Addressing the Challenges

of International Bribery

and Fair Competition

2001

The Third Annual Report Under Section 6

of the International Anti-Bribery and 

Fair Competition Act of 1998

U.S. Department of Commerce

International Trade Administration

July 2001
Addressing the Challenges

of International Bribery

and Fair Competition

2001

The Third Annual Report Under Section 6

of the International Anti-Bribery and 

Fair Competition Act of 1998

U.S. Department of Commerce

International Trade Administration

July 2001
This report can also be found on the Internet at http://www.mac.doc.gov/tcc


Executive Summary v

The environments in which governments and businesses operate are changing rapidly. Globalization has

created many new forces and energized old ones. In the

area of international trade we have seen that the promotion of open and free markets around the world has set

into motion the positive forces that now drive economic

development, democratization, social freedoms and

political stability. These same forces have produced a

higher standard of life for many of the worldís nations

and raised the expectations of many others. In addition,

competitive pressures and market demands are also

changing the dynamics of doing business internationally. 

Corruption, however, thwarts these forces and threatens, or at least postpones, the benefits of global trade.

Corruption by and of public officials is a serious threat to

governments and it undermines the rule of law.

Furthermore, corruption materially affects the environments in which companies operate and erodes the fabric

of everyday economic life; it is the invisible tax that

raises the cost of doing business and unfairly places it on

those least able to pay. For these reasons fighting corruption head-on is of critical importance to the U.S. and

other governments around the world.

Adoption in 1997 of the OECD Convention on

Combating Bribery of Foreign Public Officials in

International Business Transactions (Bribery Convention) marked an important step forward in this effort.

The Bribery Convention has been signed by all thirty

OECD members1 and Argentina, Brazil, Bulgaria, and

Chile; it entered into force on February 15, 1999. 

As President George W. Bush recently emphasized in

his statement on corruption submitted to the Second

Global Forum on Fighting Corruption at The Hague in

May 2001, only a few short years ago talking openly

about corruption was considered taboo; now this is no

longer true. The ability of governments to discuss corruption itself is a significant accomplishment. As disclosed in this report, progress on implementation of the

Bribery Convention is also a major achievement. In just

under two and a half years, almost all of the signatories

are now Parties to the Bribery Convention and are under

an international obligation to enforce their laws implementing the Convention. 

This third annual report under the International AntiBribery and Fair Competition Act of 1998 (IAFCA)

examines the continued progress that signatory countries

have made in implementing the Convention. This report

was prepared by the Department of Commerce's

International Trade Administration and the Office of

General Counsel working in close cooperation with the

State Department, the Justice Department, the Treasury

Department, the Office of the United States Trade

Representative, and the staff of the United States

Securities and Exchange Commission.

Executive Summary
This report continues to focus primarily on national

implementing legislation and its conformity with the

obligations that all signatories have accepted. The legal

framework is critical for Parties to fulfill their commitment to criminalize the bribery of foreign public officials.

We will not have a comprehensive appreciation of the

varying approaches to implementation until all signatories have ratified and implemented the Convention and

their laws have undergone an assessment. 

The report also highlights the present shift in focus to

the enforcement of these obligations. The Parties to the

Convention will now begin reviewing each otherís experiences in securing rigorous enforcement of those laws

when violations are found. We identify this as a priority

for the Bush Administration and identify initiatives the

U.S. government will take to secure the intended benefits

from this landmark agreement. The report also addresses

other issues identified in the IAFCA. Of particular note,

the report reviews steps taken by signatories to implement the OECD recommendation to disallow the tax

deductibility of bribes. It assesses antibribery programs

and transparency in several major international organizations. Finally, the report examines progress made on

advancing other goals in the IAFCA relating to fair competition in global satellite communication services.

Major Findings

ï Meaningful progress has been made over the past

year in the implementation of the OECD Bribery

Convention. Our first objectiveóensuring that all

signatories ratify the Bribery Convention and enact

implementing legislationóhas been mostly achieved.

In less than two and a half years, the Convention is

nearing full ratification. As of June 4, 2001, thirty-two

of the thirty-four Convention signatories had

deposited instruments of ratification with the OECD

Secretariat and thirty had laws on the books that make

it a crime to bribe foreign public officials in international business transactions. These countries represent over three-quarters of global trade. Only Brazil,

Chile, Ireland, and Turkey must still complete legislative action to bring the Convention into force. The

United States will continue to press these countries to

complete their legislative processes without delay. 

ï The OECD process to monitor implementation and

enforcement of the Convention and the 1997 Revised

Recommendation has proven to be rigorous. Thus

far, review of the implementing legislation of

twenty-eight countries, including the United States,

has been completed by the OECD Working Group on

Bribery. The effectiveness of this process has been

demonstrated by the willingness of several Parties to

correct weaknesses identified in their implementation and enforcement regimes after their legislation

has undergone review. The U.S. government assessments of the legislation of twenty-seven foreign

Parties, including the seven reviewed since our last

report (Argentina, France, Denmark, Italy,

Luxembourg, the Netherlands, and Poland) are

included in Chapter 2 of this report.

ï We are concerned that some countriesí legislation

may be inadequate to meet all their commitments

under the Convention, in particular the legislation of

France, Japan, and the United Kingdom. We will

continue to note our concerns in the Working Group

meetings and also when appropriate, in bilateral contacts with the other governments. 

ï Phase II of the monitoring processówhich will

include on-site visits to study the enforcement structures and practices of Parties to the Conventionó

begins this year with the review of Finland. This will

be a critical phase in ensuring rigorous enforcement

of the Conventionís obligations. The U.S. government believes that Phase II will be the true litmus test

of a Partyís commitment to the Convention and its

eventual effectiveness. 

ï We are not aware at this time of any prosecution by

another Party to the Convention for bribery payments to foreign public officials. However, as with

investigations in this country, the confidentiality of

the procedures prior to prosecution could be one factor. Nonetheless, we are disturbed by continuing

reports of alleged bribery of foreign public officials

by firms based in countries where the Convention is

in force. In the coming year we will redouble our

efforts to encourage the relevant authorities in each

Party to address all credible allegations of bribery,

and will seek to engage other signatory governments

in coordinated action in situations where bribes have

been solicited by foreign public officials.

ï Another very important element in making the

Convention a success is raising public awareness of

the laws. This includes informing the relevant prosecutorial authorities of the new tools they have to

prosecute corruption, as well as counseling businesses and the general public about the laws. While

in important economies such as Belgium, Italy,

Japan, Spain, and the United Kingdom, there continues to be relatively little official activity to publicize

the Convention, other Parties have undertaken useful

initiatives including Australia, Canada, the Czech

vi Addressing the Challenges of International Bribery and Fair Competition, 2001
Republic, Korea, and the Netherlands. The United

States will encourage other governments to increase

public awareness.

ï The United States takes monitoring of the

Convention very seriously and has committed significant resources to this endeavor, at times through

supplemental funding for the Working Group. A lack

of adequate funding for the Bribery Working Group

could jeopardize its ability to carry out its mandate.

The United States will continue to press for adequate

OECD funding for the Working Group.

ï The Commerce, State, Justice, and Treasury

Departments continue to work as a team to monitor

implementation and enforcement of the Convention.

U.S. agencies have established a comprehensive

monitoring process that includes active participation

in the OECD meetings on the Convention, bilateral

discussions with other governments on implementation and enforcement issues, and careful tracking of

bribery-related developments overseas.

ï Further substantial progress has been achieved in

implementing the OECD Council recommendation to

eliminate any remaining tax deductibility for bribes to

foreign public officials, with only one country (New

Zealand) reporting that it has not yet completed action

necessary to disallow these deductions. The United

States, in cooperation with other OECD members,

continues to provide technical assistance to the

OECDís Fiscal Affairs Committee. With significant

assistance from the U.S. Treasury Department, within

the past year the Committee on Fiscal Affairs has

completed work on a Bribery Awareness Handbook

designed to serve as a manual for tax officials in signatory countries to assist them in detecting bribes.

ï At the urging of the United States, OECD

Ministers in their 2001 communique indicated that

the OECD will move ahead on two issues of particular importance: bribery acts in relation to foreign

political parties and advantages promised or given

to any person in anticipation of that person becoming a foreign public official. These channels of

bribery and corruption are covered in the Foreign

Corrupt Practices Act (FCPA), but not specifically

covered in the Convention. After persistent encouragement by the U.S. government, and recognizing

that such a gap in Convention coverage would be

potentially a serious problem, the Working Group

agreed to issue a questionnaire to signatories to

explore this important issue.

ï The Working Group and the United States have

concluded that a targeted expansion of the

Convention membership to appropriate states could

contribute to the elimination of bribery of foreign

public officials in international business transactions.

Since our last report, one applicant country

(Slovenia) has been favorably considered for accession. We expect a small number of additional qualified applicants to satisfy the conditions for Working

Group observership or full accession to the

Convention in the coming years.

ï U.S. agencies will continue to help U.S. businesses

deal with the problem of international bribery. U.S.

officials will intensify their outreach to the private

sector to solicit its views on how best to implement

the Convention and to share information on signatories' laws and policies regarding bribery. The

Department of State, in cooperation with the

Commerce and Justice Departments, published a

new edition of its brochure, Fighting Global

Corruption: Business Risk Management, and the

Department of Commerce maintains an Internet

bribery hotline. The Department of Justice, under its

Foreign Corrupt Practices Act Opinion Procedure,

will issue opinions on the antibribery provisions of

the Foreign FCPA with respect to certain prospective

business transactions. 

ï Combating corruption is more than a responsibility

of governments. Business associations and nongovernmental organizations, such as Transparency

International, are playing an important role in helping the U.S. government monitor implementation of

the Convention and educate the public and the business community about the pernicious effects of corruption and how to combat it. 

ï International organizations are undertaking useful initiatives to promote cooperation on combating bribery and to ensure transparency and good

business practices within their own programs.

With active U.S. support, major international

financial institutions, such as the International

Monetary Fund, the World Bank, and the regional

multilateral development banks, have intensified

efforts to help client countries prevent corruption

and improve the efficiency of funded projects.

Noteworthy activities are also continuing in the

OECD, the Organization of American States, the

United Nations, the Organization for Security and

Cooperation in Europe, and the World Trade

Organization. INTELSAT, a major intergovernmental satellite organization, has maintained

active programs to address transparency and antibribery issues in its operations.

Executive Summary vii
ï The report also addresses advantages that may

accrue to international satellite organizations as a

result of privileges and immunities granted by treaty

and U.S. law. Over the past year there has been a

reduction in these advantages, and following

INTELSAT's privatization scheduled for July 18,

2001, we can expect to see an even greater reduction

in these advantages and an increasingly level playing

field for satellite service providers. (Inmarsat completed its privatization in 1999.) 

In summary, since our last report to Congress in July

2000, nine additional signatory countries have adopted

legislation to implement the Convention, and eleven more

have deposited instruments of ratification with the OECD

Secretariat; this is material progress. While four countries

must still adopt laws to implement the Conventionóand

a number of others take action to correct deficiencies in

their implementing legislationóensuring rigorous

enforcement of the Convention will be the next priority

for the U.S. government. We also will encourage other

governments to make it an important agenda item; bribery

of foreign public officials continues to be a common

threat to governments and businesses across the globe. 

Over the past several years, the U.S. government has

received reports indicating that the bribery of foreign

public officials influenced the awarding of billions of

dollars in contracts around the world. For example, in the

period from May 1, 2000 to April 30, 2001, the competition for 61 contracts worth $37 billion may have been

affected by bribery of foreign officials, and of these contracts, U.S. firms are believed to have lost at least nine,

worth approximately $4 billion. Firms from Convention

signatory countries continue to account for about 70 percent of these allegations. In other cases, we understand

that U.S. firms withdrew from contract competitions

because foreign officials demanded bribes or do not even

seek business in countries where bribery is prevalent.

(See Chapter 9.) The U.S. government is committed to

reducing, and eventually eliminating, the number of contracts influenced by such bribery. Securing effective

implementation and enforcement of the Bribery

Convention will be instrumental to that objective.

1The current member states of the OECD are Australia,

Austria, Belgium, Canada, the Czech Republic, Denmark,

Finland, France, Germany, Greece, Hungary, Iceland, Ireland,

Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands,

New Zealand, Norway, Poland, Portugal, Spain, the Slovak

Republic, Sweden, Switzerland, Turkey, the United Kingdom,

and the United States.

viii Addressing the Challenges of International Bribery and Fair Competition, 2001
ix

Introduction............................................................................................................................................................1

Chapter 1: Ratification Status ......................................................................................................................7

Chapter 2: Review of National Implementing Legislation............................................................11

Concerns About Implementing Legislation................................................................................................12

Summary of 1998 Amendments to the Foreign Corrupt Practices Act of 1977 ......................................14

Argentina......................................................................................................................................................15

Australia ......................................................................................................................................................17

Austria ........................................................................................................................................................19

Belgium........................................................................................................................................................21

Bulgaria ......................................................................................................................................................22

Canada ........................................................................................................................................................24

Czech Republic ..........................................................................................................................................26

Denmark ......................................................................................................................................................28

Finland ........................................................................................................................................................30

France ..........................................................................................................................................................32

Germany ......................................................................................................................................................36

Greece ........................................................................................................................................................38

Hungary ......................................................................................................................................................40

Iceland ........................................................................................................................................................41

Italy ..............................................................................................................................................................42

Japan ..........................................................................................................................................................45

Korea ..........................................................................................................................................................48

Luxembourg ................................................................................................................................................50

Mexico ........................................................................................................................................................52

Netherlands ..................................................................................................................................................54

Norway ........................................................................................................................................................57

Poland ..........................................................................................................................................................58

Slovak Republic ..........................................................................................................................................60

Spain ............................................................................................................................................................62

Sweden ........................................................................................................................................................64

Switzerland ..................................................................................................................................................66

United Kingdom ..........................................................................................................................................68

Chapter 3: Review of Enforcement Measures ....................................................................................71

Enforcement of National Implementing Legislation..................................................................................71

U.S. Efforts to Promote Public Awareness ................................................................................................72

Efforts of Other Signatories ........................................................................................................................72

Monitoring Process for the Convention......................................................................................................75

Monitoring of the Convention by the U.S. Government ..........................................................................78

Chapter 4: Laws Prohibiting Tax Deduction of Bribes....................................................................81

Contents
x Addressing the Challenges of International Bribery and Fair Competition, 2001

Chapter 5: Adding New Signatories to the Convention................................................................87

Chapter 6: Subsequent Efforts to Strengthen the Convention....................................................89

Outstanding Issues Relating to the Convention..........................................................................................90

Other Issues Relating to Coverage..............................................................................................................92

Chapter 7: Antibribery Programs and Transparency in

International Organizations ..........................................................................................................93

INTELSAT ..................................................................................................................................................94

International Telecommunication Union ....................................................................................................96

International Monetary Fund ......................................................................................................................97

World Bank..................................................................................................................................................98

African Development Bank ......................................................................................................................101

Asian Development Bank ........................................................................................................................102

European Bank for Reconstruction and Development ............................................................................104

Inter-American Development Bank..........................................................................................................105

Organization of American States ..............................................................................................................108

Organization for Economic Cooperation and Development....................................................................109

Organization for Security and Cooperation in Europe ............................................................................111

United Nations ..........................................................................................................................................112

World Trade Organization ........................................................................................................................113

Chapter 8: Private Sector Involvement in Monitoring and Implementation......................115

Chapter 9: Additional Information on Enlarging the Scope of the Convention ..............119

Chapter 10: Advantages to International Satellite Organizations ........................................123

APPENDIXES

Appendix A: International Anti-Bribery and Fair Competition Act of 1998 ..........................................129

Appendix B: Antibribery and Books and Records Provisions of the 

Foreign Corrupt Practices Act ..................................................................................................................137

Appendix C: Brochure on the Foreign Corrupt Practices Act ................................................................149

Appendix D: OECD Documents ..............................................................................................................155

OECD Convention on Combating Bribery of Foreign Public Officials in 

International Business Transactions (Adopted November 21, 1997, 

Signed December 17, 1997)

OECD Commentaries on the Convention on Combating Bribery of 

Foreign Public Officials in International Business Transactions 

(Adopted by the Negotiating Conference on November 21, 1997)

Revised Recommendation of the OECD Council on Combating Bribery in 

International Business Transactions (Adopted by the OECD Council May 23, 1997)

Recommendation of the OECD Council on the Tax Deductibility of 

Bribes to Foreign Public Officials (Adopted by the OECD Council April 11, 1996)

Appendix E: Websites Relevant to the Convention and Anticorruption Issues ......................................169
Introduction 1

History shows that expanded trade leads to more

prosperous businesses, wider choices of goods, and

lower prices for consumers. Expanding trade brings

higher wages, more jobs, and economic growth. It

benefits American consumers and taxpayers at all levels

of society.

Expanding trade also has many benefits abroad. Open

markets promote economic and political freedom around

the world. Economic and political freedom creates

increased competition, opportunity, and independent

thinking that strengthen democracy. In turn, greater political freedom and democracy across the globe enhance

U.S. national security. As we dismantle trade barriers and

promote the rule of law around the world, especially in the

developing world, we help create the economic and social

conditions necessary for real change. 

Corruption, however, is an impediment to trade. It

takes many forms and affects trade in different ways. In

many countries, it affects customs practices, licensing

decisions, and the award of government procurement

contracts. If left unchecked, bribery and corruption can

negate market access gained through trade negotiations,

undermine the foundations of the international trading

system, and frustrate broader reforms and economic stabilization programs. 

For more than two decades, the United States has

sought to prevent the bribery of foreign public officials in

international business. This corrupt practice has many

pernicious effects. It penalizes companies that try to compete fairly and win contracts through the quality and price

of their products and services. It tarnishes the reputation

of the companies engaging in bribery. Finally, it undermines good governance, retards economic development,

and distorts trade.

In 1997, the United States took a major step forward in building an international coalition to address

the problem when thirty-four exporting countries,

including the United States, negotiated the Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions

within the Organization for Economic Cooperation

and Development (OECD).

The following year, the Congress enacted the International Anti-Bribery and Fair Competition Act (IAFCA),

which amended certain provisions of the Securities

Exchange Act of 1934 and the Foreign Corrupt Practices

Act of 1977 (FCPA) that relate to the bribery of foreign

public officials. These changes were made to implement

the Convention. The United States ratified the Convention

on November 20, 1998, and deposited its instrument of

ratification with the OECD on December 8, 1998. The

Convention entered into force on February 15, 1999. 

While the main focus of the IAFCA is on implementation of the OECD Convention, the Act also addresses

Introduction
congressional concerns regarding privileges and immunities for international organizations which provide satellite

communications services that may affect fair competition

in that industry. (A review of these issues is contained in

Chapter 10.)

U.S. Leadership on the Convention

The United States launched its own campaign

against international corrupt business practices more

than twenty years ago with passage of the FCPA. The

law established substantial penalties for persons making payments to foreign officials, political parties,

party officials, and candidates for political office to

obtain or retain business. Enactment of the legislation

reflected deep concern across a broad spectrum of the

American public about the involvement of U.S. companies in unethical business practices. Disclosures in

the mid-1970s indicated that U.S. companies spent millions of dollars to bribe foreign public officials and

thereby gain unfair advantages in competing for major

commercial contracts.

The FCPA has made a major impact on how U.S.

companies conduct international business. However, in

the absence of similar legal prohibitions by key trading

partners, U.S. businesses were put at a significant disadvantage in international commerce. Their foreign

competitors continued to pay bribes without fear of

penalties, resulting in billions of dollars in lost sales to

U.S. exporters.

Recognizing that bribery and corruption in foreign

commerce could be effectively addressed only through

strong international cooperation, the United States undertook a long-term effort to convince the leading industrial

nations to join it in passing laws to criminalize the

bribery of foreign public officials. The Omnibus Trade

and Competitiveness Act of 1988 reaffirmed this goal,

calling on the U.S. government to negotiate an agreement

in the OECD on the prohibition of overseas bribes. After

nearly ten years, the effort succeeded. On November 21,

1997, the United States and thirty-three other nations

adopted the Convention. It was signed on December 17,

1997. All signatories to the Convention also agreed to

implement the OECD's 1996 recommendation on eliminating the tax deductibility of bribes.

The Convention entered into force on February

15, 1999. We are nearing a milestone in implementation of the Convention just over two years since its

entry into force: full ratification by all signatory

states. As of June 4, 2001, thirty countries have laws

on the books that make it a crime to bribe a foreign

public official in an international business

transaction. We continue to urge those signatories that

have not acted to conclude their internal processes as

soon as possible to bring implementing legislation

into force and those Parties with deficient legislation

to amend their legislation without further delay. In

addition, we have sharpened our focus on the need for

all Parties to rigorously enforce their laws. We are,

however, disturbed by continuing reports of alleged

bribery of foreign public officials by firms based in

countries where the Convention is in force. The Phase

II reviews of national enforcement structures and

practices will provide additional opportunities for the

United States to emphasize the importance of making

the Convention an effective instrument in the battle

against international bribery. The U.S. government is

vigorously enforcing its implementing legislation; we

expect other Parties to do the same. We believe the

Convention is the most important international antibribery instrument to date; effective implementation

and enforcement of the Convention are critical to its

success. 

Major Provisions of the Convention

The Convention obligates the Parties to criminalize

bribery of foreign public officials in the conduct of international business. It is aimed at proscribing the activities

of those who offer, promise, or pay a bribe. For this reason, the Convention is often characterized as a "supply

side" agreement, as it seeks to affect the conduct of companies in exporting nations.

The definition of "foreign public official" covers

many individuals exercising public functions, including

officials of public international organizations. It also captures business-related bribes to such officials made

through intermediaries and bribes that corrupt officials

direct to third parties. The Convention requires that the

Parties, among other things:

ï Apply "effective, proportionate, and dissuasive

criminal penalties" to those who bribe, and provide

for the ability to seize or confiscate the bribe and

bribe proceeds (i.e., net profit) or property of similar value, or to apply monetary sanctions of comparable effect.

ï Establish criminal liability of legal persons (e.g.,

corporations) for bribery, where consistent with a

country's legal system, or alternatively, ensure that

legal persons are subject to effective, proportionate,

and dissuasive noncriminal sanctions, including

monetary penalties.

2 Addressing the Challenges of International Bribery and Fair Competition, 2001
ï Make bribery of a foreign public official a predicate offense for purposes of money laundering legislation on the same terms as bribery of domestic

public officials.

ï Take necessary measures regarding accounting

practices to prohibit the establishment of off-thebooks accounts and similar practices for the purpose

of bribing or hiding the bribery of foreign public

officials.

ï Provide mutual legal assistance to the fullest extent

possible under their respective laws for the purpose

of criminal investigations and proceedings under the

Convention and make bribery of foreign public officials an extraditable offense.

The Convention tracks the FCPA closely in many

important respects. Unlike the FCPA, however, it does

not cover bribes to political parties, party officials, or

candidates for public office. The United States has urged

that the Convention be strengthened by including these

individuals and organizations in the definition of foreign

public official: the OECD Working Group on Bribery in

International Business Transactions (Working Group)

will continue to study these issues in 2001.

Reporting and Monitoring

Requirements

Section 6 of the IAFCA provides that not later than

July 1, 1999, and July 1 of each of the five succeeding

years, the Secretary of Commerce shall submit to the

House of Representatives and the Senate a report on

implementation of the Convention by other signatories

and on certain matters relating to international satellite

organizations addressed in the IAFCA. The IAFCA

requests information in the following areas related to the

Convention and antibribery issues:

ï The status of ratification and entry into force for

signatory countries.

ï A description of domestic implementing legislation and an assessment of the compatibility of those

laws with the Convention.

ï An assessment of the measures taken by each Party

to fulfill its obligations under the Convention, including an assessment of the enforcement of the legislation implementing the Convention; efforts to

promote public awareness of those laws; and the

effectiveness, transparency, and viability of the

monitoring process for the Convention, including its

input from the private sector and nongovernmental

organizations.

ï An explanation of the laws enacted by each signatory to prohibit the tax deduction of bribes.

ï A description of efforts to add new signatories and

to ensure that all countries that become members of

the OECD are also Parties to the Convention.

ï An assessment of efforts to strengthen the

Convention by extending its prohibitions to cover

bribes to political parties, party officials, and candidates for political office.

ï An assessment of antibribery programs and

transparency with respect to certain international

organizations.

ï A description of the steps taken to ensure full

involvement of U.S. private sector participants and

representatives of nongovernmental organizations in

the monitoring and implementation of the

Convention.

ï A list of additional means for enlarging the scope

of the Convention and otherwise increasing its

effectiveness.

In addition, the IAFCA requests the following information about international satellite organizations:

ï A list of advantages, in terms of immunities, market access, or otherwise, in the countries or regions

served by certain international satellite organizations; the reason for such advantages; and an assessment of progress toward fulfilling the policy

described in Section 5 of the IAFCA.

The 2001 report to Congress addresses all the areas

specified in Section 6 of the IAFCA. It updates information contained in the 2000 report and provides new

information in several areas. Of particular note, this

year's report assesses the national legislation of seven

additional Parties, bringing the total number of foreign

countries reviewed to twenty-seven. Future reports are

expected to provide more extensive information as

other signatory countries bring the Convention into

effect, and we learn more about how countries are

enforcing their antibribery laws. 

The Senate, in its July 31, 1998, resolution giving

advice and consent to ratification of the Convention,

requested that the President submit a similar report on

enforcement and monitoring of the Convention to the

Senate Committee on Foreign Relations and the Speaker

of the House of Representatives. The President delegated

responsibility for this report to the Secretary of State. In

light of the similarity of the reporting requirements, the

Commerce and State Departments have worked together,

in close coordination with the Justice and Treasury

Departments, the Office of the United States Trade Representative, and the staff of the United States Securities

and Exchange Commission, to prepare the two reports.

Introduction 3
The Monitoring Effort

The U.S. government has established a program to

monitor implementation of the Convention and encourage effective action against bribery and corruption by its

global trading partners. This effort includes regular contacts with the business community and nongovernmental

organizations, dissemination of information about the

Convention and antibribery legislation over the Internet,

and other initiatives to promote international cooperation

in combating these illicit and harmful practices.

Preparation of the annual reports to Congress under the

IAFCA has been fully integrated into the United States'

internal monitoring process. (More detailed information

on monitoring is provided in Chapter 3.)

In addition, U.S. officials participate in the OECD

process for monitoring implementation of the

Convention. The Working Group is conducting a systematic review of measures taken by signatory countries to

fulfill their obligations under the Convention. In Phase I

of this review, the Working Group is examining national

implementing legislation to assess whether it conforms to

the requirements of the Convention. Through April 2001,

the Working Group has examined the implementing legislation of twenty-eight countries, including the United

States. In Phase II of the monitoring process, which

begins this year with an examination of Finland, the

Working Group will conduct on-site visits to assess steps

that Parties are taking to enforce their antibribery legislation and fulfill other obligations under the Convention. 

We continue to be encouraged by the seriousness

with which many Parties have approached Phase I of the

OECD review and by the concrete steps many have taken

to make bribery of foreign public officials illegal under

their domestic laws. However, while we have seen some

positive action by certain countries, we are still concerned about the adequacy of several countries' implementing legislation and their apparent failure to meet all

the standards of the Convention. Chapter 2 of this report

provides a more detailed U.S. government analysis of

national implementing legislation of twenty-seven foreign Parties and reviews specific areas of concern. We

believe that the OECD's process of peer review has been

effective in encouraging signatories to enact legislation

that meets the standards of the Convention and for those

Parties with deficient legislation to bring their implementing legislation into conformity with the Convention.

As the Working Group progresses through Phase II of the

OECD monitoring process, all Parties should expect the

same level of candid and often critical peer review

afforded by the process, and to benefit from their shared

experiences. Furthermore, all Parties have an interest in

ensuring that they enact effective implementing legislation and fulfill their obligations under the Convention by

rigorously enforcing those laws. Achieving these goals

will require the continued active engagement and close

cooperation of signatory governments, the private sector,

and nongovernmental organizations.

Long-Term Commitment to Fighting

Bribery and Achieving Fair Competition

After more than twenty years of effort, the United

States is making real progress in building an international

coalition to fight bribery and level the playing field for

businesses to compete in the global marketplace. There is

now greater recognition of the damaging effects of

bribery in international business transactions and a

broader consensus on the need to take corrective action.

Adoption of the Convention by thirty-four countries represented an important and historic achievement.

Significant progress has been made this past year

towards full implementation of the Convention. Nine

more of the signatories now have laws on the books to

implement the Convention, and we expect action by the

remaining four in the very near term. While we will not

refrain from pressing for final action by these four countries, and for those with deficient legislation to rectify the

situation without further delay, we view this year as a

milestone for the Convention. In nearing full ratification

of the Convention, our efforts have shifted to ensure its

strong enforcement. It is equally important that Parties

enforce the laws they now have on the books; enforcement is the true litmus test of a Partyís commitment to the

Convention and its eventual effectiveness. 

We recognize that this is a major undertaking for

most Parties. Most Parties have had no experience in

enforcing international antibribery laws. Many foreign

companies are only beginning to adjust their internal

policies to the new international legal standards on

bribery. Full achievement of the goals of the Convention

will take time. The Parties need to establish mechanisms

for identifying potential violations of their implementing

legislation, and for identifying and correcting weaknesses in their implementation programs. Moreover,

prosecutors need to gain experience in prosecuting these

new laws. Nevertheless, each Party is entitled to expect

full compliance with commitments made by all of the

other Parties to identify and eliminate bribery of foreign

public officials in international business transactions.

Each signatory to the Convention has acknowledged that

4 Addressing the Challenges of International Bribery and Fair Competition, 2001
such bribery raises serious moral and political concerns;

it undermines good governance and economic development, and distorts international competition. Furthermore, each has acknowledged that it shares a responsibility to combat such bribery in international business

transactions.

The Bush Administration will encourage governments to combat corruption affecting international trade.

This has been established as a major negotiating objective in future trade agreements. In addition to supporting

the OECD Convention, the United States has undertaken

or supports a variety of other international initiatives to

combat bribery and corruption and to promote good governance and business integrity. 

ï The U.S. government initiated and hosted the First

Global Forum on Fighting Corruption, attended by

90 countries, in February 1999. The Dutch government organized the Second Global Forum on May

28-31 at The Hague, which was cosponsored by the

U.S. government. President Bush in a statement

submitted to the participants noted that the event will

help to keep the promotion of integrity and

transparency high on the international agenda. Senior

Administration officials attended the Forum, including U.S. Attorney General John Ashcroft, who

urged his fellow justice ministers to adopt the highest moral standard in their own behavior in order to

have credibility in the fight against corruption. The

Second Global Forumís Final Declaration stresses

the importance of monitoring mechanisms including

efforts undertaken in the of the OECD Convention.

The Final Declaration also encourages the

secretariats of the various regional monitoring mechanisms ìto seek more ways for effective cooperation.î The South Korean government will host a

Third Global Forum in 2003.

ï The United States is a Party to the Inter-American

Convention Against Corruption negotiated under the

auspices of the Organization of American States

(OAS) in 1996. The United States deposited its

instrument of ratification with the Secretary General

of the OAS in September 2000. With the assistance

of the United States, the OAS and the State Parties to

the Inter-American Convention have reached agreement on creating a mechanism to monitor implementation of this convention. The evaluation mechanism

will gauge how well the countries that have ratified

the Convention are living up to their obligations.

ï The United States is a signatory to the Criminal

Law Convention on Corruption negotiated under

the auspices of the Council of Europe (COE) in

1999. The United States participates in the formal

COE mechanism created to monitor implementation of the convention.

ï The United States supports work in the OECD

Trade Committee seeking to address the question of

what practices or characteristics of a trade regime

may be susceptible to bribery and corruption in order

to identify the factors and circumstances that may

facilitate, encourage, or simply allow bribery and

corruption to occur.

ï United Nations is expected, within the next few

months, to begin formal discussions and negotiations on a global comprehensive convention against

corruption.

ï We are encouraging the application of anticorruption principles adopted by the Global Coalition for

Africa in 1999 and the work of the Asia Pacific

Economic Cooperation (APEC) forum in promoting economic reforms that enhance good goverance. Nine Asian countries, under the auspices of

the Asian-Development Bank (ADB) and the

OECD have prepared a working draft of an AntiCorruption Action Plan for the Asia-Pacific region

which will be proposed to interested countries of

the region for their consideration and possible

endorsement at the next ADB/OECD Conference

hosted by the government of Japan, in Tokyo,

November 28-30, 2001.

ï Since 1998, the Heads of Government of the G-8

have directed their Senior Experts on Transnational

Crime (Lyon Group) to explore ways to combat official corruption resulting from large flows of money

between countries. 

ï The Congressional Helsinki Commission has been

instrumental in promoting a strong initiative against

corruption in the Organization for Security and

Cooperation in Europe (OSCE). It has held hearings

on U.S. government policies and measures against

corruption in the OSCE region and globally. At the

request of the Helsinki Commission Chairman,

Senator Ben Nighthorse Campbell, the General

Accounting Office this year will conduct a comprehensive examination of U.S. government international responses to the problems of corruption.

ï The Stability Pactóa compact for cooperation

among 40 countries and major international organizations created to help foster stability in Southeast

Europeórecently established a program against corruption. This Stability Pact Anticorruption Initiative

(SPAI) is currently being implemented by participant

countries of Southeast Europe.

Introduction 5
ï The U.S. government, international business, nongovernmental organizations, and members of civil

society have mobilized to pressure governments and

multilateral organizations to prevent corrupt practices, strengthen public institutions, and foster an

anticorruption culture in society. U.S. government

agencies that implement assistance programs overseas are now designing their programs so that they

target law enforcement, good governance, public

education, and other efforts considered important in

any countryís fight against corruption.

The United States is encouraging anticorruption and

good governance initiatives in many international organizations, including the major international financial

institutions (e.g., the World Bank and International

Monetary Fund), the Organization of American States,

the United Nations, and the World Trade Organization.

(A review of these initiatives is provided in Chapter 7.)

In addition to outreach activities, where appropriate, the

United States encourages all international organizations

to maintain high standards of ethics, transparency, and

good business practices in their internal operations and

the projects they administer.

Combating international bribery and corruption will

require a long-term effort on many fronts to succeed.

The Bush Administration is committed to pursuing this

effort vigorously in close contact with Congress, the

business community, and interested nongovernmental

organizations.

6 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 1: Ratification Status 7

The OECD Convention on Combating Bribery of

Foreign Public Officials in International Business

Transactions ("the Convention") entered into force on

February 15, 19991 for twelve of the thirty-four signatories to the Convention: Bulgaria, Canada, Finland,

Germany, Greece, Hungary, Iceland, Japan, Korea,

Norway, the United Kingdom, and the United States. In

less than two and a half years, the Convention has been

ratified by nearly all signatoriesóa remarkable achievement for a multilateral instrument that requires Parties to

criminalize acts with trans-border consequences. As of

June 4, 2001, thirty-two countries had deposited an

instrument of ratification with the Secretary General of

the OECD. These countries represent over three-quarters

of global trade.

In addition to the twelve countries identified above,

as of June 4, 2001, the following eighteen also had laws

implementing the Convention: Argentina, Australia,

Austria, Belgium, the Czech Republic, Denmark, France,

Italy, Luxembourg, Mexico, the Netherlands, New

Zealand, Poland, Portugal, the Slovak Republic, Spain,

Sweden, and Switzerland. Of the remaining four signatory countries, Brazil, Chile, Ireland, and Turkey had not

implemented the Convention under domestic law. Only

Ireland and New Zealand have not deposited their instruments of ratification with the OECD. (Table 1 provides

summary information on all signatories regarding

domestic ratification, enactment of implementing legislation, deposit of an instrument of ratification, and entry

into force of the Convention.)

Since our last report, nine additional countries have

adopted laws to implement the Convention. The legislation of seven of these Parties has been reviewed by the

OECD Working Group on Bribery and by the U.S.

government: Argentina, France, Denmark, Italy,

Luxembourg, the Netherlands, and Poland. The U.S.

government assessments of these seven countries have

been included in Chapter 2 of this report. The OECD

Working Group on Bribery assessments can be viewed at

http://www.oecd.org/daf/nocorruption/report.htm and

through a web-link on the Commerce Department Trade

Compliance Center web-site at http://www.mac.doc.-

gov/tcc. New Zealand and Portugal adopted legislation

after our cut-off date of April 30, 2001, but before publication of this report. It is anticipated that assessments of

the implementing legislation of New Zealand, Portugal,

and the remaining signatories will be included in next

yearís report.

In all of the signatory countries that have not completed the steps to bring the Convention into force,

there has been notable progress in preparing implementing legislation and obtaining the necessary authorizations for ratifying the Convention. Each of these

countries is expected to complete this process by the

Ratification Status

1
end of 2001. The following status report on their internal legislative process is based on information obtained

from U.S. embassies and reporting from the signatories

themselves to the OECD, which is publicly available at

http://www.oecd.org/daf/nocorruption/annex2.htm.

Brazil

The bill to ratify the Convention was approved by

parliament on June 12, 2000 and was signed by the

President on August 6, 2000. The instrument of ratification was deposited with the OECD Secretariat on August

24, 2000.2 The Convention text was published in the

Official Gazette of Brazil on November 30, 2000. 

Draft implementing legislation was approved by the

President and submitted to Congress on February 20,

2001. Once the legislation is approved, the text will go to

the President for signature. The government expects to

complete this process by the end of 2001.

Chile

The Chamber of Deputies approved the draft bill

to ratify the Convention on March 23, 2000. The draft

bill was then sent to the Senate on April 4, 2000 and

was approved in March 2001. The instrument of ratification was deposited with the OECD Secretariat on

April 18, 2001. 

