"The Fight against Foreign Bribery: The OECD Anti-Bribery Convention and the International Community"
Remarks by Richard Boucher, OECD Deputy Secretary-General
Chatham House, London, United Kingdom
19 January 2010
Main message: There has been significant progress over the last ten years, but much work remains as we embark on the next ten years in the fight against foreign bribery.
Distinguished guests, ladies and gentlemen:
I am pleased to be here with you today at Chatham House to address the very real problem of the bribery of foreign public officials. It is an honour to share this platform with Jack Straw. I congratulate him for the programme he has announced to invigorate the UK’s fight against corruption, in particular, foreign bribery.
The “bribery of foreign officials” may seem remote or abstract, but it is one of the most insidious forms of corruption, that often involves huge sums of money, and sometimes development aid. Action against foreign bribery by OECD countries and other major trading and investing countries is important for two reasons: one, because of the serious harm caused by this activity; and two, because major economies have a clear responsibility to act and make a difference.
So what are we talking about? Maybe a real-life example would help. Let’s say that a Ministry of Health in a developing country wants to build a hospital or import medicines. It even puts out a call for tender. But in order to win the contract, executives from a foreign company or their local agent offer a bribe to the minister and key officials who will take the decisions. It may even be the case that the officials asked for the bribe. Because this foreign company gets the contract on the basis of a bribe rather than merit, it’s proposal might not be the most cost-effective. The company might even bribe officials to overlook costly health and safety standards, or provide the company with preferential tax treatment.
Who pays the price? The victims are numerous. They include the general public who will not have proper access to effective health care because the new hospital is sub-standard or the new medicines never arrive, and whose tax dollars will have been wasted on a substandard public good. The companies that were more qualified for the job pay the price when they go out of business because of unfair competition. Outside the hospital’s walls, people lose trust in their government and they are frustrated by the clear lack of accountability. In the worst case scenario, widespread corruption can lead to unrest or violence and even instability in a whole region.
A former anti-corruption official from Nigeria who participated in the OECD International Anti-Corruption Day event on 9 December said simply, “Bribery means stealing from the poorest”. We have a responsibility to protect these victims from the effects of foreign bribery. We cannot allow our companies to be part of it. And we cannot ask or expect developing countries to act against corruption unless we address the supply of bribes.
Foreign bribery: The last ten years
With the entry into force of the OECD Anti-Bribery Convention in 1999, the OECD and other countries who ratified the Convention—now 38, including the U.K.—made a commitment to stop foreign bribery in international business transactions.
Before the Convention, foreign bribery was a crime without a punishment in most countries. In international business, paying bribes was business as usual, and many governments offered tax deductions for bribe payments. Today, all countries that have ratified the OECD Anti-Bribery Convention have made foreign bribery a criminal offence. And there are no more tax deductions for bribe payments.
Investigations and prosecutions of foreign bribery are increasing. To date, about 150 sanctions have been imposed for cases involving foreign bribery and another 250 cases are under investigation. The Parties to the Convention also continuously strive to improve their laws and institutions for combating foreign bribery and ensuring full compliance with the OECD Anti-Bribery Convention. The UK bribery bill is an excellent example of this kind of progress.
The future of the fight against bribery
As we recover from a global economic crisis, we need to be even more alert about the risks of foreign bribery. With many businesses under stress, competition for new contracts is fierce. As the world economy regains speed, companies rushing for new business could be tempted to push the boundaries, increasing their exposure to the risks of bribery and corruption.
The new OECD anti-bribery tools
To strengthen its anti-bribery tools, in December 2009, the OECD Council and the 38 Parties to the Convention announced the adoption of a new Anti-Bribery Recommendation. The new Recommendation strengthens the existing legal framework in the Convention and has new provisions for: combating small facilitation payments, corporate liability, protecting whistleblowers, improving lines of communication between public officials and law enforcement authorities, and preventing and detecting foreign bribery through external audits and internal controls, ethics and compliance.
Starting this year, a new phase of strong, focused examinations will scrutinize countries’ implementation of this new Recommendation and as well as the OECD Anti-Bribery Convention. These examinations will be carried out by the OECD Working Group on Bribery, which includes all the Convention countries.
The OECD is also launching an Initiative to Raise Global Awareness of Foreign Bribery. We plan – with all the Convention countries – a three-year global campaign to show that foreign bribery carries a heavy price, that it is a serious crime and that it can no longer be a part of business as usual. Higher awareness and condemnation of this crime by the public will encourage law enforcement authorities to investigate and prosecute allegations of foreign bribery. It will also strengthen companies’ resolve not to bribe and make public officials wary of receiving or soliciting bribes.
Engaging the world on foreign bribery
The G-20 has asked the world’s largest economies to adopt and enforce international laws against transnational bribery, such as the OECD Anti-Bribery Convention, and to ratify the UN Convention against Corruption (UNCAC). Current parties to the Convention include all G-7 countries and important players like Brazil and South Africa. The OECD is also engaging with major emerging economies that are not yet part of the Convention. In particular, we are reaching out to China and India, in hopes that these countries, too, will join. Russia has begun the process of adhering to the Anti-Bribery Convention as part of its drive to become an OECD member. We need the participation of these and other important international traders and investors in order to effectively achieve a level playing field and to reduce the tragic costs of foreign bribery to so many societies.
Of course, the credibility of the Convention depends first on the engagement and performance of those who are already members. The quick passage of the Foreign Bribery Bill and the introduction of the new UK Foreign Bribery Strategy should position the United Kingdom to be among the leaders in the fight against foreign bribery – at the OECD and globally. I am sure that that your actions as well as your law will influence other countries and have an important impact on the international fight against foreign bribery.
I would like to thank you all, again, for your attention today and am encouraged to see such public interest here in the United Kingdom on the issue of foreign bribery. Foreign bribery is a crime and it must be stopped. Not only is it bad for governments and bad for business, but it inflicts real pain on real people.
By working together, the message we are sending on foreign bribery is clear: The only ones who pay pay the price for foreign bribery are the ones responsible for this crime.
Thank you and good afternoon.