OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

The Organisation for Economic Cooperation and Development (OECD) first put international corruption on its agenda in 1989 and evolved two basic objectives for its work: to fight corruption in international business and to help level the competitive playing field for companies.

After several years spent analysing the nature of corruption in international business and studying the measures that countries might take to combat it, OECD countries agreed in 1994 on an initial Recommendation on Bribery in International Business Transactions (1994), which was later revised in May 1997 Revised Recommendation of the Council on Combating Bribery in International Business Transactions.

Based on the Recommendations, but also upon on discussion underway since 1995, OECD countries and several non-members, negotiated Convention on Combating Bribery of Foreign Public Officials in International Business Transactions which was signed in 1997. The Convention, which came into force on 15 February 1999, is open to accession by states non-members of the OECD. All 29 OECD Member countries have signed it and non-member signatories are Argentina, Brazil, Bulgaria, Chile and the Slovak Republic. A further OECD Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials was signed in April 1998.

Corruption is no longer business as usual. Significantly the Convention requires signatories to enact laws that make it a crime to offer, promise or give a bribe to a foreign public official in order to obtain or retain international business deals

Australia has been a member of the OECD since 1971. The Department of Foreign Affairs and Trade (DFAT) outlines the relationship and role of the OECD on Australia and the OECD

Within the OECD the anti corruption and anti bribery work is carried out by the OECD Anti-Corruption Division directed by the Working Group on Bribery under the Directorate for Financial, Fiscal and Enterprise Affairs.

There is long-standing consensus among participants in the Working Group on Bribery on the need for a rigorous process of multi-lateral survillance to ensure the effectiveness of the instruments to combat bribery in international business transactions, particularly those involving criminal law. The OECD Anti Corruption Division is responsible for monitoring application and enforcement of the Convention.

The following was agreed:

The purpose of monitoring is to ensure compliance with the Convention and implementation of the revised Recommendation. Monitoring also provides an opportunity to consult on difficulties in implementation and to learn from the solutions found by other countries.

Effectiveness Monitoring must be systematic and provide a coherent assessment of whether a participant has implemented the Convention and 1997 revised Recommendation.

Equal treatment Monitoring must be fair and this means equal treatment for all participants. Monitoring performance is an exercise among peers who can be frank in their evaluations. The Secretariat has an important role in ensuring uniform application of the procedures.

Recommendation and Convention The Recommendation and the Convention are very different instruments: the Convention contains detailed binding commitments in the field of criminal law; the Recommendation has a wider scope and is written in more general terms. Both are important elements of the activity to combat bribery in international business transactions. There are also important interconnections between the two instruments, for example, in the areas of accounting and money laundering.

Cost-efficient The monitoring procedure should be efficient, realistic, concise and not overly burdensome. It is necessary, however, to ensure that monitoring is effective, since together with the Convention and the Recommendation, it guarantees the level playing field.

Co-ordination with the Council of Europe and other organisations International organisations such as the Council of Europe and European Union, and the participants in them share the goal of combating corruption, though the scope of their respective efforts and their more specific objectives may differ. All participants want to avoid duplication of effort. Since the Council of Europe is launching a procedure to monitor implementation of its anti-corruption principles and instruments, particular efforts should be made to take its activities into account.

Public information The 1997 revised Recommendation calls on the Working Group to provide regular information to the public on its work and activities and on implementation of the Recommendation. This general responsibility must be balanced against the need for confidentiality which facilitates frank evaluation of performance.

The Monitoring system has been developed using self and mutual evaluation and divided into Phase 1 and Phase 2. The Phase 1 (legislation) reviews were desk studies and are now complete for most countries and the reports are available by searching by country and veiwing the Country Surveys/Reviews/Guides.

Phase 2 (enforcement) monitoring includes detailed preparation by the government under review, non government organisations and a one week country visit. The Phase 2 reviews started with a visit to Finland in September 2001. Since then USA, Germany, Iceland and Canada have been reviewed with a further six countries, including Australia scheduled for review during 2003.

Australia passed Criminal Code Amendment (Bribery of Foreign Public Officials) Act in 1999 as a response to the OECD convention.

Tax deductability for bribes paid overseas in the course of doing business was removed in the Taxation Laws Amendment Act (No. 2) 2000. At the same time an Explanatory Memorandum issued by the Treasurer.

See Information on complying the Australian legislation prepared by TI Australia for general information about compliance.