Chile currently has no legislative provisions criminalizing bribery of foreign public officials. Studies on the

necessary amendments to national law are underway in

the Presidential Secretariat General and other government agencies.

Ireland 

Legislation to ratify and implement the Convention,

entitled the Prevention of Corruption Bill 2000, was submitted to the Dail (the lower house of the Irish parliament)

in January 2000. The "second stage reading" in the Dail

was completed on December 15, 2000. The bill must now

be reviewed and approved by the appropriate Dail

Committee, voted on in the full Dail, followed by a vote

in the Seanad (the upper house of the Irish parliament),

and then be signed by the President. The government

expects the process will be completed before parliament's

summer 2001 recess. Legislation pending in the Irish

parliament can be viewed or tracked at:

www.irlgov.ie/oireachtas.

New Zealand

A bill to ratify and implement the Convention was

initially introduced to parliament in September 1999, but

consideration was delayed by changes in government. On

April 4, 2001, the government amended the draft legislation to make the bill's provisions apply extraterritorially

and to alter the elements of a defense. The bill was

approved by parliament and received royal assent on

May 2, 2001 and entered into force on May 3, 2001. After

cabinet approval, New Zealand will deposit its instrument of ratification. This action is expected to take place

in late June 2001. It is expected that New Zealandís

implementing legislation will undergo review at the June

26-28 Working Group plenary.

The Inland Revenue Department (IRD) is working

on separate legislation to end the tax deductibility of

bribes. That legislation will be introduced later in 2001. 

Portugal

The National Assembly approved ratification by resolution number 32/2000 of December 2, 1999.

Presidential decree number 19/2000 authorizing ratification was issued on March 31, 2000. Ratification of the

Convention became effective with its publication in the

official gazette on March 31, 2000, and the instrument of

ratification was deposited with the OECD Secretariat on

November 23, 2000. 

On February 15, 2001, the Council of Ministers

approved draft implementing legislation, and the

National Assembly passed the legislation unanimously

on April 5, 2001. The legislation was finalized by the

First Committee on April 26, 2001, enacted by the

President and entered into law upon publication in the

official gazette on June 4, 2001.

Turkey 

The bill ratifying the Convention received parliamentary approval on February 1, 2000, and entered into

force on February 6, 2000. The instrument of ratification

was deposited with the OECD Secretariat on July 26,

2000. An inter-ministerial committee has prepared draft

implementing legislation, including amendments to the

penal, income tax, and tender codes. The draft bill has

been approved by the Ministry of Justice and the Prime

Minister and was submitted to parliament on November

3, 2000, where it was forwarded to the Justice commission for discussion. 

Efforts to Encourage Implementation

The United States has continued to give a high priority to encouraging signatories to complete their ratification procedures and enforce the Convention. Over the

past year, U.S. officials have encouraged signatories to

ratify and implement the Convention in both public state8 Addressing the Challenges of International Bribery and Fair Competition, 2001
ments and direct contacts with foreign governments. The

Secretaries of Commerce, State, and the Treasury, as well

as senior officials of these agencies, have used a variety

of opportunities to comment on the importance of the

Convention and to underscore U.S. concern that all signatories implement it as soon as possible. These efforts

have met with marked success. Since our last report,

eleven additional signatories have become Parties to the

Convention, among them important exporters such as

France, Italy, and the Netherlands. We will continue our

efforts to secure full implementation of the Convention

and will exercise equal vigor in encouraging Parties to

the Convention to faithfully and forcefully enforce the

laws they have enacted. U.S. agencies will also continue

to encourage the U.S. and foreign private sectors to support the Convention and to work to eliminate the bribery

of foreign public officials in international business.

1Article 15 of the Convention states that the Convention

shall enter into force on the sixtieth day following the date

upon which five of the ten countries, which have the ten largest

shares of OECD exports and which represent by themselves at

least 60 percent of the combined total exports of those ten

countries, have deposited their instruments of acceptance,

approval, or ratification with the OECD Secretariat. For each

signatory depositing its instrument after such entry into force,

the Convention shall enter into force on the sixtieth day after

deposit of its instrument.

2Brazil, Chile, Portugal, Turkey, and Poland deposited

instruments of ratification with the OECD Secretariat before

domestic implementing legislation supporting the Convention

was in place. Polandís implementing legislation entered into

force before it became internationally bound under under the

Convention, and Portugalís implementing legislation entered

into force on June 4, 2001. As of June 4, 2001, the other three

remain without legislation specifically implementing the

Convention. 

Chapter 1: Ratification Status 9
Ratification Status of Signatory Countries to the OECD Anti-Bribery Convention

(As of June 4, 2001)

Instrument of Ratification Convention

Deposited With Enters

Signatory Country Ratified Legislation Approved OECD Secretariat1 Into Force

Totals:34 33 30 32 32

Argentina October 18, 2000 November 1, 1999 4 February 8, 2001 April 9, 2001

Australia October 18, 1999 June 17, 1999 October 18, 1999 December 17, 1999

Austria April 1, 1999 October 1, 1998 2 May 20, 1999 July 19, 1999

Belgium June 9, 1999 April 3, 1999 2 July 27, 1999 September 25, 1999

Brazil August 6, 2000 August 24, 2000 5 October 23, 2000

Bulgaria June 3, 1998 January 15, 1999 December 22, 1998 February 15, 1999

Canada December 17, 1998 December 10, 1998 December 17, 1998 February 15, 1999

Chile March 8, 2001 April 18, 2001 5 June 17 2001

Czech Republic December 20, 1999 April 29, 1999 January 21, 2000 March 21, 2000

Denmark March 30, 2000 March 30, 2000 September 5, 2000 November 4, 2000

Finland October 9, 1998 October 9, 1998 December 10, 1998 February 15, 1999

France May 25, 1999 June 30, 2000 July 31, 2000 September 29, 2000

Germany November 10, 1998 September 10, 1998 November 10, 1998 February 15, 1999

Greece November 5, 1998 November 5, 1998 February 5, 1999 February 15, 1999

Hungary December 4, 1998 December 22, 1998 December 4, 1998 February 15, 1999

Iceland August 17, 1998 December 22, 1998 August 17, 1998 February 15, 1999

Ireland

Italy September 29, 2000 September 29, 2000 December 15, 2000 February 13, 2001

Japan May 22, 1998 September 18, 1998 October 13, 1998 February 15, 1999

Korea December 17, 1998 December 17, 1998 January 4, 1999 February 15, 1999

Luxembourg January 15, 2001 January 15, 2001 March 21, 2001 May 20, 2001

Mexico April 21, 1999 April 30, 1999 May 27, 1999 July 26, 1999

The Netherlands December 13, 2000 December 13, 2000 January 12, 2001 March 13, 2001

New Zealand May 2, 2001 May 2, 2001

Norway December 18, 1998 October 27, 1998 December 18, 1998 February 15, 1999

Poland June 11, 2000 September 9, 2000 September 8, 2000 November 7, 2000

Portugal March 31, 2000 June 4, 2001 November 23, 2000 January 22, 2001

Slovak Republic February 11, 1999 September 1, 1999 3 September 24, 1999 November 23, 1999

Spain December 1, 1998 January 11, 2000 January 14, 2000 March 14, 2000

Sweden May 6, 1999 March 25, 1999 June 8, 1999 August 7, 1999

Switzerland December 22, 1999 December 22, 1999 May 31, 2000 July 30, 2000

Turkey February 1, 2000 July 26, 2000 5 September 24, 2000

United Kingdom November 25, 1998 1889, 1906, 1916 4 December 14, 1998 February 15, 1999

United States November 20, 1998 November 10, 1998 December 8, 1998 February 15, 1999

1 The Convention entered into force February 15, 1999. The Convention enters into force for all other signatories on the sixtieth day after each

signatory deposits an instrument of ratification with the OECD.

2 Date legislation came into effect.

3 Date partial implementing legislation came into effect.

4 The U.K. relied exclusively on existing legislation to implement the Convention and Argentina on legislation implementing the Inter-American Convention Against Corruption.

(See Chapter 2 reviews). 

5 Deposited instrument of ratification with legislation still being drafted or before parliament.

10 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 2: Review of National Implementing Legislation 11

The Departments of Commerce, State, and Justice

and the staff of the United States Securities and Exchange

Commission (SEC) have reviewed the implementing legislation of the following twenty-seven countries:

Argentina, Australia, Austria, Belgium, Bulgaria,

Canada, the Czech Republic, Denmark, Finland, France,

Germany, Greece, Hungary, Japan, Korea, Mexico,

Poland, Iceland, Italy, Luxembourg, The Netherlands,

Norway, the Slovak Republic, Spain, Sweden,

Switzerland, and the United Kingdom. Legislative

reviews of twenty of these countries appeared in last

yearís report. These have been revised and updated as

necessary in this report. In addition to these reviews, the

chapter also provides a summary of the 1998 amendments made to the Foreign Corrupt Practices Act (FCPA)

to implement the OECD Convention. 

The views contained in this chapter are those of the

U.S. government agencies and staff mentioned above and

not necessarily those of the Working Group on Bribery,

the body at the Organization for Economic Cooperation

and Development that is reviewing the implementing

legislation of the signatories to the Convention in the

OECD monitoring process. Information for the reviews

in this chapter was obtained from, inter alia, implementing legislation and related laws of the countries listed

above, reporting from U.S. embassies, private sector

comments, publications, nongovernmental organizations,

the OECD Working Group Country Reports, and other

public sources. The Working Group Country Reports on

the implementing legislation reviewed to date are made

public on the OECD website at http://www.oecd.org/-

daf/nocorruption/index.htm, and are linked through the

Department of Commerceís website. 

Our methodology for analyzing implementing legislation was to compare it with the requirements of the

Convention. We looked first at whether the legislation contains provisions implementing the basic statement of the

offense, set forth in Article 1 of the Convention, which

obligates the country to criminalize the bribery of foreign

public officials. We also looked closely at the definitions of

the offeror and offeree of the bribe to ensure that transactions within the scope of the Convention are adequately

covered, pursuant to Article 1 of the Convention. Article 1

requires each Party to criminalize the bribery of foreign

public officials by ìany person.î Article 1.4 defines ìforeign public officialî as: any person holding a legislative,

administrative, or judicial office, whether they are

appointed or elected; any person exercising a public function; and any official or agent of a public international

organization. We then examined the manner and extent to

which the country will exercise its jurisdiction in enforcing

its law, in accordance with Article 4 of the Convention.

We have paid special attention to the penalties

imposed for the offense of bribery of foreign public offiReview of National

Implementing Legislation

2
cials, which Article 3 of the Convention states must be

ìeffective, proportionate, and dissuasive.î Where possible, we have examined other issues, such as bribery as a

predicate offense to money laundering (Convention

Article 7), provisions on books and records (Convention

Article 8), mutual legal assistance and extradition

(Convention Articles 9 and 10), and conspiracy, attempt,

and authorization (Convention Article 1.2).

Drawing from this methodology, each country

review follows the same format:

ï Basic statement of the offense.

ï Jurisdictional principles.

ï Coverage of payor/offeror.

ï Coverage of payee/offeree.

ï Penalties. 

ï Books and records provisions.

ï Money laundering.

ï Extradition/mutual legal assistance.

ï Complicity (including incitement, aiding and abetting, or authorization), attempt, conspiracy.

Analyzing a Partyís implementing legislation is a

complex undertaking that requires an understanding of

not only the Partyís new laws implementing the

Convention but also of the existing body of legislation

relevant to bribery and corruption. Convention implementation differs markedly among the Parties depending

on their individual legal systems. Some Parties enacted

new legislation, whereas others amended existing

domestic antibribery provisions of their laws. We have

taken into consideration throughout the review process

that the Convention seeks to ensure functional equivalence among the measures taken to sanction bribery,

without requiring absolute uniformity or changes in fundamental principles of a Partyís legal system. (See paragraph 2 of the Commentaries on the Convention.)

Nonetheless, individual country implementation of some

elements (e.g., penalties, statute of limitations, etc.)

diverges to such a degree that the issue will be addressed

by the OECD Working Group on Bribery during its

Phase II review. 

We are continuing to review information on relevant

legislation and to monitor the signatoriesí implementation of the Convention, independently and within the

OECD Working Group on Bribery. Further analysis of

implementing legislation and related laws is required for

us to have a thorough understanding of how each country is attempting to fulfill its obligations to meet the

Conventionís standards for criminalizing the bribery of

foreign public officials. Equally important now that most

signatories are Parties to the Convention will be how

countries apply and enforce their implementing legislation. This analysis remains a high priority of the U.S.

government agencies responsible for monitoring implementation of the Convention.

Concerns about Implementing

Legislation

Based on information currently available, we remain

generally encouraged by the efforts of the twenty-seven

other Parties who have implemented the Convention.

However, for a number of countries, we have concerns

about how requirements have been addressed and, in

some cases, the absence of specific legislative provisions

to fulfill obligations under the Convention. Several countries, particularly France, Japan, and the United Kingdom

have implementing or pre-existing legislation that we

believe falls short of the Convention's requirements. The

concerns raised by the French legislation relate mostly to

enforcement issues and will merit close scrutiny during

the Phase II monitoring process of the Convention.

Japanese officials have informed the Working Group on

Bribery at the OECD that it has submitted legislation

which they expect will be enacted shortly rectifying some

of the deficiencies in its laws. The U.K., however, has not

yet made public new draft implementing legislation, nor

has it indicated when such legislation would be introduced to parliament. We have repeatedly called upon

Japan and the U.K. in particular, since they are key

exporters and influential OECD members, to act quickly

to bring their implementing legislation into conformity

with the Convention. 

The following concerns are especially noteworthy

and will require further examination during Phase II, the

enforcement stage of the monitoring process of the

Convention:

ï Deficiencies in France’s Implementation: The

basic statement of the offense in the French implementing legislation does not explicitly criminalize

the ìgivingî of bribes as required by the wording of

Article 1, paragraph 1 of the Convention, which

reads "to offer, promise or give any undue advantage". The absence of the word "giving" in the

French legislation raises the potential that the French

law applies only to the offer itself and that payments

extending indefinitely into the future based upon an

offer made before the effective date of the French

legislation would not be criminalized. In addition,

the French legislation appears to require that prosecutions of French nationals for extraterritorial

bribery of a foreign public official must be preceded

by a complaint from a ìState victim,î e.g., a repre12 Addressing the Challenges of International Bribery and Fair Competition, 2001
sentative of the State whose official was bribed,

which is in our view extremely unlikely and has the

potential of further reducing the possibility of French

prosecutions over its own nationals. (We note that

Luxembourgís implementing legislation, which was

based on the French model, did not include such a

condition for the prosecution of its nationals under its

bribery law. In addition, Luxembourgís basic statement of the offense, which is otherwise very similar

to the French version, includes the word ìgiving.î)

Finally, France implemented the Convention in conjunction with various EU anticorruption instruments.

We are concerned that, in several circumstances,

France affords more rigorous and comprehensive

treatment of bribery of officials of EU states than it

does of officials of non-EU states. For example,

France apparently eliminated its requirement of dual

criminality with respect to violations of EU conventions by non-French nationals who seek refuge in

France but did not do so with respect to violations of

laws implementing the OECD Convention. In addition, France permits the victim of a bribery scheme,

e.g., a competitor, to initiate a public prosecution for

bribery of French and EU officials, but not for

bribery of non-EU officials. Third, France permits

only the Paris Public Prosecutor and examining magistrate to investigate and bring prosecutions under the

law implementing the OECD Convention, whereas

domestic and EU corruption may be investigated and

prosecuted by prosecutors and magistrates throughout the country. 

ï Deficiencies in Japan’s Implementation: Japanís

implementing legislation raises several issues. For

example, the Japanese legislation contains a ìmain

officeî exception, which provides that the legislation

will not apply where the person who pays a bribe to

a foreign public official is employed by a company

whose ìmain officeî is in the corrupt foreign officialís country. Thus, a Japanese national employed

by a foreign company may not be prosecuted for the

bribery of an official of that companyís home country even if the bribe is offered or paid in Japan. We

believe that this exception is a loophole in the

Japanese implementing legislation. Also, we believe

that the maximum fine of $2.5 million for legal persons is not ìeffective, proportionate, and dissuasive,î

given the serious questions concerning its ability to

confiscate the proceeds of the bribery. While we are

encouraged that Japan has now taken steps to amend

its implementing legislation to eliminate the ìmain

office exceptionî and to expand its definition of foreign public official, further action will be required to

correct all defects in its legislation, now almost two

years since its legislation was found to be inadequate

by the Bribery Working Group to fully implement

the Convention. 

ï Deficiencies in the U.K.’s Implementation: For the

United Kingdom, existing corruption law does not

explicitly address bribery of foreign public officials,

and its adequacy for implementing the requirements

of the Convention is not, even in the views of British

legal commentators, certain. The U.K. Government

has recognized the need for new legislation but has

not taken steps to introduce and pass such legislation

in parliament. It is now almost two years since the

U.K. legislation was reviewed by the Bribery

Working Group, and we have yet to see final action.

The inaction by the U.K. is disappointing.

ï Nationality Jurisdiction: Canada, the U.K., and

Japan have declined to extend nationality jurisdiction

to offenses committed under their laws implementing the Convention, although their legal systems do

provide for nationality jurisdiction over other

offenses. Further, some countries, including, Austria,

Belgium, Finland, and France, while asserting

nationality jurisdiction, make it contingent upon the

principles of dual criminality or reciprocity, thus

requiring that the laws of the country whose official

is bribed or a third country where the bribe is paid

also prohibit bribery of foreign officials. These

requirements could limit the ability of these Parties

to prosecute bribery of foreign officials in countries

where such behavior is most likely to occur.

ï Liability of Legal Persons: Many countries,

including Argentina, Austria, Bulgaria, the Czech

Republic, Hungary, Luxembourg, the Slovak

Republic, Spain, and Switzerland, have not provided

for effective, proportionate and dissuasive criminal

or non-criminal sanctions for legal persons.

Argentina, Austria, Bulgaria, the Czech Republic,

Hungary, Luxembourg, the Slovak Republic, and

Switzerland have indicated that they are in the

process of amending their legislation in this respect.

ï Inadequate Penalties: Several countries, including

Italy, Japan, Mexico, The Netherlands, Norway, the

Slovak Republic, and Spain have penalties that may

fall short of the Convention requirement that they be

ìeffective, proportionate and dissuasive.î 

ï Differing Standards for Bribery of EU Officials: A

number of European Union member countries,

including France, implemented the Convention in

conjunction with various EU anticorruption instruChapter 2: Review of National Implementing Legislation 13
ments. The implementing legislation of some of these

countries contains several definitions of the term ìforeign public officialî, or different jurisdictional requirements, depending on whether the foreign official

is an EU official. We have concerns that this may lead

to different penalties or uneven application of a countryís jurisdiction over bribes to EU officials vis-a-vis

bribes to other foreign public officials. 

ï Limited Statutes of Limitations: Several countries,

such as Denmark, Japan, Norway, Hungary, and the

Slovak Republic have statutes of limitations periods

that are three years or less. We are concerned that

such short statutes of limitations may not fulfill the

Convention requirement that statutes of limitations

be sufficiently long so as to provide an adequate

period of time for investigation and prosecution.

However, Hungary, Norway, and the Slovak

Republic have indicated that they are taking steps to

address this deficiency in their respective laws. 

ï Definition of Foreign Public Official: In some

countries, such as Mexico, the implementing legislation provides for a definition of foreign public official based on ìapplicable law.î This is a concern as it

could mean that the definition would depend on the

law of the foreign country where the offense

occurred, instead of the autonomous definition in the

Convention.

ï Inappropriate Defenses: Several Eastern

European countries, such as the Czech Republic, the

Slovak Republic, and Bulgaria have included a

defense in their implementing legislation that

exempts an individual from prosecution or the imposition of sanctions if the bribe is solicited, the individual pays or agrees to pay the bribe and thereafter

the individual voluntarily and immediately reports

the bribe or promise to pay a bribe to the authorities.

Similarly, Italy has a possible defense under its law,

called ìconcussioneî (coercion), which may also

excuse a briber where the official induced the bribe.

Although there may be a rationale for permitting

such a defense for domestic acts of bribery, the

United States believes this defense is inappropriate

for instances of transnational bribery and may constitute a loophole.

Many of the countries reviewed are consideringóor

are already in the process of amendingótheir implementing legislation to address concerns raised in the

OECD Working Group monitoring process, including

Argentina, Austria, Greece, the Czech Republic, Japan,

Korea, Luxembourg, Norway, the Slovak Republic,

Switzerland and the U.K. Our analysis has focused primarily on existing legislation at the time of this writing,

but we will monitor the progress of proposed amendments and report on any new legislation in subsequent

reports. As we continue our analysis of implementing

legislation and more information becomes available in

the enforcement stage, we will be in a better position to

assess the overall conformity of Partiesí laws with the

Convention. The analysis will be useful for our participation in the Working Group and our dialogue with signatories on promoting effective implementation of the

Convention.

Summary of Amendments to the FCPA

Through the FCPA, the United States declared its

policy that American companies and companies traded

on U.S. stock exchanges should act ethically in bidding

for foreign contracts and should act in accordance with

the U.S. policy of encouraging the development of democratic institutions and honest, transparent business

practices. Since 1977, the FCPA has required issuers and

U.S. nationals and companies to refrain from offering,

promising, authorizing, or making an unlawful payment

to public officials, political parties, party officials, or

candidates for public office, directly or through others,

for the purpose of causing that person to make a decision

or take an action, or refrain from taking an action, or to

use his influence, for the purpose of obtaining or retaining business.

The International Anti-Bribery and Fair Competition

Act of 1998 (IAFCA) amended the FCPA to implement

the OECD Convention. First, the FCPA formally criminalized payments made to influence any decision of a

foreign public official or to induce him to do or omit to

do any act in order to obtain or to retain business. The

IAFCA amended the FCPA to include payments made to

secure ìany improper advantage,î the language used in

Article 1(1) of the OECD Convention.

Second, the OECD Convention calls on Parties to

cover ìany person.î The FCPA prior to the passage of the

IAFCA covered only issuers with securities registered

under the 1934 Securities Exchange Act and ìdomestic

concerns.î The IAFCA expanded the FCPAís coverage to

include all foreign persons who commit an act in furtherance of the offer, promise to pay, payment, or authorization of the offer, promise, or payment of a foreign bribe

while in the United States.

Third, the OECD Convention includes officials of

public international organizations within the definition of

ìpublic official.î Accordingly, the IAFCA similarly

expanded the FCPAís definition of public officials to

14 Addressing the Challenges of International Bribery and Fair Competition, 2001
include officials of such organizations. Public international organizations are defined by reference to those

organizations designated by Executive Order pursuant to

the International Organizations Immunities Act (22

U.S.C. ' 288), or otherwise so designated by the President

by Executive Order for the purpose of the FCPA.

Fourth, the OECD Convention calls on Parties to

assert nationality jurisdiction when consistent with

national legal and constitutional principles. Accordingly,

the IAFCA amended the FCPA to provide for jurisdiction

over the acts of U.S. businesses and nationals in furtherance of unlawful payments that take place wholly outside

the United States.

Fifth and finally, the IAFCA amended the FCPA to

eliminate the disparity in penalties applicable to U.S.

nationals and foreign nationals employed by or acting as

agents of U.S. companies. Prior to passage of the IAFCA,

foreign nationals employed by or acting as agents of U.S.

companies were subject only to civil penalties. The

IAFCA eliminated this restriction and subjected all

employees or agents of U.S. businesses to both civil and

criminal penalties. A joint Commerce-Justice brochure

summarizing the antibribery provisions of the FCPA is

reprinted in Appendix C of this report.

One issue that has arisen with respect to the United

Statesí implementation of the Convention is the existing

disparity between the maximum term of imprisonment

under the FCPA (five years) and that under the domestic corruption statute (fifteen years). (See 18 U.S.C. '

201.) Article 3(1) of the Convention requires that each

Party provide for a range of penalties for foreign bribery

comparable to those provided for bribery of its own

officials. The interested U.S. government agencies are

considering whether to support an amendment to the

FCPA to conform the penalties for domestic and foreign

bribery offences. 

The following summary of foreign legislation should

not be relied on as a substitute for a direct review of the

legislation by persons contemplating business activities

relevant to these provisions. 

Argentina

Argentina signed the Convention on December 17,

1997 and deposited its instrument of ratification with the

OECD on February 8, 2001. The Argentine implementing legislation, entitled the Statute on Ethics in the

Exercise of Public Office (Law No. 25.188), was enacted

on November 1, 1999 and entered into force on

November 10, 1999. This legislation amended the

Argentine Penal Code to implement the standards of the

Inter-American Convention Against Corruption (OAS

Convention). According to Argentine officials, draft legislation to conform Argentine law to the requirements of

the OECD Convention is being prepared for submission

to Congress by July 2001.

Our main concern with the existing Argentine law is

that it does not provide for liability of legal persons in the

case of bribery of foreign public officials. The proposed

bill to implement the OECD Convention includes provisions that may address deficiencies in the Argentine legislation, but it is not final and has not been submitted to

the Argentine Congress. Therefore, this review only

addresses the enacted provisions amending the Penal

Code to implement the OAS Convention. We will continue to monitor the status of the draft legislation and

provide further analysis in next year's report.

Basic Statement of the Offense

The basic statement of the offense of bribery under

the Convention is contained in Article 258 bis of the

Argentine Penal Code:

It shall be punished with 1 to 6 years of imprisonment and perpetual special disqualification to hold a

public office, whoever offers or gives to a public official from another state, directly or indirectly, any

object of pecuniary value, or other benefits as gifts,

favors, promises or advantages in order that the said

official acts or refrains from acting in the exercise of

the official duties, related to a transaction of economic or commercial nature.

According to Argentine authorities, intent is required

to commit the basic offense. Bribery payments to intermediaries are covered. Also, Argentine authorities stated

that a ìgiftî may not necessarily constitute a bribe; factors such as value and the effect on the public official will

be assessed to determine the status of the gift.

The basic statement of the offense does not cover acts

or omissions of the public official not within her authorized competence, whereas the Convention requires that

bribery to a foreign public official for any official act ìin

relation to the performance of public dutiesî be covered,

ìwhether or not within the official's authorized competence.î (See Convention Articles 1.1 and 1.4(c) and

Commentary 19.) Argentine officials have explained that

this deficiency would be addressed in the draft legislation.

Jurisdictional Principles

Argentina generally practices territorial jurisdiction.

Pursuant to Penal Code Article 1.1, Argentina will exercise territorial jurisdiction over offenses committed even

partially in Argentina or areas subject to its jurisdiction,

Chapter 2: Review of National Implementing Legislation 15
or relating to offenses whose effects occur in Argentina or

areas subject to its jurisdiction. Any actions, e.g., a phone

call or e-mail, may trigger Argentine territorial jurisdiction. ìEffectsî on Argentine territory may include undue

benefits or contracts obtained in exchange for the bribe. 

The Argentine Penal Code contains no provisions on

nationality jurisdiction, although Argentina will assert

nationality jurisdiction pursuant to Article 1.2 over

offenses committed abroad by ìagents or employees of

Argentine authorities performing their duties,î including

public agencies and enterprises. Argentina establishes

nationality jurisdiction through various treaties, but those

treaties do not apply to Argentine nationals who commit

bribery of a foreign public official abroad. Although the

Convention does not require nationality jurisdiction, it

does encourage consideration thereof where other

offenses under a country's laws can be reached through

such jurisdiction. (See Commentary note 26.)

Coverage of Payor/Offeror

Article 258 bis covers bribery by ìwhoever,î but this

includes only natural persons, not legal persons.

Argentine officials have stated that proposed changes to

the Argentine Penal Code, to be presented to Congress by

July 2001, will introduce corporate criminal liability for

bribery offenses. As Argentine law does not at this time

cover legal persons, Argentina has not met its obligations

under Convention Articles 2 and 3.2. 

Coverage of Payee/Offeree

Article 258 bis covers bribes to a ìpublic official

from another State.î There is a definition contained in the

Argentine Penal Code for ìpublic official,î but that definition only applies to domestic bribery offenses.

Argentine authorities have stated its courts may refer to

the definition in the Convention as well as the

Commentaries to ensure that ìforeign public officialî is

properly defined. However, there is some uncertainty as

to the legislationís coverage in practice, especially in

light of other Conventions to which Argentina is a party

that have different definitions of the same term.

Additionally, Article 258 bis does not cover officials

from international organizations as required by the

OECD Convention. 

Penalties

Article 258 of the Argentine Penal Code provides

that individuals who commit bribery of foreign public

officials are subject to being penalized by one to six years

of ìreclusionî and can no longer enjoy the right to hold a

public office. These penalties are for the most part comparable to the provisions on bribery of domestic officials

found in Penal Code Articles 258-259. One minor difference is that the aggravated bribery offenses for domestic

officials, e.g., bribery of judges or where a public official

is the offender, are punishable by imprisonment, or

ìprisonî for a term of 3-10 years. Argentine officials have

explained that the penalty for bribery of foreign public

officials, ìreclusion,î is stricter than the penalty of

national bribery offenses, ìimprisonment,î in that a term

of reclusion may not be suspended. In addition, a fine of

90,000 Argentine pesos (approx. U.S.$90,000) may also

be imposed for both domestic and foreign bribery

offenses with an ìaim of monetary gain.î

The bribe may be forfeited upon conviction pursuant

to Article 23 of the Argentine Penal Code. If forfeiture is

not possible, then Article 22 states that a fine of 90,000

pesos (approx. U.S.$90,000) may be assessed. Seizure of

both the bribe and bribe proceeds is possible under

Article 231 of the Argentine Code of Criminal Procedure.

The Argentine legislation contains no criminal or

administrative penalties for legal persons for the offense

of bribing a foreign public official, contrary to the

requirements of Convention Articles 2 and 3.2. 

According to Articles 62 and 258 bis of the Argentine

Penal Code, the statute of limitations period for bribery

of foreign public officials is six years, and begins to run

at midnight on the date the offense is committed (the date

when the offer, promise or giving of the bribe took place).

The statute of limitations can be suspended or interrupted

pursuant to Article 67. 

Books and Records Provisions

According to the Argentine government, the Law of

Corporations No. 19.550, Statute of Financial Entities

Law No. 21.526, National Securities Commission Law

No. 17.811, and Insurance Companies Law No. 20.091,

generally cover the types of accounting offenses

required under the Convention. Articles 43-55, 51, and

54 of the Commerce Code provide that ìtradersî must

report their commercial transactions and keep a book of

original entries, an inventory, and balance sheet that

reflects the accurate financial situation of the company.

The Charter of the General Inspectorate of Companies,

Article 12, gives that body the authority to impose

penalties on individuals and entities, including for omissions and falsifications under the books and records

provisions of the Convention. Furthermore, Article 300,

Section 3 of the Argentine Penal Code penalizes with a

prison term of six months to two years certain individuals for publishing, certifying, or authorizing a false or

incomplete inventory, balance, or profit and loss

16 Addressing the Challenges of International Bribery and Fair Competition, 2001
account. According to Argentine authorities, legal

persons are generally subject to auditing requirements.

Money Laundering

Articles 277-299 of Argentina's Penal Code, as

amended by Law No. 25.246 on Money Laundering,

include bribery of domestic and foreign public officials

as predicate offenses for the application of the moneylaundering legislation, including the concealment of benefits from the crimes, and irrespective of where the

underlying offense occurred. The money-laundering

legislation does not apply to self-laundering. 

Extradition/Mutual Legal Assistance 

Extradition is governed by Article 6 of the International Co-operation in Criminal Matters Act (ICCMA)

absent another relevant treaty. For extradition, dual criminality is required (imprisonment of at least one year

under both the Argentine and requesting state's laws).

Argentina will extradite its nationals only with their consent; otherwise, the case may be tried in Argentina. 

Extradition by the United States and Argentina is

governed by a 1972 bilateral treaty (entered into force in

1972).

Mutual legal assistance to foreign states may be provided pursuant to the ICCMA, when there is no other

applicable treaty. Argentina does not require a minimum

prison sentence or fine in order to grant mutual legal

assistance. Mutual legal assistance between the United

States and Argentina is governed by a 1990 bilateral

treaty (entered into force in 1993). Bank secrecy cannot

be invoked as grounds to refuse mutual legal assistance.

Complicity, Attempt, Conspiracy

Argentine Penal Code Articles 45 and 46 cover the

offense of complicity. Article 45 provides that persons

who take part in the commission of the criminal act, provide assistance or cooperation without which the offense

could not be committed, and directly abet another to

commit a criminal act, will all be punished by the same

penalty as the perpetrator. Penal Code Article 46 covers

incitement, aiding and abetting, direct or indirect cooperation, and authorization. It provides that someone

who cooperates in any form in the commission of a criminal act and who gives assistance by carrying out a preceded promise, whether or not essential, will be punished

by one-third or one-half of the full offense. Authorities

state that accomplices may be punished whether or not

the perpetrator is convicted. 

Attempt is defined in the Argentine Penal Code

under Articles 42-44. If the commission of the offense is

not concluded because of circumstances beyond the

offender's will, then the penalty will be reduced to onethird or one-half of the full offense. According to Article

43, if an offender ìvoluntarily desists from performing a

crime,î including by voluntarily stopping an intermediary from completing the crime, she shall be exempted

from liability. 

Conspiracy is apparently not punishable under

Argentine law. Argentine Penal Code Article 210 provides that whoever takes part in a group of three or

more people having the purpose of committing an

offense will be liable for ìbelongingî to the group. A

member of such an association would be subject to a

prison sentence of 3-10 years, whereas the ìheadî

would be subject to at least 5 years.

Australia

Australia signed the Convention on December 7,

1998, and deposited its instrument of ratification with the

OECD Secretariat on October 18, 1999. Australia has

implemented the Convention through the Criminal Code

Amendment (Bribery of Foreign Public Officials) of

1999 to the Criminal Code Act of 1995. The amendment

was enacted on June 17, 1999, and entered into force on

December 18, 1999. The following analysis is based on

the amendment, related laws, and reporting from the U.S.

embassy in Canberra.

Basic Statement of the Offense

Section 70.2(1) of the Criminal Code, "Bribery of a

Foreign Public Official," provides that a person is guilty

of an offense if: 

(a) the person: (i) provides a benefit to another

person; or (ii) causes a benefit to be provided to

another person; or (iii) offers to provide, or promises

to provide, a benefit to another person; or (iv) causes

an offer of the provision of a benefit, or a promise of

the provision of a benefit, to be made to another

person; and

(b) the benefit is not legitimately due to the other

person; and

(c) the first-mentioned person does so with the

intention of influencing a foreign public official

(who may be the other person) in the exercise of the

official's duties as a foreign public official in order

to: (i) obtain or retain business; or (ii) obtain or retain

a business advantage that is not legitimately due to

the recipient, or intended recipient, of the business

advantage (who may be the first-mentioned person).

Under Section 70.2(2), in determining whether a

Chapter 2: Review of National Implementing Legislation 17
benefit or a business advantage is "not legitimately

due," the following are to be disregarded:

(a) the fact that the benefit/business advantage may

be customary, or perceived to be customary, in the

situation;

(b) the value of the benefit/business advantage;

(c) any official tolerance of the benefit/business

advantage.

The amendments contain exceptions for payments

that are lawful in the foreign public official's country

(Section 70.3) and for facilitation payments made "for

the sole or dominant purpose of expediting or securing

the performance of a routine government action of a

minor nature." (Section 70.4).

Jurisdictional Principles

Under Section 70.5(1), there is jurisdiction over a

person who commits bribery of a foreign public official

wholly or partly in Australian territory, or wholly or

partly on board an Australian aircraft or ship.

Nationality jurisdiction is established under Section

70.5(1)(b), which covers acts of bribery of foreign public officials conducted wholly outside Australia by an

Australian national, an Australian resident (subject to

the Attorney General's consent), or "body corporate"

incorporated under Australian law.

We understand that there is no applicable statute of

limitations for prosecutions of bribery of a foreign public official.

Coverage of Payor/Offeror

Section 70.2(1) of the Criminal Code applies to "a

person." Under Australian law, "person" refers to natural

persons as well as "bodies corporate." We understand that

the latter refers to legal persons generally. Under Section

12.3(2) of the Criminal Code, bodies corporate may be

held criminally liable where a board of directors carries

out or authorizes the conduct; where a "high managerial

agent" does so; or where a "corporate culture" exists that

permitted or led to the conduct.

Coverage of Payee/Offeree

Under Section 70.1 of the Criminal Code, "foreign

public official" is broadly defined to include employees

or officials of, or persons who work under contract for or

are otherwise in the service of, a foreign government

body (or subdivision thereof), including members of

legislatures; employees of, or persons who work under

contract for or are otherwise in the service of, a public

international organization; and authorized intermediaries

of such persons. For this purpose, "foreign government

body" includes a "foreign public enterprise," which is

defined to include instances in which the government

exercises de jure or de facto control over the enterprise,

or in which the enterprise enjoys special legal rights,

benefits or privileges because of its relationship to the

government.

Penalties

The Criminal Code provides that natural persons

who are convicted of bribing a foreign public official are

subject to a fine of A$66,000 (approx. U.S.$38,000),

imprisonment for a maximum of ten years, or both.

Bodies corporate are subject to a fine of A$330,000

(approx. U.S.$188,000). Previously, these exceeded the

penalties in the Criminal Code for bribery of domestic

public officials. However, the Criminal Code was

amended to increase the penalties for domestic bribery to

those imposed on bribery of foreign public officials.

