Transnational Bribery of Foreign Officials: A New Threat to the Future of Democracy

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I. INTRODUCTION

While every nation in the world proscribes the bribery of domestic government officials,(1) very few of these nations have extended the prohibition to similarly condemn the bribery of foreign public officials.(2) In many countries, the practice of "transnational bribery"(3) has become a routine aspect of conducting business in foreign lands. Whether bribes are given in response to official demands or in an attempt to derive a competitive advantage, businesses frequently view the practice as a prerequisite to securing lucrative contracts in foreign states.

Corruption involving public officials has reached new proportions in recent years. The end of the Cold War, the spread of democracy, and growing deregulation and privatization have fostered a climate conducive to the increasing incidence and magnitude of corrupt business practices.(4) The transition to market economies in Eastern Europe and the former Soviet Union summarily removed all economic restraints, and corruption and bribery that were previously policed now often go unchecked.(5) In addition, since the economies of countries such as China and Russia have opened up to international trade and foreign investment, corruption has taken on new dimensions.(6)

As bribery has become increasingly pervasive, the resultant economic and political costs have risen dramatically, particularly in developing countries undergoing political and economic reform.(7) Transnational bribery leads to artificially inflated prices and rewards corruption and inefficiency. Government procurement decisions based on the desire for personal enrichment, rather than on considerations of value and quality, divert scarce resources from their optimal uses. As trade barriers are eliminated and global competition becomes increasingly intense, pervasive corruption threatens the economic growth of developing countries and discourages desperately needed foreign investment. Developing countries that have only recently adopted democratic institutions suffer from political instability, and public perceptions of increased corruption and declining standards of living may lead to a backlash against democracy and a return to prior forms of government.(8)

As the cost of business bribes becomes increasingly expensive, the world community has become less willing to accept bribery as an inherent element of "business as usual." International organizations, such as the World Trade Organization, the United Nations, and the OECD, have begun to institute reforms aimed at curbing the practice of transnational bribery. Regional organizations and multilateral lenders have also begun to address the problem. However, recent initiatives against transnational corruption have two common weaknesses--they lack enforceability and they do not address corruption on a global scale.(9)

Anti-corruption movements around the world have set the stage for a comprehensive attack on transnational bribery. The Organization of American States adopted the first convention to criminalize transnational bribery in 1996, and efforts by the OECD to address the issue culminated in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which was signed by the representative Ministers in November 1997, and is expected to enter into force by 1999. While these developments are promising, they offer only a partial solution to a complex problem. Transnational bribery will persist until a comprehensive anti-corruption strategy, based on an understanding of the underlying causes of corruption, is implemented.

Part II of this Note will examine the prevalence of transnational bribery in the context of international trade. It then will discuss the negative impact of transnational bribery on national economies, political structures, and international trade. Part III will examine the debilitating impact of transnational bribery on developing countries. …