Australia's Implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

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On 16 December 1996 the UN adopted the United Nations Declaration against Corruption and Bribery in International Commercial Transactions. (1) The Declaration committed UN members to criminalise bribery in an effective and coordinated manner and to deny tax deductibility for bribes. Approximately a year later the Declaration was endorsed by the 29 member states of the Organisation for Economic Cooperation and Development (`OECD') adopting the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (`OECD Convention'). (2) In doing so, OECD members agreed to establish legislation criminalising the bribing of foreign public officials by the end of 1998. (3) In keeping with this commitment, Australia prepared appropriate draft legislation, the Criminal Code Amendment (Bribery of Foreign Public Officials) Bill 1998 (Cth). Following a National Interest Analysis and a public review process by the Joint Standing Committee on Treaties (`JSCT'), this bill was passed in revised form on 3 June 1999 as the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 (Cth) (`Bribery Act'). (4)

The passage of the legislation signifies a clear intention by the Federal Government, not only to address the issue of bribery of foreign corrupt officials, but also to ensure a legal regime that is consistent with the approach taken by other OECD countries, in particular the United States. Furthermore, as indicated by the Attorney-General's Department, (5) only a consistent approach by all OECD countries will address the ramifications of the bribery of foreign public officials.

It appears generally accepted that Australian firms are not significantly involved in corrupt practices overseas and that, arguably, Australian firms will ultimately benefit from the predicted reduction in the incidence of international bribery resulting from the OECD's action. (6) Nonetheless during the consultation process a number of Australian companies, and particularly the various Chambers of Commerce, voiced opposition to the ratification of the OECD Convention. (7)

Most opponents argued that not only will adoption of the OECD Convention hurt Australia's ability to compete for projects in the region, (8) but that it will also particularly disadvantage small and medium-sized enterprises. In any event, the document does nothing to attack corruption `at the coal face', as it makes no mention of the extortion of bribes, nor does it try to penalise recipients. Furthermore, concern was expressed as to how companies could distinguish between necessary girls or facilitation payments and bribes as future criminalised activities. These questions will ultimately be decided by courts after the event. Criticisms of this nature are similar to those which have been raised by US businesses in relation to the US Foreign Corrupt Practices Act (`FCPA'). (9)

Despite the opposition that exists, the passing of the Australian Bribery Act evidences Australia's clear intention to combat the negative effects caused by the international bribery of foreign officials. On its face, the legislation is severe. However, the real issue remains the extent to which, in practice, the Bribery Act will be implemented and enforced.


The true cost of corruption worldwide is unknown, but it certainly runs into the billions of dollars. (10) Despite this, with the exception of the US, little effort has been made to combat this problem. While some, particularly in the West, see it as simply a part of doing business, corruption in international business transactions has significant deleterious effects. Widespread bribery:

* Grossly distorts the tendering process for government contracts. This leads to more costly projects and, often, an adverse effect on the quality of the work;

* Distorts the prioritisation of major projects (encouraging `white elephant' investment projects);

* Diverts money from public accounts to private individuals and often into foreign bank accounts. …


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