Under Section 19 of the Proceeds of Crime Act

1987, courts may order the forfeiture of "tainted property," defined as "property used in, or in connection

with, the commission of the offense," or "proceeds of

the offense."

Books and Records Provisions

Companies are required, under Section 298 of the

Corporations Law, to keep financial records that "(a)

correctly record and explain their transactions and

financial position and performance; and (b) would

enable true and fair financial statements to be

prepared and audited." Violations of Section 298 are

punishable by a criminal fine of up to A$12,500

(approx. U.S. $6,300). Under Section 296 of the

Corporations Law, annual financial reports (required

of most companies) must be consistent with the

Australian accounting standards. Failure to comply

with those standards can result in civil penalties for

company directors. Section 310 of the Corporations

Law requires that companies furnish external audit

reports to the Australian Securities and Investment

Commission.

Money Laundering

Bribery of foreign, as well as domestic, public officials is a predicate offense for the application of the

money-laundering provisions in the Proceeds of Crime

Act 1987. Section 81(3) of that act pertains to actions or

transactions involving the proceeds of crime, where the

person knows or reasonably should know that the money

or other property is derived from some form of unlawful

activity.

18 Addressing the Challenges of International Bribery and Fair Competition, 2001
Extradition/Mutual Legal Assistance

The 1976 U.S.-Australia extradition treaty, as

amended in 1990, provides for extradition for offenses

that are punishable under the laws of both parties by

deprivation of liberty for a maximum period of more

than one year. Under the authority of the Extradition Act

of 1988, Australia may extradite persons on the basis of

bilateral extradition treaties, multilateral treaties with

extradition provisions, or bilateral arrangements or

understandings based on reciprocity. Accordingly, we

understand that Australia is currently able to extradite

persons to all of the signatories of the Convention

except Bulgaria. Australia generally does not refuse

extradition on the grounds that an individual is an

Australian national.

A bilateral mutual legal assistance treaty between the

United States and Australia entered into force in 1999.

Legal assistance can also be provided, in the absence of

a treaty, on the basis of reciprocity under the Mutual

Assistance in Criminal Matters Act 1987.

Complicity, Attempt, Conspiracy

Section 11.1(1) of the Criminal Code pertains to

aiding, abetting, counseling, and procuring the commission of a bribery of a foreign public official, as well as an

attempt to commit that offense. Conspiracy to bribe a

foreign public official is covered under Section 11.5(1) of

the Criminal Code.

Austria 

Austria signed the Convention on December 17,

1997. The Austrian parliament passed legislation

amending the Austrian Penal Code in order to implement and ratify the Convention on July 17, 1998. The

domestic legislation implementing the Convention

became effective on October 1, 1998. Austria deposited

its instrument of ratification with the OECD on May 20,

1999. The Austrian legislation entered into force on July

23, 1999. This analysis is based on those amendments

as well as information provided by the U.S. embassy in

Vienna.

The Austrian legislation raises a number of concerns.

At present, it contains no criminal responsibility for legal

persons, nor does it provide for sufficient comparable

administrative or civil sanctions. The punishment for

natural persons is limited to imprisonment of only two

years, and there is no provision of fines for natural persons. We also are concerned that Austria may assert

nationality jurisdiction only under the condition of dual

criminality, i.e., when the offense is also punishable in

the country where it was committed, particularly in the

case where an Austrian national bribes a foreign public

official in a third country.

Basic Statement of the Offense

The basic statement of the offense is contained in

Austrian Penal Code Section 307(1), which provides that:

Whoever offers, promises, or grants a benefit for the

principal or a third person to a foreign official for the

commission or omission of an official act or a legal

transaction in violation of his duties in order to gain

or retain an order or other unfair advantage in international trade, shall be punished by imprisonment of

up to two years.

Jurisdictional Principles

Austria exercises both territorial and nationality

jurisdiction. Under Sections 62, 63, and 67 of the

Austrian Penal Code, Austria may exercise jurisdiction over all offenses committed in Austria or on an

Austrian aircraft or vessel, irrespective of location.

The territoriality principle is broadly interpreted (

e.g., even a phone call from Austria in furtherance of

the bribe transaction would suffice). However, in

order for nationality jurisdiction to apply, Section 65

of the Austrian Penal Code provides that the offense

must also be punishable in the country where it has

been committed. Austria will exert jurisdiction over

non-nationals where the offender was arrested in

Austria and cannot be extradited (again, the offense

must be punishable in the country where it has been

committed).

Coverage of Payor/Offeror

Section 307 of the Austrian Penal Code, cited above,

covers bribes made by "whoever." This encompasses

only natural persons. We understand that Austria plans on

implementing the Second Protocol to the EU Convention

on the Protection of the Financial Interests of the

European Community by mid-2002, and that it will then

hold legal persons responsible for active bribery of foreign public officials.

Coverage of Payee/Offeree

Foreign public officials are defined in Section 74

(4c) of the Austrian Penal Code as: any person who holds

an office in the legislature, administration, or judiciary of

another state, who is fulfilling a public mission for

another state or authority or a public entity of another

state, or who is an official or representative of an international organization.

Chapter 2: Review of National Implementing Legislation 19
Penalties

Section 307 of the Austrian Penal Code provides a

maximum term of imprisonment of two years for the

payor/offeror, the same penalty imposed for the bribery

of domestic officials. As stated above, legal persons are

not covered in the amendments to the Penal Code.

However, Austrian Penal Code Section 20 does provide

for confiscation of illegal gains, and there are also some

applicable administrative penalties applicable to legal

persons.

Austria will confiscate criminal proceeds pursuant to

Penal Code Section 20, paragraph 4, although there are

several exceptions under Section 20a paragraphs 1 and 2,

i.e., where the enriched person has satisfied or has contractually bound itself to satisfy civil law claims in connection with the offense, or has been sentenced, or if the

gains are removed by other legal measures. Also, confiscation is apparently not permitted if the gains are less

than 300,000 Austrian shillings (approx. U.S. $18,450),

the gains are disproportionate to the cost of the proceedings, or it would constitute "inappropriate hardship."

Austria provides for administrative liability for legal

persons. Under Section 58, paragraph 1 of the Federal

Law on Public Procurement, a legal person may be

excluded from public procurement where there is a likelihood that its employee has seriously misbehaved in the

conduct of business, even absent the initiation of criminal

proceedings or a conviction. Section 123 of the Federal

Law on Public Procurement apparently also allows the

contracts already awarded to be rescinded where it was

obtained through an illegal act of a representative of a

legal person. Under Section 13 of the Austrian Business

Law of 1994, legal persons whose business conduct was

significantly influenced by the conduct of the convicted

natural person may be excluded from the exercise of

business if the natural person has been sentenced for the

offense of bribery to a prison term of more than three

months or a fine.

Section 57 of the Austrian Penal Code provides that

bribery prosecutions cannot be brought if not initiated

within five years after the commission of the offense.

Books and Records Provisions

Section 189, paragraph 1 of the Austrian Code of

Commercial Law requires merchants to keep books and

records in accordance with correct accounting principles.

Section 190, paragraph 2 provides that all entries "must be

complete, accurate, up-to-date, and orderly." Section 268

provides that annual financial statements and company

reports must be examined by an auditor. The general

accounting provisions apply to all persons engaged in

commercial activities, excluding small merchants. Also,

certain small corporations are exempt from the obligatory

annual audit. Under Section 122 of the Federal Law of

Private Companies, the penalty for violation of the

accounting provisions is imprisonment for up to two years

or a fine. This applies to managing directors, members of

the supervisory board, and agents. The same penalties

apply under the Federal Law on Public Companies.

Money Laundering

Section 165 of the Austrian Penal Code establishes

all punishable offenses as predicate offenses for money

laundering. Persons may be prosecuted for having

money-laundered property deriving from the predicate

crime of bribery even if it was committed abroad. The

penalty for money laundering is imprisonment for up to

two years or a fine.

Extradition/Mutual Legal Assistance

Under Section 11, paragraph 1 of the Extradition and

Mutual Legal Assistance Act, extradition is permitted if

the offense is punished under both the law of the requesting country and Austrian law with imprisonment of more

than one year. It is our understanding that the requirement

of dual criminality will be met in cases arising between

Convention Parties. Section 12, paragraph 1 of the

Extradition and Mutual Legal Assistance Act prohibits

the extradition of Austrian nationals. However, it is our

understanding that where Austria will not extradite its

own nationals, it will exercise jurisdiction over them in

conformity with Convention Article 10.3.

Austria has entered into bilateral extradition agreements with three signatories to the Convention:

Australia, Canada, and the United States. Austria has

also signed the European Extradition Agreement which

governs extradition requests among Belgium, Bulgaria,

the Czech Republic, Denmark, Germany, Finland,

France, Greece, Hungary, Ireland, Iceland, Italy,

Luxembourg, Netherlands, Norway, Poland, Portugal,

Sweden, Switzerland, the Slovak Republic, Spain,

Turkey, and the United Kingdom. With regard to

Belgium, Germany, France, Greece, Italy, Luxembourg,

the Netherlands, Portugal, and Spain, the Schengen

implementation agreement of 1997 also applies.

Austria has mutual legal assistance treaties with

Australia, Estonia, Latvia, Monaco, Slovenia, the former

Yugoslavia, and the United States.

It is our understanding that requests originating from

countries not mentioned above will be handled in accordance with Austrian Federal Law on Extradition and

Judicial Assistance, and on the basis of reciprocity.

20 Addressing the Challenges of International Bribery and Fair Competition, 2001
Consultations are also covered by the same law. The

bribery of a foreign public official is an extraditable

offense under the extradition treaties to which Austria is

a party. It is our understanding that the condition of reciprocity will met with regard to the Convention, unless the

requesting state refuses reciprocity. Similarly, dual criminality is required for the granting of mutual legal assistance, but it is our understanding that between Austria

and Parties to the Convention, the condition will always

be met under Article 1.

We understand that Austrian authorities will not

decline to render mutual legal assistance for criminal

matters within the scope of the Convention on bank

secrecy grounds.

Complicity, Attempt, Conspiracy

Austrian Penal Code Section 12 provides that anyone

who is an accessory or who instigates a criminal act is

punished as a perpetrator. Section 15 covers attempt.

Conspiracy is not punishable under Austrian law.

Belgium

Belgium signed the Convention on December 17,

1997, and deposited its instrument of ratification on July

27, 1999. In order to implement the Convention, Belgium

enacted two laws. One is the Bribery Prevention Act

(known as Act 99/808), which entered into force on April

3, 1999, and which amended provisions of the Criminal

Code relating to the bribery of public officials. The other

is the Act of May 4, 1999 (known as Act 99/1890), which

entered into force on August 3, 1999, and which creates

criminal liability for legal persons. The following analysis is based on those acts, related Belgian laws, and

reporting from the U.S. embassy in Brussels.

One concern is that the definitions of "foreign public

official" under Belgian law are not autonomous. In addition, there are certain limitations on the exercise of

nationality jurisdiction.

Basic Statement of the Offense

Article 246, Section 2 of the Criminal Code provides

that "the act of proposing, whether directly or through

intermediaries, an offer, promise or advantage of any

kind to a person exercising a public function, either for

himself or a third party, in order to induce him to act in

one of the ways specified in Article 247 shall constitute

active bribery." Article 247 specifies four different types

of acts: (1) an act within the scope of a person's

responsibilities that is proper but not subject to remuneration; (2) performance of an improper act, or refraining

from a proper one, in the exercise of one's function; (3)

commission of an offense in the exercise of one's

function; or (4) use of influence derived from one's function to obtain performance of an act, or failure to perform

one, by a public authority. Pursuant to Article 250,

Articles 246 and 247 now apply to persons who exercise

a public function in a foreign state, as well as in Belgium.

Article 251 extends the coverage of Articles 246 and 247

to persons who exercise a public function in an organization governed by public international law. These provisions are not limited to bribes made in order to obtain or

retain business or other improper advantage in international business.

Jurisdictional Principles

Under Article 3 of the Criminal Code, jurisdiction is

established over offenses committed within Belgian territory by Belgian or foreign nationals. Act 99/808 added

Article 10 quater to the Code of Criminal Procedure.

This provides for jurisdiction in certain cases over persons (foreign as well as Belgian nationals) who commit

bribery offenses outside the territory of Belgium. Various

limitations apply, however. For example, if the bribe

recipient exercises a public function in a European Union

member state, Belgian prosecution may not proceed

without the formal consent of the other state. If the bribe

recipient exercises a public function in a state outside the

EU, the formal consent of that state is again required in

order to prosecute. In addition, there is a requirement that

the act be a violation of the laws of the other state, and

that the state would punish such bribery of a person exercising a public function in Belgium. Bribery involving a

person who exercises a public function within an EU

institution is subject to prosecution. For bribes involving

persons exercising a public function within other public

international organizations, the formal consent of the

organization is required before prosecution can proceed.

Under Articles 21-18 of the Code of Criminal

Investigation, the statute of limitations for criminal

offenses is ten years from the date the offense was committed. This period may be extended because of the conduct of investigations or prosecutions.

Coverage of Payor/Offeror

Under the Article 5 of the Criminal Code as amended

by Act 99/1890, all persons, natural or legal, are subject

to prosecution for the bribery of a foreign public official.

Coverage of Payee/Offeree

Under Article 250, Section 2, whether a person exercises a public function in another state is determined in

Chapter 2: Review of National Implementing Legislation 21
accordance with the law of that state. When the foreign

state is not a member of the European Union, it is necessary also to determine whether the function is considered

a public one under Belgian law. Under Article 251,

Section 1, whether a person exercises a public function in

a public international organization is evaluated by reference to the by-laws of that organization. Thus, these definitions are not autonomous.

Article 246, Section 3 provides that corruption

offenses also apply in the case of a person who is a

candidate for the exercise of a public function, who

implies that he will exercise such a function, or who misleads another into believing that he currently exercises

such a function.

Penalties

We understand that the applicable penalties are

derived not only from Articles 247-249, but also from

other provisions of the Criminal Code. Individuals who

commit bribery of a foreign public official are subject to

fines ranging from BF20,000 to BF40 million (approx.

U.S. $420-$840,000), and/or imprisonment for a period

of six months to fifteen years. Legal persons face fines

ranging from BF600,000 to BF72 million (approx. U.S.

$12,600-$1.5 million). Penalties are more severe if the

person to whom the bribe is offered or paid exercises certain functions relating to the investigation, prosecution,

or adjudication of offenses, e.g., police officers, prosecutors, jurors, or judges. The existence of a bribery agreement between the payor/offeror and the payee/offeree is

also an aggravating circumstance.

Belgian law also provides for certain civil and

administrative penalties for the bribery of a foreign public official: 

Loss of rights such as holding public office (Articles

31-33 of the Criminal Code).

Disqualification from public procurement (Article

19, Section 1 of the Act of March 20, 1991).

Prohibition from exercising certain professional

functions (Section 1 of Royal Order No. 22 of October

24, 1934).

Articles 35-39 and 89 of the Code of Criminal

Investigation permit seizure of bribes and the proceeds of

bribery. Articles 42-43 of the Criminal Code authorize

the confiscation of items that are the object of the offense

or that were used or intended to be used to commit the

offense (when they belong to the convicted person), any

proceeds of the offense and patrimonial advantages

derived directly from the offense, as well as any goods

and assets acquired in exchange for these advantages and

any income derived from investing them.

Books and Records Provisions

The Act of July 17, 1995, and the Companies Act of

1872 impose accounting requirements on all commercial

concerns and prohibit the establishment of off-the-books

accounts, use of false documents, and other acts covered

under Article 8 of the Convention. Those who violate

these provisions are subject to criminal, civil, and administrative penalties.

Money Laundering

Under the Act of January 11, 1993, there is a prohibition on the laundering of "the proceeds of an offense

involving bribery of public officials," domestic or foreign.

Extradition/Mutual Legal Assistance

The U.S.-Belgium extradition treaty, which entered

into force in 1997, provides that offenses shall be extraditable if punishable under the laws of both parties by

deprivation of liberty for a period of more than one year.

Bribery of a foreign public official is also an extraditable

offense under the Extradition Act of March 15, 1874.

Belgium has bilateral extradition treaties with twenty

countries and is a party to the European Convention on

Extradition of December 13, 1957. Section 1 of the

Extradition Act of March 15, 1874, prohibits the extradition of Belgian nationals.

The U.S.-Belgium mutual legal assistance treaty

entered into force on January 1, 2000. Belgium may also

provide legal assistance under the authority of other bilateral or multilateral mutual legal assistance treaties; the

Convention applying the Schengen Agreement of June

19, 1990; the European Convention on Mutual

Assistance in Criminal Matters of April 20, 1959; or provisions of the domestic Judicial Code.

Complicity, Attempt, Conspiracy

Complicityóincluding aiding and abetting, authorization, and incitementóis covered under Articles 66-67

of the Criminal Code. Attempting to bribe a public official, domestic or foreign, is generally not specifically

covered under Belgian law, although the mere offer of a

bribe is sanctionable.

Bulgaria 

Bulgaria signed the Convention on December 17,

1997, and deposited its instrument of ratification with

the OECD Secretariat on December 22, 1998. A Law on

Amendment to the Penal Code was passed by parliament on January 15, 1999, and came into force on

January 29, 1999.

22 Addressing the Challenges of International Bribery and Fair Competition, 2001
Bulgaria's implementing legislation amends Articles

93 and 304 of the Penal Code to cover bribery of foreign

public officials in the course of international business

activities. The following analysis is based upon the Penal

Code and reporting from the U.S. embassy in Sofia and

nongovernmental organizations.

Bulgarian law currently does not provide for liabilityócriminal or otherwiseóof legal persons, although

the Bulgarian parliament is considering legislation providing for noncriminal sanctions for legal persons who

bribe foreign public officials. There are also concerns

over available defenses.

Basic Statement of the Offense

Article 304(1) of the Penal Code provides for

criminal penalties for "[a] person who gives a gift or

any other material benefit to an official in order to perform or not to perform an act within the framework of

his service, or because he has performed or has not

performed such an act." Under Article 304(2), this

applies to a person who "gives a bribe to a foreign

official in relation to the performance of international

business activity." Current Bulgarian law does not

cover the promising or offering of a bribe, but this is

included in legislation that is pending before parliament. The U.S. embassy in Sofia advises that

Bulgarian law was recently amended to cover the

promising or offering of a bribe.

Under Articles 306 and 307, there are available

defenses for (1) a person who has been blackmailed into

giving a bribe or (2) a person who has of his own accord

informed the authorities of the bribe. We understand that

recent legislation has eliminated provocation as a defense.

Although Article 304 does not address bribes made

through intermediaries, Article 305a imposes criminal

liability on persons who "mediate" in the giving or

receiving of a bribe.

Jurisdictional Principles

Article 3 of the Penal Code states that the code

applies to all crimes committed in the territory of

Bulgaria. It is not clear how this provision applies to

crimes committed only in part in Bulgaria. Under Article

4(1) of the Penal Code, the code applies to crimes committed by Bulgarian citizens abroad.

Under Article 80 of the Penal Code, the statute of

limitations for offenses carrying a penalty of imprisonment for three years or less is two years, while for

offenses carrying a penalty of imprisonment of more

than three years the statute of limitations is generally

five years.

Coverage of Payor/Offeror

Article 304 refers to acts by "a person," without reference to nationality.

Coverage of Payee/Offeree

In amended Article 93 of the Penal Code, "foreign

official" is defined as any person:

ï exercising duties in a foreign country's public institutions (office or agency);

ï exercising functions assigned by a foreign country, including for a foreign public enterprise or

organization; or

ï exercising duties or tasks of an international

organization.

Penalties

Under Article 304 of the Penal Code, the penalty for

bribery of a domestic or foreign public official is imprisonment for a term of up to three years, unless the official

has violated his official duties in connection with the

bribe, in which case the penalty is imprisonment for a

term of up to five years. "Mediation" of bribery under

Article 305a is generally subject to a penalty of imprisonment for up to three years. According to official government sources, legislation recently enacted increases

the penalties for all types of corruption.

Legal persons are not subject to criminal liability

under Bulgarian law. Currently, there are also no applicable noncriminal sanctions for legal persons who bribe a

foreign public official. The Council of Ministers is

preparing amendments to the Administrative Offenses

and Sanctions Act to introduce noncriminal (monetary)

liability of legal persons for such bribery.

Under Article 307a of the Penal Code, "the object of

the crime under Articles 301-307 shall be seized in favor

of the state and where it is missing, a sum equal to its

value is adjudged." Under Article 53, "objects" subject to

seizure include those used in the perpetration of the crime

as well as those acquired through the crime.

Books and Records Provisions

Article 5 of the Accountancy Act sets forth certain

principles that must be observed in the preparation of

records by "enterprises," which are defined as "any economically separate legal entities, sole proprietorships and

companies without legal personality performing any

activity permitted by the law." Under Article 308 of the

Penal Code, forgery of official documents is punishable

by imprisonment for up to three years.

Under Article 15 of the Law on Public Financial

Control, the audit of the books and records of certain

Chapter 2: Review of National Implementing Legislation 23
enterprises is required, and auditors must report infractions to prosecuting authorities. Obligations on accountants are found in Article 57a(1) of the Accountancy Act.

Money Laundering

Under Article 253 of the Penal Code, "[a] person

who concludes financial transactions or other transactions with funds or property of which he knows or

supposes that they have been acquired by crime" is

subject to punishment of imprisonment for one to five

years and a fine of 3,000 to 5,000 Bulgarian levs

(approx. U.S. $1,300 $2,200). In certain cases, these

penalties are increased to imprisonment for one to eight

years and a fine of 5,000 to 200,000 levs (approx. U.S.

$2,200-$8,700).

Extradition/Mutual Legal Assistance

Bribery is not listed as an extraditable offense under

the 1924 U.S.-Bulgaria extradition treaty. However,

Article 10.1 of the Convention provides that bribery of a

foreign public official shall be deemed to be an extraditable offense under extradition treaties between the

parties. Dual criminality is required under the treaty and

under Article 439 of the Penal Code. Article 25.4 of the

Bulgarian Constitution and Article 439b(1) of the Penal

Procedure Code prohibit the extradition of Bulgarian

nationals.

The United States and Bulgaria do not have a mutual

legal assistance treaty. Under Article 461 of the Penal

Procedure Code, Bulgaria may provide legal assistance

in criminal matters to a requesting state (1) pursuant to

the provisions of an international treaty to which

Bulgaria is a party, or (2) on the basis of reciprocity.

Complicity, Attempt, Conspiracy

Complicity in criminal acts is covered under Articles

20-22 of the Penal Code. Under Article 21, a person who

aids or abets an offense is subject to the same punishment

as that which applies to the offense itself, subject to due

consideration for the nature and degree of the person's

participation. Articles 17-19 of the Penal Code apply to

attempts to commit offenses. Article 18 provides that an

attempt is subject to the same punishment as that pertaining to the underlying offense, with due consideration

given to the degree of implementation and the reasons

why the crime was not completed.

Canada 

The Canadian Corruption of Foreign Public Officials

Act, 46-47 Elizabeth II ch. 34, was adopted on December

7, 1998, assented to on December 10, 1998, and entered

into force on February 14, 1999.

Sources for this analysis include the text of the act,

diplomatic reporting, and information from nongovernmental organizations.

We are concerned that Canada, which has previously

asserted nationality jurisdiction over certain other crimes

and thus has constitutional authority to do so, has not done

so for offenses created to implement the Convention.

Basic Statement of the Offense

Section 3(1) of the Corruption of Foreign Public

Officials Act provides:

Every person commits an offense who, in order to

obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to

give or offer a loan, reward, advantage or benefit of

any kind to a foreign public official or to any person

for the benefit of a foreign public official;

(a) as consideration for an act or omission by the

official in connection with the performance of the

official's duties or functions; or

(b) to induce the official to use his or her position to

influence any acts or decisions of the foreign state or

public international organization for which the official performs duties or functions.

The act contains exceptions for facilitation payments, payments that are lawful under the written law of

the receiving official's country, and payments related to

bona fide business promotion and execution of a

contract. (See Sections 3(3) & (4).)

Jurisdictional Principles

The Corruption of Foreign Public Officials Act does

not contain any specific provisions governing jurisdiction. It is also our understanding that Canadian courts

will assert territorial jurisdiction where a significant portion of the activities constituting the nature of the offense

takes place in Canada. There must be a real and substantial link between the offense and Canadian territory.

It is our understanding that the courts in Canada have

adopted a two-part test for determining whether a crime

took place in Canada. The court will first consider all the

relevant acts that took place in Canada that may have

legitimately given Canada an interest in prosecuting the

offense. Second, the court will consider whether it would

offend international comity to assert jurisdiction over

those acts and the offense. (See Libman v. R., 2 S.C.R.

178 (1985).)

Canada has not asserted extraterritorial jurisdiction

for this offense. However, Canadian law provides that

24 Addressing the Challenges of International Bribery and Fair Competition, 2001
any person who, while outside Canada, conspires to commit an indictable offense in Canada shall be deemed to

have committed the offense of conspiracy in Canada.

(See Criminal Code '465(4).) The penalties for conspiracy are the same as those for the substantive offense. (See

Criminal Code '465(1)(c).)

Coverage of Payor/Offeror

The Corruption of Foreign Public Officials Act

applies to "every person," without reference to nationality. "Person" includes "Her Majesty and public bodies,

bodies corporate, societies, companies, and inhabitants of

counties, parishes, municipalities or other districts in

relation to the acts and things that they are capable of

doing and owning respectively." (See Criminal Code '2.)

Coverage of Payee/Offeree

Section 2 of the Corruption of Foreign Public

Officials Act defines a "foreign public official" as:

(a) a person who holds a legislative, administrative,

or judicial position of a foreign state;

(b) a person who performs public duties or functions

for a foreign state, including a person employed by a

board, commission, corporation or other body or

authority that is established to perform a duty or

function on behalf of the foreign state, or is performing such a duty or function; and

(c) an official or agent of a public international

organization that is formed by two or more states or

governments, or by two or more such public international organizations.

The act further defines a foreign state to include a

foreign national government, its political subdivisions, and their departments, branches, and agencies.

The definition of a public official includes persons

employed by "a board, commission, corporation or

other body of authority that is established to perform a

duty or function on behalf of the foreign state, or is

performing such a duty or function." It is our understanding that the legislature intended that judges interpret the terms of the act by reference to the OECD

Convention and Official Commentaries, which provide that a "public enterprise" is "any enterprise,

regardless of its legal form, over which a government,

or governments, may, directly or indirectly, exercise a

dominant influence." The Act does not address

whether state-owned enterprises acting in a commercial context are covered. The Official Commentaries

affirmatively state that they are not so covered if the

enterprise receives no subsidies or privileges. (See

OECD Commentary, footnote 14.)

Penalties

The Corruption of Foreign Public Officials Act provides for a sentence of imprisonment of not more than

five years. We understand that corporations are subject to

fines at the discretion of the court with no maximum set

by statute. There does not appear to be any guidance as to

the proper calculation of the fine.

The penalties under the act are roughly congruent to

the penalties for domestic bribery except that a person

convicted of bribery of a foreign public official is not

subject to debarment.

In addition to the penalties for bribery, the act contains two other offenses: possession of the proceeds of

bribery (Section 4) and laundering of the proceeds of

bribery (Section 5). The penalty for violation of these

provisions is up to ten years' imprisonment, a penalty that

is higher than that for the bribery offense itself.

The act incorporates Section 2 of the Criminal Code

which defines "person" to include "bodies corporate." We

understand that corporations may be prosecuted criminally in Canada.

The Canadian principle of corporate criminal liability appears to be similar to, but potentially somewhat narrower than, that of the United States. It focuses on an

identification of the corporation with the "directing

mind," which is anyone who has been authorized to exercise "the governing executive authority of the corporation." A corporation is liable if the criminal acts are performed by the manager within the sector of operation

assigned to him or her by the corporation. The sector may

be functional or geographic or may embrace the entire

undertaking of the corporation.

Sections 7 and 9 of the Corruption of Foreign Public

Officials Act adds the three offenses created under the act

(bribery, possession of proceeds, and money laundering

of proceeds) to the statutory list of "enterprise crimes"

(See Criminal Code '462.3.), thus enabling the government to obtain warrants to search, seize, and detain the

proceeds of these offenses and to obtain an order of forfeiture upon conviction. (See Criminal Code ''462.32-.5.)

Books and Records Provisions

Canada has a number of statutes that govern books

and records. They prohibit falsification of books and documents, false pretense, false statement, false prospectus,

forgery, and fraud. (See Criminal Code ''361-62, 366,

380, 397, and 400.) However, Canadian business leaders

have criticized the Canadian laws as insufficient because

they do not prohibit off-the-books accounts, inadequately

identified transactions, the recording of nonexistent

expenses, and the use of false documents.

Chapter 2: Review of National Implementing Legislation 25
The generally accepted auditing standards in effect in

Canada require the auditor to obtain a written certification from management that it is not aware of any illegal

or possibly illegal acts.

Money Laundering

Sections 5 and 7 of the Corruption of Foreign Public

Officials Act criminalize the laundering of the proceeds

of any payment in violation of the act and makes offenses

under the act predicate offenses under Canada's moneylaundering legislation. (See Criminal Code 462.3.) The

act further criminalizes the laundering of the proceeds of

any payment that "if it had occurred in Canada, would

have constituted an offense under Section 3."

Extradition/Mutual Legal Assistance

Canada will provide mutual legal assistance and

extradition with respect to the offenses covered by the

OECD Convention. Under Canadian law, there must be

an extradition agreement with the country requesting

extradition; that country must punish the offense by

imprisonment for a maximum term of two or more years;

and the equivalent offense must also be punishable under

Canadian law by a maximum term of imprisonment of

two or more years.

Complicity, Attempt, Conspiracy

Canadian law permits prosecution for attempt and

aiding and abetting. (See Criminal Code ''21(1), 24.) The

Corruption of Foreign Public Officials Act covers any

individual who "agrees to give or offer" a payment. (See

'3(1).) In addition, as noted, Canadian law provides that a

conviction for conspiracy carries the same penalties as a

conviction for the substantive offense.

Czech Republic

The Czech Republic signed the Convention on

December 17, 1997. The Czech parliament passed implementing legislation on April 29, 1999, which entered into

force on June 9, 1999. The Czech President ratified the

Convention under national law on December 20, 1999,

and the Czech Republic deposited its instrument of ratification with the OECD on January 21, 2000.

The Czech Republic made only minor modifications

to its Criminal Code to implement the Convention, particularly with the addition of a definition for the terms

"bribe" and "public official." Sources for this analysis

include the Czech implementing legislation, relevant

Criminal Code provisions, and information from the U.S.

embassy in Prague.

Our main concern with the Czech legislation pertains

to the defense of "effective repentance," which provides

that the criminal nature of bribery shall not apply if the

offender provided or promised a bribe solely because he

had been requested to do so and reported the fact voluntarily and without delay to the prosecutor or police

authority. We believe this defense is inappropriate for

instances of transnational bribery and may constitute a

loophole. Also, the Czech law currently does not provide

for criminal responsibility for legal persons, or for effective, proportionate, and dissuasive noncriminal sanctions

as required by the Convention.

Basic Statement of the Offense

The basic statement of the offense is contained in

Section 161, paragraph 2b of the Czech Criminal Code

which states that:

(1) Whoever in connection with procuring affairs in

the public interest provides, offers, or promises a

bribe shall be sentenced to imprisonment for up to

one year or to a monetary fine;

(2) A perpetrator shall be sentenced to imprisonment

of one year to five years or to a monetary fine.(a) if

he commits the act referred to in paragraph 1 with the

intent of procuring a substantial benefit for him/herself or for another person or to cause substantial

harm or other particularly serious effect to another

person; (b) if he commits the act referred to in paragraph 1 vis-a-vis a public official.

Section 162a paragraph 1 defines a "bribe" as "an

unwarranted advantage consisting in direct material

enrichment or other advantage that the person being

bribed or another person receives or is to receive with its

consent, and for which there is no entitlement."

The basic statement of the offense under Section 161,

paragraph 2b covers "any person," defined as natural persons. It also covers direct bribes and bribes through intermediaries, and bribes to foreign officials as well as third

parties. (Although third parties are not specifically mentioned in the basic statement of the offense (Section

161(2)b), the definition of bribery (Section 162a) which

mentions "another person" incorporates the concept of

bribes for third parties.) Section 161 also includes the

concept of intentionality. The basic statement of the

offense also goes beyond the scope of the Convention in

that it does not require that the alleged offender acted in

the context of international business transactions.

The Czech legislation also contains a defense of

"effective repentance" in Section 163, which provides

that the criminal nature of bribery and indirect bribery

shall not apply if the offender has provided or promised

26 Addressing the Challenges of International Bribery and Fair Competition, 2001
a bribe solely because he has been requested to do so and

reported the fact voluntarily and without delay to the

prosecutor or police authority.

Jurisdictional Principles

The Czech Republic exercises jurisdiction over any

acts committed in whole or in part (or which violated or

threatened an interest protected under the Code) in its

territory. (Section 17, paragraph 2 of the Criminal Code.)

It is our understanding that this would include communication by fax, phone, or acts committed on board a

Czech vessel or aircraft. In addition, the Czech Republic

will also exert nationality jurisdiction over its nationals

and stateless persons who reside permanently in the

Czech Republic. (Section 18 of the Criminal Code.)

Companies that bribe will be excluded from Czech

procurement irrespective of the nationality of their

agents, employees, or board members liable for bribery

of foreign public officials. Czech law will apply to foreigners and stateless non-Czech residents if the act was

committed in a country that also criminalizes the

offense, and if the offender is caught in the Czech

Republic and was not extradited to a foreign state.

(Section 20, Criminal Code.)

Coverage of Payor/Offeror

The basic statement of the offense only covers bribes

by natural persons, as Czech law does not provide for

penal responsibility for legal persons.

Coverage of Payee/Offeree

The Czech definition of foreign public official

includes the definition of domestic public officials under

Section 89 of the Criminal Code in addition to a new definition under Section 162a, paragraph 2, extending the

definition of public official (found in Section 161, paragraph 2b) to foreign officials.

Section 89, paragraph 9 of the Criminal Code provides that:

A public official shall mean an elected (public) representative or other person authorized by the state

administration or local (municipal) authority, a court

or other state organ, or a member of the armed forces

or armed corps insofar as he takes part in the fulfilment of the tasks set by society and the state, for

which he exercises authority entrusted to him as a

part of his responsibility for fulfilment of such tasks.

When exercising entitlements and competency

according to special legal provisions a public official

shall also mean a natural person holding the position

of a forest guard, water guard, nature guard, hunting

guard or fishing guard. Criminal liability and protection of a public official under individual provisions

of this Code shall require that a crime be committed

in connection with the official's authority (competency) and responsibility.

Section 162a, paragraph 2 provides that in addition

to Section 89, "public official" also includes any person

occupying a post (a) in a legislative or judicial authority

or the public administration authority of a foreign

country, or (b) an enterprise, in which a foreign country

has the decisive influence, or in an international organization consisting of countries or other entities of international public law, if the execution of such a function is

connected with authority in handling public affairs and

the criminal act was committed in conjunction with such

authority.

It is our understanding that this definition includes all

levels and subdivisions of the foreign government.

Penalties

Bribery of domestic and foreign public officials by

natural persons may be punished by imprisonment of

one to five years and/or a monetary fine ranging from

2,000 Czech koruna to CZK5 million (approx. U.S. $50-

$124,000). (Section 161, paragraph 2b, Section 53,

Criminal Code.) The guidelines for imposing penalties

are contained in Sections 33 and 34 of the Criminal

Code. They contain examples for judges to take into

account when determining penalties, such as the state of

mind of the offender or the nature of the motive for the

crime.

Civil sanctions applying to both natural and legal

persons apparently are possible under Section 451 of the

Civil Code, which provides that the court may render a

civil law judgement on the transfer of illegal gains.

The statute of limitations for the offense of bribery

of foreign public officials is five years (offenses subject to a maximum prison term of not less than three

years). (Section 67, Criminal Code.) The statute of limitations period does not include the period in which the

offender could not be tried because of legal impediments, when the offender was abroad, or if there is a

conditional stay of criminal prosecution. The period

shall be interrupted and a new statute of limitations

shall commence where the offender is informed of the

alleged offense and a criminal investigation has begun,

or if the offender commits a new offense during the

statute of limitations period.

Section 55 of the Czech Criminal Code allows for

forfeiture of an asset belonging to the offender if the

bribe is secured during a criminal proceeding.

Chapter 2: Review of National Implementing Legislation 27
Books and Records Provisions

The Accounting Act No. 563/1991 Coll., as amended

by the Act No. 117/1994 Coll. and Act No. 219/1997

Coll., governs the maintenance of books and records

under Sections 6,7,11-16, 29 and 33. The Accounting Act

applies to all legal and natural persons carrying on business that are required to report taxes. On January 1, 2001,

a new Act on Auditors entered into force obligating auditors to notify immediately, to the statutory and supervisory bodies of the company, any indications of possible

acts of bribery.

Money Laundering

It is our understanding that as with bribery of

domestic officials, bribery of foreign officials is a

predicate offense for the application of the Czech

money-laundering legislation. (Section 1, paragraph 2,

Act No. 61/1996 Coll. Concerning Certain Measures

Against Legalization of Proceeds of Criminal Activity

and amendments.)

