TWENTY YEARS OF THE OECD ANTI-BRIBERY CONVENTION: NATIONAL IMPLEMENTATION AND HYBRIDIZATION.

Author:Acorn, Elizabeth
Position:Organisation for Economic Co-operation and Development - ARTICLES
 
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  1. INTRODUCTION

    The 1997 Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1) ("Convention" or "OECD Convention") is an early and prominent international effort to address the complex governance challenge posed by bribery in international business. Some of the worlds most well-known corporations have admitted to paying sizable bribes to government officials of foreign states to win lucrative contracts or secure business advantages. In 2014, for instance, the cosmetics company Avon Products admitted to the bribery of Chinese government officials to procure and maintain a business licence. (2) Decades earlier, in the 1970s, the Chairman of Lockheed Corporation's Board testified to a US Senate Subcommittee that it had paid bribes to Indonesian military officers to facilitate the purchase of Lockheed jets. (3) Today, British American Tobacco is under investigation for the bribery of government officials to thwart national tobacco regulations in Burundi and Rwanda. (4)

    Prior to the OECD Convention, illicit business practices like these often fell directly into the "governance gap" of cross-border business, (5) where the prohibition on bribery in a business's home state did not reach to its activities abroad and the host states to these powerful corporate visitors could face significant governance limitations of their own. (6) The OECD sought to change this. At the US's urging, in the early 1990s, the OECD took up the challenge of combatting bribery in international business by focusing on its wealthy member states that are the source of much of the world's foreign direct investment and exports. Recognizing in its preamble that "all countries share a responsibility to combat bribery in international business", (7) the Convention requires OECD member states to establish a criminal prohibition against foreign bribery--the payment of bribes to public officials of foreign governments to obtain a business advantage. (8) As Transparency International, a leading non-governmental organization focused on anticorruption notes, the OECD Convention state parties "are responsible for approximately two-thirds of world exports and almost 90 per cent of total foreign direct investment outflows" and are critical to "curbing the export of corruption globally". (9)

    This article looks back on the 20 years since the OECD Conventions signing and examines how states have implemented the Convention. It seeks to contribute to growing scholarship in comparative international law and identify the similarities and differences in how states have implemented their shared international obligation to criminalize foreign bribery. (10) Section II introduces the OECD Convention in more detail and gives a brief account of the Convention and its emergence. It further provides an overview of the implementation efforts across the 29 OECD states that originally signed the Convention in 1997. It shows that states have, by and large, made the necessary law reforms to establish criminal prohibitions against foreign bribery. However, the section also introduces some notable divergences in state implementation, including the frequency with which states enforce these new laws. Section III situates these implementation efforts and national distinctions within the framework of comparative international law.

    Section IV examines the Conventions implementation more closely, through case studies of four of the largest economies within the OECD--Canada, Germany, the United Kingdom, and the United States. These case studies draw on a variety of sources, including legislation, case law, international monitoring reports, and semistructured interviews that I conducted with various actors involved in the day-to-day operation of foreign-bribery rules within these countries. (11) As is discussed further below, these four states are similar on many dimensions, with well-established domestic legal institutions and high levels of exposure to the international economy that brings significant risks of foreign bribery. Nonetheless, these countries differ markedly in the frequency with which they enforce their anti-foreign bribery laws--the US and Germany have completed hundreds of enforcement actions, while Canada and the UK have completed only handfuls. Notably, these countries also diverge in how they enforce these prohibitions, which has consequences for the frequency with which they complete enforcement actions. For example, while Canadian authorities exclusively respond to allegations of foreign bribery with the traditional criminal-law methods of lengthy trials and guilty pleas, prosecutors in other states, like the US and Germany, deploy a variety of tools to enforce their foreign-bribery prohibitions, including diversionary resolution mechanisms that do not require a determination of criminal guilt.

    To account for this variation, I look to national policies to combat corporate and economic crime more generally and trace how they interact with the shared obligation to criminalize foreign bribery. For instance, in the 20 years since the Conventions signing, the UK has experimented with several different approaches to antiforeign-bribery enforcement, including a new offence that punishes corporations for the failure to prevent bribery. Much of this experimentation can be traced back to the challenging antiforeign-bribery enforcement environment in the UK created by its high standard for corporate criminal liability. In contrast, in the US, the relatively low bar for corporate criminal liability and the pivot by federal prosecutors in the mid-2000s to the use of diversionary settlement procedures for corporate wrongdoing at large has enabled prolific antiforeign-bribery enforcement.

    These cross-national distinctions in how antiforeign-bribery prohibitions are enforced are significant, particularly when we consider the expansion of the international anticorruption regime and the OECD's increasing attention to the enforcement of antiforeign-bribery laws. As the article sets out in Section V, the criminalization of foreign bribery has become a core component of the growing international anticorruption regime and is included in the United Nations' 2003 Convention against Corruption, (12) which covers much of the globe. Further, this section draws again on the case studies to reveal competing normative justifications for the criminalization of foreign bribery, from the expressive moral condemnation of a specifically criminal sanction to a consequentialist objective that emphasizes changing corporate behaviour over the criminal status of the punishment. These varied objectives suggest not only further national distinctions, but also competing benchmarks for evaluating antiforeign-bribery enforcement. Before examining the case studies, the article begins with an overview of the Convention and its implementation in the original OECD state signatories.

  2. BACKGROUND AND OVERVIEW OF THE OECD CONVENTION

    In many ways, the OECD Convention is a notable instance of international cooperation. After years of discussion at the OECD and other international forums, (13) the then 29 OECD members voluntarily undertook a legally binding commitment to criminalize, in their own national laws, foreign bribery. (14) Scholars have noted the "surprising rapidity" (15) with which the Convention was created, a feat that is all the more significant given the decades of historic inaction that preceded the Convention. Until the mid-1990s, international organizations like the International Monetary Fund and the World Bank shied away from the topic of corruption altogether and--other than the US (16)--OECD states had done little to acknowledge, let alone combat, the questionable and sometimes sizable payments that their corporations made to foreign public officials to advance their business interests abroad. (17)

    What initially brought bribery in international business to the attention of the OECD was an effort by the US following its own legislative initiative and the subsequent absence of unilateral action by other states to combat the problem. In the aftermath of the Watergate scandal, the US went out on its own to prohibit foreign bribery by its corporations and citizens through the creation of its Foreign Corrupt Practices Act (FCPA) in 1977. (18) Other countries, however, did not follow suit. The result, as many US companies saw it, was that they faced a competitive disadvantage in competing for business opportunities abroad. While American companies risked possible criminal sanctions for paying bribes to win business abroad, companies from other prominent exporting and investing states faced no such national restrictions. In bringing the issue of foreign bribery to the OECD, the US sought to "multilateralize" the FCPA so that individuals and corporations from throughout the OECD would be prohibited from engaging in foreign bribery. Notably, as in the FCPA, the focus at the OECD has always been on combatting the payment of bribes in international business and not on the receipt of bribes by foreign public officials. (19)

    As Kenneth Abbott and Duncan Snidal recount, it was not just US business interests that pushed forward the OECD Convention. Transparency International--a then new and vocal non-governmental organization with a mandate to expose and fight corruption globally--lobbied European business leaders and governments to support the US efforts. (20) For these non-governmental actors, part of what was attractive about the OECD Convention was its criminal prohibition of foreign bribery. Criminalization was only one of several responses that the OECD considered. (21) It was favoured by non-governmental actors because it provided "the strongest form of condemnation" of bribery in international business and a "powerful instrument for changing public attitudes on bribery and...

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