Academic journal article The George Washington International Law Review

The OECD Anti-Bribery Convention: Coverage of Foreign Subsidiaries

Academic journal article The George Washington International Law Review

The OECD Anti-Bribery Convention: Coverage of Foreign Subsidiaries

Article excerpt

I. INTRODUCTION

In December 1997 U.S. Secretary of State Madeleine Albright and ministers representing the other members of the Organization for Economic Cooperation and Development (OECD)' and five non-members participating in the Working Group on Bribery in International Business Transactions of the Committee on International Investment and Multinational Enterprises (CIME) (the "Working Group")2 signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "Convention").3 This agreement, the product of several years of negotiations within the OECD,4 has been hailed by the U.S. government as a "bold and historic step in the fight against international commercial bribery,"5 and as "a major milestone in U.S. efforts over more than two decades to have other major trading nations join us in criminalizing the bribery of foreign public officials in international business transactions."6 The Convention entered into force on February 15, 19997 and as of January 2001, 29 countries, including the United States, had deposited their instruments of acceptance for approval or ratification.8 Ministers of OECD member states have urged that all signatories ratify the Convention and implement it fully as soon as possible.9 The signatories include most of the major exporting countries in the world,10 whose companies account for the lion's share of international contracting.11

The Convention requires that parties criminalize the bribery of foreign public officials for the purpose of obtaining or retaining business.12 Parties must establish jurisdiction over this offense on the basis of territoriality13 and, in some cases, nationality.14 However, the Convention does not directly address acts of bribery by foreign-incorporated subsidiaries of companies that are subject to the parties' national laws proscribing the bribery of foreign public officials.

This note examines whether the failure to address foreign subsidiaries is a gap that could weaken the Convention. Section II of this note provides a brief over-view of the Convention's key provisions. Section III addresses the 1998 amendments to the relevant U.S. domestic law, the Foreign Corrupt Practices Act (FCPA).15 Section IV discusses the extent to which the Convention and the FCPA may reach acts of bribery by foreign subsidiaries. Section V discusses certain "soft law" approaches in lieu of criminalization and recommends that corporations, with the active endorsement of organizations such as the OECD and the International Chamber of Commerce (ICC), adopt meaningful codes of conduct to address bribery by foreign subsidiaries. The note concludes that bribery by foreign subsidiaries is a problem whose potential dimensions are as yet unknown and that merits close attention as the Convention is implemented.

II. THE OECD CONVENTION

Under the Convention, each party is obligated to take necessary measures that:

establish that it is a criminal offense under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of inter-national business.16

Parties are also required to take necessary measures to criminalize "complicity in, including incitement, aiding and abetting, or authorization of an act of bribery of a foreign public official."17 "Foreign public official" is defined broadly as "any person holding a legislative, administrative or judicial office of a foreign country, whether appointed or elected; any person exercising a public function for a foreign country, including for a public agency or public enterprises; and any official or agent of a public international organization. …

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