Extradition/Mutual Legal Assistance

Under Czech law, the Convention will be considered as a basis for extradition and mutual legal assistance. Bribery of foreign public officials is an extraditable offense under Czech law and the extradition

treaties to which the Czech Republic is a party. Where

no treaty applies, Section 379 of the Code on Criminal

Procedure permits extradition of a person in the Czech

Republic to a foreign country if the offense is

punishable in both countries, extradition is found

admissible by a competent Czech court, the statute of

limitations has not expired, and the accused is not a

Czech national. It is our understanding that the Czech

condition for dual criminality will be considered fulfilled between parties to the Convention. Section 382

provides that a permit is required from the Czech

Minister of Justice once a competent court has decided

upon the admissibility of the extradition. Czech nationals cannot be extradited. (Section 21, Criminal Code.)

Under Section 18 of the Criminal Code, Czech law

applies to Czech nationals and permanent residents who

commit offenses abroad, and such persons can be prosecuted in the Czech Republic.

Mutual legal assistance may be governed by the

1959 European Convention on Mutual Legal

Assistance in Criminal Matters. Where no treaty

applies, mutual legal assistance is governed by

Section 384 of the Code on Criminal Procedure.

Under Section 56 of the Act on International Private

and Procedural Law, Czech judicial authorities will

grant legal assistance to foreign judicial bodies if the

requirement of reciprocity is met. Consultation procedures are determined on a case-by-case basis by the

Supreme Prosecution Office at the request of the competent foreign body for the transfer of criminal proceedings. (Section 383, Code on Criminal Procedures.) Also applicable are the 1972 European

Convention on Transfer of Criminal Proceedings and

Article 21 of the 1959 European Convention on

Mutual Assistance in Criminal Matters. In noncriminal matters where no treaty governs, the Act on

International Private and Procedural Law will apply,

along with the relevant provisions in the bilateral and

multilateral mutual legal assistance treaties to which

the Czech Republic is a party.

Although Section 38 of the Law No. 21/1992 Coll.

on Banks, as amended, provides for bank secrecy, the

provisions also state that bank secrecy is not violated

where such information is provided relating to criminal

proceedings.

Complicity, Attempt, Conspiracy

Section 9, paragraph 2 of the Czech Criminal Code

provides that where the offense has been committed

collectively by two or more persons, each one shall be

held individually liable. Section 10 of the Criminal Code

defines "participants" in criminal offenses as persons

who intentionally organize, instigate, or assist in crime.

Sections 7 and 8 of the Criminal Code govern conspiracy

and attempt, respectively. Section 7 concerns "especially

serious criminal offenses," which are defined as offenses

punishable by imprisonment of at least eight years.

However, bribery of foreign public officials is punishable

by imprisonment of five years or less, so apparently

Section 7 would not apply.

Denmark

Denmark signed the Convention on December 17,

1997. The Danish parliament passed legislation amending the Danish Criminal Code and ratifying the

Convention on April 4, 2000, and this legislation entered

into force on May 1, 2000. Denmark deposited its instrument of ratification with the OECD on September 5,

2000. 

Danish legislation seems to conform in the most part

to the Convention requirements. However, we are concerned with the discrepancy between the statute of limitations for a natural person and for a corporate entity. In

our view, the two-year limitation, applicable only to corporate entities, is insufficient. 

28 Addressing the Challenges of International Bribery and Fair Competition, 2001
Basic Statement of the Offense

Section 122 of the Criminal Code, as amended,

provides:

Any person who unlawfully grants, promises or

offers some other person exercising a Danish, foreign or international public office or function a gift or

other advantage in order to induce him to do or fail

to do anything in relation to his official duties shall

be liable to a fine, simple detention, or imprisonment

for any term not exceeding three years.

Although the law does not provide any specific

defenses or definitions, the Danish authorities have represented that certain payments or gifts would not be

deemed ìunlawful,î i.e., ìusual giftsî in connection with

special events and ìordinary giftsî for acts already committed, provided there was no explicit or implicit agreement in advance of the official act. In addition, the legislative history indicates that the Danish authorities

intend to permit a defense for facilitation payments in

certain circumstances.

Intent is required to commit the basic offense. Danish

authorities also state that third-party beneficiaries to the

bribes are also covered by Section 122. 

Jurisdictional Principles

Denmark will assert jurisdiction over any act committed in whole or in part within its territory or where the

consequences of the criminal act are manifest in

Denmark. Liability of legal persons depends upon the

location in which the requisite natural person committed

the crime. 

Denmark also asserts nationality jurisdiction over

acts committed outside the territory of any state. With

respect to acts within another stateís territory, Denmark

asserts nationality jurisdiction provided the crime is also

punishable within that state. 

Coverage of Payor/Offeror

The Danish law applies to any person, irrespectively

of nationality. Although the Danish law does not explicitly

refer to payments through intermediaries, Danish law

encompasses such payments through its law on complicity.

Danish law provides for the prosecution of legal persons for foreign bribery, subject to the discretion of the

public prosecutor. The law requires that at least one natural person employed by the legal person have committed the crime with the requisite intent. That person, however, need not hold a managerial position and may be an

agent rather than a salaried employee. Prosecution and

conviction of the natural person is not a prerequisite for

criminal liability of the legal person. 

Coverage of Payee/Offeree

The Danish law does not, in and of itself, define foreign officials. However, the legislative history states that

a person holding a ìforeign public office or functionî

includes officials of foreign countries, public enterprises,

and international organizations, and explicitly references

the definition in Article 1(4)(a) of the Convention. It further provides that judges, elected and appointed officials,

and employees of all levels of the foreign government are

included, as well as officials of state-owned enterprises

engaged in commerce and industry.

Penalties

As of July 1, 2001, Danish law provides for a term of

imprisonment between seven days and three years and a

fine. Legal persons may be fined. In addition, the gain

realized from the offense of foreign bribery may be

confiscated.

Under Danish law, fines are calculated according to

a "day-fine" system in which the size of a single day-fine

is dependent upon the defendant's economic situation.

The fine itself can range from a single day-fine of not less

than 2 DKK (approx. U.S.$0.22) to 60 day-fines of an

indeterminate amount. The actual amount of day-fines,

and thus the total amount of the fine, is set by the court

according to the nature of the offense and the defendant's

means. Further, should a fine of 60 day-fines be deemed

inadequate by the court due to the amount of profits

obtained or that might have been obtained by the defendant from the violation, the court has the discretion to

impose a fine outside of the day-fine system.

According to section 93 of the Danish Criminal

Code, the statute of limitations for bribery of foreign public officials is five years for an individual, whereas it is

two years for a legal person. The statute of limitations can

be triggered or suspended pursuant to section 94. The

statute begins to run the day when the act has ceased. 

Books and Records Provisions

Denmarkís Bookkeeping Law requires companies to

keep accounts in accordance with ìgood bookkeeping

practices,î to promptly record transactions, and to substantiate every bookkeeping entry with a voucher showing the date and amount of the transaction. Violations of

the Bookkeeping Law may be punished by a fine and

imprisonment of up to one year.

Money Laundering

Denmark prohibits some forms of money-laundering

through section 284 of the Criminal Code, which prohibits receiving stolen goods. Section 284 prohibits

Chapter 2: Review of National Implementing Legislation 29
acquiring the profits or gains from listed offenses, including domestic and foreign bribery, hiding them, or otherwise assisting in ensuring their availability for the benefit of another person.

Extradition/Mutual Legal Assistance

The United States has an extradition treaty with

Denmark. Denmark does not, however, extradite its

nationals except to other Nordic countries.

The United States does not have a mutual legal assistance treaty with Denmark, nor does Denmark have a

general mutual legal assistance law. Thus, requests for

assistance are handled through traditional letters rogatory. The Danish authorities will provide legal assistance

when the request can be carried out in corresponding

Danish proceedings.

Complicity, Attempt, Conspiracy

Danish law provides for prosecution of every person

who ìcontributedî to the commission of an offense and

for the same penalties, except in special circumstances,

as those applicable to the substantive offense. (See

Criminal Code 23.) Danish law also provides for prosecutions of attempts, with lower penalties than for the

completed offense. (See Criminal Code 21.) However,

the offense of bribery is complete when a bribe is promised or offered, regardless of whether the bribe is

accepted or received by the public official. Danish law

does not provide for prosecution of conspiracies.

Finland 

Finland signed the Convention on December 17,

1997, and enacted implementing legislation on October

9, 1998. Finland deposited its instrument of ratification

with the OECD on December 10, 1998. The implementing legislation entered into force on January 1, 1999.

Sources for this analysis include the new provisions

to the Finnish Penal Code, Chapter 16, entitled "Offenses

Against Public Authorities," as well as information from

the U.S. embassy in Helsinki.

One concern with the Finnish legislation is that

Finland requires dual criminality in order to exercise

jurisdiction over Finnish citizens abroad.

Basic Statement of the Offense

The basic statement of the offense of bribing foreign

public officials is set forth in Chapter 16 of the Finnish

Penal Code, Section 13 on bribery:

(1) A person who to a public official, to an employee

of a public corporation, to a soldier, to a person in the

service of the European Communities, to an official

of another Member State of the European Union, or

to a foreign public official, in exchange for his/her

actions in service, promises, offers or gives a gift or

other benefit, intended to the said person or to

another, that affects or is intended to affect or is conductive to affecting the actions in service of the said

person, shall be sentenced for bribery to a fine or to

imprisonment for at most two years.

(2) A person who in exchange for the actions in

service of a public official or another person mentioned in paragraph (1) promises, offers, or gives a

gift or other benefit mentioned in the said paragraph

to another person, shall also be sentenced for bribery.

Generally, Section 13 provides that persons who

intentionally promise, offer, or give gifts or other benefits

either directly or indirectly to a foreign public official to

affect the behavior of such an official may be imprisoned

for a maximum period of two years or fined. The provision is not limited to bribes in the context of international

business. Although intermediaries are not specifically

mentioned, the provision says that bribes "intended" for

public officials are covered. Payments involving third

parties are covered under Section 13(2).

Jurisdictional Principles

Finland practices both territorial and nationality

jurisdiction. Chapter 1, Section 1 of the Finnish Penal

Code provides that Finnish law shall apply to offenses

committed in Finland. Pursuant to Section 10 of the same

chapter, acts are deemed to have been committed in

Finland if the criminal act occurred in Finland or if the

consequences of the offense as defined by statute were

realized in Finland. Chapter 1, Section 6 of the Finnish

Penal Code allows for the prosecution of a Finnish citizen who commits an offense outside of Finland. Chapter

1, Section 11 of the Finnish Penal Code requires dual

criminality for offenses committed abroad by a Finn. The

provisions on jurisdiction have been part of Finnish Penal

law since 1996, and no changes were needed to implement the Convention.

Coverage of Payor/Offeror

The Finnish legislation covers bribery by any person.

It is our understanding that "any person" is to be broadly

construed, applying to both natural and legal persons.

Coverage of Payee/Offeree

In Chapter 16, Section 20, of the Finnish Penal Code,

a "foreign public official" is defined as:

a person who in a foreign State has been appointed or

30 Addressing the Challenges of International Bribery and Fair Competition, 2001
elected to a legislative, administrative or judicial

office or duty, or who otherwise performs a public

duty for a foreign State, or who is an official or representative/agent of an international organization

under public law.

Although the Finnish definition of foreign public

official contains no reference to employees of a "public

agency or public enterprise" as required by Article 1.4(a)

of the Convention, it is our understanding that Section 13

of the Finnish law, the provision containing the basic

statement of the offense, does prohibit bribes to employees of public corporations.

Penalties

Under Chapter 16, Section 13, the Finnish law provides for a fine or a two-year maximum prison sentence

for persons who have committed bribery of domestic

public officials. No amount for the fine is specified. In

addition, for "aggravated bribery," Chapter 16, Section

14 provides that the offender shall be sentenced to a minimum of four months' and a maximum of four years'

imprisonment. These provisions also apply to the bribery

of foreign public officials, so the penalties for domestic

and foreign bribery are the same. Statutes of limitations

for bribery by natural persons are covered under the

Finnish Penal Code Chapter 8, Section 1, which provides

that charges must have been brought within five years

after the offense for the imposition of a sentence. For

aggravated bribery, the statute of limitations is ten years.

Chapter 16, Section 28 of the Finnish Penal Code

provides that the provisions on corporate criminal liability apply to bribery and aggravated bribery. Under Penal

Code Chapter 9, Section 5, corporations can be fined

from a minimum of 5,000 Finnish Markka (approx. U.S.

$712) to a maximum of FM5 million (approx. U.S.

$711,650). Chapter 9, Section 2 of the Penal Code provides that a Finnish corporation may be fined for the

actions of its management representatives or employees,

when acting within the scope of their employment on

behalf of the corporation or for its benefit, if they act as

accomplices in committing an offense or allowed the

offense to happen. Section 2(2) states that even if a specific person cannot be identified as the offender, the corporation itself can still be fined.

Penal Code Chapter 9, Sections 4 and 6 set forth

illustrative lists of factors that must be taken into account

when determining sentencing of a corporation to a corporate fine and calculating the fines for corporations,

including the lack of corporate oversight; the position of

the offender in the corporation; the seriousness of the

offense; the consequences to the corporation due to the

commission of the offense; measures, if any, taken by the

corporation to prevent the offense from occurring;

whether the offender sentenced is part of management;

the size of the corporation; the amount of shares held by

the offender; and the extent to which the offender can be

held personally liable for the commitments of the corporation. For fines, the list also takes into account not only

the size of the corporation, but also its solvency, earnings,

and other indicators of its financial circumstances.

Chapter 9 provides that if the offender is not sentenced to a punishment due to the statute of limitations,

then the corporation on behalf of which he acted cannot

be sentenced either. The minimum statute of limitations

for corporate fines is five years. Chapter 9, Section 9 provides that the enforcement of any corporate fine will

lapse five years from the date the fine was imposed.

Chapter 40, Section 4 of the Finnish Penal Code covers forfeiture of bribes: the gift or benefit or the corresponding value will be forfeited to the State from the

bribe recipient or beneficiary. Section 4 applies to passive

bribery. We understand that, although the Finnish penal

code does not specifically address forfeiture for active

corruption, Chapter 2, Section 16 of the Penal Code provides for forfeiture generally and can be applied to

offenses of active corruption. We understand that there

are no additional civil or administrative sanctions for

bribery under Finnish law.

Under Chapter 12, Section 94, paragraph 2 of the

Act on Credit Institutions, financial institutions must

provide prosecution and investigative authorities all

information necessary for crime detection. It is our

understanding therefore that bank secrecy should not

inhibit mutual legal assistance in criminal matters under

the Convention.

Books and Records Provisions

The Finnish law on accounting provisions is covered

by the Accounting Act, which applies to natural persons

and companies. Chapter 1, Article 1 states that anyone

carrying out business or practicing a profession must

keep accounting records of such activities.

The Finnish law on offenses for accounting provisions is covered under Chapter 30, Section 9 of the

Finnish Penal Code:

If a person with a legal obligation to keep accounts,

his/her representative or the person entrusted with the

keeping of accounts intentionally (1) neglects in full

or in part the recording of business transactions or the

balancing of the accounts, (2) enters false or misleading data into the accounts, or (3) destroys, conceals or

damages account documentation and in this way

Chapter 2: Review of National Implementing Legislation 31
essentially impedes the obtaining of a true and sufficient picture of the financial result of the business of

the said person or of his/her financial standing, he

shall be sentenced for an accounting offense to a fine

or to imprisonment for at most three years.

Money Laundering

Money laundering is a crime under Chapter 32,

Section 1(2) of the Finnish Penal Code. It covers all

assets or property resulting from offenses of the Finnish

Penal Code, including bribery of foreign public officials.

Extradition/Mutual Legal Assistance

Section 4 of the Finnish Extradition Act provides that

extradition will not be granted unless the request is based

upon an act that is an extraditable offense, or the act, if it

had been committed in Finland, constitutes an offense for

which the penalty is greater than one year. Acts within the

scope of Article 1 of the Convention will fulfill the dual

criminality requirement, as the Finnish penalty for

bribery is a maximum of two years. The Finnish

Extradition Act provides that Finnish nationals shall not

be extradited. However, under the Extradition Act

between Finland and other Nordic countries, Finnish

nationals may be extradited to other Nordic countries in

some cases. Finland is also a party to the European

Convention on Extradition of 1957 and is expected to ratify the 1996 Convention relating to extradition between

member states of the European Union soon. After ratification of that convention, Finland will be able, under certain conditions, to extradite Finnish nationals to other

European Union states.

We understand that mutual legal assistance is provided for by the Finnish Act on International Legal

Assistance in Criminal Matters. Under that act, Finland

can provide assistance without the condition of dual

criminality, except where coercive measures are

requested, unless such measures would be available

under Finnish law had the offense upon which the request

is based occurred in Finland. Finland has also ratified the

1959 European Convention on Mutual Legal Assistance

in Criminal Matters and its 1978 Protocol.

Complicity, Attempt, Conspiracy

Chapter 5 of the Finnish Penal Code contains provisions on complicity, attempt, and authorization. Under

Chapter 5, Section 1, if two or more persons have committed a crime together, they will be punished as principals. If the offense is carried out or attempted, under

Chapter 5, Section 2 of the Penal Code, a person who

encouraged another in committing the offense will be

punished for incitement as a principal. Complicity is covered by Chapter 5, Section 3, which provides that a person who acts to further the crime, whether it is carried out

or attempted, will be sentenced under the same provisions as a principal. Finnish law does not specifically

criminalize an attempt to bribe a foreign public official,

as the basic prohibition already covers promising and

offering bribes to such officials. Conspiracy is not punishable under the Finnish Penal Code.

France

France signed the Convention on December 17,

1997. The French government completed its internal

processes for ratification of the Convention with the

adoption of law no. 99-424 dated May 27, 1999,

authorizing ratification of the Convention. The French

implementing legislation, Act 2000-595, became final

on June 30, 2000. France deposited its instrument of

ratification with the OECD on July 31, 2000. The

OECD Convention entered into force for France on

September 29, 2000. 

The legislation amends the French Penal Code to

criminalize the bribery of foreign public officials by

adding a new chapter containing three sections to the

Penal Code at the end of Title III of Book IV, entitled

ìInterference with the Public Administration of the

European Communities, the Member States of the

European Union, other Foreign States and Public

International Organizations.î As indicated by the title, the

legislation also incorporates Franceís obligations under

various European Union conventions on corruption. 

Our main concern with an earlier version of the

French implementing bill had been that it contained a

ìgrandfather clauseî that would have exempted from

prosecution future bribery payments relating to contracts

entered into before the Conventionís entry into force for

France. Under pressure from the OECD and several

OECD members, including the United States, this provision was removed during parliamentary review of the

bill. However, we will continue to monitor this issue very

closely as it is our understanding that there is a possibility that French judges could read the so called ìprinciple

of non-retroactivityî back into the law, particularly since

the new legislation still does not explicitly state that the

act of ìgivingî bribe payments is covered. The absence

of the word "giving" in the French legislation raises the

potential, denied by the French authorities, that the

French law applies only to the offer itself and that payments extending indefinitely into the future based upon

an offer made before the effective date of the French leg32 Addressing the Challenges of International Bribery and Fair Competition, 2001
islation would not be punishable. Also, there are questions as to whether and to what extent a legal person can

be prosecuted for the acts of employees or subordinates,

and the French statute of limitations of only three years

seems low. 

In addition, we have several concerns about the

jurisdictional and prosecutorial provisions in the

French legislation. Although the French legislation

provides for extraterritorial nationality jurisdiction, it

appears to require that a complaint be filed with the

French public prosecutorís office by an official of the

payee/offereeís government in order for French prosecutors to assert jurisdiction in such cases. Such a

requirement could cause a major loophole in the

French authoritiesí ability to enforce their Convention

obligations effectively over French nationals outside

of French territory. 

Further, France implemented both the OECD

Convention and various EU anticorruption conventions

at the same time. We are concerned that, in several

instances, France afforded more rigorous and comprehensive treatment of bribery of officials of EU states

than it did of officials of non-EU states. For example,

for offenses under various EU conventions, France also

allows for "non-nationality" jurisdiction over persons

temporarily in France for committing certain offenses

outside of France irrespective of otherwise applicable

dual criminality requirements, but does not apply this

basis of jurisdiction to similarly situated persons under

the OECD Convention. Moreover, the new legislation

provides that investigations for bribery offenses falling

under the Convention may only be initiated by French

prosecutors, even when the offense is committed on

French soil; whereas prosecutions for bribery of domestic and European Union officials may be initiated by

victims. This disparate treatment also could decrease

the number of foreign bribery cases brought under the

Convention, as prosecutorial discretion could never be

overridden, unlike in the case of domestic and European

Union officials context. Finally, the new legislation also

provides that only the Paris Public Prosecutor, the

examining magistrate, and the Correctional Tribunal

will have jurisdiction to prosecute, investigate, and try

offenses relating to the bribery of foreign public officials. This provision apparently applies only to cases

brought under the OECD Convention and not to cases

involving corruption of EU officials. We are uncertain

why this special provision was included in the law and

what effect that may have on enforcement. We will

continue to monitor these issues very closely in the

implementation stage.

Basic Statement of the Offense

The basic statement of the offense of active bribery

under the Convention is contained in Articles 435-3 and

435-4 of the French Penal Code. These provisions apply

to active corruption of officials of foreign States other

than Member States of the European Union and of officials of public international organizations other than institutions of the European Communities. They provide that:

ï 435-3 With regard to the implementation of the

Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions

signed in Paris on December 17, 1997, the act of

unlawfully proposing, at any time, directly or indirectly, offers, promises, donations, gifts or any

advantages whatsoever in order to cause a person of

public authority, or a person carrying out public service, or a person vested with an elective mandate in a

foreign country or in an international public organization, to act or refrain from performing an act within

his/her duties, mission or mandate, or facilitated by

his/her duties, mission, or mandate in order to obtain

or retain business or another improper advantage in

international business, is punishable by 10 years

imprisonment and a 1 million franc (FF) fine

(approx. U.S.$129,000).

ï It is also punishable by the same penalties to yield

to a person cited above who unlawfully solicits, at

any time, directly or indirectly, offers, promises,

donations, gifts or any advantages whatsoever to act

or refrain from acting as described above. 

The prosecution of the crimes listed in this article

may only be exercised at the request of the Public

Prosecutor. 

ï Art. 435-4 With regard to the implementation of the

Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions

signed in Paris on December 17, 1997, the act of

unlawfully proposing, at any time, directly or indirectly, offers, promises, donations, gifts or any advantages whatsoever in order to cause a magistrate, a jury

member, or any other person who has a judicial function, an arbitrator or an expert appointed either by a

court or by the parties, or a person whom a judicial

authority has given the authority to conduct conciliation or mediation, in a foreign country or in an international public organization, to act or refrain from

acting or refrain from performing an act within

his/her duties, mission or mandate, or facilitated by

his/her duties, mission, or mandate in order to obtain

or retain business or another improper advantage in

international business, is punishable by 10 years

Chapter 2: Review of National Implementing Legislation 33
imprisonment and a 1 million FF fine (approx.

U.S.$129,000).

ï It is also punishable by the same penalties to yield

to a person cited above who unlawfully solicits, at

any time, directly or indirectly, offers, promises,

donations, gifts or any advantages whatsoever to act

or refrain from acting as described above.

The prosecution of the crimes listed in this article

may only be exercised at the request of the Public

Prosecutor. 

The basic statement of the offense contained in

Articles 435-3 and 435-4 is based on the French Penal

Code Articles 433-1 and 434-9, which apply to bribery of

domestic officials. Articles 435-3 and 435-4 contain a

more detailed definition of foreign public official and

include officials of public international organizations.

Articles 435-3 and 435-4 are also limited to bribes made

in order to obtain or retain business or an other improper

advantage. Also, although bribe payments for third parties are not explicitly mentioned in the new Penal Code

provisions, French officials explained that the provision

would apply regardless of the ultimate beneficiary. 

Neither the new provisions nor the domestic bribery

provisions upon which they were based explicitly provide that "giving" bribe payments are covered, although

French representatives have stated that such acts are

implicit in the language of the provisions. It is our understanding that prior French law required proof of a ìcorruption pactî between the briber and the official receiving the bribe. This requirement made bribery offenses

very difficult to prove, as bribery transactions are usually

conducted in secret. With the addition of the language ìat

any timeî to the basic statement of the offense, the

French explain that there is no longer the need to prove

when the ìcorruption pactî took place when the only evidence one has is the bribe payment. French authorities

explain that the new law eliminates this requirement by

assuming that an offer was renewed at the time of the

payment. Although apparently there is case law to support this interpretation, we will not be certain that bribe

payments stemming from pre-Convention contracts will

be covered by the French legislation until the issue is

decided by the French courts.

According to the French, Articles 435-3 and 435-4

do not apply to European Union officials, whereas the

more specific provisions under new Penal Code Articles

435-1 an 435-2 are applicable. The articles covering

bribery of both foreign public officials and EU officials

generally appear to use the same language and call for the

same penalties. However, the articles implementing the

EU conventions do not contain the provision limiting the

initiation of prosecutions to public prosecutors. In other

words, under French law, domestic bribery cases and

bribery cases involving European Union officials, but not

officials of other countries, may be initiated by victims,

overriding the prosecutorís discretion; but this is not possible under the legislation implementing the OECD

Convention, even if the offense is committed in France. 

Jurisdictional Principles

Pursuant to Penal Code Article 113-2, France will

exercise territorial jurisdiction over offenses committed

at least in part in France or relating to offenses committed in France.

France will also assert nationality jurisdiction over

French nationals who commit offenses outside of French

territory only when the offense is punishable under the

laws of the state where it occurred. Article 113-6.

However, it is our understanding that such prosecutions

against French nationals must also be preceded by a complaint from the State victim. This provision, particularly

when coupled with the limitation that prosecutions can be

initiated only by prosecutors, could seriously limit the

effectiveness of French enforcement of Convention obligations, because officials of the payee/offeree government may be very reluctant to request French government action.

Furthermore, under certain circumstances, French

courts can assert "non-nationality jurisdiction," provided for in Penal Code Article 689-1. This exceptional basis of jurisdiction only applies to enumerated

offenses falling under various international conventions listed in Articles 869-2 to 689-7 of the Code of

Criminal Procedure. The French implementing legislation contains a new article, Article 689-8, which

provides that this special basis of jurisdiction can be

used for offenses falling under various EU anticorruption instruments, but no such provision was added

with respect to the OECD Convention. Therefore,

France has provided for a jurisdictional regime that

waives nationality and dual criminality requirements

for some of its prosecutions in EU corruption cases,

but not those falling under the OECD Convention, in

apparent disregard for Article 5.

Also, new Penal Code Article 706-1 of the French

implementing legislation provides that the Paris Public

Prosecutor, the examining magistrate, and the

Correctional Tribunal will have jurisdiction to prosecute,

investigate, and try offenses relating to the bribery of foreign public officials. This centralizing provision apparently applies only to cases brought under the OECD

Convention and not to domestic cases or those involving

34 Addressing the Challenges of International Bribery and Fair Competition, 2001
corruption of EU officials. This raises concerns because

apparently, according to the OECD Working Group

Country Report on the French legislation: 

the bribery of both European Union and French officials will fall within the responsibility of regional

jurisdictional economic and financial poles, which

were created to adapt the law to the complexity of

financial and economic crime, and to strengthen the

means of combating corruption. New working methods will be introduced: modern logistical means will

be available and multidisciplinary teams will be

placed at the disposal of specialized courts.

French officials explained that jurisdiction over

offenses falling under the Convention will be prosecuted

out of Paris for harmonization purposes. 

Coverage of Payor/Offeror

The provisions to the French Penal Code appear to

cover bribes made by ìany personî including both natural and legal persons. Criminal responsibility for legal

persons is dependant upon the offense having been

committed by a natural person on behalf of the company.

Penal Code Article 121-2.

Coverage of Payee/Offeree

Article 435-3 and Article 435-4 cover bribes made to

ìa person of public authority, or a person carrying out

public service, or a person vested with an elective mandate in a foreign country or in an international public

organizationî and ìa magistrate, a jury member, or any

other person who has a judicial function, an arbitrator or

an expert appointed either by a court or by the parties, or

a person who a judicial authority has given the authority

to conduct conciliation or mediation, in a foreign country

or in an international public organization.î It is also our

understanding that the legislation will be interpreted in

light of the Convention and its Commentaries. 

Penalties

For natural persons, Articles 435-3 and 435-4 of the

French Penal Code provide a penalty of ten years imprisonment and a 1 million FF fine (approx. $U.S.129,000).

The same penalties apply to individuals who ìyield to

solicitationsî under the same Articles. These are the same

as the penalties for bribery of domestic officials. 

Article 435-5 provides for additional penalties for

natural persons, including: the loss of benefits [civic

benefits, civil benefits, and family benefits for five

years or more] pursuant to Penal Code Article 131-26;

a ban on holding public office for a period of five

years, or on holding a professional or commercial

position in the same field as the one held when the

bribe occurred; publication and dissemination of the

judgment pursuant to Article 131-35; and confiscation

pursuant to Article 131-21 of the bribe or bribe proceeds, with the exception of objects subject to restitution. In addition, foreigners having violated the basic

statement of the offense may be subject to deportation

pursuant to Article 131-30 either permanently or for a

period of ten years or more. Article 435-5 is based

upon Article 433-22 of the Penal Code which sets

forth penalties for natural persons for the bribery of

domestic officials. 

Legal entities, except for State entities, can also be

found criminally liable under Penal Code Article 435-6

under the terms of Article 121-2 for violations of

Articles 435-2, 435-3 and 435-4. The penalties include:

a fine of five times the fine provided for natural persons,

i.e., 5 million FF (approx. U.S.$645,000), pursuant to

Article 131-38 and, for a maximum of five years: banning the entity from participating in the professional or

commercial activity, directly or indirectly, in which the

offense was committed; placing the entity under judicial

supervision; closure of the division/establishment used

to commit the offense; exclusion of the entity from government procurement; banning the entity from raising

public funds; prohibiting the entity from writing checks

other than those that allow funds to be withdrawn or certified checks, and disallowing the use of credit cards;

confiscation according to Article 131-21 of the bribe or

bribe proceeds, except for objects subject to restitution;

and publication and dissemination of the judgement

against the entity as stipulated in Article 131-35. Article

435-6 is based upon Article 433-25 of the Penal Code

which sets forth penalties for legal persons for the

bribery of domestic officials. 

The offense of bribery of foreign public officials

will fall within the general statute of limitations under

Article 8 of the French Penal Procedure Code, which is

three years. Apparently the statute of limitations will

start to run from the date the ìcorruption pactîóas it is

referred to under French law, i.e., a meeting of minds

between the briber and the recipient of the bribeówas

agreed to, or from the occurrence of the last act relating

to ìthe corruption pact.î (Arret Carignon. C. cass.,

27/10/1997.) Pursuant to Articles 7 and 8 of the French

Penal Procedure Code, the statute of limitations may be

interrupted during investigations or prosecutions. After

interruption, the limitation period begins anew. The

statute of limitations is suspended if there is an obstacle

of law or fact. Suspension stops the limitation period

only temporarily. 

Chapter 2: Review of National Implementing Legislation 35
Books and Records Provisions

According to the French government, Articles 8-17

of the French Commercial Code and Articles 1 to 27 of

the related Decree of November 29, 1983, as amended,

and the amended Ministerial Decree of April 27, 1982,

generally cover the types of accounting offenses listed

under the Convention. Also relevant are the Law of July

24, 1966 and the Decree of March 23, 1967. 

Money Laundering

France punishes money laundering resulting from all

offenses regardless of where the underlying offense

occurred pursuant to Article 324-1 of the Penal Code. 

Extradition/Mutual Legal Assistance 

Dual criminality is necessary in order for France to

grant an extradition request. In the absence of a treaty, the

Law of March 10, 1927 requires that the requesting country either imposes a fine for the offense under its own law

or provides for a minimum term of imprisonment of at

least two years for the offense. If France does have an

extradition treaty with the requesting country, the

requesting country's law must provide for the minimum

prison term for the offense according to the terms of the

treaty. France will not extradite its nationals. The

European Convention on Extradition and the bilateral

extradition treaties to which France is a party provide that

where a request has been refused on nationality grounds,

the State refusing the request must submit the matter to

its national authorities upon request from the State seeking extradition. In the absence of an extradition treaty,

where France has denied an extradition request upon

nationality grounds, Article 113-8 of the French Penal

Code provides that France will submit the issue to its

national authorities following an official condemnation

by the State where the offense occurred. 

France has signed treaties with the United States and

the European Community regarding mutual legal assistance; it has also entered into many bilateral mutual legal

assistance treaties. In the absence of a treaty, France does

not require a minimum prison sentence or fine in order to

grant mutual legal assistance, pursuant to the Law of

March 10, 1927. 

Pursuant to Penal Code Article 132-22, bank secrecy

cannot be invoked to refuse mutual legal assistance. 

Complicity, Attempt, Conspiracy

Penal Code Articles 121-6 and 121-7 cover the

offense of complicity. Article 121-7 provides that accomplices are those who knowingly aid or assist in the facilitation or consummation of an offense, as well as persons

who by giving, promising threatening, ordering, or abusing authority or power cause an offense or give instructions so that it may be carried out. Penal Code Article 121-

6 provides that accomplices will be treated the same as the

principal author of the offense. The offense of bribery of

a foreign public official occurs whether or not the offer to

bribe the official is accepted. Therefore, attempt is not

specifically mentioned in the provisions on the offense of

bribery of foreign public officials, as it is not contained in

the French Penal Code provisions on bribery of domestic

officials. Conspiracy, as defined in the United States, is

apparently not punishable under French law. 

Germany 

Germany signed the Convention on December 17,

1997, and deposited its instrument of ratification with the

OECD on November 10, 1998. The German legislation

entered into force on the same date as the Convention,

February 15, 1999.

Sources for this analysis include Germany's implementing legislation, "The Act on the Convention Dated

December 17, 1997, on Combating Bribery of Foreign

Public Officials in International Transactions," dated

September 10, 1998 (ACIB), and reporting from the U.S.

embassy in Berlin.

Germany will impose sanctions upon legal persons

only where an identifiable natural person employed by

the legal person has committed an offense. Although an

actual prosecution does not seem to be a prerequisite, this

provision may create an impediment to effective enforcement, depending on how Germany applies this provision.

Basic Statement of the Offense

Germany's basic statement of the offense is in two

parts. With respect to officials, soldiers, and judges, the

ACIB prohibits:

bribery concerning a future judicial or official act

which is committed in order to obtain or retain for the

offender or a third party business or an unfair advantage in international business transactions. [ACIB

'2(1).]

Germany implemented the Convention by making

judges, officials, and soldiers of foreign governments and

international organizations "equal" to domestic judges,

officials, and soldiers for purposes of Sections 334

(active bribery), 335 (severe cases of bribery), 336 (omission of public service), and 338 (fine and forfeiture). The

basic offense, therefore, is defined in Criminal Code

Section 34 as follows:

Whoever offers, promises, or grants an advantage to

36 Addressing the Challenges of International Bribery and Fair Competition, 2001
any official, any person specifically engaged for public service, or any soldier of the Federal Armed

Forces, on behalf of such person or for a third party,

in return for the performance of a past or future public service and the past or future breach of his official

duties, shall be punished.

Unlike the domestic bribery provisions, the implementing legislation applies to "future judicial or official

acts." As Section 334 applies to "offers," the timing of the

payment itself, whether before or after the corrupt act, is

not determinative. In addition, the implementing legislation refers to "official acts"; the domestic bribery laws

use the term "performance of past or future public service and the past or future breach of his official duties."

The second prong of the implementing legislation

applies to bribery of foreign parliamentarians. The implementing legislation provides in ACIB '2(2) that:

Anyone who offers, promises, or grants to a member

of a legislative body of a foreign state or to a member

of a parliamentary assembly of an international

organization an advantage for that member or for a

third party in order to obtain or retain for him/herself

or a third party business or an unfair advantage in

international business transactions in return for the

member's committing an act or omission in future in

connection with his/her mandate or functions, shall

be punished.

Jurisdictional Principles

Germany applies the principles of both territorial and

nationality jurisdiction. Germany will assert jurisdiction

when an offender or participant has acted or ought to

have acted within its territory or when the "success of the

offense" occurs within its territory. (See Criminal Code

''3, 9.) In addition, Germany will assert jurisdiction over

the acts of its nationals abroad.

Coverage of Payor/Offeror

German law applies to "whoever" offers or pays a

bribe, although Germany does not at present provide

criminal responsibility for corporations. However,

pursuant to Section 30 of the Administrative Offenses

Act, a legal person may be fined when a person acting for

the corporation was authorized by or was himself or herself "in a leading position." It is our understanding that

the corporation may be held liable when a person in a

leading position fails to properly supervise his subordinates. (See Administrative Offenses Act, '130.)

German law provides that a corporation cannot be

held administratively liable if the criminal offense itself

cannot be prosecuted for "legal reasons." It is our understanding that this refers to such legal impediments as the

statute of limitations and not mere inability to assert jurisdiction over a culpable individual.

Coverage of Payee/Offeree

The implementing legislation covers payments

offered or made to (1) judges of a foreign state or an

international court; (2) public officials of a foreign state

or "persons entrusted to exercise a public function with or

for an authority of a foreign state, for a public enterprise

with headquarters abroad, or other public functions for a

public state; (3) a public official or other member of the

staff of an international organization or a person

entrusted with carrying out its functions; (4) a soldier of

a foreign state or one who is entrusted to exercise

functions of an international organization; and (5) a

member of a legislative body or parliamentary assembly

of a foreign state or international organization. (See

ACIB '2(1)(1).) In addition, German law covers

payments made to a third party.

Penalties

As noted, Germany implemented the Convention by

adding bribery of foreign officials to its existing domestic

bribery statutes. The penalties, therefore, are the same.

