swedish Saab in Austria and Czech Republic, May 2007
French Thales commissions, July 2007
German Siemens bribe fund, August 2007
US Pacific Consolidated Industries (PCI) in UK, October 2007
US Wilbros Group in Nigeria, November 2007

Bribe Payers Index

One measure of corporate bribery worldwide is TI’s Bribe Payers Index (BPI). Derived from a survey of over 11,000 business executives in 125 countries, the BPI looks at the propensity of companies from 30 leading exporting nations to bribe abroad.

The 2006 BPI demonstrates that although companies from states signatory to the OECD Convention tend to bribe less, their scores are far from satisfactory.

To find out more about the 2006 BPI, click here

Taking Action

Report a case

To report foreign bribery in countries party to the OECD Convention:

Find the relevant office in the country of nationality of the accused person or seat of the accused company.
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.

See TI table on how to report foreign bribery cases involving companies from ten OECD Convention countries: Australia, Brazil, Denmark, France, Germany, Hungary, Ireland, South Korea, Slovak Republic, Switzerland, The Netherlands, United States.

Send TI a news report

If you have seen a news story in your national media about bribery by a foreign company in your country, please send it to TI c/o Gillian Dell, gdell@transparency.org and to the TI national chapter in the home country of the company concerned.

Write a letter to the OECD or to an OECD Convention signatory government

To signal disapproval of the OECD Convention governments failure to enforce the OECD Convention, please send a letter to the OECD Secretary General Angel Gurría and to the Justice and Development Ministers of the OECD Convention countries that are failing to enforce the Convention. Please click here to see some sample letters.

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