The Emergence of an International Enforcement Regime on Transnational Corruption in the Americas
Zagaris, Bruce, Lakhani, Sheila, Law and Policy in International Business
A prospective investor in the Americas must pay attention to the realities of corruption in the hemisphere. In many countries, investors wanting to obtain government procurement contracts must confront the practice of paying bribes to obtain contracts. U.S. persons, entities publicly traded in the United States, and entities that have strong moral and ethical standards, cannot pay bribes and often lose business opportunities. Increasingly, proactive stances by investors competing in procurement and by the U.S. government have resulted in the cancellation and reissue of bids, as occurred several years ago in Brazil in the aftermath of exposing illegal payments in the award of a contract. Subsequently, Raytheon succeeded in obtaining a multi-million dollar procurement for comprehensive surveillance and consulting work on the Amazon.
In particular, the United States' Foreign Corrupt Practices Act has energized U.S. firms and the U.S. government to pursue a level playing field. Other governments also criminalize the payment of transnational bribes, require accounting and transparency in connection with public procurement, and take steps to strengthen civil society. The problem of developing an effective international anti-transnational bribery regime is substantial. The practice of commercial corruption in procurement has been embedded for centuries. Low salaries for government officials, the need or desire to supplement the modest salaries of officials, the use of clever business practices to mask the receipt of illicit payments, and a fear that leaning on transnational bribery may cause a loss of business, are among the many problems that restrict political will.
The development of an international enforcement regime on transnational corruption must also confront the reality of the need to design and construct the requisite mechanisms, institutions, uniform laws, mutual assistance, and alliances. In the Western Hemisphere, efforts to develop enforcement regimes suffer from the absence of a strong enforcement infrastructure. Not surprisingly, although the Inter-American Convention Against Corruption (Inter-American Corruption Convention) was signed in April 1996, its implementation has been comparatively slow. Nevertheless, the political will to combat transnational bribery has emerged and gained momentum dynamically. In particular, on December 17, 1997, the signing of the Organization of Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention) jump-started the enforcement regime. Major international governmental organizations, such as multilateral development banks, have joined in the enforcement efforts. Equally important, nongovernmental organizations (NGOs), including Transparency International, are contributing significantly to the initiative.
This Article identifies and discusses the efforts to develop an international enforcement regime to prevent and combat transnational bribery. It emphasizes developments in the Western Hemisphere. The Inter-American Corruption Convention is the initial focus. Thereafter, the impact of the OECD Anti-Bribery Convention and its implementation efforts are examined. The efforts of international governmental organizations, such as the European Union (EU) and multilateral development banks, are considered. Finally, the Article comments on potential prospects for future development of the anti-transnational corruption enforcement regime in the Western Hemisphere.
II. INTER-AMERICAN CORRUPTION CONVENTION
The principal mechanism in the Western Hemisphere to develop an enforcement regime against transnational corruption is the Inter-American Corruption Convention. Emerging from the Organization of American State's Working Group on Probity and Public Ethics, and connecting with civil society, the initiative focuses on establishing a legal framework, namely a convention, developing model laws, and forming an alliance with interested international governmental organizations and NGOs. …