OECD work against bribery

by Angel Gurría, Secretary-General of the OECD
to Eurotradia, an international consulting company
Paris, 5 December 2006

Ladies and Gentlemen,

I am very honoured to take part in today’s meeting, which brings together representatives of leading French corporations. I have been invited to address issues of bribery, the implications for your businesses, and the role of the OECD and its Convention in this area.

There is no shortage of opportunities to reiterate the pernicious effects of corruption on development and on democracy. This is of paramount importance to you, insofar as foreign bribery is a scourge for the competitive environment in which your firms do business.

Even so, rather than going on about the pernicious effects of bribery, which are widely acknowledged, let us focus on what we can do now to fight effectively against foreign bribery. Foreign bribery in business transactions is a “hot-button” topic: one need only look at the myriad cases raised by the Volcker Commission in connection with the United Nations’ “Oil for Food” programme, or – just last week – reports in the press about suspected bribery by reputable corporations.

It is now an established fact that corruption represents a cost for growth and development. It is thus an issue that is covered in the media and condemned by governments and public opinion, and one that has led to a great many investigations, prosecutions and convictions in numerous countries. For instance, in 23 of the 36 countries that have signed the OECD Convention on Combating Bribery, more than a hundred investigations have been launched, and the number is growing all the time. And those being punished today are not only corrupt government officials, but also the individuals and businesses that pay bribes: over 30 convictions or sentences have been meted out in our signatory countries, along with fines that in one case amounted to 28 million dollars.

Foreign bribery is also a core concern of the international community, for States and the private sector alike. The International Chamber of Commerce, the World Economic Forum and the Extractive Industry Transparency Initiative (EITI) have proposed strategies for alerting businesses and fighting bribery in international markets. At the intergovernmental level, a number of instruments have been developed for combating bribery, such as, of course, the United Nations Convention Against Corruption, but also the Council of Europe’s Convention on Corruption and other regional instruments. The World Bank has recently bolstered its anti-corruption programme.

OECD has long been in the vanguard of these initiatives, with, as the cornerstone of this effort, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, but also with its work on governance, public procurement and conflicts of interest. For the business community, however, the essential contribution is still the Anti-Bribery Convention. The highlights of this 17-article instrument, which entered into force in 1999, naturally include the criminalisation of bribery of a foreign public official, but also the fact that businesses are held to account for such offences, and for related offences such as taking tax deductions for bribe payments.

But the essential, and unique, feature of this instrument is still the evaluation and monitoring process, and especially what is known as “Phase 2”. In this connection, OECD conducts extensive analysis, which includes on-site visits and discussions with all relevant parties in combating corruption, including businesses. These reviews lead to reports that are adopted by all 36 signatory countries, specific recommendations for implementation, and release to the public. To date, 27 countries have been examined, including all of the G7. There remain nine countries to be reviewed by 2008, including Poland, Turkey, Brazil and Argentina. A major achievement this year was the Mid-Term Study of Phase 2 Reports. Published in June, this is a retrospective of the first 21 country reviews. It identifies major accomplishments and the best practices in use in certain countries, but in addition, and above all, it analyses recurrent problems and the challenges to be met.

So what comes next?

The greatest remaining challenge is to achieve actual and effective implementation in a number of jurisdictions. Yes, there have been 30 convictions to date, but there are also major countries that have yet to launch a single investigation, and this is disturbing. Moreover, it is a known fact that bribery is a difficult offence to detect, and it is therefore essential to improve the tools of detection, such as the encouragement of whistle-blowing, accounting standards, auditors’ responsibilities, and so on. Because Phase 2 reports have clearly analysed weaknesses, the OECD should not stop there. Efforts must continue, and pressure must be maintained, in particular through an ongoing but renewed process of country monitoring and evaluation, including on-site visits. It is on these future endeavours that our signatory States are currently working. Nor should these efforts sideline major countries, such as China, India and Russia, whose businesses are increasingly present in international markets. It is therefore necessary to integrate these players into our work.

Your businesses are among the players concerned most directly by this Convention and its implementation, and you have an essential role to play. To change attitudes and behaviour is still more than ever on the agenda, as shown by foreign bribery cases only just recently revealed. The world is changing, prosecutions for bribery are multiplying, and denunciations by governments themselves and by competitors are more and more frequent. In a nutshell, the probability of criminal prosecution and severe penalties is getting higher and higher. I should venture to say that the risk-benefit ratio (the trade-off between the risks incurred and the presumed returns) is no longer conducive to bribery.

Obviously, at this time this shift is perceptible primarily in countries that have signed the Convention, but with policy changes and adoption of instruments such as the United Nations Convention, corruption is going to be condemned and sanctioned the world over. Bribes are losing their lustre; it is the value of your products and the quality of your services that will make the difference. Against this backdrop, French businesses – your businesses – have genuine added value to contribute in terms of tradition, reputation and know-how.

To move towards this change, codes of ethics are of course important, as are, more broadly, principles of corporate accountability. Clearly this is a starting point, but it is not enough. We know that at times these are only window-dressing. The principles and the ethics involved must not belong to the Legal Directorate or the Ethics Committee alone. The entire firm needs to feel involved, from the boardroom to the sales staff, but also your subcontractors, agents and intermediaries who are so vital to doing business. It has to be clear to one and all that to pay bribes is not an acceptable practice, that this is condemned, and that it ought to be denounced.

As leading firms in your industries, you factor significantly in the global economy, and consequently you bear a special responsibility. Because you have very high-level businesses which are capable of being major players on the international stage amidst fair competitive conditions, it is also clearly in your interest to rid international markets of corruption. This is the challenge you must meet, that we must meet.