Under Sections 334 and 335, bribery of a public

official is punishable under a three-tier system: "less

severe offenses" earn a prison term of up to two years, or

a fine; "general" offenses earn a prison term of three

months to five years; "particularly severe cases" earn a

prison term of one to ten years.

There is no statutory definition of "less severe

offenses." A "particularly severe case" is one that" concerns an advantage of large proportions," where the perpetrator "continuously accepts advantages which he requested in return for the future performance of a public

service," and where the perpetrator "conducts the activity

as a business or as a member of a gang, which he joined

in order to continuously commit such acts."

As noted, corporations are not subject to criminal

liability. However, they may be prosecuted administratively

and subjected to fines under the Administrative Offenses

Act. The statutory fines on corporations are up to DM1 million (approx. U.S.$433,000) for intentional acts by a leading person and up to DM500,000 (approx. U.S. $216,000)

for negligent acts. (See Administrative Offenses Act, '30.)

However, it is our understanding that corporations can be

subject to fines up to the amount of the commercial advantage. (SeeAdministrative Offenses Act,'17(4).) We have not

received any information on how often this provision has

been invoked against German corporations.

Chapter 2: Review of National Implementing Legislation 37
It is our understanding that both the bribe and the

proceeds of bribery are forfeitable under the Criminal

Code, Section 73. However, in the case of corporations,

a corporation cannot both be fined and subjected to an

order of forfeiture.

Books and Records Provisions

We understand that Germany's laws prohibit the

establishment of off-the-books accounts, the making of

off-the-books or inadequately identified transactions, the

recording of nonexistent expenditures, the entry of liabilities with incorrect identification of their object, and the

use of false documents to justify book entries. These prohibitions are principles to which a corporation must

adhere to meet the legal requirement that it conform with

legal norms.

Money Laundering

Bribery is a predicate offense for Germany's moneylaundering provision. (See Criminal Code '261.) As with

domestic bribery, however, bribery committed within

German territory is always a predicate offense, whereas

bribery committed abroad is only a predicate offense if it

is also punishable at the place of the offense.

Extradition/Mutual Legal Assistance

Pursuant to bilateral agreements and various

European conventions, Germany will render mutual legal

assistance in investigations of foreign bribery. Germany

also has a law permitting non-treaty-based mutual legal

assistance.

Pursuant to the Convention, bribery of a foreign public official is an extraditable offense. The United States

has an extradition treaty in force with Germany.

However, the German Basic Law prohibits the extradition of its nationals.

Complicity, Attempt, Conspiracy

Attempt and complicity are both covered by German

law. (See Criminal Code ''25(2), 26, 27, and 334 and

ACIB '1(2).)

Greece 

Greece signed the Convention on December 17,

1997, and ratified it on November 5, 1998. It deposited

its instrument of ratification with the OECD on

February 5, 1999. Greece's implementing legislation

was adopted on November 5, 1998, and became effective on December 1, 1998.

Sources for this analysis include Greek Law

2656/1998 implementing the Convention, as well as other

information obtained by the U.S. embassy in Athens.

Under Article 28 of the Greek Constitution, generally

approved rules of international law and international conventions that have been ratified under Greek law form an

integral part of domestic Greek law and supersede any

existing conflicting law, to the extent that they do not

conflict with the Constitution. Accordingly, the

Convention became an integral part of Greek law when

Greece enacted Law 2656/1998 ratifying the Convention

and including specific provisions to criminalize bribery

of foreign public officials.

Basic Statement of the Offense

The basic statement of the offense is set forth in

Article 2(1) of Law 2656/1998:

Any person who, in the conduct of international business and in order to obtain or retain business or other

improper advantage, promises or gives, whether

directly or through intermediaries, any undue gift or

other advantage, 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, is punished with imprisonment of at least one year.

Jurisdictional Principles

Although the statute itself does not contain any information about jurisdictional principles, Greek law provides

for both territorial and nationality jurisdiction. Article 5 of

the Greek Criminal Code provides that Greece follow the

principle of territoriality: Greek criminal laws apply to all

acts committed in Greek territory, either by Greeks or

other nationals. Article 16 generally defines the place

where acts are committed as the place where the act or

omission was carried out in whole or in part. It is our

understanding that if only part of the act in furtherance of

the bribery took place in Greece, the crime would still fall

within Greek jurisdiction. Article 6 of the Criminal Code

provides that Greek criminal laws apply to criminal acts

committed abroad by a Greek national if the act is punishable under the laws of the country in which it occurs.

Coverage of Payor/Offeror

Article 2 covers bribery by "any person," but does

not describe what persons or entities are covered by this

term. It is our understanding that "any person" means any

individual.

Under Article 71 of the Greek Civil Code, legal

entities are generally responsible for the acts or omissions of their representatives, meaning those in man38 Addressing the Challenges of International Bribery and Fair Competition, 2001
agement positions, in carrying out the legal entities'

functions. Greek law does not provide for criminal

responsibility for legal entities. Therefore, corporations

are subject only to administrative penalties (See below).

It is unclear to what extent a corporation could be held

responsible for bribes involving lower-level employees.

It appears that under Criminal Code Article 922, the

company may also be held responsible in some circumstances for acts and omissions of its employees and auxiliary personnel whose positions have been prescribed

by the company's bylaws and when acting in the scope

of their positions.

Coverage of Payee/Offeree

The statute itself does not define "foreign public

official." However, it is our understanding that the statute

incorporates the definitions found in the Convention and

Official Commentaries, and specifically that Convention

Article 4(a) containing the definition of "foreign public

official" and Commentary footnotes 14-18 apply. It is our

understanding that the definition of a foreign public

official will be interpreted in light of the definitions of

domestic public officials under the Greek Criminal Code,

Articles 13 and 263(a), which is even broader than the

Convention definition.

Penalties

Although Law 2656 states that any person who

bribes a foreign public official "is punished with

imprisonment of at least one year," it is our understanding that the law is to be read in conjunction with Criminal

Code Articles 235 and 236 on bribery of domestic

officials, which provide that the penalty for bribery may

range between one and five years. There do not appear to

be any fines for individuals for the bribery of domestic or

foreign public officials.

As stated above, the Greek judicial system does not

recognize criminal responsibility for legal entities.

Article 5 provides three kinds of administrative penalties

for a company whose managerial employees violate the

law: fines of up to three times the value of any benefit

that it has received, temporary or permanent prohibition

from doing business, or provisional or permanent

exclusion from state grants or incentives. Article 2(2)

provides for the confiscation of the bribe or the value of

the bribe. Article 76 of the Greek Code of Criminal

Procedure provides for confiscation of the proceeds of a

crime. Also, if an act violates the anticorruption laws as

well as Article 2(1) of Law 2331/1995 concerning money

laundering, then paragraphs 6-10 of that article on the

confiscation of goods will also apply. Goods may also be

seized during the criminal investigation/inquiry under the

Code of Criminal Procedure Articles 258, 259, 260, 261,

266, 288, and 495.

Under Articles 111, paragraphs 3 and 112 of the

Criminal Code, the statute of limitations in general for

acts of bribery, as for all crimes, is five years after the

commission of the act.

Books and Records Provisions

Books and records are covered by Greece's

Accounting Code. Violations of the code are punished

under Law 2523/1997, which provides for both criminal

and civil sanctions. If the violations in question are committed in furtherance of a bribe to a foreign public official, Article 3 of Law 2656/1998 also applies. Article 3

specifically prohibits off-the-books business accounts,

false bookkeeping entries, or false documents and provides for a three-year prison term for such offenses,

unless a longer term would apply pursuant to another

provision of Greek law. Article 4 of Law 2656/1998 gives

the authority to investigate violations of Article 3 to the

Greek Financial and Economic Crimes Office.

Money Laundering

Bribery of foreign public officials is a predicate

offense for the application of the Greek money-laundering Law 2331/1995, as is the case with domestic bribery,

without regard to where the bribe occurred.

Extradition/Mutual Legal Assistance

Greece has an extradition treaty with the United

States that has been in effect since 1932. The treaty

includes bribery as an extraditable offense. Generally,

under Article 437 of the Code of Criminal Procedure,

extradition is permitted if the maximum prison sentence

for the act upon which the extradition request is based

exceeds two years under both Greek law and the law of

the country requesting extradition. Bribery of foreign

public officials is an extraditable offense because, as

noted above, the maximum prison sentence is five years.

The Convention will serve as the legal basis for extradition for the offense of bribery of foreign public officials.

Under Article 428 of the Code of Criminal Procedure,

Greece cannot extradite its own citizens.

The Greek government will offer mutual legal assistance in accordance with the European Convention on

Mutual Legal Assistance concerning criminal acts, and in

accordance with its bilateral mutual assistance treaties.

Article 7 of Law 2656/1998 gives the authority for purposes of Convention Article 4 on jurisdiction to the

Greek Ministry of Justice.

Chapter 2: Review of National Implementing Legislation 39
Complicity, Attempt, Conspiracy

It is our understanding that the Greek Criminal Code

Articles 45-49 on complicity and aiding and abetting

apply to bribery of foreign public officials.

Hungary

Hungary signed the OECD Convention on December

17, 1997, and deposited its instrument of ratification with

the OECD on December 4, 1998. Hungary's implementing legislation entered into force on March 1, 1999.

Our primary source for this analysis is the implementing legislation contained in Title VIII of the

Hungarian Criminal Code (Crimes Against the Purity of

International Public Life), dated December 22, 1998.

Two major concerns arise from Hungary's implementation of the Convention. First, Hungary currently provides for neither criminal nor civil liability for legal persons. Second, Hungarian law includes a defense for bribes

that are solicited by the official and are paid only to avoid

an "unlawful disadvantage." In our view, these matters

must be addressed for Hungary to fully implement the

Convention. In addition, we are concerned that Hungary's

three-year statute of limitations is too short and may not

fulfill the Convention requirement of an adequate period

of time for investigation and prosecution.

Basic Statement of the Offense

The basic prohibition for bribery of public officials is

Section 258/B of the Hungarian Criminal Code (HCC):

(1) The person who gives or promises a favor to a

foreign official person or with regard to him to

another person, which may influence the functioning

of the official person to the detriment of the public

interest, commits a misdemeanor and shall be punishable with imprisonment of up to two years.

(2) The briber shall be punishable for a felony with

imprisonment of up to three years, if he gives or

promises the favor so that the foreign official person

violates his official duty, exceeds his competence, or

otherwise abuses his official position.

(3) The perpetrator of the crime defined in subsection (1) shall not be punishable, if he gave or promised the favor upon the initiative of the official person because he could fear unlawful disadvantage in

case of his reluctance.

Jurisdictional Principles

Hungary applies the principles of territorial and

nationality jurisdiction. (See HCC '3.) In addition, our

translation of Hungary's law states that Hungary will

apply its law to non-Hungarian citizens abroad, if the acts

are violative of Hungarian law and the law of the place of

perpetration. (See HCC '4.) The statute of limitations for

bribery of a foreign public official is three years.

Coverage of Payor/Offeror

The Hungarian statute applies to "person[s]."

Hungarian law does not provide for criminal responsibility of legal persons. We are not aware of any administrative or civil sanctions that may be imposed on legal

persons for bribery.

Coverage of Payee/Offeree

A foreign official person is defined in the statute to

include the following (see HCC '258/F(1)):

ï A person holding a legislative, administrative or

judicial office in a foreign state.

ï A person at an organ or body entrusted with public

power or public administration duties or who fulfills

tasks of public power or state administration.

ï A person serving at an international organization

constituted by international treaty, whose activity

forms part of the proper functioning of the organ.

ï A person elected to the assembly or other elected

body of an international organization that is constituted by international treaty.

ï A member of an international court with jurisdiction over the Republic of Hungary or a person

serving the international court, whose activity forms

part of the proper functioning of the court.

Penalties

The penalties for bribery of a foreign public official

are up to two years for purchasing influence and up to three

years where the bribe was intended to induce the official to

violate his official duty, exceed his competence, or otherwise abuse his official position. These penalties are identical to those for domestic bribery. (Compare HCC ''253,

258/B.) In addition, Hungary authorizes the confiscation of

property "which was obtained by the perpetrator during or

in connection with the commission of the crime." (HCC

'62, 63.) In addition, the law provides for the confiscation

of instrumentalities of crime. (See HCC ''77, 77/A.)

Although Hungary does not provide for criminal

responsibility of a legal person, it does provide that an

officer of a business association may be barred from

being an "executive officer of a business association until

relieved of the detrimental legal consequences related to

his criminal record." (Act CXLIV of 1997 on Business

Associations, '23.) In addition, such a person may be

40 Addressing the Challenges of International Bribery and Fair Competition, 2001
barred from being an executive officer in a particular profession for up to three years. (See id.)

Books and Records Provisions

Act XVIII of 1991 on Accounting defines the reporting and bookkeeping obligation of economic organizations. In addition, tax provisions include detailed regulations concerning the verification, accounting, and

registration of incomes and costs arising in connection

with the activity of the enterprise.

Money Laundering

Foreign and domestic bribery are predicate offenses

for Hungary's money-laundering offense. (See HCC '303.)

Extradition/Mutual Legal Assistance

Hungary will extradite non-nationals provided there

is dual criminality. (See HCC '11.) Hungary will extradite

Hungarian nationals only if the person holds dual nationality and is a resident of a foreign state. (See HCC '13.) 

Hungary has both an extradition treaty and a mutual

legal assistance treaty with the United States, both of

which entered into force in 1997. Hungary will provide

mutual legal assistance provided that doing so will not

"prejudice the sovereignty, security, or public order of the

Republic of Hungary" (Act XXXVIII of 1996 on

International Legal Assistance in Criminal Matters, '2).

Complicity, Attempt, Conspiracy

Hungarian law covers attempt and abetting. (See

HCC ''16-21.)

Iceland

Iceland has implemented the Convention by enacting

Act No. 147/1998, amending its General Penal Code, and

Act No. 144/1998, on the Criminal Liability of Legal

Persons on Account of Bribery of Public Officials. Both

laws were passed on December 22, 1998, and went into

effect on December 30, 1998. Act No. 147/1998

amended Section 109 of the General Penal Code to fully

equate bribery of a foreign public official or an official of

a public international organization with bribery of a

domestic public official.

Basic Statement of the Offense

Section 109 of the General Penal Code provides:

(1) Whoever gives, promises or offers a public official a gift or other advantage in order to induce him

to take an action or to refrain from an action related

to his official duty, shall be imprisoned for up to three

years, or, in case of mitigating circumstances, fined.

(2) The same penalty shall be ordered if such a

measure is resorted to with respect to a foreign public official or an official of a public international

organization in order to obtain or retain business or

other improper advantage in the conduct of international business.

Section 18 of the General Penal Code requires intent

for all criminal actions; therefore bribery of a foreign

public official must be intentionally committed.

Jurisdictional Principles

Iceland's law provides for both territorial and nationality jurisdiction. Chapter 2 of the General Penal Code

allows for prosecution of any offense committed, in part

or in whole, in Iceland. The General Penal Code requires

only that a significant number of the elements be traced

to Iceland. Under Section 7 of the General Penal Code,

an offense is deemed to have been committed where its

consequences are actual or deliberate.

Section 5 of the General Penal Code allows Iceland

to prosecute its nationals for crimes committed abroad if

the acts were also punishable under the law of the nation

where committed. However, under Section 8 of the

General Penal Code, the penalties for such offenses are

limited to those of the country where the crime is committed. We understand that the statute of limitations for

bribery of foreign public officials is five years with

respect to both natural persons and legal persons.

Coverage of Payor/Offeror

Iceland's General Penal Code applies to whoever

offers or pays a bribe, without reference to nationality.

Legal entities are also covered under Act No. 144/1998

on the Criminal Liability of Legal Persons on Account of

Bribery of Public Officials.

Coverage of Payee/Offeree

"Foreign public official" is not specifically defined in

the General Penal Code. However, the explanatory notes

to the act amending Section 109 of the General Penal

Code expressly state that the term "foreign public official"

is meant to have as broad a scope as in the Convention.

Furthermore, the explanatory notes state that the law will

be interpreted in conformity with the Convention.

Penalties

Under Section 109 of the General Penal Code, the

maximum prison sentence for bribery of a domestic or

foreign public official is three years. Fines may be

assessed in certain circumstances.

Chapter 2: Review of National Implementing Legislation 41
Act No. 144/1998, on Criminal Responsibility of

Legal Persons on Account of Bribery of Public Officials,

provides that a legal person may be fined if its employee

gives, promises, or offers a domestic or foreign public

official a gift or advantage to induce acts or omissions as

part of the recipient's official duties. Icelandic law

provides for criminal responsibility of legal persons. In

May 2000 the maximum limit on fines for legal persons

was removed.

The Code of Criminal Procedure allows for the

seizure of "objects" if obtained by criminal means under

Section 78. "Objects" include documents, money, and

proceeds. Iceland's implementing legislation does not

provide for civil or administrative penalties for bribery of

a foreign public official.

Books and Records Provisions

Section 1 of the Business Records Act requires all

businesses, regardless of form, to maintain clear records.

Section 6 of the Business Records Act requires businesses to maintain records in such a manner as to make

all transactions traceable. Section 36 of the Business

Records Act makes a violation of any part of the act a

criminal offense. Violators may be fined and, in serious

cases, imprisoned for a period not to exceed six years.

Money Laundering

Bribery of a foreign public official or a domestic official is a predicate offense for the application of Iceland's

money-laundering law found in Section 264 of the

General Penal Code. Where the bribe occurred is not a

relevant consideration.

Extradition/Mutual Legal Assistance

Act 13/1984 on Extradition of Criminal Offenders

and Other Assistance in Criminal Matters (Extradition

Act) allows the extradition of any suspect so long as the

alleged act is punishable under Icelandic law by a prison

term of at least one year. However, the extradition of

nationals of Iceland is forbidden under Section 2 of the

Extradition Act.

The Extradition Act also governs mutual legal assistance. Under the Extradition Act, Iceland will render

legal assistance regardless of the applicable penalty. The

Code of Criminal Procedure sets forth the procedures for

rendering legal assistance to foreign states.

Complicity, Attempt, Conspiracy

Section 20 of the General Penal Code provides that

any attempt to commit a crime is punishable. Under

Section 22 of the General Penal Code, all accomplices to

an offense under the General Penal Code are criminally

liable. Section 70 of the General Penal Code provides

that when two people commit a crime, both may be prosecuted for the commission of the crime. In addition,

under Section 70, acting together to commit a crime is

regarded as an aggravating factor. We understand that

conspiracy per se could constitute a criminal offense only

under certain circumstances.

Italy

Italy signed the Convention on December 17, 1997.

It adopted implementing legislation (Act No. 300) on

September 29, 2000, which entered into force on

October 26, 2000. Italy deposited its instrument of

ratification of the Convention with the OECD on

December 15, 2000, and the Convention entered into

force for Italy on February 13, 2001. Although Italian

law does not provide for criminal responsibility for

legal persons, on May 2, 2001, the Council of Ministers

approved the text of an implementing decree which will

introduce administrative sanctions against legal persons

for bribery pursuant to guidelines and principles set

forth in Article 11 of the Italian implementing legislation and consistent with Italyís obligations under

Articles 2 and 3 of the Convention. The decree will

enter into force upon signature by the President and

publication in the official gazette. 

Generally, the Italian implementing legislation

appears to fulfill the requirements of the Convention.

One minor concern is that, in certain circumstances,

Italian law provides for a defense for “concussione”

(coercion), whereby the briber may not be penalized for

being obliged or induced to make an illegal payment. We

also note that Italian law does not provide financial

penalties for natural persons convicted of bribery

offenses. The added possibility of imposing financial

penalties, although not required by the Convention,

would make Italyís sanctions more ìeffective, proportionate and dissuasiveî than would imprisonment alone.

We will monitor both the use of the defense of concussione as well as the effectiveness of the penalties provided for in the Italian legislation during Phase II of the

monitoring process.

Basic Statement of the Offense

In order to implement the Convention, Italy added a

new Article 322 bis to its Criminal Code to establish the

offenses of passive bribery of officials of the European

Communities and, in Paragraph 2, subsection 2, the

active bribery of foreign public officials. Article 322 bis

42 Addressing the Challenges of International Bribery and Fair Competition, 2001
Paragraph 2, subsection 2, provides that the provisions of

Articles 321 and322 on domestic bribery will apply

where money or other advantages are given, offered, or

promised to foreign public officials. The term ìforeign

officialsî is defined as: 

persons carrying out functions or activities equivalent to those performed by public officials and persons in charge of a public service within other foreign States or public international organizations,

when the offense was committed in order to procure

an undue benefit for himself or others in international

business transactions.

The Italian implementing legislation refers to

Articles 321 and 322 on the bribery of domestic officials,

which in turn reference the Italian provisions on passive

bribery, including Articles 318, 319, 319 bis, 319 ter, and

Article 320, by domestic officials in order to determine

applicable penalties. Generally, the relevant articles concern two aspects of bribery: bribery acts where a bribe

payment was made in order for a foreign public official

to perform acts relating to oneís office, and, secondly,

bribery for the public official to omit or delay such acts

relating to oneís duties, or for breaching oneís duties.

Intent is required for both categories of offenses.

According to Italian officials, bribery through intermediaries is covered, as are bribes made for third parties. 

Italian law contains a possible defense to the basic

statement of the offense. Article 317 of the Criminal

Code covers the offense of concussione by a public official. In such cases, only the public official would be

liable for punishment and not the person who was

ìobligedî or ìinducedî to pay a bribe. This provision

might weaken the effective application of the

Convention. Italy has indicated, however, that defendants

in bribery cases have only rarely invoked this provision,

and even more rarely has it been successful. 

Jurisdictional Principles

Italy practices both territorial and nationality jurisdiction. Under Article 6 of the Criminal Code,

ì[w]hoever commits an offense in the territory of the

State shall be punished according to Italian law. An

offense shall be deemed committed in the territory of the

State when the act or omission, which constitutes it,

occurred therein in whole or in part, or when an event

which is a consequence of the act or omission took place

therein.î The Italian courts have generally held that

territorial jurisdiction applies where the offense originates abroad and is completed in Italian territory and

where the offense is committed wholly abroad with the

participation of another person in Italian territory. Italian

territory is held to include Italian aircraft and ships.

With respect to nationality jurisdiction, Articles 6

through 10 of the Criminal Code establish jurisdiction

over offenses committed abroad in certain limited cases:

ï jurisdiction over an Italian national or an alien for

an offense committed by a public officer in service of

the State by abusing the powers or violating the

duties of oneís office, regardless of whether the citizen or alien is found within Italy, and

ï jurisdiction in certain other limited cases over

Italian nationals (or aliens) within Italian territory for

offenses committed abroad.

We understand that Italian law does not require dual

criminality for establishing jurisdiction over an offense

which occurs entirely abroad. 

Coverage of Payor/Offeror

Article 322 bis, establishing bribery of a foreign public official as an offense, does not specify to whom it

applies. However, Article 322 bis is linked in the statutory scheme to Article 321, the corresponding article

regarding domestic active bribery, which applies to ìany

person.î Under Italian law only natural persons can be

held criminally liable.

As noted above, the newly adopted legislative decree

will provide for administrative sanctions for a legal

person found guilty of a bribery offense. Article 11 of the

implementing legislation enabled the government to

issue a decree providing for the administrative responsibility of legal persons and companies, associations, and

bodies without legal personality that do not carry out

statutory functions (partnerships). We understand that the

definition of ìlegal personsî under Article 11 would

include state-owned and state-controlled corporations

when they are acting in their commercial capacity, but

exclude them when they are exercising ìpublic powers.î

The Italian authorities explained that this provision

would be interpreted narrowly to ensure that State and

other public enterprises, including those that cover

regions and municipalities, would not escape administrative liability. 

Coverage of Payee/Offeree

As noted above, paragraph 2, subsection 2 of Article

322 bis of the Criminal Code applies to the bribery of

ìpersons carrying out functions or activities equivalent to

those performed by public officials and persons in charge

of a public service within other foreign States or public

international organizations.î We understand that the

intent of Italian legislators is to criminalize the bribery of

foreign public officials executing functions corresponChapter 2: Review of National Implementing Legislation 43
ding to those of a public official under Italian law. Article

357 (defining ìpublic officerî) and Article 358 (defining

ìperson in charge of a public serviceî) of the Criminal

Code do not correspond exactly to the definition of ìforeign public officialî in Article 1 of the Convention. The

Italian authorities, however, represented that Italian case

law illustrates that all the categories of public officials

referred to in Article 1 of the Convention are indeed covered by Italian law.

Penalties

Penalties for a natural person convicted of giving,

promising, or offering a bribe to a foreign public official

for the performance of an act related to the office of the

official or for an omission or delay of an act relating to

the office of the official or for performance of an act in

breach of official duties are covered in Articles 321 and

322 of the Criminal Code read in conjunction with

Criminal Code Articles 318-320. Ranges of imprisonment depend on the severity of the offense and can vary

from a term of imprisonment between 6 months and 3

years at the lower end to a term between 6 and 20 years

for crimes in which another person has been wrongly

sentenced to a term of imprisonment of more than 5

years. In certain circumstances, e.g., where the foreign

public official does not accept the offer or promise of a

bribe, the penalty can be reduced up to a maximum of

one-third. Although the Convention does not require

monetary penalties for natural persons, we believe that

adding such sanctions could prove more dissuasive than

imprisonment alone.

A natural person is also subject to a number of civil

sanctions including permanent or temporary disqualification from holding public office, loss of capacity to enter

into contracts with the public administration, and an obligation to make restitution and pay damages. 

As stated above, the Italian legal system does not provide for criminal responsibility of legal persons.

However, pursuant to Article 11 of its implementing legislation, the Italian government has issued a legislative

decree to regulate administrative liability for legal persons. The following principles and guidelines in Article 11

are to have been followed in the legislative decree.

Paragraph (1)(f) of Article 11 repeats the basic principle of

the Convention that noncriminal penalties of legal persons

should be ìeffective, proportionate and dissuasive.î

Monetary sanctions under paragraph (l) (g) of Article 11

range from Italian Lire 50 million (approx. U.S.$22,000)

to Italian Lire 3 billion (approx. U.S.$1.3 million) depending on the gravity (i.e., the amount of bribe proceeds) of

the offense and the financial condition of the firm. Where

these two factors are ìespecially slight,î the range of fines

is between Italian Lire 20 million (approx. U.S.$9,000)

and Italian Lire 200 million (approx. U.S.$90,000). In

addition, according to paragraph (1)(h) of Article 11, the

fines shall not exceed the social capital or total assets of

an enterprise. Paragraph (1)(n) of Article 11 states that the

fines shall be reduced by one-third to one-half where the

enterprise has adopted ìconduct ensuring an effective

compensation or restoration with regard to the offense

committed.î

In addition, Article 11 provides for one or more of the

following sanctions, in addition to fines, in ìparticularly

serious casesî:

1.The closing (temporary or permanent) of the place

of business.

2.Suspension or revocation of authorizations,

licenses, or permits instrumental to the commission

of the offense.

3.Disqualification (temporary or permanent) from

carrying out the activity of the body and possible

appointment of another body to carry out the activity

where necessary to prevent damage to third parties.

4.Prohibition (temporary or permanent) from dealing

with the public administration.

5.Temporary exclusion from obtaining any

allowances, funding, contributions or aid, and possible revocation of those already granted.

6.Prohibition (temporary or permanent) from advertising goods and services.

7.Publication of the sentence.

Italian law provides for both preventive (e.g., to

avoid aggravation or prolongation of an offense) and probatory (when evidence is to be acquired) seizure. Article

240 of the Criminal Code covers confiscation generally,

and the Italian implementing legislation added a new

Article 322-ter which covers confiscation in cases where

the offense involved a gift or a promise. For legal persons, Article 11(1)(i) of the implementing legislation provides for confiscation of the bribe or the bribe proceeds,

or their equivalent value.

The general statute of limitations is five years for the

criminal offense of bribing a foreign public official and

with respect to the application of administrative sanctions

on a legal person or other covered body for the commission of an offense. In certain instances of aggravated

bribery, the statute of limitations is 10 years. However,

the deadline for commencing preliminary investigations

is also relevant to the discussion of statutes of limitations.

Where an investigation concerns an unknown person, the

deadline is six months unless the public prosecutor

requests an extension. In the case of an investigation of a

44 Addressing the Challenges of International Bribery and Fair Competition, 2001
known person, the deadline is also six months unless the

public prosecutor requests an indictment for trial or an

extension. In the latter case, extensions are usually

limited to 1 year, although in the case of complex

investigations of ìserious offensesî (including bribery of

a foreign public official), investigations may be extended

for two years.

Books and Records Provisions

Accounting and auditing requirements for Italian

firms are specified in Article 13 of Presidential Decree

600/73 and Articles 2364 and 2400 of the Civil Code.

Requirements for limited liability companies with a capital of at least Italian Lire 200 million (approx.

U.S.$90,000) are contained in Article 2488. Company

executives who provide false financial information, or

who unlawfully distribute profits, can be punished with

imprisonment of one to five years and a fine of Italian

Lire 2 million to 20 million (approx. U.S.$900 to

$9,000). Auditors who commit this offense are subject to

punishment of imprisonment of six months to three years

and a fine of Italian Lire 200,000 to 2 million (approx.

U.S.$90 to $900). Under Article 2409 of the Civil Code

directors and auditors may be dismissed for accounting

and auditing irregularities. Criminal and administrative

penalties may also result under Legislative Decree No. 74

of March 10, 2000 for the issuance of false invoices and

other false documents in order to evade taxes.

Money Laundering

Article 648 bis of the Criminal Code calls for the

punishment of anyone who substitutes, transfers, or conceals money, goods, or assets obtained by means of an

intentional criminal offense for the purpose of concealing

the link between such assets and a predicate offense. This

provision would only apply to a person who has laundered the money, who may not always be the person who

committed the predicate offense. Italian law provides for

punishment of a person who invests the proceeds from

these crimes in financial assets and for the possibility of

punishing a person for money laundering, even if the

predicate offense has been committed abroad.

Extradition/Mutual Legal Assistance

Pursuant to Article 696 of the Code of Criminal

Procedure, Italy will respond to requests for extradition

under international conventions in force in Italy or under

bilateral treaties, including the bilateral extradition treaty

between the United States and Italy. Under Title II of the

Code of Criminal Procedure, Italy may, in some cases,

grant extradition to a country with which it does not have

a treaty. The Court of Appeal cannot consent to extradition in certain limited cases. For example, if the offense

for which extradition is sought is punishable by death

under the law of the requesting country, sufficient assurance must be provided that the accused will not be sentenced to death or, if already sentenced, will not be executed. Italian citizens can be extradited only pursuant to

a treaty obligation. The extradition treaty between the

United States and Italy does not permit refusal of extradition based on the nationality of the individual sought.

Italy is a party to the European Convention on Legal

Assistance in Criminal Matters and to a number of bilateral legal assistance treaties, including a mutual legal

assistance treaty with the United States. Article 696 of the

Code of Criminal Procedure provides that letters requesting mutual legal assistance can be executed pursuant to

such agreements. Where no treaty exists, mutual legal

assistance can be granted pursuant to provisions in Title

III of the Code of Criminal Procedure. The Court of

Appeal and the Minister of Justice must refuse to grant

assistance in certain limited instances, such as where the

requested acts are expressly prohibited by Italian law or

are in conflict with fundamental principles of the Italian

legal system. Italian authorities have confirmed that

mutual legal assistance will be granted for an offense

coming within the scope of the OECD Convention. Italy

will not deny mutual legal assistance in criminal investigations on the grounds of bank secrecy.

Complicity, Attempt, Conspiracy

Article 110 of the Criminal Code states that participants in the same offense shall each be subject to the prescribed punishment. In case of aggravating circumstances, such as the participation of five or more persons

in the offense, the punishment shall be increased pursuant

to Article 112. As the Criminal Code does not define participation, it is not evident whether aiding and abetting

and authorization are covered. The Italian authorities

have indicated that under Articles 322 and 322 bis, incitement to bribery is considered a completed crime and that

these provisions would also apply to an attempt.

Conspiracy does not exist in Italian law. 

Japan 

Japan signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD on October 13, 1998. Implementing legislation

was adopted on September 18, 1998, and entered into

force on February 15, 1999, when the Convention itself

entered into force for Japan.

Chapter 2: Review of National Implementing Legislation 45
Japan's legislation to implement the Convention is

found in amendments to the Unfair Competition

Prevention Law (Law No. 47 of May 19, 1993) (UCPL),

rather than the Penal Code, where domestic bribery laws

are found. The penalties are criminal, however.

Provisions of the Penal Code apply generally to all

crimes unless specified otherwise.

Sources for this analysis include the UCPL, provisions of the Penal Code and other Japanese laws, information obtained from the government of Japan through

diplomatic exchanges, and reporting from the U.S.

embassy in Tokyo.

There are concerns as to whether the maximum fines

for natural and legal persons are "effective, proportionate

and dissuasive," as Article 3(1) of the Convention

requires. There is also a concern that Japan will not subject the proceeds of bribery to confiscation, nor will it

impose monetary sanctions of comparable effect (other

than the criminal fines that otherwise apply to bribery) in

lieu of such confiscation, as required under Convention

Article 3(3). The "main office" exception to territorial

jurisdiction is problematic, as is the fact that bribery is

not included among the crimes subject to the application

of nationality jurisdiction. Other concerns relate to the

definition of "foreign public official," coverage of payments made to a third party at the direction of a foreign

public official, and the length of the statute of limitations.

Basic Statement of the Offense

Article 10 bis (1) of the UCPL provides:

No person shall give, offer or promise any pecuniary

or other advantage to a foreign public official, in

order that the official act or refrain from acting in

relation to the performance of official duties, or in

order that the official, using his position, exert upon

another foreign public official so as to cause him to

act or refrain from acting in relation to the performance of official duties, in order to obtain or retain

improper business advantage.

Article 10 bis (1) does not include the element of

intent. Intent is generally an element in all criminal

offenses pursuant to Article 38 of the Penal Code. Article

8 provides that general provisions such as Article 38

apply to crimes under statutes other than the Penal Code.

Article 10 bis (1) does not address bribes offered, promised, or given through intermediaries, nor bribes paid, on

behalf of a public official, to a third party.

Jurisdictional Principles

Article 10 bis of the UCPL does not address basic

jurisdictional principles. However, Article 1 of the Penal

Code sets forth the principle of territoriality. We understand that in order to establish jurisdiction, at least one

element of the offense must be committed in Japan.

Pursuant to Article 8 of the Penal Code, the provisions of

Article 1 apply to the UCPL.

Under Article 10 bis (3) of the UCPL, Article 10 bis

(1) does not apply if the country of the foreign official

who is the bribe recipient is the same country in which

the "main office" of the briber is located. Under this

exception, therefore, a bribe transaction that occurred in

whole or in part in Japan would not be covered under the

UCPL if the briber's "main office" were located in a certain country and the bribe recipient were an official of the

government of that same country.

Under Article 3 of the Penal Code, nationality jurisdiction is applied only for specified crimes: arson, forgery, rape, murder, bodily injury, kidnapping, larceny,

robbery, fraud, extortion, or embezzlement. Bribery,

either domestic or foreign, is not included.

The statute of limitations for active bribery of foreign officials, like bribery of domestic officials, is three

years. Article 250 of the Code of Criminal Procedure

prescribes a three-year statute of limitations for offenses

with a potential sentence of less than five years. Article

255 bis (1) provides that the statute of limitations does

not run during the period in which the offender is outside Japan.

Coverage of Payor/Offeror

Article 10 bis (1) prohibits conduct by any "person,"

without reference to nationality.

Coverage of Payee/Offeree

In Article 10 bis (2), "foreign public official" is

defined to include:

ï Persons engaged in public service for a national or

local government in a foreign country.

ï Persons engaged in service for an entity constituted

under foreign special laws to carry out specific tasks

in the public interest.

ï Persons engaged in business operations in which

more than half of the stock or capital is held directly

by a foreign government, or in which the majority of

the executives are appointed by a foreign government, and that have been granted special privileges

by a foreign government.

ï Persons engaged in public service for an international organization.

ï Persons exercising a public function that falls

under the competence of and is delegated by a foreign government or international organization.

46 Addressing the Challenges of International Bribery and Fair Competition, 2001
This definition of "foreign public official" does not

address indirect government control of an enterprise, nor

cases of de facto control where the government holds less

than 50 percent of the shares of an enterprise.

Under Articles 197 and 198 of the Penal Code, laws

against active and passive domestic bribery apply in

cases in which a person is bribed in anticipation of

becoming a public official, if that person actually

becomes a public official. It is not clear whether this

applies equally to bribery of a foreign public official.

Penalties

Under Article 14 of the UCPL, legal persons can be

held criminally liable. Article 14 provides that the maximum fine for legal persons is 300 million yen (approx.

$2.5 million). There is no comparable penalty for

domestic bribery because the Penal Code, which covers

domestic bribery, does not provide for criminal liability

of legal persons.

Under Article 13, the penalties for natural persons

are imprisonment for up to three years or a maximum

fine of •3 million (approx. U.S. $25,000). The corresponding penalties in Article 198 of the Penal Code for

domestic bribery are imprisonment for up to three years

or a maximum fine of •2.5 million (approx. U.S.

$21,000). According to the Japanese legislation, a fine or

imprisonment can be applied in the alternative, but not

together.

Article 19 of the Penal Code provides for confiscation of the bribe or its monetary equivalent. Under the

recently enacted Anti-Organized Crime Law, if there has

been a conviction under Article 10 bis (1) UCPL, the

judge has discretion to confiscate "any property given

through a criminal act." Japanese law does not provide

for confiscation of the proceeds of bribery, or monetary

sanctions of comparable effect. Nor does Japanese law

contain other civil or administrative sanctions for bribery

of a foreign public official.

