Damned If You Do, Damned If You Don't? the OECD Convention and the Globalization of Anti-Bribery Measures

Article excerpt

ABSTRACT

This article explores the efforts of the international community to battle corruption by focusing on the recently promulgated Organization of Economic and Cooperative Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. For many years the United States battled corruption by prohibiting its domestic businesses from bribing foreign officials. Other countries, however, generally viewed U.S. policy as a form of unilateral commercial disarmament and declined to pass their own anti-bribery legislation. The Convention, therefore, marks a recent shift by the international community, as it requires signatories to enact laws to punish domestic corporations for bribes paid to foreign officials.

The authors begin by examining the U.S. Foreign Corrupt Practices Act (FCPA), the precursor to the OECD Convention, and by describing all cases initiated by the government pursuant to the FCPA. The authors then discuss multinational anti-bribery efforts that ultimately led to the adoption of the Convention. The article focuses on the provisions of the Convention as well as the implementing legislation of various signatories. Finally, the authors explains compliance measures that multinational U.S. corporations have adopted to protect themselves from FCPA

The [OECD Convention] criminalizes the giving of bribes.

-- World Trade, January 1999 at p. 58(1)

Going in [to a developing] country you have to be ready to grease a few palms.

-- World Trade, Same Edition, Different Title, at p. 88(2)

I. INTRODUCTION

At the outset of the new millennium, thirty-four industrialized countries agreed to outlaw conduct that had previously been standard operating procedure at many multinational corporations by adopting the Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention).(3) Under the broadly drafted Convention, the signatories(4) agreed to enact laws that would punish as criminal activity bribes paid by domestic companies to foreign officials for "improper advantage in the conduct of international business."(5)

For decades, the United States was effectively the sole country to prohibit its national businesses from bribing foreign officials.(6) Many overseas competitors were not disappointed to see the high-minded United States engage in a commercial form of unilateral disarmament. They viewed bribery as an integral part of international business culture,(7) particularly in developing countries, to be accepted as any other necessary evil. Some countries even allowed bribes as legitimate income tax deductions. Other competitors felt that, while admirable, U.S. measures were not something they could afford to imitate in a highly competitive global market. Still others took the view that bribery was caused by demand from the payee--not the payor--and that prevention of bribes in foreign developing countries was the responsibility of authorities in those countries.

In this atmosphere of ambivalence, the policy shift of the signatories to the OECD Convention took many companies by surprise, multilateralizing a dilemma that corporate America has faced for years. That is, a company may lose a major foreign contract unless it pays the "right person," yet that payment may violate applicable anti-corruption laws. The two quotations at the beginning of this article, taken from different articles in the same publication, provide a telling illustration of the contradictory forces now impelling business decisions.

How great a threat anti-bribery compliance poses to business relationships remains unclear.(8) For example, it is debatable how much U.S. business has materially suffered from U.S. bans on bribes to foreign officials or whether these prohibitions have created more efficient and better-organized enterprises. …