Books and Records Provisions

Companies and partnerships with capital equal to or

exceeding •500,000 (approx. U.S. $4,200) must, under

Article 32 bis (1) of the Commercial Code, keep accounts

and balance sheets that reflect the condition of the business and profits/losses. Such accounts must be kept in

accordance with the requirements of the Financial

Accounting Standards for Business Enterprises. Under

Article 498 bis (1) of the Commercial Code, directors and

others administering the affairs of a company are subject

to non-criminal fines of up to •1 million (approx. U.S.

$8,400) for falsification of records.

Articles 281 and 282 of the Commercial Code contain certain requirements for the maintenance of financial

records by companies that issue shares of stock. Under

Article 266 bis (3), directors are liable for falsifying audit

reports, prospectuses, etc. Share-issuing companies with

capital of •500 million (approx. $4.2 million) or more, or

total liabilities of •20 billion (approx. U.S. $168 million)

or more, must be audited by external auditors pursuant to

Article 2 of the Law for Special Exceptions to the

Commercial Code.

Companies that issue securities listed on a stock

exchange are covered by the Securities and Exchange

Law (SEL). Article 207 of the SEL provides that balance

sheets, profit and loss statements, and other documents

relating to financial accounting are to be prepared in

accordance with the requirements prescribed by the

Ministry of Finance. Under Article 207 (2), such records

must be audited by independent auditors. Under Article

30 of the Certified Public Accountants Law, accountants

who falsely certify the correctness of financial documents are subject to administrative sanctions.

Article 197 (1) of the SEL provides for criminal

penalties (imprisonment for up to five years and/or fines

of up to •5 million (approx. U.S. $42,000) for persons

who submit false registration statements. The corporation may also be penalized under Article 207.

Individuals submitting false registration statements may

also, under Article 18 of the SEL, be held civilly liable

to injured investors.

Money Laundering

Under the Anti-Organized Crime Law, the acceptance of a bribe by (but not the act of bribing) a domestic

or foreign official is a predicate offense for the purpose of

Japan's money-laundering laws. Penalties include imprisonment for maximum terms of three to five years, or

fines ranging from a maximum of •1 million to •10 million (approx. U.S. $8,400-$84,000).

Extradition/Mutual Legal Assistance

Under the U.S.-Japan extradition treaty, bribery is an

extraditable offense so long as it is punishable in both

countries by imprisonment for a period of more than one

year. The treaty provides that extradition of a party's

nationals is discretionary. The United States and Japan do

not have a mutual legal assistance treaty. (One is

currently under negotiation.) Japan can provide legal

assistance to other countries under the Law for

International Assistance in Investigation (dual criminality

is required) and the Law for Judicial Assistance to

Foreign Courts.

Chapter 2: Review of National Implementing Legislation 47
Complicity, Attempt, Conspiracy

Complicity is governed by Articles 61-65 of the

Penal Code. Article 61 pertains to instigation of criminal

acts. Aiding and abetting the commission of an offense is

covered under Article 62. Neither the Penal Code nor the

UCPL criminalizes attempted bribery. Under Article 60,

conspiracy is punishable if a coconspirator carries out the

criminal act. These provisions apply equally to offenses

under the UCPL.

Korea 

Korea signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD on January 4, 1999. The implementing legislation

entered into force on February 15, 1999. Sources for this

analysis include the Foreign Bribery Prevention Act in

International Business Transactions of 1998 (FBPA) and

diplomatic reporting from the U.S. embassy in Seoul.

One concern with the Korean legislation is that

currently neither domestic or foreign bribery is a predicate offense to Korean money laundering legislation.

However, we understand that Korea will enact new

legislation so that bribery will be a predicate offense.

Basic Statement of the Offense

Article 1 sets forth the purpose of the FBPA, which

is to contribute to the establishment of sound practice in

international business transactions by criminalizing

bribery of foreign public officials and providing the

details necessary for implementing the OECD Convention. The basic statement of the offense of bribery is

contained in the FBPA's penalty provisions for natural

(Article 3) and legal (Article 4) persons. Article 3,

"Criminal Responsibility of Bribery," provides that:

Any person, promising, giving or offering [a] bribe

to a foreign public official in relation to his/her official business in order to obtain [an] improper advantage in the conduct of international business transactions, shall be subject to [penalties].

We understand that under Korean law generally a

bribe is "any undue advantage in relation to a public official's duty or business." Furthermore, it is our understanding that although its implementing law does not

explicitly include liability for payments for the benefit of

third parties, the Korean law does cover situations in

which payments are made to a third party for the benefit

of a public official and in which payments are made to a

public official for the benefit of a third party.

Article 4 covers such bribes on behalf of a legal person by a "representative, agent, employee or other individual working for [a] legal person...in relation to its

business." There are two exceptions to the basic statement of the offense. Article 3(2) provides an exception

for (1) bribes where they are "permitted or required by

the law" in the country of the foreign public official and

(2) facilitating payments.

Jurisdictional Principles

Article 2 of the Korean Criminal Code provides for

territorial jurisdiction. Jurisdiction will be established

over any offense that has been committed in the territory

of the Republic of Korea. Article 3 of the Korean

Criminal Code allows Korea to prosecute its nationals for

offenses committed abroad (nationality jurisdiction).

Article 6 of the Korean Criminal Code confers Korean

jurisdiction over any offenses in which the Republic of

Korea or a Korean national is a victim.

Coverage of Payor/Offeror

Article 3 covers bribes made by "any person," without reference to nationality. Article 4 of the FBPA provides for criminal responsibility of legal persons.

Coverage of Payee/Offeree

"Foreign public officials" are defined in Article 2 of

the FBPA. Article 2 covers officials, whether appointed

or elected, in all branches of government, at either the

national or local level. The FBPA covers all foreign

public officials who perform public functions, such as

those in "business, in the public interest, delegated by

the foreign government," people "working for a public

organization established by law to carry out specific

business in the public interest," officials of public international organizations, and persons working for companies "over which a foreign government holds over 50

percent of its subscribed capital" or over which the

government exercises "substantial control." Article

2(2)(c) of the FBPA provides an exception for employees of businesses that operate on a "competitive

basis equivalent to entities of [an] ordinary private

economy [sic]" and that do not receive "preferential

subsidies or other privileges."

Penalties

For individuals, Article 3(1) of the FBPA provides

for a maximum prison sentence of five years or a maximum fine which is the greater of 20 million won (approx.

U.S. $15,600) or twice the profit obtained as a result of

the bribe. Article 3(3) provides that where imprisonment

is imposed, "the prescribed amount of fine shall be concurrently imposed." The stated intent of Article 3(3) of

48 Addressing the Challenges of International Bribery and Fair Competition, 2001
the FBPA is to effectively deprive the offeror/payor of the

profits obtained from the bribery. Under Article 132 of

the Korean Criminal Code, the criminal penalty for

bribery of domestic public officials is imprisonment for a

maximum of five years or a maximum fine of 20 million

won (approx. U.S. $15,600).

In addition to the fines imposed on representatives,

agents, employees, or other individuals working for legal

persons under Article 3, the entity itself may be fined

under Article 4 where a representative, agent, or other

employee of the legal entity, in the ordinary conduct of

the business of the legal entity, commits the offense of

bribery of a foreign public official. Article 4 of the FBPA

provides for a maximum fine which is the greater of 1 billion won (approx. U.S. $781,300) or twice the profit

obtained as a result of the bribe. The same provision provides that fines will not be imposed if the legal person has

paid "due attention" or has made "proper supervisory

efforts" toward preventing the violation.

Article 5 of the FBPA provides for confiscation of

bribes in the possession of the briber or another person

who has knowledge of the offense. (It is our understanding the Korea has indicated that the language

"after the offense has been committed" which appeared

in the original Article 5 had been inserted mistakenly

and is to be deleted). However, the bribe proceeds are

not subject to confiscation. Instead, the FBPA in

Articles 3 and 4 provides for a fine up to twice the profits obtained through bribery of a foreign public official

(See above). Under Article 249 of the Criminal

Procedures Act, the statute of limitations for the bribery

of foreign public officials under the act is five years.

Article 253 of the Criminal Procedures Act provides

that when a prosecution is initiated against one of the

offender's accomplices, or the offender remains overseas to circumvent punishment, the statute of limitations is suspended.

Books and Records Provisions

It is our understanding that under Korean law, firms

must prepare financial statements in accordance with

Korean accounting standards, which prohibit off-thebooks transactions and accounts. The accounting

standards require all financial transactions to be

recorded on the basis of objective documents and evidence. We understand in addition that Korea's External

Audit Law obligates auditors to report fraud on the part

of managers to shareholders and a statutory auditor.

Korea's regulatory authorities can bring administrative

measures against firms and auditors for material omissions, falsifications, and fraud.

Administrative penalties may include the suspension

of licenses and the issuance of securities. Firms and auditors may, in some circumstances, be subject to criminal

sanctions pursuant to the External Audit Law.

Money Laundering

Convention Article 7 requires that each party that has

made bribery of domestic public official a predicate

offense for the purpose of the application of its moneylaundering legislation shall do so on the same terms for

the bribery of a foreign public official. Currently, bribery

of neither domestic nor foreign officials is a predicate

offense for the application of Korean money laundering

legislation.

Extradition/Mutual Legal Assistance

It is our understanding that Korea's Extradition Act

provides for granting extradition requests on a reciprocal

basis even in the absence of a treaty, but reserves discretionary authority to the government to deny extradition in cases involving a Korean national. We understand

that dual criminality is a mandatory condition for

extradition under the Korean Extradition Act, but that

Korea may deem the requirement of dual criminality fulfilled if the offense falls within the scope of Article 1 of

the Convention.

Under its International Mutual Legal Assistance in

Criminal Matters Act, Korea requires reciprocity before

it will provide mutual legal assistance to countries with

which it does not have mutual legal assistance treaties. In

the absence of contrary treaty provisions, Korea further

requires dual criminality. It is our understanding that the

requirement of dual criminality will be met for requests

made within the scope of the Convention. Banking

records may be obtained by court warrant under the

International Mutual Legal Assistance in Criminal

Matters Act and the Act on Real Name Financial

Transaction and Protection of Confidentiality.

Complicity, Attempt, Conspiracy

Complicity is covered under the Korean Criminal

Code, which categorizes the offense as coauthoring, abetting, and aiding. Article 30 of the Korean Criminal Code

provides that when two or more persons jointly commit

an offense, each person shall be punished as an author.

Article 31(1) of the Korean Criminal Code provides that

any person who abets another person in committing an

offense shall be subject to the same criminal liability as

that of the actual offender. Article 32 of the Korean

Criminal Code provides that any person who aids another

person's commission of an offense shall be punished by a

Chapter 2: Review of National Implementing Legislation 49
penalty, which shall be less than that of the author. Article

8 of the Korean Criminal Code links the above provisions

to the FBPA by making them applicable to offenses enumerated in other criminal statutes.

Luxembourg

Luxembourg signed the Convention on December 17,

1997. The law implementing the Convention of January

15, 2001 (entitled the ìLaw of January 15, 2001 approving the Convention of the Organization for Economic

Cooperation and Development on Combating Bribery of

Foreign Public Officials in International Business

Transactions and relating to misappropriation, destruction

of documents and securities, dishonest receipt of money

by a public officer, unlawful taking of interests and

bribery and amending other legal provisionsî), entered

into force on February 10, 2001. Luxembourg deposited

its instrument of ratification on March 21, 2001.

Our main concern with Luxembourg's legislation is

that it provides for neither corporate criminal liability

nor for effective, proportionate, and dissuasive noncriminal sanctions for corporations, as required by

Articles 2 and 3.2 of the Convention. However, the

Luxembourg authorities stated that a Justice Ministry

working group has been set up to prepare a reform

which would introduce the principal of criminal liability of legal persons at the end of 2001. 

Basic Statement of the Offense

The basic statement of the offense is contained primarily in Criminal Code Articles 247, 249 para. 2, and

Article 250 para. 2, concerning bribery of public

officials, which by application of Article 252 now also

apply to foreign public officials. Article 247 generally

provides that the act of unlawfully proposing or giving,

directly or indirectly, or offering, promising, giving,

presenting, or providing any advantages whatsoever, to a

person entrusted with, or agent of, public authority, a law

enforcement officer, or a person charged with performing

a public function or holding an elected office for herself

or a third person in order that: (1) she acts or refrains

from performing her duties, or (2) she uses her influence

to obtain from an official or public administration

advantages, employment, government procurement, or

any other favorable decision, will be punished by imprisonment from five to ten years and a fine ranging from

20,000 Luxembourg francs (approx. U.S.$420) to

7,500,000 francs (approx. U.S.$157,350). 

Articles 249 para. 2 generally provides that anyone

solicited by a public official as defined above and

accepts, or who proposes offers, promises, gifts, presents,

or any advantages whatsoever so that the official will act

or refrain from acting according to her duties will be punished by imprisonment of five to ten years and fines of

20,000 francs (approx. U.S.$420) to 7,500,000 francs

(approx. U.S.$157,350).

Article 250 para. 2 generally provides that anyone

solicited by a member of the judiciary or any other person holding judicial office, arbitrator, or expert appointed

by the court or by the parties, who accepts or who

proposes offers, promises, gifts, presents, or any advantages whatsoever so that the official will act or refrain

from acting according to her duties will be punished by

imprisonment from ten to fifteen years and fines ranging

from 100,000 francs (approx. U.S.$2,098) to 10,000,000

francs (approx. U.S.$209,800).

Article 252 generally provides that the provisions

above apply to offenses involving elected or appointed

public officials or those charged with such duties of

another State, European Communities officials, officials

or agents of public international organizations. 

According to the Luxembourg officials, bribe payments to foreign public officials made through intermediaries or to third parties are covered by the provisions

above. Intent is an essential condition of the offense. The

basic offense of bribery of foreign officials goes beyond

the Convention in that it is not restricted to bribery acts in

order to obtain or retain advantages in international business transactions. 

Jurisdictional Principles

Luxembourg practices both territorial and nationality jurisdiction. (See Articles 7 ter and 5 of the Code of

Criminal Procedure, respectively.) According to Article

7 ter, territorial jurisdiction applies where an act constituting an essential element of the offense occurs

within the territory of Luxembourg. Therefore, under

Luxembourg law a court may assert jurisdiction if the

offense was committed abroad but its effects are realized in Luxembourg. 

According to Luxembourg officials, the condition of

dual criminality is not required in order for Luxembourg

courts to assert jurisdiction over its nationals for the criminal offense of bribery of foreign public officials committed outside of its territory.

In addition, unlike Franceís implementing legislation, no complaint is required to be filed by a "State

victim," e.g., a representative of the State whose official

was bribed, in order for there to be prosecution of the

offense. If a State victim does make such a complaint,

prosecution is still discretionary. 

50 Addressing the Challenges of International Bribery and Fair Competition, 2001
Coverage of Payor/Offeror 

Luxembourg's Criminal Code provisions on bribery

concern only natural persons. Luxembourg has indicated

that a working group within the Ministry of Justice has

been charged with developing amendments so that

corporations will be penalized under its laws (See also

discussion on penalties, infra.) Luxembourg officials predict that the bill will be introduced in Parliament at the

end of 2001. 

Coverage of Payee/Offeree

Criminal Code Article 252 applies the offenses of

bribery of national public officials found in Articles 247,

249, and 250 to foreign public officials, European

Communities officials, and officials of other public international organizations. Articles 247 and 249 define a

public official as a person entrusted with or agent of public authority, a law enforcement officer, or a person

charged with performing a public function or holding an

elected office for oneself or a third person, and Article

250 covers members of the judiciary or any other person

holding judicial office, arbitrators or experts appointed

by the court or by the parties.

Penalties

Currently, Luxembourgís laws prohibiting bribery of

foreign public officials provide for criminal penalties only

for natural persons. Through the application of Criminal

Code Article 252, the amounts of the fines and terms of

imprisonment for bribery of foreign public officials under

Luxembourg law are identical to those for domestic officials listed in Articles 247, 249, and 250 above. 

There are no penalties for legal persons specifically

for the bribery of foreign public officials under

Luxembourg law at this time. Although dissolution of

legal persons is possible under the law of Luxembourg as

a criminal measure, Luxembourg's own Conseil d'Etat

has indicated that it is doubtful that this penalty would

apply to bribery of foreign public officials by legal persons, and it would be "inappropriate and disproportionate" if it were. (See Article 203 of the Act of August 15,

1915 on Commercial Companies as amended, and

Article 18 of the Act of April 21, 1928, on non-profit

associations and foundations as amended.)

A natural person sentenced to prison for more than

five years is also subject to the following: deprivation of

certain rights for life or for ten to twenty years such as

the ability to serve in public office, vote or be elected,

receive medals for public service, be an expert, witness,

or someone who can certify official documents, provide

evidence, act as a member of a family council or serve

to legally protect the incompetent, bear arms, hold a

teacher or other public education position, or hold other

licenses. (See Criminal Code Articles 10-12.)

Luxembourg officials have stated that both the bribe

and the bribe proceeds may be seized (Code of Criminal

Procedure Articles 66 et seq.) and confiscated (Criminal

Code Article 31 et seq.), although it is unclear whether the

bribe proceeds can be confiscated from a legal person.

Luxembourg also has stated that confiscation of goods is

possible from both natural and legal persons and third parties. Because confiscation of the bribery instrument (e.g.,

the bribe itself or the object of value) is dependent upon

the conviction of the natural person who owns the assets,

it is unclear whether such confiscation is possible from

legal persons or third parties who own the assets but who

have not been convicted. Where confiscation is no longer

possible, a fine in the same amount may be imposed. 

Under the law of January 15, 2001, the statute of limitations for bribery of foreign public officials is ten years,

and may apparently be triggered the day the ìcorruption

pactî between the public official and the briber was

agreed upon, the date of the last bribery payment, or the

date when the public official acts or refrains from acting

(pursuant to the corruption pact). The Law of January 15,

2001, obviated an earlier defect in the law, whereby the

statute of limitations was decreased to only three years

when the judge found that due to attenuating circumstances the offense should have been classified as a misdemeanor instead of a crime. Under Article 637 of the

Code of Criminal Procedure, the statute of limitations

may be interrupted by the prosecutorís investigation or

judicial proceedings. 

Books and Records Provisions

Articles 8 and 9 of the Commercial Code contain

general provisions on bookkeeping that apply to merchants, including both natural and legal persons. Article

477 of the Commercial Code contains provisions on false

documents. Penalties for falsifying business, banking, or

private documents range from imprisonment from five to

ten years. Under Luxembourg law, companies are

required to undergo auditing of their accounts and,

depending on their size, may be required to use an independent auditor. Since 1998, certain sectors, e.g., professions, within the financial sector, are required by statute

to exercise internal controls. 

Money Laundering

The Act of August 11, 1998, added money-laundering offenses to the Luxembourg Criminal Code and

expanded the list of predicate offenses for money launChapter 2: Review of National Implementing Legislation 51
dering to include both bribery of domestic and foreign

public officials. (See Article 506-1 of the Criminal

Code.) The money-laundering legislation covers both

the bribe and the bribe proceeds. The legislation applies

even when the bribery offense occurs in another country,

as long as bribery is also a criminal offense under that

countryís laws. (See Article 506-3 of the Criminal

Code.) In addition to present disclosure requirements on

financial institutions, the new money laundering legislation also requires auditors, notaries, casinos, and other

similarly situated establishments to report suspicious

facts that may evidence money-laundering activity to the

State Prosecutor.

Extradition/Mutual Legal Assistance 

Extradition may be granted for persons committing

bribery of foreign public officials, pursuant to Article 2

of the European Convention on Extradition of

December 13, 1957, which requires that a person must

be charged with an offense carrying a penalty of imprisonment of at least one year. Luxembourg officials stated

that the Convention will serve as a legal basis for

extradition. The extradition treaty between the United

States and Luxembourg has been in force since August

13, 1884, and was supplemented by a subsequent

extradition convention which entered into force on

March 3, 1936.

Luxembourg will not extradite its nationals. Pursuant

to bilateral or multilateral conventions, a country requesting extradition of a Luxembourg national which has been

refused can lodge a complaint with the Luxembourg

authorities to initiate an investigation of the offense in

Luxembourg or, if no treaty exists, the alleged offender

may be prosecuted on the condition of reciprocity. 

Luxembourg laws relating to mutual legal assistance

include the Act of August 8, 2000, on international

mutual legal assistance in criminal matters and various

bilateral and multilateral treaties. A treaty with the United

States was signed on March 13, 1997, and entered into

force on February 1, 2001.

According to Luxembourg officials, the terms of

imprisonment for bribery of foreign public officials

under its laws are adequate for purposes of mutual legal

assistance pursuant to Article 5 of the Act of August 8,

2000 on international mutual legal assistance in criminal

matters. Dual criminality will be deemed to exist if

mutual legal assistance is sought concerning an offense

falling under the Convention. 

Also, according to Luxembourg officials, bank

secrecy is not a ground for refusing mutual legal

assistance in criminal matters. (See Law of April 5,

1993, Article 40.) Full cooperation with legal requests

is also required of auditors, notaries, casinos, and

other similar establishments under the Act of August

11, 1998, supra, concerning organized crime and

money laundering. 

Complicity, Attempt, Conspiracy 

Criminal Code Articles 66, 67, and 69 address the

offenses of complicity under Luxembourg law. Attempt

is covered under Criminal Code Article 51. There are no

conspiracy provisions in Luxembourg's law similar to the

concept of conspiracy in U.S. law.

Mexico 

Mexico signed the Convention on December 17,

1997, and deposited its instrument of ratification on May

27, 1999. Mexico's implementing amendments to the

Federal Penal Code came into force on May 18, 1999.

Mexico's implementation of the Convention raises

three concerns. First, Mexico has made prosecution of

corporations contingent upon prosecution of a natural

person, thus creating a potential bar to prosecution if

such a person evades Mexican jurisdiction or is otherwise not subject to prosecution. Second, Mexico has not

adopted an autonomous definition of "public official,"

thus making its prosecutions dependent upon a foreign

state's law. Finally, Mexico's penalties for natural persons are based upon multiples of the daily minimum

wage and are grossly inadequate when applied to executives of companies engaged in international business.

Basic Statement of the Offense

The basic statement of the offense is contained in

Article 222 bis of the Federal Penal Code:

The same penalties provided in the previous article

shall be imposed on [a person] who, with the purpose

of retaining for himself/herself or for another party,

undue advantages in the development or conducting

of international business transactions, offers, promises, or gives, whether by himself/herself or through

a third party, money or any other advantage, whether

in assets or services:

1. To a foreign public official in order that he/she

negotiates or refrains from negotiating the carrying

out or the resolution of issues related to the functions

inherent to his/her job, post, or commission;

2. To a foreign public official in order to perform the

carrying out or the resolution of any issue that is

beyond the scope of the inherent functions to his/her

job, post, or commission.

52 Addressing the Challenges of International Bribery and Fair Competition, 2001
Jurisdictional Principles

Mexico asserts both territorial and nationality jurisdiction. (See Penal Code ''1, 2(1), 4.) Mexican law

applies when the promise, offer, or giving of the bribe

occurs within Mexico or when extraterritorial conduct is

intended to have an effect in Mexico. Mexico also asserts

jurisdiction over crimes committed in a foreign territory

by a Mexican or by a foreign national against a Mexican

provided there is dual criminality. Mexico would not

have jurisdiction over the extraterritorial acts of a

Mexican corporation unless the natural person who commits the offense on behalf of the corporation otherwise

comes within its jurisdiction.

Coverage of Payor/Offeror

Article 222 bis applies to any individual responsible

for the offense. Mexican law imposes only derivative liability on corporations. Thus, a court may impose sanctions on a corporation only after a member or representative of the corporation has been convicted of committing

the bribery offense using means provided by the corporation and in the name of or on behalf of the corporation.

(See Penal Code '11.)

Coverage of Payee/Offeree

Mexican law defines a foreign official as "any person

displaying or holding a public post considered as such by

the applicable law, whether in legislative, executive, or

judicial branches of a foreign State, including within

autonomous, independent regions, or with major state

participation agencies or enterprises, in any governmental order or level, as well as in any international public

organization or entity." (See Penal Code '222 bis.) This

definition, by its reference to "applicable law," raises a

question as to whether Mexico has adopted the

autonomous definition required by the Convention.

Penalties

For natural persons, Mexican law imposes the same

penalties for foreign bribery as it does for domestic

bribery. These penalties depend on the size of the advantage obtained or promise made and range from imprisonment of between three months and twelve years, a fine of

U.S.$108-$1,800 (500 times the daily minimum wage),

and dismissal and debarment from holding a public job

from three months to twelve years. (See Penal Code

'222.) In addition, upon conviction, the instruments and

the proceeds of the crime are subject to mandatory forfeiture. When, however, those instruments and proceeds

are in the hands of a third party, forfeiture is only available if the third party is in possession for the purpose of

concealing or attempting to conceal or disguise their origin, ownership, destination, or location.

For legal persons, the sanction is up to "500 days of

fine" and the possibility of suspension or dissolution. (See

Penal Code '222 bis.) "Days of fine" is defined as the daily

net income of the legal person. In addition, the court considers the degree of knowledge of management, the damage caused by the transaction, and the benefit obtained by

the legal entity in fixing the appropriate sanction.

Books and Records Provisions

Mexican law requires natural and legal persons to

keep proper accounts, to accurately record transactions

and inventory, and to maintain an adequate accounting

system that best suits the conditions of business and

enables the identification and tracking of each financial

transaction. The penalties range from approximately

U.S.$150 to $3,600 for most accounting offenses. (See

Federal Fiscal Code ''28, 30; Fiscal Regulations ''26, 29,

30, 32, 32A.) Further, if the accounts are deliberately falsified, e.g., by keeping two sets of books, the penalty for

natural persons includes three months to three years of

imprisonment. For companies with listed securities the

maximum fine is approximately U.S. $450,000. (See

Securities Market Law '26 bis.)

In addition, Mexico imposes auditing requirements

on large or profitable companies. Under these audit rules,

the auditors themselves are required to ensure that a

companyís books are accurate and are subject to a range

of sanctions for noncompliance. (See Fiscal Code ''52,

91B, 96.)

Money Laundering

Mexico's money-laundering law applies to transactions involving the product of any illicit activity, and thus

applies to the proceeds of bribery of a foreign official.

(See Penal Code '400 bis.) However, under Mexican law,

a money-laundering prosecution may only be brought

after there has been a conviction for the underlying

offense.

Extradition/Mutual Legal Assistance

Mexico can provide mutual legal assistance in both

criminal and civil matters. In addition, Mexico will honor

extradition requests. Although Mexico does not, except in

exceptional circumstances, extradite its own nationals, it

will commence its own prosecution in lieu of extradition.

Complicity, Attempt, Conspiracy

Mexican law holds that accomplices are punishable

as principals. (See Penal Code '13.) Accomplices include

Chapter 2: Review of National Implementing Legislation 53
individuals who agree to or prepare the offense, who

carry out the offense, individually, in a joint manner, or

through a third party, who cause another to commit an

offense or assist another in committing an offense, or

who otherwise participate in the commission of an

offense. In addition, Mexican law punishes attempt and

conspiracy, which it defines as "part of a criminal organization or gang of three or more individuals [who] gather

together with the purpose of committing a crime." (See

Penal Code ''12(1), 64.)

The Netherlands

The Netherlands signed the Convention on

December 17, 1997 and deposited its instrument of ratification with the OECD Secretariat on January 12, 2001.

The Dutch enacted bills ratifying and implementing the

Convention on December 13, 2000, which came into

force on February 1, 2001. Aruba and the Netherlands

Antilles must still pass implementing legislation before

the Convention will become effective for those parts of

the Kingdom of the Netherlands. 

Basic Statement of the Offense

The basic statement of the offense is found in several amended provisions of the Dutch Penal Code

Articles 177, 177a, 178, and 178a. Article 177 of the

Penal Code criminalizes bribery of a public servant

where there is a breach of that public official's duty.

Article 177a establishes the offense of bribing public

officials in order to obtain an act or omission not in

breach of her official duties. Article 178 criminalizes

bribery of judges. Article 178a provides that Articles

177, 177a, and 178 apply to foreign as well as domestic

officials. The abovementioned provisions criminalize

the rendering or offering of gifts, promises, or services

to public officials. According to Dutch officials, ìpromisesî includes offering. Intent is implicitly required in

the offenses, and the perpetrator may be pursued for the

offense whether or not the official acts, as long as the

offer was made. The bribery offenses described exceed

the obligation of Article 1 of the Convention in that they

cover bribes in exchange for past acts or omissions.

Also, the offenses go beyond Article 1 of the Convention

in that they are not restricted only to bribes made in the

conduct of international business. 

Although not specifically stated in the statute, legislative history and case law relating to domestic bribery

indicates that the offense covers bribes made through

intermediaries. The bribery provisions do not explicitly

refer to third parties, although the Dutch government has

stated that they would apply to bribes made to third

parties with the knowledge of the public servant, as the

foreign public official will have received something of

value to influence her actions.

Jurisdictional Principles

The Netherlands practices both territorial and nationality jurisdiction. Article 2 of the Dutch Penal Code provides that the criminal law of the Netherlands is applicable to any person who commits a criminal offense within

the Netherlands. Article 3 provides that offenses

committed on Dutch vessels and aircraft are covered

under Dutch law. Territorial jurisdiction is interpreted

broadly and includes telephone calls, faxes, and e-mail.

Dutch citizens are also subject to nationality jurisdiction

by Dutch courts under Penal Code Article 5.1. In the case

of bribery of foreign public officials, it would appear that

such nationality jurisdiction will only apply subject to

dual criminality, i.e., the offense must be considered a

serious offense under both Dutch law and the laws of the

country where the offense was committed. Also, there is

no precedent in Dutch case law for applying nationality

jurisdiction to legal persons, although the Dutch government has stated that in its view legal persons can have

nationality and there is academic literature contending

that nationality jurisdiction could apply to legal persons

under Article 5 of the Penal Code. 

Coverage of Payor/Offeror

Articles 177, 177a, and 178 apply to any person.

Article 51.1 provides that criminal offenses can be committed by both natural and legal persons. According to

the Dutch authorities, the concept of legal person is

broadly interpreted under Dutch jurisprudence. Legal

persons include ship owning firms, unincorporated associations, partnerships, and special funds. (See Article

51.3 Dutch Penal Code.) Under Dutch law, the concept of

legal persons is found primarily under civil law and

includes the State, municipalities, water control corporations, all regulatory bodies, associationsóincluding religious associationsócooperatives, mutual insurance societies, companies limited by shares, private companies

with limited liability, and foundations. 

Article 51.2 provides that where a criminal offense

has been committed by a legal person, the institution of

criminal proceedings may be instituted and penalties may

be imposed against (1) legal persons, (2) those who have

ordered the commission of the criminal offense and those

in control of the unlawful behavior, or (3) against both

the legal person and those who ordered or have control

over the behavior at issue. 

54 Addressing the Challenges of International Bribery and Fair Competition, 2001
For the legal person to be liable under Article

51.2(1), the offense must be imputed to a natural person,

although the natural person does not have to hold a managerial position, and the legal person must have accepted

either the acts, the possibility of the acts, or the same

types of acts in the past. If it is clear that the legal person

in some way condoned the acts, then it is not necessary

to identify a particular natural person.

The Dutch government explained that in order to

hold natural persons of the company liable under Article

51.2(2), it is not required that they hold positions on the

board or be directors or owners of the legal person.

Such natural persons can instead have de facto control,

e.g., they have illustrated their intent that the offense be

carried out, are aware of the possibility that the offense

may take place, or they fail to prevent the acts. There is

also case law indicating that a person can be considered

as holding a managerial position if she has authority or

influence over the organization or parts of the organization. Natural persons who explicitly order the prohibited act and, in some cases, those who suggest such

acts will be held liable. For the offense under Article

51.2(2), the legal person must have committed a criminal offense.

Coverage of Payee/Offeree

Article 178a provides that the offenses covered in

Articles 177, 177a, and 178 also apply to foreign public

officials. The definition of foreign public official as set

forth in Penal Code Article 178a is ìpersons in the public

service of a foreign state or an international legal organizationî and judges ìof a foreign state or an international

law organization.î 

ìPublic servantî is defined under Penal Code Article

84 as ìall persons elected to public office in elections

duly called under lawî as well as arbitrators and personnel of the armed forces. According to the billís legislative

history, ìofficialî has been interpreted broadly by the

Dutch courts to include appointed public officials who

perform State duties and also includes members of

Parliament and municipal councils. ìPublic servantî has

been defined by the Dutch Supreme Court as ìone who

under the supervision and responsibility of the authorities

has been appointed to a function of which the public

character cannot be denied with a view to implementing

tasks of the state and its organs.î

According to the Dutch government, the language in

Article 178a that provides there should be ìequal treatmentî of foreign public officials in comparison with

domestic officials should ensure that the definition of foreign public official should be read as broadly as that of

ìpublic servant.î Moreover, the Dutch explained that

Dutch courts will also use the Convention to interpret the

implementing legislation and that the Convention definition of ìforeign public officialî will therefore govern. 

Penalties

Under Article 177 of the Dutch Penal Code, the

imprisonment and the fine for bribery of foreign public

officials acting in breach of official duties for natural persons have been increased from the penalty for bribery of

domestic officials from two years and a category 4 fine

(i.e. 25,000 guilders, approx. U.S.$9,600) to four years

and a category 5 fine (100,000 guilders, approx.

U.S.$38,400), and for legal persons, a fine that may be

increased to the amount of the next highest level than that

for natural persons, which would be 1 million guilders

(approx. U.S.$384,000). However, for the penalties of

bribery of foreign public officials where the official is not

acting in breach of duties under Article 177a.1(1), the

prison sentence for natural persons is not more than two

years or a category 4 fine (25,000 guilders, approx.

$9,600), and for legal persons, a fine of not more than the

amount of the next category, which would be category 5,

or 100,000 guilders (approx. U.S.$38,400.) For breaches

of Articles 178.1 (where the purpose of the bribe is to

influence a judge's decision) and 178.2 (where the bribe

is intended to obtain a conviction in a criminal case), the

prison terms for natural persons are six and nine years

respectively, and 25,000 and 100,000 guilders respectively. For legal persons under the same provisions, the

penalties are not more than 100,000 guilders and 1 million guilders, respectively. 

The fines are comparable to those of other offenses,

such as those for theft, embezzlement, etc. However,

except for the penalties for bribery of a foreign public

official where the official is acting in breach of official

duties, the penalties are less than those for passive

bribery under domestic law. According to the Dutch

government, fines and imprisonment can be applied

simultaneously. 

In addition to prison terms and fines for natural persons, Article 28 of the Dutch Penal Code provides that

certain rights can be withdrawn, e.g., the right to hold

public office, serve in the armed forces, or serve as an

advisor before the courts. Also, legal persons may be dissolved on application by the Public Prosecutor's office,

and injured parties may bring civil cases for damages

against legal persons for unlawful acts, such as bribery of

foreign public officials. 

Moreover, pre-trial seizure of the bribe and proceeds

is permissible under Articles 94 and 94a of the Code of

Chapter 2: Review of National Implementing Legislation 55
Criminal Procedure, and is discretionary in nature. Article

33 of the Penal Code provides for forfeiture of the bribe,

but not the proceeds. Again, the forfeiture is discretionary.

Where the bribe is in the possession of a bona fide third

party who has no knowledge of the bribe, it is not subject

to forfeiture. However, under Penal Code Article 36e1

concerning unlawfully obtained gains, courts can order

payment by the briber so that she is returned to the financial state present before the bribe took place.

The statute of limitations for bribery offenses is set

forth in Article 70 of the Penal Code. For bribery acts to

public officials breaching their official duties (Article

177) and for bribery of judges (Article 178), the statute of

limitations is 12 years; for bribery acts of officials acting

outside the scope of their duties (Article 177a), the statute

of limitations is 6 years. The statute of limitations period

commences on the date after the offense was committed,

and is terminated if the offense is prosecuted.

Books and Records Provisions

Accounting requirements under Dutch law are contained in Articles 361,362 et. seq. of Book 2 of the Civil

Code. Article 225 of the Penal Code addresses fraudulent

accounting practices. 

Money Laundering

There are currently no specific provisions establishing a money-laundering offense under Dutch law,

although the Dutch authorities have stated that efforts are

underway to establish such an offense. There are, however, Dutch provisions on stolen property in Articles 416

and 417 bis of the Penal Code. According to the Dutch

government, Articles 416 and 417 bis cover both the

bribe and the bribe proceeds for the act of bribing a foreign public official, and therefore fulfill the requirement

under Article 7 of the Convention. 

Extradition/Mutual Legal Assistance 

Section 51a of the Extradition Act as amended provides that the new offenses of bribery of foreign public

officials are extraditable offenses. However, the offenses

of bribing judges under Article 178 are not covered, so

extradition requests based on Article 178 must be made

pursuant to a treaty. Under Section 5(1)(a) of the

Extradition Act, extradition is allowed only where the

penalty of imprisonment is one year or more in both the

Netherlands and the requesting State. 

Section 4(1) of the Extradition Act forbids the extradition of Dutch nationals, except in cases where the

Minister of Justice is given a guarantee that the Dutch

national can serve any eventual term of imprisonment in

the Netherlands. Also, when such an extradition request

is refused, the Dutch prosecutors will address the case as

required by the Convention.

The Dutch government has said that where a treaty is

a condition for providing mutual legal assistance Article

9 of the Convention satisfies that condition. Mutual legal

assistance must be treaty based where the information

requested is from the tax department, or where it covers

a political question. Moreover, where the request concerns financial information, a treaty may be required. The

Netherlands is a party to the European Treaty Regarding

Mutual Legal Aid in Criminal Cases of 1959 and bilateral

mutual legal assistance treaties. Articles 552h and 552s of

the Code of Criminal Procedure apply to substantive

issues of mutual legal assistance. In the absence of a

treaty, "reasonable" requests for mutual legal assistance

will be honored pursuant to Penal Code Article 552K.2.

Article 551K of the Penal Code provides that every effort

will be made to comply with mutual legal requests based

upon treaties. Requests for mutual legal assistance will

not be honored where the object of the request is based

upon punishing the defendant due to nationality, race, or

religion, pursuant to Article 552L.1 or where honoring

the request would cause double jeopardy. Also, the

request may not be honored if the alleged offender is

undergoing trial in the Netherlands. 

The only mutual legal assistance situation where

prison terms are relevant is in the case of a request for

document seizure. Document seizure can only be provided where extradition would be available for the underlying offense. 

The Dutch government has stated that mutual legal

assistance should not be denied under Dutch law on bank

secrecy grounds. 

Complicity, Attempt, Conspiracy 

The Dutch Penal Code Articles 47.1(2), 48, and 49.1

address complicity, incitement, aiding and abetting and

authorization required under Convention Article 1.2.

Article 47.1(2) provides that a person who by gifts,

promises, abuse of authority, or violence provides the

means to commit an offense is liable as a principal.

Article 48 provides that those who intentionally assist in

the commission of an offense and those who provide the

means necessary for the commission of the offense are

liable as accessories. Article 49.1 provides for the penalties for accessories to the offense. 

Dutch law on attempt is found in Penal Code Articles

45.1, 45.2, and 46b. There are no conspiracy provisions

under Dutch law, although Article 140.1 of the Penal

Code provides that participation in an organization

56 Addressing the Challenges of International Bribery and Fair Competition, 2001
whose objective is to commit serious offenses is punishable by a maximum term of imprisonment of five years

or a category 4 fine. 

Norway

Norway signed the Convention on December 17,

1997, and deposited its instrument of ratification with the

OECD on December 18, 1998. The amendments to the

Penal Code were passed on October 27, 1998, and

entered into force on January 1, 1999.

Norway has implemented the Convention by

amending Section 128 of the Norwegian Penal Code to

extend existing provisions of law regarding the bribery

of domestic public officials to cover the bribery of foreign public officials and officials of public international

organizations.

Sources for this analysis include the Penal Code,

other Norwegian laws, and information provided by the

U.S. embassy in Oslo.

There are concerns that under Norwegian law, the

maximum penalty for bribery of a foreign public official

is imprisonment for only one year, and that the relevant

statute of limitations is only two years.

Basic Statement of the Offense

Section 128 of the Penal Code provides:

Any person who by threats or by granting or promising a favor seeks to induce a public servant illegally

to perform or omit to perform an official act, or who

is accessory thereto, shall be liable to fines or imprisonment for a term not exceeding one year. The term

public servant in the first paragraph also includes foreign public servants and servants of public international organizations. 

Section 128 does not refer to intent. However, Section

40 of the Penal Code states that the provisions of the Penal

Code apply only if a person acts intentionally. Section 128

also does not mention bribes paid through intermediaries,

nor does it expressly address payments that are made to

third parties for the benefit of a public official.

Jurisdictional Principles

Norway exercises territorial jurisdiction over acts of

bribery of foreign officials by any person so long as any

part of the crime is committed in Norway. In addition to

territorial jurisdiction, under Section 12.3(a) of the Penal

Code, Norway applies nationality jurisdiction over

crimes, including acts of bribery of foreign public officials, committed abroad by Norwegian nationals or persons domiciled in Norway.

Under Section 67 of the Penal Code, the statute of

limitations for bribery of foreign officials is only two

years. This is linked to the length of the maximum

penalty. If Norway increases the maximum term of

imprisonment, then the statute of limitations will automatically increase.

Coverage of Payor/Offeror

Section 128 specifically covers acts by "any person."

Coverage of Payee/Offeree

Although Norway's law does not define "foreign

public servant," we understand that Norway will interpret this term in accordance with the requirements of

the Convention.

Penalties

Under Section 128, the penalty for natural persons

for bribery of domestic or foreign public officials is a fine

or imprisonment for a term not exceeding one year. It is

not clear from the statute whether both a fine and imprisonment could be imposed. There is no stated limit on the

amount of the fine.

Under Section 48(a) of the Penal Code, enterprises

may be held criminally liable when "a penal provision is

contravened by a person who has acted on behalf" of the

enterprise. "Enterprise" is defined as "a company, society

or other association, one-man enterprise, foundation,

estate or public activity." There is no stated limit to such

fines; Section 48(b) lists factors that are to be considered

in determining the size of the fine. Under Section 48(a),

an enterprise may also "be deprived of the right to carry

on business or may be prohibited from carrying it on in

certain forms."

Confiscation of both the bribe itself and the proceeds

of bribery is authorized under Sections 34-37(d) of the

Penal Code.

Books and Records Provisions

Section 2.1 of the Norwegian Accounting Act requires that records be kept of all information that is "of

importance for the size and composition of property,

debts, income and expenditure." Section 8.5 provides that

violations of the Accounting Act are punishable by fines

or imprisonment ranging from three months to six years.

Under Section 5.1 of the Auditing Act, auditors are

required to ensure that accounts are correct, that the

company manages its capital in a prudent fashion, and

that there are satisfactory internal controls. Pursuant to

Section 9.3, violators of the Auditing Act are subject to

fines or imprisonment for up to one year.

Chapter 2: Review of National Implementing Legislation 57
Money Laundering

Section 317 of the Penal Code makes it a crime to

receive or obtain the proceeds of any criminal act under

Norwegian law, as well as to aid and abet the securing of

such proceeds for another person. As a result, bribery of

domestic or foreign officials is a predicate offense for the

purpose of application of money-laundering legislation.

Violations of Section 317 are punishable by fines or

imprisonment for a term not exceeding three years. For

"aggravated offenses," the penalty is imprisonment for a

term not to exceed six years.

Extradition/Mutual Legal Assistance

Under the extradition treaty between the United

States and Norway, bribery is an extraditable offense so

long as it is punishable in both states by a penalty of deprivation of liberty for a period of more than one year. This

dual criminality requirement is also found in Section 3.1

of the Extradition Act. As previously noted, currently

Section 128 of the Penal Code provides that imprisonment shall not exceed one year. However, Section 3.2 of

the Extradition Act provides that the "King-in-Council"

may enter into extradition agreements covering criminal

acts with penalties under Norwegian law of one year's

imprisonment or less. Section 2 of the Extradition Act

prohibits the extradition of Norwegian nationals.

The United States and Norway do not have a mutual

legal assistance treaty. Norway is a party to various

European conventions relating to mutual legal assistance.

It is our understanding that irrespective of other agreements, the OECD Convention provides a sufficient basis

for Norway to provide mutual legal assistance to other

Parties to that Convention.

Complicity, Attempt, Conspiracy

Section 128 of the Penal Code expressly applies to

those who are accessories. Section 128 does not directly

address attempt; rather the statute includes the phrase

"seeks to induce." The Penal Code contains no specific

provisions on conspiracy.

Poland

Poland signed the Convention on December 17,

1997, and deposited its instrument of ratification with the

OECD Secretariat on September 8, 2000. Poland implemented the OECD Convention by amendments to its

Penal Code, Code of Criminal Procedure, Act on

Combating Unfair Competition, Act on Public Orders,

and Banking Law. These amendments came into force on

February 4, 2001.

Our chief concern with Polandís implementing legislation is its failure to create criminal liability for legal

persons. Instead, Poland has adopted an administrative

law that is unduly restrictive and cumbersome and will

likely prove difficult to apply.

Basic Statement of the Offense

Article 229.5 of the Penal Code provides that a person ìwho provides or promises to provide a material or

personal benefit to a person performing a public function

in a foreign state or in an international organization, in

relation to the performance of that functionî shall be subject to the same penalties as a person who violates

Polandís domestic bribery law. Apart from generally

applicable defenses of mistake of law or fact, there are no

specific defenses provided for this offense. However, a

ìfacilitation paymentî would likely be deemed to be a

payment to obtain an ìact of less significance,î and

would be punished less severely than a bribe to influence

the award of business.

According to Polish authorities, intent is required to

commit the basic offense. Bribery payments through

intermediaries are not expressly covered by the Penal

Code, although Polish authorities state that the general

provisions would cover the offense. (See Penal Code

29, 18.) Also, the authorities state that ìpromises to

provideî includes both the act of promising as well as

offering, although legal authorities and judicial decisions state the contrary. 

Jurisdictional Principles

Polish law provides for jurisdiction over a crime

committed within Polish territory or where the consequence is intended to take place within Polish territory.

(See Penal Code 5.) Further, although generally applicable, Polish law provides for nationality jurisdiction that is

conditioned upon dual criminality. (See Penal Code 109,

111.1.) Polish law provides for unconditional extraterritorial nationality jurisdiction whenever required by an

international agreement. (See Penal Code 113.) Poland

interprets the Convention as requiring it to assert nationality jurisdiction over foreign bribery offenses without

the requirement of dual criminality. 

Coverage of Payor/Offeror

The Polish law applies to any ìperson,î regardless of

nationality. Polish law does not provide for criminal liability over legal persons. However, as part of its implementing legislation, Poland amended its unfair practices

law to provide for administrative liability for legal persons that violate Article 229.5. (See Act on Combating

58 Addressing the Challenges of International Bribery and Fair Competition, 2001
Unfair Competition 15a.) The responsibility for prosecuting legal persons is entrusted to the Office of

Protection of Competition and Consumers, which may

only act after receiving a referral from the public prosecutorís office. Pursuant to this law, liability requires proof

that a natural person violated the foreign bribery law

while acting on behalf of the company and within his

authority to represent the company, take decisions on its

behalf, or exercise control over it, or that a lower level

employee or agent did so with the consent of such a person. Prosecution and conviction of the culpable natural

person is a prerequisite to corporate liability unless such

a prosecution is not possible due to lack of jurisdiction or

other legal impediments.

Coverage of Payee/Offeree

Polandís bribery law does not define who is a ìperson performing a public function.î Other provisions of

Polish law, however, encompass a broad range of ìpublic

officials,î including elected officials, judges, state prosecutors, employees of state and local governments and

other ìstate institutions,î and members of the military.

(See Penal Code 115.13.) Further, Polish case law indicates that the term ìperson performing a public functionî

encompasses individuals who do not have the status of a

public official but nonetheless perform a public function,

e.g., one whose activities in the public sphere are regulated by law, as well as employees and officials of public

enterprises and agencies. Polish law also covers payments to a public official through an intermediary.

However, with respect to payments to third parties,

Polish law prohibits only the payment of a pecuniary

benefit but not the provision of a non-pecuniary benefit.

(See Penal Law 115.4.)

Penalties

Polish law provides for a complex structure of sanctions, in which the penalty is dependent upon the nature

of the public officialís act and the amount of the bribe.

Penalties range from 6 months to 12 years for aggravated

offenses and a fine or imprisonment of up to two years

where ìthe act is of less significance.î (See Penal Law

229(1)-(4).) The courts may impose a fine ranging from

100 to 720,000 Zloty (PLN)(approx. U.S.$25 to

$181,000) where the crime was committed, as in most

bribery cases, to obtain a material benefit and may also

order debarment from public contracting. Legal persons

are subject to a fine of up to 10 percent of their pre-tax

revenue for the year preceding the final action of the

Office for Protection of Competition and Consumers.

(See Unfair Competition Law 22d.)

Polish law also provides for the forfeiture of the proceeds of bribery, including any ìfinancial benefitî from

the offense. (See Penal Code 44-46.) In some circumstances forfeiture is only possible upon conviction. (See

Penal Code 44, 45.) When the specific proceeds have

been concealed or dissipated, then the court may order

the forfeiture of substitute assets. Further, where a natural person committed the offense on behalf of a legal person, the criminal court may ìobligateî the legal personó

separately and apart from administrative proceedings

under the Unfair Competition Lawóto return the financial benefit, in whole or in part, to the State Treasury. 

According to Polandís penal code, aggravated

bribery has a statute of limitation of ten years, while mitigated bribery has a five year limitation. (See Penal Code

101.2.) The period is initiated the day that the crime is

committed. Additionally, there is a ten-year time period

with respect to the statute of limitations for imposing a

fine on entrepreneurs for unfair competition. (See

Combating Unfair Competition article 22d.2.)

Books and Records Provisions

Polandís Act on Accountancy requires companies to

maintain accurate books and records that reflect each

economic operation engaged in by the company. Further,

all companies are required to prepare annual financial

statements and economic activity reports that reflect honestly the financial status and profitability of the entity.

The failure to maintain such accurate financial statements

is punishable by a fine ranging from 230 to 2,208,000

PLN (approx. U.S.$58 to $555,000) and up to two years

imprisonment. (See Accountancy Act 77.2.) In addition,

individuals who fail to keep books or records or ìdishonestlyî do so may be punished under the Fiscal Penal Law

by fine or by a period of up to two years of imprisonment.

(See Fiscal Penal Law 60-61.) 

Money Laundering

Bribery of foreign officials is a predicate offense for

the application of the Polandís money-laundering

offense, Penal Law 299. 

Extradition/Mutual Legal Assistance

The 1996 U.S.-Poland Extradition Treaty provides

for extradition for offenses that are punishable under the

laws of both parties by deprivation of liberty for a maximum period of more than one year. Poland does not,

however, extradite its nationals.

Poland entered into a mutual legal assistance treaty

with the United States in 1996. In addition, Poland will

provide assistance to other countries based on bilateral

Chapter 2: Review of National Implementing Legislation 59
treaties, multilateral treaties such as the European

Convention on Mutual Legal Assistance in Criminal

Matters of 1959, or its Code of Criminal Procedure.

Similarly, Poland will provide assistance in civil enforcement actions against legal persons pursuant to its unfair

competition law. 

Complicity, Attempt, Conspiracy

Article 18.1 of Polandís Penal Law provides that a

person who directs or orders another person to commit a

crime is responsible for the crime as a principal. Articles

18.2 and 18.3 establish liability for inducing or aiding

and abetting another to commit an offense. Article 19

states that these latter acts carry the same penalties as

those for committing the actual bribery, but the court may

apply an ìextraordinary mitigation of punishment.î

Attempts are punishable by the same penalty as the substantive offense unless the person voluntarily abandons

the prohibited act or prevents the consequences from taking place. ( See Penal Law 13.1, 15.1.) However, a person who extends a bribe offer that is not accepted would

be deemed to have committed the substantive offense

rather than an attempt. Poland does not have a separate

offense of conspiracy.

Slovak Republic

The Slovak Republic signed the Convention on

December 17, 1997, and deposited its instrument of ratification on September 24, 1999. The Slovak Republic

partially implemented the Convention by amendments to

its Criminal Code that entered into force on September 1,

1999. However, as noted below, there are significant gaps

in the Slovak Republic's legislation, which are expected

to be filled by a complete revision of the Criminal Code

that is currently underway.

The Slovak Republic's current legislation raises several concerns. First and foremost, the Slovak Republic

has not established any criminal or civil liability for corporations. Second, the Slovak Republic has retained the

defense of "effective regret," which, in the context of foreign corruption, creates a significant loophole.

Basic Statement of the Offense

The basic statement of the offense of bribing foreign

public officials is set forth in Section 161b(1) of the

Slovak Criminal Code:

Whoever offers, promises or gives a bribe or other

undue advantage, whether directly or through an

intermediary, to a foreign public official in order that

the official act or refrain from acting in relation to the

performance of official duties with the intention to

obtain or retain business or other improper advantage

in the conduct of international business, shall be punished...

Section 161c provides similar coverage for bribery

of members of foreign public assemblies, judges and

officials of international courts, and representatives and

employees of intergovernmental organizations of which

the Slovak Republic is a member or whose jurisdiction

it accepts.

Slovak law recognizes a defense of "effective

regret," which applies when the offender is solicited for a

bribe by an official and immediately reports the crime to

authorities. (See Cr. Code '163.) Although the purpose of

this defense is to assist law enforcement in detecting and

investigating domestic corruption by ensuring that corrupt officials are reported before they take any action in

response to the bribe, this defense creates a potential

loophole in cases of bribery of a foreign official where

the Slovak Republic is not able to intervene immediately

and prosecute the official before any benefit is conferred.

Jurisdictional Principles

The Slovak Republic asserts both territorial and

nationality jurisdiction over criminal offenses. Pursuant

to Section 17 of the Criminal Code, Slovak law applies to

offenses committed in whole or in part on Slovak territory as well as offenses committed abroad that were

intended to have an effect within Slovak territory.

Pursuant to Section 18 of the Criminal Code, Slovak law

also applies to extraterritorial acts by Slovak nationals, as

well as stateless persons and foreign nationals with permanent residency in the Slovak Republic. This nationality jurisdiction is qualified, however, by a requirement

that the offense be punishable in the country in which the

crime takes place. Finally, pursuant to Section 20 of the

Criminal Code, the Slovak Republic will apply its law to

the extraterritorial crimes of a non-national who is apprehended in the Slovak Republic but not extradited to the

foreign state in which the crime took place, again subject

to the condition of dual criminality.

Coverage of Payor/Offeror

Slovak law imposes criminal liability only upon natural persons. Although there are some limited civil and

administrative sanctions available, Slovak law does not

provide for effective and dissuasive sanctions against

legal persons for the offense of bribery of foreign public

officials. We understand that the Slovak Republic

intends to address this issue in its recodification of the

Criminal Code.

60 Addressing the Challenges of International Bribery and Fair Competition, 2001
Coverage of Payee/Offeree

Section 89, paragraph 10 of the Criminal Code

defines "foreign public official" as: 

any person holding a function in the legislative or

judicial body or in the public administration of a foreign country [or] in an enterprise in which a foreign

country exercises a decisive influence, or in an international organization established by states or other

subjects of public international law.

In addition, Section 161c applies specifically to

bribery of a:

member of a foreign public assembly, foreign parliamentary assembly, or a judge or official of an international court whose jurisdiction is accepted by the

Slovak Republic or to a representative or employee

of an intergovernmental organization or body of

which the Slovak Republic is a member or has a relationship following from a treaty, or to a person in a

similar function.

Penalties

The penalty for violation of the base offense under

Sections 161b and 161c is punishment of up to two

years and a monetary sanction. However, when the

offender acts as part of an organized group or derives an

"advantage of a large extent," defined as 22 million

Slovakia koruna (approx. U.S. $433,840), the range of

imprisonment is increased from one to five years. In

addition, an offender may be fined up to SKK 5 million

(approx. U.S. $98,600) and, pursuant to Sections 55 and

73 of the Criminal Code, any asset that was used to

commit the crime or was obtained as a result of the

crime may be forfeited from the offender or confiscated

from third parties.

Books and Records Provisions

Slovak law requires all companies, including stateowned enterprises, to maintain "accounts in a complete, open, and correct manner so that they fairly

report all events that are subject to accounting." (See

Law on Accounting No. 563/1991 Coll, '7(1).)

Companies that meet certain income requirements are

required to have audited financial statements and to

publish certain information concerning their financial

statements (id. at '20.) Auditors are required to report

evidence of money laundering but not other crimes.

(See Law No. 249/1994 Coll. to Prevent Laundering

Proceeds of Most Serious Crimes.) Violations of the

Accounting Law are punishable by fines of up to SKK

1 million (approx. U.S. $19,720). (See Law on

Accounting, '37.) In addition, the use of false or distorted data in connection with the keeping of

commercial records may also be punished under

Section 125 of the Criminal Code, which carries with it

sanctions that include bans on future business activities, forfeiture of property, and monetary sanctions and,

if the offender violated a specific duty resulting from

the law or his employment, imprisonment from one to

five years. Additionally, on October 5, 2000, the parliament approved a bill making additional persons

within a corporation accountable for reporting suspicious transactions, as well as progressively eliminating

anonymous bank accounts.

Money Laundering

Bribery of a foreign official is a predicate offense for

the Slovak Republic's money-laundering law, provided

that the amount laundered exceeds SKK 4 million

(approx. U.S. $79,000). (See Cr. Code '252.)

Extradition/Mutual Legal Assistance

The Slovak Republic recognizes the offense of

bribery of foreign officials as a basis for extradition,

subject to the requirements of dual criminality and

reciprocity. Although the Slovak Republic will not

extradite its nationals, the Slovak Prosecutor

General's Office will proceed against such nationals

at the request of a foreign country's authorities. (See

Cr. Code '21.)

The Slovak Republic can render mutual legal assistance under both treaty and nontreaty mechanisms, subject to a requirement of reciprocity. Dual criminality is

not required, and bank secrecy is not a bar in either

criminal or civil matters. (See Law on Banks No.

21/1992, '38.)

Complicity, Attempt, Conspiracy

Slovak law treats accomplices as principals. (See Cr.

Code ''9, 10.) A person is liable for the offense if he is

involved in preparing, attempting, or committing the

offense. A person may be deemed to have participated in

the offense by inciting, aiding, abetting, or authorizing

the commission of the offense. Slovak law also criminalizes attempt. (See Cr. Code '8(1).)

Slovak law provides for the separate prosecution of

conspiracy only for offenses that fall within the statutory

definition of a "very serious criminal offense," a definition that limits such offenses to offenses with a maximum

penalty of eight years' imprisonment or more. (See Cr.

Code ''7, 41(2), 62(1).) Accordingly, conspiracy to bribe

foreign political officials is not covered by the Slovak

conspiracy law.

Chapter 2: Review of National Implementing Legislation 61
Spain

Spain signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD on January 14, 2000. The Spanish implementing

legislation, found in the Organic Act 3/2000 of January

11, entered into force on February 2, 2000. In order to

implement the Convention, Spain added Article 445 bis

(the basic statement of the offense of bribery of foreign

public officials) to its Penal Code. Sources for this analysis include provisions from the Spanish Penal Code and

information from the U.S. embassy in Madrid.

The Spanish legislation divides the offense of bribery

of foreign public officials into several categories, making

it difficult to determine the respective penalties, statute of

limitations, etc., for each type of offense. We are concerned that the amended Spanish Penal Code does not

provide criminal responsibility for legal persons, and the

administrative and civil sanctions that it does provide

may not be effective, proportionate, and dissuasive as

required by the Convention. Finally, Spain did not add a

separate definition of "foreign public official" to its Penal

Code to implement the Convention. Therefore, it is our

understanding that Spanish judges will have to read the

existing definition for domestic officials in conjunction

with the definition found in the Convention itself.

Basic Statement of the Offense

Article 445 bis of the Spanish Penal Code provides:

Whoever, through presents, gifts, offers or promises,

bribes or attempts to bribe, directly or through intermediaries, authorities or public officials, whether

foreign or from international organizations, in the

exercise of their position for themselves or for a third

party, or complies with their demands, so that they

act or refrain from acting in relation to the performance of official duties, to obtain or retain a business

or other improper advantage in the conduct of international business, will be punished pursuant to the

penalties set forth in Article 423.

Article 445 bis covers the active bribery of foreign

public officials or officials of international organizations,

and criminalizes donations, presents, offers, or promises.

It is our understanding that "to offer or promise" covers

offering, promising, or giving.

Jurisdictional Principles

Spain exercises both territorial and nationality jurisdiction. Under Article 23 of the Judiciary Organic Act,

Spanish courts may assert jurisdiction over any acts committed wholly or partly in Spanish territory, and on board

Spanish ships or airplanes. Article 23.2 provides that

Spain will also have jurisdiction over acts committed

abroad by Spanish nationals or foreigners possessing

Spanish nationality after committing the act, but only if:

ï The act (bribery) is punishable under the law of the

place where it was committed.

ï Either the aggrieved party or Attorney General's

office has made a claim before the Spanish courts.

ï The accused has not been absolved, pardoned, or

punished abroad for the same act. (If he or she

already has served part of the sentence, then the

Spanish authorities will take this into consideration

in deciding what the Spanish sentence should be.)

Coverage of Payor/Offeror

As stated above, Article 445 bis applies to "whoever." The Spanish code covers actions by individuals,

even though actions may be carried out by a body corporate. The Spanish legal system does not establish criminal liability for legal persons, although it does provide

for some administrative and civil penalties.

Coverage of Payee/Offeree

Article 445 bis covers bribes to authorities or public

officials, whether foreign or from international organizations. There is no separate definition for foreign public

officials under the Spanish Penal Code. Instead, Spanish

courts will have to read Article 24 of the Spanish Penal

Code, which defines public authorities and officers, in

conjunction with the Convention's definition of foreign

public official in Article 1.4a for a full understanding of

the definition.

Penalties

Article 445 bis provides that the penalties for bribery

of a foreign public official will be those found under

Spanish Penal Code Article 423. Article 423 refers to

penalties for passive domestic bribery, found in Articles

419, 420, and 421 of the Spanish Penal Code. Article 419

provides for punishment by imprisonment from two to

six years and a fine for as much as three times the amount

of the bribe. Article 420 provides that for completed

unjust acts that are not crimes, the penalty is imprisonment from one to four years; for attempt for such acts, the

penalty is imprisonment from one to two years; and for

both, a fine for as much as three times the value of the

bribe. Article 421 provides that if a bribe is made so that

an official would refrain from acting within the scope of

his or her duties, the penalty is a fine for as much as three

times the value of the bribe.

62 Addressing the Challenges of International Bribery and Fair Competition, 2001
The Spanish Code does not provide for criminal liability for legal persons. However, the manager of the

legal person may be held liable for the acts of his or her

employees pursuant to Article 31 of the Spanish Penal

Code. Article 31 provides that:

Whoever acts as a "de facto" or "de jure" manager of

a legal person, or who acts on behalf of or as a legal

or voluntary representative of another, will have to

answer personally, even though he may not have the

conditions, qualities or relations that the corresponding crime or misdemeanor requires to be the active

subject of the same, if these circumstances exist in

the entity or person on whose behalf or under whose

representation he acts.

Article 20.a of the 13/1995 Act Concerning

Contracts with the Public Administration, as amended by

the 53/1999 act, provides that a legal person may be prohibited from Spanish government procurements for up to

eight years where the legal person's representatives have

been convicted of criminal offenses on its behalf.

Pursuant to certain articles under the Spanish

Criminal Procedural Act, including Articles 13, 299, 334-

338 and 589, Spanish judges may order the seizure of

donations, presents or gifts, assets, instruments, and proceeds related to the offense of bribery of foreign public

officials. Confiscation is available under Article 127 of

the Spanish Penal Code, which provides:

Penalties imposed for a culpable crime or misdemeanor will bring with them the loss of the effects

coming from it and the instruments used to commit

it, as well as the profits coming from the crime whatever the transformations they may have suffered.

These effects, instruments and profits will be seized,

except when they belong to a bona fide third party,

who is not responsible for the crime, and who has

legally acquired them. Effects and instruments seized

will be sold if their trade is legal, and their product

will be used to cover the civil responsibilities of the

sentenced person. If their trade is illegal, they will be

dealt with according to the regulations and if no regulations apply, they will be destroyed.

Article 127 provides that confiscation may only be

effected up to the amount needed to cover the offender's

"civil responsibilities" such as damages and compensation, the cost of the legal proceedings, and the fine, as set

forth in Article 125 and 126.

Pursuant to Spanish Penal Code Articles 131 and 33,

the length of the statute of limitations depends on the

severity of crime allegedly committed. Accordingly, the

statute of limitations for bribery of foreign public

officials subject to punishment under Article 419 is ten

years, and the statute of limitations for bribery punishable

under Article 420 is five years. Article 132 provides that

the statute of limitations period begins on the date the

offense was committed, or when the last act of a continuous series of offenses took place, or when the illegal

activity ceased.

Books and Records Provisions

Bookkeeping is regulated under the Spanish

Commercial Code and several other related laws.

Article 25.1 of the Spanish Commercial Code provides

that "all entrepreneurs must keep orderly accounts

suitable to the business conducted to provide for

chronological monitoring of all the respective operations, and draw up balance sheets and inventories on a

regular basis." Article 1 defines an entrepreneur as an

individual who owns a company or a corporate body.

Article 25.2 provides that the entrepreneur or duly

authorized person must maintain accounting books.

Article 29.1 states that all accounting book entries

must be in chronological order and clearly comprehensible. Article 30.1 requires that books and records

be kept for six years. Financial statements, including

balance and income sheets, must be submitted at yearend closing pursuant to Article 34.1. Article 34.2 provides that annual accounts must clearly and accurately

disclose the company's financial situation, assets, and

liabilities. Accounting principles are also covered

under the Royal Decree 1643/90, of December 20,

which enacted the General Plan of Accounting.

Auditing requirements are set forth inter alia in the

Law on Accounts Auditing of June 13, 1988, and the

Companies Act, adopted under Royal Legislative

Decree 1564/1989, of December 22.

Money Laundering

Article 301 of the Spanish Penal Code provides that

whoever acquires, converts, or transmits goods, or carries

out any other act to help someone else do so, including

hiding the illicit origin of the goods, knowing that they

originated from a serious crime, will be punished by

imprisonment from six months to six years and a fine up

to three times the value of the goods. A conviction for the

underlying offense is not required. It is our understanding

that bribery of foreign public officials will be considered

a "serious crime" and therefore a predicate offense for

money-laundering legislation when punishable under

Article 419 and 420 of the Spanish Penal Code. Article

301.4 provides that predicate offenses for Spanish

money-laundering legislation may occur in whole or in

part abroad.

Chapter 2: Review of National Implementing Legislation 63
Extradition/Mutual Legal Assistance

Spain generally does not require dual criminality

and will provide mutual legal assistance in penal matters. Spain has entered into multilateral agreements on

mutual legal assistance, such as the European

Agreement on Legal Assistance of April 20, 1959.

Spain is a party to multilateral treaties for mutual

legal assistance in criminal matters with Germany,

Belgium, Austria, Bulgaria, Denmark, France,

Hungary, Iceland, Luxembourg, the Netherlands,

Portugal, the Czech Republic, Sweden, Turkey,

Finland, Greece, Ireland, Italy, Norway, Poland, the

Slovak Republic, the United Kingdom, and

Switzerland. Spain has entered into bilateral treaties

for mutual legal assistance in criminal matters with

Argentina, Canada, the United States, Australia,

Mexico, and Chile.

Where dual criminality is required under one of

the treaties, it will be deemed to exist if the offense

upon which mutual legal assistance is based falls

under the scope of the Convention. If no treaty applies,

Spain will apply the principle of reciprocity. It already

does this with Brazil, Japan, New Zealand, and Korea.

Where no multilateral or bilateral treaty or the principle of reciprocity applies, we understand that Spain

will consider the Convention a sufficient legal basis

for mutual legal assistance. According to Article 8.1 of

the Constitutional Act, when it is considered to be in

the public interest to do so, Spain may not allow a

request for legal assistance to be rejected by invoking

bank secrecy.

Spain will also extradite persons for crimes committed under the Convention under its existing bilateral

and multilateral extradition treaties. Spain has multilateral extradition treaties with Austria, Belgium,

Bulgaria, the Czech Republic, Denmark, Finland,

France, Germany, Greece, Hungary, Iceland, Ireland,

Italy, Luxembourg, the Netherlands, Norway, Poland,

Portugal, the Slovak Republic, Sweden, Switzerland,

Turkey, and the United Kingdom. Spain has bilateral

extradition treaties with Argentina, Australia, Brazil,

Canada, Chile, Korea, Mexico, and the United States. It

is our understanding that Spain will consider the

Convention (in the absence of a bilateral or multilateral

treaty) a legal basis for extradition. However, it appears

that Spain will not extradite persons who bribed a foreign public official to refrain from doing an act which

should have been done within his or her official capacity (as the penalty for such an offense is a fine only).

Spain will extradite its own nationals for crimes pursuant to its multilateral and bilateral treaties, or in the

absence thereof, using the Convention as a basis. Article

3.3 of the Passive Extradition Act provides that where

extradition is refused due to nationality, the charge will

be reported to the Attorney General for appropriate

legal action.

Complicity, Attempt, Conspiracy

Article 27 of the Spanish Penal Code provides that

principal offenders and accomplices are responsible for

crimes and misdemeanors. Article 28 provides that principal offenders are those who carry out the offense,

jointly or by using another as an instrument, including

those who assist either directly or indirectly and those

who cooperate by performing an act necessary for the

perpetration of the crime. Article 29 defines accomplices

as those not covered by Article 28 who cooperate in the

execution of a crime through previous or simultaneous

actions. Pursuant to Article 63 of the Spanish Penal Code,

accomplices receive a lower penalty than the main perpetrator of the offense.

Sweden

Sweden signed the Convention on December 17,

1997, and deposited its instrument of ratification with the

OECD on June 8, 1999. Implementing legislation

amending the Penal Code was enacted on March 25,

1999, and entered into force on July 1, 1999. The following analysis is based on those amendments, related

Swedish laws, and reporting from the U.S. embassy in

Stockholm.

The maximum sentence for bribery of a foreign public official is imprisonment for only two years, raising

questions about whether the penalties are sufficiently

"effective, proportionate and dissuasive."

Basic Statement of the Offense

Under Chapter 17, Section 7 of the Penal Code, it is

unlawful to give, promise, or offer a bribe or other

improper reward, whether for one's self or any other

person, to, inter alia, a minister of a foreign state, a

member of a foreign legislative assembly, a person

exercising public authority in a foreign state, or a

member of the European Commission, the European

Parliament, or the European Court of Auditors, or judges

of the European Court of Justice for the exercise of official duties. This provision does not expressly address

bribes offered or made through intermediaries. The law is

not limited to bribes given in order to obtain or retain

business or other improper advantage in the conduct of

international business.

64 Addressing the Challenges of International Bribery and Fair Competition, 2001
Jurisdictional Principles

Chapter 2, Section 1 of the Penal Code establishes

jurisdiction over crimes committed in Swedish territory. Chapter 2, Section 2 provides that "a crime is

deemed to have been committed where the criminal

act was perpetrated and also where the crime was

completed or, in the case of an attempt, where the

intended crime would have been completed." Where a

crime is committed in Sweden by an alien on a foreign vessel or aircraft against "another alien or foreign interest," under Chapter 2, Section 5 authorization from the Swedish Government is required to

initiate a prosecution. Under Chapter 2, Section 2,

jurisdiction may be established over Swedish nationals and foreign nationals domiciled in Sweden for

crimes committed outside Sweden (1) if the act is

criminal under the law of the place where it was committed, or (2) if the act was committed outside the territory of any state, the punishment involves

deprivation of liberty. Prosecution of offenses committed outside Sweden generally requires authorization from the Swedish Government.

Under Chapter 35, Section 1 of the Penal Code, the

statute of limitations is five years for crimes punishable

by a maximum term of imprisonment of two years.

Coverage of Offeror/Payor

Chapter 17, Section 7 of the Penal Code refers to

acts by "a person." Under Swedish law, legal persons

are not subject to criminal liability per se. However,

under Chapter 36, Section 7 of the Penal Code, entrepreneurs are subject under certain circumstances to

"quasi-criminal" corporate fines for crimes committed

in the exercise of business activities. ("Entrepreneur" is

defined in the Part III of the Commentary to the Penal

Code as "any natural or legal person that professionally

runs a business of an economic nature.")

Coverage of Payee/Offeree

Chapter 17, Section 7 covers bribes offered or paid

to a minister of a foreign state, a foreign legislator, or a

member of a foreign directorate, administration, board,

committee or other such agency belonging to the state

or to a municipality, county council, association of local

authorities, parish, religious society, or social insurance

office. Also covered are members of the European

Union Commission, the European Parliament, and the

European Court of Auditors, as well as judges of the

European Court of Justice. The statute applies in addition to those who otherwise exercise public authority in

a foreign state.

Under Chapter 17, Section 17, cases of bribery

involving certain payees/offerees can be prosecuted

only if the offense is reported for prosecution by the

employer or principal of the payee/offeree or if prosecution is called for in the public interest. This category apparently includes bribes of foreign public officials other than ministers of foreign states, members

of foreign legislatures, and officials of certain EU

institutions.

Penalties

Chapter 17, Section 7 provides that bribery of foreign (or domestic) public officials is punishable by a fine

or imprisonment for a maximum of two years. (The maximum sentence in Sweden for the most severe crimes is

imprisonment for ten years.) Guidelines for determining

the appropriate penalty, including aggravating and mitigating circumstances, are listed in Chapter 29 of the

Penal Code. Fines, which are assessed in accordance with

Chapter 25 of the Penal Code, generally range from 900

to 150,000 Swedish crowns (approx. U.S. $84 -$14,000).

Under Chapter 36, Section 8, corporate fines for

"entrepeneurs" may range from 10,000 to 3 million

Swedish crowns (approx. U.S. $930 -$278,000). Chapter

36, Section 9 provides that in determining the amount of

the fine, "special consideration shall be given to the

nature and extent of the crime and to its relation to the

business activity." Chapter 36, Section 10 sets forth certain circumstances requiring the mitigation or nonimposition of corporate fines.

Chapter 36, Section 1 of the Penal Code authorizes

the forfeiture of the "proceeds of crime" unless forfeiture

would be "manifestly unreasonable." Under Chapter 36,

Section 4, the value of "financial advantages" derived

"as a result of a crime committed in the course of business" may be forfeited, unless such forfeiture would be

"unreasonable."

Books and Records Provisions

Accounting obligations are set forth in the

Bookkeeper Act, which applies generally to persons

carrying out business activities. The Companies Act

requires that companies have audits performed by

independent auditors, and contains rules on reporting

irregularities that are discovered during audits. For

private partnerships and individuals, audits are

required under the Accounting Act. Chapter 11,

Section 5 of the Penal Code provides that bookkeeping offenses carry penalties of up to two years imprisonment, with a possible increase up to four years in

"gross" cases.

Chapter 2: Review of National Implementing Legislation 65
Money Laundering

Money laundering is a crime under Chapter 9, Section

6a of the Penal Code. All crimes by which an individual

has enriched himself, or involving a criminal acquisition,

are predicate offenses for purposes of this statute.

Extradition/Mutual Legal Assistance

Extradition between the United States and Sweden

is governed by a 1961 bilateral treaty (entered into force

in 1963), supplemented by a convention that entered

into force in 1984. Under the treaty as amended,

offenses are extraditable if they are punishable by deprivation of liberty for a period of at least two years

under the laws of both parties. Sweden is a party to the

European Convention on Extradition and has bilateral

extradition treaties with a number of countries. Pursuant

to the Act on Extradition of Offenders, Sweden may

extradite in the absence of an extradition agreement.

Section 4 of that Act authorizes extradition for offenses

punishable in Sweden by imprisonment for more than

one year. Under Section 2, extradition of Swedish

nationals is prohibited except with respect to requests

from other Nordic countries.

Legal assistance to foreign states may be provided

under the Act with Certain Provisions Concerning

International Mutual Assistance in the Field of Criminal

Cases, the Act on the Use of Coercive Measures at the

Request of a Foreign State, and the Act on Taking

Evidence for a Foreign Court. Dual criminality is generally required. A mutual legal assistance agreement with

the foreign state is not necessary. The United States and

Sweden do not have a mutual legal assistance treaty.

Complicity, Attempt, Conspiracy

Chapter 23, Section 4 of the Penal Code establishes

liability for those who further a criminal act by "advice or

deed" or who induce another to commit the act. Under

Swedish law, attempt per se is not a punishable offense

with respect to bribery, although the offense of bribery

includes the act of offering a bribe. Likewise, conspiracy

is not a punishable offense with respect to bribery

.

Switzerland

Switzerland signed the Convention on December

17, 1997. The Swiss parliament adopted a law ratifying

and implementing the Convention on December 22,

1999. Because of a mandatory three-month period

(allowing for a possible referendum) which began on

January 11, 2000 (the date that the legislation was

published in the Official Gazette), the law did not enter

into force until May 1, 2000. Switzerland deposited its

instrument of ratification with the OECD on May 31,

2000. This analysis is based on the relevant Swiss Penal

Code provisions and information from the U.S.

Embassy in Bern.

Concerns with the Swiss implementing legislation

include a lack of legal responsibility for legal persons and

no monetary fines for natural persons. However, it is our

understanding that a new provision on the responsibility

of legal persons has been introduced within the framework of ongoing revisions of the general provisions of

the Penal Code.

Basic Statement of the Offense

The basic statement of the offense of bribery of a

foreign public official is contained in Title 19, Article

322 septies of the Swiss Penal Code (PC), which provides that:

Anyone who offers, promises, or grants an undue

advantage to a person acting for a foreign state or an

international organization, as a member of a judicial

or other authority, a civil servant, expert, translator,

or interpreter employed by an authority, or an arbitrator or military person, for that person or for

another, for him to act or not to act in his official

capacity, contrary to his duties, or using his discretionary powers, will be punished by five years of

imprisonment.

Jurisdictional Principles

Article 3, line 1 of the PC provides that it is applicable to anyone who commits a crime or offense in

Switzerland. It is our understanding that bribery of a

foreign public official which occurs in whole or in part in

Switzerland will fall within Swiss jurisdiction.

Switzerland exercises jurisdiction over extraterritorial

offenses committed by Swiss nationals in limited

circumstances. Under Article 6 of the PC: 

Swiss criminal law may apply to a Swiss person who

commits a crime or offense overseas that would be

extraditable under Swiss law, if the act is also a crime

in the foreign state where committed, and if the actor

resides in Switzerland or is extradited to the

Confederation because of his infraction. The foreign

law will be applicable if it is more favorable to the

guilty party.

Although non-Swiss persons within Swiss territory

currently cannot be prosecuted, it is our understanding

that within the framework of ongoing revisions to the

general parts of the PC, the application of Swiss law will

be enlarged to cover acts by such persons.

66 Addressing the Challenges of International Bribery and Fair Competition, 2001
Coverage of Payor/Offeror

The Swiss law currently covers natural persons. A

new provision on the responsibility of legal persons has

been introduced within the framework of ongoing revisions of the general provisions of the Penal Code.

Coverage of Payee/Offeree

It is our understanding that Article 322 septies covers

all foreign public officials as defined under the Convention, as it includes "persons acting for a foreign state

or an international organization or as a member of a judicial or other authority." We understand that all levels of

government, including those at the local and state levels,

are also covered. Members of the judiciary are specifically mentioned, as are civil servants, arbitrators, translators, and interpreters. It is also our understanding that by

its terms article 322 septies includes any person exercising a public function.

Penalties

The new Swiss legislation provides for a maximum

prison term of five years for natural persons, which is the

same penalty for bribery of domestic officials. There is no

minimum sentence. Article 63 of the PC provides that "the

court shall determine the sentence based upon the behavior of the offender in committing the offense, taking into

account his motives, prior history and personal situation."

There are no fines under Swiss law for bribery offenses

committed by natural persons. In addition to imprisonment, Swiss law also provides for other sanctions such as:

disqualification from holding a public office under Article

51 PC; disqualification from employment under Article

54 PC; deportation of foreigners under Article 55 PC; and

publication of the judgment under Article 61 PC.

Although currently legal entities cannot be punished

under Swiss jurisprudence, an agent of the legal person

can apparently be held criminally liable. Swiss law also

provides for civil and administrative sanctions which

may be indirectly imposed on Swiss companies as third

parties to an offense.

Article 59 of the Penal Code provides that a judge

may confiscate assets or their monetary equivalent resulting from an offense or which would have served as payment to an individual for committing a crime. Confiscation from legal entities is currently only possible when

they are considered as third parties to, and not the authors

of, the offense. However, it is our understanding that once

the new law concerning legal responsibility for legal persons is enacted, companies will also be subject to direct

confiscation under Article 59. Seizure is also provided for

in the civil codes and in the laws of the cantons.

Article 70 of the Penal Code provides that the statute

of limitations for a criminal act is ten years for violations

punishable by imprisonment of more than three years,

which is the case for bribery of a foreign public official.

According to Article 71, the statute of limitations will run

from the day when the accused committed the act; or, if

the actions were done in several stages, then from the day

of the last of the acts; or, if the actions lasted over a

longer period, then from the last day of their completion.

Article 72 provides that the statute of limitations will not

run during an ongoing investigation or following a judicial decision concerning the accused. In the case of

bribery of a foreign public official, the clock may be

stopped for a maximum of fifteen years.

Books and Records Provisions

The Swiss Debtors Code ("Obligations") contains

the Swiss provisions on books and records. Any company

that must register its trade name with the commercial register is required to maintain its books and records in

accordance with Swiss accounting rules. It is our understanding that Article 957 of the Swiss Debtors Code generally covers the acts prohibited by Article 8 of the

Convention.

Money Laundering

Article 305 bis of the Penal Code on money laundering provides that anyone who commits acts that may prevent the identification of the origin, discovery, or confiscation of sums which the person knows or should have

known resulted from a crime, will be punished by

imprisonment or a fine. Just as with bribery of domestic

officials, bribery of foreign public officials will be a predicate offense for the application of Swiss money-laundering legislation. Under line three of article 305 bis of the

PC, the money launderer is punishable when the predicate offense was committed outside of Switzerland and is

also punishable in the state where it was committed.

Extradition/Mutual Legal Assistance

Article 35 of the Federal Law on International

Mutual Legal Assistance in Criminal Matters (EIMP)

provides that extradition may be granted if: (1) the act is

punishable under both Swiss law and the requesting

country by imprisonment of a maximum of at least a year

or a more severe penalty, and (2) Switzerland does not

have jurisdiction.

Swiss law on mutual legal assistance is provided for

in the EIMP. Mutual legal assistance in foreign criminal

proceedings is provided for in Part III of the EIMP. More

specifically, discovery of procedural or official Swiss

Chapter 2: Review of National Implementing Legislation 67
documents is governed by Article 63 of the EIMP. In

order to obtain mutual legal assistance which entails

coercion under Article 63, Article 64 provides that the

requesting country must show that the elements of the

crime are also punishable under Swiss law. Articles 85-

93 of the EIMP contain provisions on the delegation of

criminal prosecutions, and Articles 94-108 of the EIMP

contain provisions on the delegation of enforcement of

criminal judgments. Dual criminality must exist for there

to be mutual legal assistance. This requirement will be

satisfied with the entry into force of Article 322 septies

for bribery of foreign public officials. Switzerland ratified the European Convention on Mutual Legal

Assistance on April 20, 1959.

It is our understanding that although Article 47 of the

Federal law on banking and accounts protects bank

secrecy, such protection is not absolute. Under Federal

and cantonal law, banks and their agents and employees

must testify and supply certain information to the authorities where the law provides that they have a duty to do

so, particularly in criminal proceedings.

Complicity, Attempt, Conspiracy

Complicity is covered in Articles 24 and 25 of the

Penal Code. Article 24 defines an "instigator" as a person

who intentionally persuades another to commit a crime.

That person is punished as the "main author" of the crime

if it is carried out. An "accomplice" is defined as someone who intentionally lends his assistance in furtherance

of a crime. Article 25 provides that courts may penalize

the accomplice to a lesser extent than the "main author,"

depending on the facts of the case. Although authorization is not specifically covered under Swiss law, it may

fall within the articles on complicity. Attempt for bribery

of a foreign public official is covered under Swiss Penal

Code Articles 21 and 23. Conspiracy does not exist under

Swiss law, although Swiss Penal Code article 260 ter

criminalizes participation in or support of a criminal

organization.

United Kingdom

The United Kingdom signed the Convention on

December 17, 1997. Parliament approved ratification on

November 25, 1998, and the U.K. deposited its instrument

of ratification with the OECD on December 14, 1998. The

U.K. Government has recognized the need for new legislation but has not taken steps to introduce and pass such

legislation in parliament. It is now almost two years since

the U.K. legislation was reviewed by the Bribery Working

Group, and we have yet to see final action. 

We based our analysis on the texts of relevant U.K.

laws, a March 1998 report of the U.K. Law Commission

that considered how the U.K. would meet the requirements of the Convention, information obtained from nongovernmental organizations, and reporting from the U.S.

embassy in London.

Our main concern with the existing legislation on

which the U.K. is basing implementation of the

Convention is that it is unclear whether it applies to the

bribery of foreign public officials. Under U.K. law,

bribery of public officials is primarily covered under the

common law and under three statutes: the Public Bodies

Corrupt Practices Act 1889, the Prevention of Corruption

Act 1906, and the Prevention of Corruption Act 1916,

referred to collectively as the Prevention of Corruption

Acts. Although these statutes address the bribery of

domestic public officials, they do not specifically address

the bribery of foreign public officials, and we are

unaware of any specific cases that interpret the law as

applying to foreign public officials. Another concern we

have is that although the U.K. has the constitutional

authority to assert nationality jurisdiction, it has thus far

declined to consider doing so with respect to offenses

covered by the Convention.

Basic Statement of the Offense

The U.K. is basing its implementation of the

Convention upon the Prevention of Corruption Acts and

the common law. Specifically, the U.K. considers that its

laws comply with Article 1 of the Convention under the

1906 act, as amended by the 1916 act. Section 1(1) of the

1906 act states that:

If any person corruptly gives or agrees to give or

offers any gift or consideration to any agent as an

inducement or reward for doing or forbearing to do,

or for having after the passing of this Act done or forborne to do, any act in relation to his principal's

affairs or business, or for showing or forbearing to

show favour or disfavour to any person in relation to

his principal's affairs or business he shall be guilty of

a misdemeanor.

Generally, the 1906 act criminalizes bribes corruptly

offered or given by any person to an agent to induce him

or her to act or not to act in relation to his or her principal's affairs or business. "Agent" is defined under the

Prevention of Corruption Acts as any person employed

by or acting for another, a person serving under the

Crown, or any local or public authority. It is our understanding that this definition covers domestic public

officials, but it is unclear whether foreign public officials

are covered.

68 Addressing the Challenges of International Bribery and Fair Competition, 2001
Jurisdictional Principles

With very few exceptions, the U.K. exercises only

territorial jurisdiction. It is our understanding that if any

part of the offense, either the offer or acceptance or

agreement to accept, takes place within the territory of

the U.K. jurisdiction, it can be prosecuted in the U.K. The

Criminal Justice Act of 1998 on Terrorism and

Conspiracy provides that any conspiracy in the U.K. to

commit crimes abroad is a criminal offense. The U.S.

embassy reports that the antiterrorism legislation would

apply to a conspiracy in the U.K. to bribe a foreign public official. The U.K. does not exercise nationality jurisdiction over bribery offenses, although it does exercise

nationality jurisdiction over other offenses such as murder, high treason against the crown, and piracy.

Coverage of Payor/Offeror

The Prevention of Corruption Acts and the common

law concern bribery by "any person" without distinction

as to nationality. The 1906 act, which covers bribes by

"any person," does not define "person." Schedule 1 of the

Interpretation Act of 1978 states that "person" includes a

body or person corporate or unincorporate. The U.K.

legal system provides criminal liability for legal persons.

Companies can be held criminally responsible, and fined,

for the acts of those who control the company, including

representatives of the company.

Coverage of Payee/Offeree

It is our understanding that under the U.K.'s

Prevention of Corruption Acts, a public official is identified based upon his or her position as an officer, member,

or servant of a "public body." The 1916 act extended the

definition of "public body" to include "local and public

authorities of all descriptions." As stated above, the 1906

act uses agency law to criminalize bribes that would

encourage an agent in the public or private sector to contravene the principal/agent relationship. Section 1(2) of

the 1906 act defines "agent" as "any person employed by

or acting for another" and Section 1(3) further provides

that "a person serving under the Crown or under any corporation or any borough, county or district council, or

any board of guardians, is an agent." The 1916 act provides that a person serving under a "public body" (i.e.,

under any local or public authority) is an agent within the

meaning of the 1906 act. Nothing in either the Prevention

of Corruption Acts or the common law indicates with certainty whether the U.K. law applies to foreign public officials. Furthermore, it is our understanding that the 1906

act does not cover members of parliament or the judiciary when they are acting in their official capacity.

Penalties

The penalty for corruption in a magistrate's court is a

maximum of six months imprisonment and/or a fine of

£5,000 (approx. U.S. $7,090). For convictions in crown

courts, the penalty is a maximum of seven years imprisonment and/or an unlimited fine. There are no express

provisions on corporate criminal liability, but we understand that companies can be fined for breaches of the

criminal law. There is no statute of limitations under U.K.

laws for prosecution of bribery cases. U.K. courts may

order confiscation of the bribe and the bribe proceeds

under the Criminal Justice Act of 1988, as amended by

the Proceeds of Crime Act of 1995. Following a conviction, Section 43 of the Powers of Criminal Courts Act of

1973 allows a court to order forfeiture from the offender

of lawfully seized property used to commit or facilitate

the offense. It is our understanding that under Section 4

of the Criminal Justice (International Cooperation) Act of

1990, the U.K. Secretary of State may decide whether to

grant a request for receiving assistance in obtaining evidence, such as bank records, inside the U.K.

Books and Records Provisions

The Companies Act of 1985, Sections 221, 222, and

722 prohibit generally the establishment of off-thebooks accounts, the making of off-the-books or inadequately identified transactions, the recording of nonexistent expenditures, the entry of liabilities with incorrect

identification of their object, and the use of false documents. These provisions govern private and public limited companies, companies limited by guarantee, and

unlimited companies. Section 223 provides that failure

to comply with Sections 221 and 222 is an offense

unless the company officer can show that he acted

honestly and the default was excusable under the circumstances. On summary conviction, the penalty for an

offense under Section 223 is a maximum term of six

months and/or a fine of £5,000 (approx. U.S. $7,090), on

conviction by indictment, the penalty is imprisonment

for a maximum term of two years and/or an unlimited

fine. For violation of Section 722, the penalty is an

unlimited fine, and if the violation persists, a daily fine.

Section 17 of the Theft Act of 1968 also contains an

offense for false or fraudulent accounting, the penalty

for which is imprisonment for a maximum of two years.

The Companies Act of 1985 also provides that certain

companies must have an external audit.

Money Laundering

It is our understanding that since offering and accepting bribes are indictable offenses, they automatically fall

Chapter 2: Review of National Implementing Legislation 69
within the purview of the Criminal Justice Act of 1988,

as amended by the Criminal Justice Act of 1993, which

sets forth the U.K. money-laundering legislation, both as

to the bribe and the bribe proceeds.

Extradition/Mutual Legal Assistance

The U.K. has extradition agreements with all of the

OECD member countries except Japan and Korea. The

U.K. is also a party to the Council of Europe Convention

on Extradition of 1957. In the absence of an extradition

agreement, the U.K. considers extradition requests on an

ad hoc basis under Section 15 of the Extradition Act of

1989. If, under the law of the country requesting extradition, the offense is punishable with a prison term of

twelve months or more, extradition may be available.

U.K. nationals may be extradited.

Under Part I of the Criminal Justice Act of 1990

(International Cooperation), the U.K. can provide mutual

legal assistance in criminal matters to other countries

without treaties or agreements. It is our understanding

that the U.K. will provide assistance to foreign authorities

to facilitate any criminal investigation or proceeding in

the requesting country, and that there is no threshold

penalty level for the provision of mutual legal assistance.

We further understand that dual criminality is not

required for mutual legal assistance other than in general

cases of search and seizure.

Complicity, Attempt, Conspiracy

Complicity, aiding and abetting, incitement, and

authorization are addressed in an 1861 act entitled

"Aiders and Abettors," which provides that:

Whosoever shall aid, abet, counsel, or procure the

commission of [any indictable offense], whether the

same be [an offense] at common law or by virtue of

any Act passed or to be passed, shall be liable to be

tried, indicted, and punished as a principal offender.

The Criminal Attempts Act of 1981, Section 1, provides that a person is guilty of an attempt when he or she

"does an act which is more than merely preparatory to the

commission of the offense." Under U.K. law, conspiracy

to commit a crime is also a crime, and subject to the same

penalties as the primary offense. The Criminal Law Act

of 1977, as amended by the Criminal Justice (Terrorism

and Conspiracy) Act of 1988, defines conspiracy as "an

agreement that a course of conduct shall be pursued

which will necessarily amount to or involve the commission of any offense or offenses by one or more of the parties to the agreement if the agreement is carried out in

accordance with their intentions."

70 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 3: Review of Enforcement Measures 71

Enforcement of National Implementing

Legislation

As of July 2001, the Convention has been in force for

almost two and a half years for twelve signatories,

including five G-7 countries, and for over a year for

almost two-thirds of the signatories. The U.S. government recognizes that achieving Convention goals will

take time. The Parties need to establish mechanisms for

identifying potential violations of their implementing

legislation, and for identifying and correcting weaknesses in their implementation programs. Moreover,

prosecutors need to gain experience in prosecuting these

new laws. Nevertheless, each signatory is entitled to

expect full compliance with commitments made by all

signatories to identify and eliminate bribery of foreign

public officials in international business transactions.

We are not aware of any prosecution by another Party

to the Convention for bribery payments to foreign public

officials at this time. However, as with investigations in

this country, the confidentiality of the procedures prior to

prosecution could be one factor. Nonetheless, we are disturbed by continuing reports of alleged bribery of foreign

public officials by firms based in countries where the

Convention is in force. While reports in the general media

are not always sufficiently credible to lead to an official

response, the recurring reporting of some allegations

should have initiated inquiries by some of the Parties to

the Convention. While not all inquiries will or should lead

to prosecutions, we expect that during Phase II reviews

governments will be prepared to explain sufficiently the

procedures and methods they have developed for identifying and pursuing cases of transnational bribery. 

In the United States, Foreign Corrupt Practices Act

(FCPA) investigations of the bribery of foreign public

officials and prosecutions are subject to the same rules

and principles that govern any other federal criminal or

civil investigation. To ensure that uniform and consistent

prosecutorial decisions are made in this particular area,

all criminal investigations under the FCPA are supervised

by the Criminal Division of the Department of Justice.

In the twenty-four years since the passage of the

FCPA, the Department of Justice has brought over thirty

criminal prosecutions and six civil injunctive actions.1 In

addition, the United States Securities and Exchange

Commission (SEC) has brought several civil enforcement actions against issuers for violations of the antibribery provisions and numerous actions for violations of

the books and records provisions of the FCPA. In the

period January 2000 to May 2001, the SEC settled two

cases involving allegations of violations of the books and

Review of Enforcement

Measures

3
records provisions of the FCPA involving illicit payments

to foreign officials. The defendants in each case agreed to

pay substantial civil penalties in excess of $250, 000.

The Department of Justice also has provided assistance to American businesses engaged in international

business transactions. Since 1980, the Department has

issued thirty-five opinions in response to requests from

American businesses stating whether it would take

enforcement action if the requestors proceeded with

actual proposed transactions.

U.S. Efforts to Promote Public

Awareness

For many years prior to the adoption of the

Convention, the U.S. government sought to educate the

business community and the general public about international bribery and the FCPA. As a result, U.S. companies engaged in international trade are generally aware of

the requirements of U.S. law. Since U.S. ratification of

the Convention and the passage of the IAFCA, the U.S.

government has increased efforts to raise public awareness of U.S. policy on bribery and initiatives to eliminate

bribery in the international marketplace.

President George W. Bush has made it clear that

increasing accountability and transparency in governance

around the world is an important foreign policy objective

for his Administration. In his May 28, 2001, statement on

corruption submitted to the Second Global Forum on

Fighting Corruption and Safeguarding Integrity (Second

Global Forum) at The Hague, the President also advised

participants that the United States is committed to bringing renewed energy to the global anticorruption agenda,

and to increasing the effectiveness of the American policies and programs that address this important issue.

Over the past year, Secretaries Norman Y. Mineta

and Donald L. Evans, and other senior Commerce officials, including Under Secretary Grant D. Aldonas, have

spoken out against international bribery and urged

support for the Convention. At the May 2001, OECD

Ministerial, Secretary Evans made it clear that the Bush

Administration is determined to fight bribery and

corruption in international business transactions. Recognizing that the OECD Antibribery Convention was a

significant step to eliminate these activities, the Secretary

in meetings with business and labor representatives committed the Commerce Department to continue to promote

efforts to have the Convention implemented and enforced

by every signatory.

The Secretaries of State and the Treasury, the U.S.

Attorney General and senior officials in their Departments

have been supportive as well. In May 2001, at the Council

of the Americas 31st Washington Conference, Secretary

of State Colin L. Powell urged participants to fight corruption, noting that corruption can destroy the strongest

democracy, if it is not dealt with effectively.

In a May 31, 2001, speech during the Second Global

Forum, U.S. Attorney General John Ashcroft urged countries not to wait for further anticorruption studies or additional international agreements before implementing

their existing treaty obligations. 

Officials of the Commerce, State, and Justice

Departments are also in regular contact with business

representatives to brief them on new developments on

antibribery issues and discuss problems they encounter

in their operations. As part of a vigorous outreach program, the three departments provide on their Internet

websites detailed information on the Convention, relevant U.S. laws, and the wide range of U.S. international

activities to combat bribery. In May 2001, the State

Department, in cooperation with the Commerce and

Justice departments, also re-published a brochure titled

Fighting Global Corruption: Business Risk

Management that contains information about the benefits of good governance and strong corporate antibribery

policies, the requirements of U.S. law and the

Convention, and various international initiatives underway to combat business bribery and official public corruption. The brochure is being made available to U.S.

and foreign companies and business associations. The

brochure can be found at www.state.gov. (See Chapter 8

for more information on U.S. government outreach initiatives on bribery and corruption.)

Efforts of Other Signatories

Rigorous enforcement of these new laws against

bribery of foreign public officials is one part of the

process in making the Convention a success. Another

very important element is raising public awareness of the

laws. This includes informing the relevant prosecutorial

authorities of the new tools they have to prosecute corruption, as well as counseling businesses and the general

public about the laws. 

For years, businesses from many of the signatory

countries were able to bribe foreign officials without fear

of penalty; they even benefitted from being able to

deduct such bribes from their taxes. This is no longer the

case for most of the signatories to the Convention. It is

the responsibility of each Party to the Convention to publicize that bribes are no longer an acceptable way to

obtain an international contract, and that serious criminal

72 Addressing the Challenges of International Bribery and Fair Competition, 2001
penalties can be imposed upon those who bribe or

attempt to bribe foreign public officials. 

However, efforts to raise public awareness about

business corruption and the importance of the

Convention vary widely among other signatory countries. The United States has the most extensive public

outreach program of any signatory to the Convention.

Several other countries are also taking useful initiatives

to raise public awareness on the need to fight corruption,

both at home and abroad, and they have expanded their

activities over the past year. Yet in many signatory countries, including important economies such as Belgium,

Italy, Japan, Spain, and the U.K., there continues to be

relatively little official activity to publicize the

Convention or encourage a public dialogue on unethical

business practices in international trade.

Governments have sought to draw attention to the

Convention and the problems of business corruption in a

variety of ways, for example, through speeches by highlevel officials, publications, and well-publicized anticorruption programs. Nongovernmental organizations are

also playing an important role in raising public awareness

of corruption and the need for effective remedies.

Transparency International, a nongovernmental organization committed to promoting good governance and

fighting bribery and corruption, has been particularly

active. Working with a network of representatives and

supporters in seventy-seven countries around the world,

Transparency International has sought to educate governments and societies on the importance of fighting corruption and enacting effective legislation. Other private

national organizations, some founded since the

Convention came into effect, also have emerged to help

promote public awareness of corruption and encourage

public discussion of possible solutions.

According to reports from U.S. embassies and public

sources of information, the following countries have

undertaken notable activities to raise public awareness on

corruption.

The government of Australia developed an extensive campaign to raise public awareness of its anticorruption policies. The Australian government has issued

press releases and placed advertisements in trade publications to explain the Convention and government efforts

to fight corruption. It has also organized seminars in

Australia and overseas to brief Australian companies. In

addition, the Australian federal police maintain a hotline

and e-mail site for reporting all crimes, including bribery,

known as ìcrimestoppers.î It can be reached in Australia

at 1-800-333-000, or over the internet at the e-mail

address www.crimestoppers@afp.gov.au.

In Bulgaria, fifteen nongovernmental organizations

have joined together to form Coalition 2000, an advocacy group devoted to fighting corruption. Coalition

2000 is developing an anticorruption action plan and

publicizing the Convention. It has its own Internet website with links to the OECD website and the text of the

Convention. The Bulgarian government has endorsed

and supported activities of Coalition 2000. Among

Southeast European countries participating in the

Stability Pact, Bulgaria has taken the lead in promoting

a new regional anticorruption initiative aimed at

promoting trade and investment and improving the overall business climate. The government has posted the

Stability Pact initiative on its Internet website and also

publicized it at government press conferences.

Canada's Justice Department has published a booklet on the Convention and Canada's antibribery laws titled

The Corruption of Foreign Officials Act that is available

to its business community. The Justice, Foreign Affairs,

and International Trade Ministries also prepare an annual

report to parliament on the implementation of the

Convention. Under the auspices of the federal Transnational Crime Working Group, a study was conducted,

titled Impact on Canada of Corrupt Foreign Officials in

Other Countries, which was completed in September

2000 and recently made public. The study recommends

that the government create a new body to coordinate federal anticorruption activities, in part because ì[t]here is a

general feeling in parts of the business community that

Canadian commerce suffers abroad because individual

businesses do not pay bribes on a routine basis as a means

of securing contracts.î The study further recommends that

ìresearch into the scope and impact of corruption on

Canadian commercial interests and on the issue of trade

distortions caused by corruption is required.î The government has also established a training program for its foreign service officers on its legislation implementing the

Convention and has held a number of regional seminars

this past year. In addition to these government initiatives,

several nongovernmental organizations, including

Transparency International, the Canadian Bar Association, and the Canadian Association of Manufacturers

and Exporters, are helping to raise public awareness by

holding seminars on the Convention and related issues.

The government of the Czech Republic has initiated

a highly publicized war on corruption as part of its anticrime efforts. As part of this campaign, the Ministry of

Interior publishes an annual report on progress in the

fight against corruption. The report is available on the

Ministryís website (www.mvcr.cz/korupce). The government also has organized a number of seminars over the

Chapter 3: Review of Enforcement Measures 73
past several years to brief national and municipal officials

on its anticorruption legislation. Czech officials also have

given numerous broadcast and print media interviews on

corruption and bribery issues. In addition to these government initiatives, the Transparency International

branch in the Czech Republic has conducted its own public information campaign, distributing posters and pamphlets that incorporate information on the Convention.

The government and Transparency International Czech

Republic will host the 10th International Anti-Corruption

Conference, October 7-11, 2001 in Prague. This joint

meeting of politicians, government officials, and representatives of the private sector, nongovernmental organizations and international development agencies is the

first of its kind in Central and Eastern Europe. 

In France, magistrates and the media are continuing

to foster public awareness with their investigations into

domestic and international corruption cases, including

alleged bribes by a major French oil company and more

recently a probe into the sale of arms to an African country

through a French company. The French chapter of Transparency International has also been particularly active.

Despite the wide coverage of corruption cases, the OECD

Convention has not been publicized by the government or

the media. However, a special government-related internet

site on corruption, which includes articles on the latest

scandals and links to special anticorruption sites, can be

found at www.adminet.com/obs/corruption.html. 

In Germany, public outrage over alleged improper

donations to the Christian Democratic Union political

party has raised the profile of anticorruption issues. The

German government and business associations have been

working together to publicize antibribery laws in seminars and newsletters. For example, the U.S. Consul

General of Dusseldorf and the North Rhine-Westphalia

State Minister of Justice held a conference on enforcement of the OECD Convention for prosecutors and

judges in June 2000, which was followed in March 2001

by a roundtable hosted by the Consul General at which

U.S. and German business representatives discussed

possible ways to reduce corrupt practices abroad.

Increasingly, German companies are starting to develop

internal procedures to promote compliance with the law.

To encourage companies in that direction, the German

government now requires all applicants for Hermes

export credit guarantees to declare that financed transactions have been and will remain free of corruption.

In Greece, the Ministry of Justice circulated a questionnaire to all prosecutors' offices during the summer

2000 to report all potential cases concerning the application of the Convention. 

Korea has seen a dramatic increase in national anticorruption activities over the past two years. President

Kim Dae Jung established a presidential anticorruption

commission to investigate corruption and make policy

recommendations. In February 2000, President Kim

personally inaugurated a new anticorruption website on

which Korean citizens may report complaints about

unfair treatment and public corruption. Under the

leadership of Mayor Goh Kun, the city of Seoul has

undertaken a high-profile anticorruption campaign featuring a new online procurement information system that

allows citizens to monitor the entire administrative

process of government procurement and civil applications. On December 10-13, 2000, the Korean government sponsored and organized jointly with the Asian

Development Bank the ìSeoul Conference on

Combating Corruption in the Asia-Pacific Region.î The

Seoul metropolitan government and the United Nations

will co-host an international symposium on anti-corruption on August 30-31, 2001 in Seoul. The event will

bring together world experts and high-ranking officials

from Asia and Africa and is aimed at expanding Seoul's

two-year-old On-line Procedures Enhancement system

(OPEN) that enables citizens to monitor online civil

applications for permits or approval in areas vulnerable

to corruption. In addition, the GOK will host the Third

Global Forum and the Eleventh International AntiCorruption Conference in 2003.

In Mexico, the Vicente Fox administration is sponsoring the establishment of a semi-autonomous National

Council on Corruption, which will be composed of individuals chosen for their credibility on corruption issues.

The Council will evaluate government anticorruption

efforts and will be the primary vehicle through which

civil society expresses its views on corruption. Eightyone organizations, including prominent business

organizations and NGOs, will support the public-private

partnership. 

The Netherlands hosted the Second Global Forum

on Fighting Corruption on May 28-31, 2001, in The

Hague. This important conference was attended by some

1,600 participants, including ministerial and senior-level

representation from 143 countries and 30 nongovernmental organizations (NGOs). The conference's Final

Declaration emphasized the "Guiding Principles" for

effective national anticorruption efforts that were developed by the United States at the First Global Forum. The

Final Declaration also stressed the importance of monitoring mechanisms for the implementation of instruments

such as the OECD, Council of Europe, and InterAmerican anticorruption conventions.

74 Addressing the Challenges of International Bribery and Fair Competition, 2001
The Slovak Republic, under the leadership of Prime

Minister Mikulas Dzurinda, has called for a national program to fight corruption. Many high-level officials,

including the Prime Minister and Interior Minister, have

publicly condemned official bribery and pledged to take

action against it. The government has organized several

inter-ministerial conferences to discuss the problem.

Sweden has been an active supporter of the

Convention. Senior officials have spoken out against

international corruption and publicly emphasized

Sweden's willingness to expand the scope of its international cooperation to combat the problem.

In addition to the United States, a number of the signatories to the Convention have posted their national

implementing legislation or draft legislation on their government websites or the OECD Anticorruption Division

website: Australia, Austria, Belgium, Canada, Denmark,

Finland, France, Germany, Greece, Hungary, Iceland,

Ireland, Japan, Korea, Luxembourg, the Netherlands,

New Zealand, Norway, Poland, Spain, Sweden, and

Switzerland. (See Appendix E for a list of websites.)

Monitoring Process for the Convention

Monitoring is crucial for promoting effective implementation and enforcement of the Convention by signatory countries. The OECD has developed a comprehensive monitoring process that provides for input from the

private sector and nongovernmental organizations. In

addition to the OECD process, the U.S. government has

its own intensive monitoring process, of which these

annual reports to the Congress are an integral part. The

United States has encouraged all signatories to participate fully in the OECD monitoring process and establish

their own internal mechanisms for ensuring followthrough on the Convention by governments and the private sector. We have also stressed the importance of signatories devoting sufficient resources to ensure that the

monitoring process is effective.

OECD Monitoring

The OECD has established a rigorous process to

monitor implementation and enforcement of the

Convention and of the 1997 Revised Recommendation of

the Council On Combating Bribery In International

Business Transactions (Revised Recommendation). Our

experience with Phase I of the process confirms that it is

a serious undertaking that encourages Parties to fulfill

their obligations under the Convention. Evaluating

implementation of the Convention is a challenging project given the diverse legal systems of signatory countries.

The OECD review process seeks to accommodate these

differences by focusing on the functional equivalence of

measures and the identification of the strengths and

weaknesses of the various approaches to implementation.

Over the past two years, the effectiveness of this

process has been demonstrated by the willingness of several Parties to correct weaknesses identified in their

implementation and enforcement regimes after their legislation has undergone the review process. 

Framework for Monitoring

Article 12 of the Convention instructs the signatories

to carry out a program of systematic followup to monitor

and promote the full implementation of the Convention

through the Working Group on Bribery. Guidance for the

Working Group on monitoring and followup is provided

in the Revised Recommendation.

The key elements of the monitoring program are as

follows:

ï A self-evaluation provided in response to the

Working Group questionnaire, assessing implementation of the Convention and Revised Recommendation, including whether the country disallows

tax deductibility of bribes to foreign public officials.

ï A peer group evaluation wherein Working Group

members have an opportunity to review the questionnaire and seek clarifications from representatives

of the signatory government.

ï A Working Group report providing an objective

assessment of the progress of the participating country in implementing the Convention and Revised

Recommendation.

ï Regular provision of information to the public on

the Working Group's programs and activities and on

implementation of the Convention and Revised

Recommendation.

Operation of the Working Group

To carry out its mandate, the Working Group agreed

at its July 1998 meeting to certain modalities concerning

the system of self-evaluation and peer group evaluation

provided for in the Convention and Revised

Recommendation. The Working Group recognized that a

rigorous process of multilateral surveillance of implementation was necessary to ensure the effectiveness of

these instruments. 

The monitoring process has been divided into two

stages, an implementation phase (Phase I) and an

enforcement phase (Phase II). The objective of Phase I is

to evaluate whether a Party's implementing legislation

meets the standards set by the Convention and the

Chapter 3: Review of Enforcement Measures 75
Revised Recommendation. The objective of Phase II is to

study and assess the structures and methods of enforcement put in place by countries to enforce the application

of those laws. The modalities are summarized below and

are also available on the OECD's public website at

http://www.oecd.org//daf/nocorruption/selfe.htm for

Phase I and http://www.oecd.org//daf/nocorruption/-

selfe2.htm for Phase II.

Phase I began in the latter part of 1998 with the

distribution of a questionnaire to signatories soliciting

information on how their respective laws and legal

systems implement the Convention and the Revised

Recommendation. The Working Group was instructed to

report periodically on the results of the Phase I review to

the OECD Ministers. The Phase I questionnaire contained a comprehensive list of questions on how Parties

intend to fulfill their obligations under the Convention

and the Revised Recommendation. Countries were

asked, among other things, to:

ï Provide the dates on which the Convention was

signed and ratified, necessary implementing legislation

was enacted, and the Convention entered into force.

ï Review how each of the substantive provisions of

the Convention, from the elements of the offense

(Article 1) to extradition (Article 10), is implemented.

ï Explain their laws and policies regarding the tax

deductibility of bribes, accounting requirements,

external audit and internal company controls, public

procurement, and international cooperation.

To encourage a candid and frank discussion among

the Working Group members in evaluating each other's

laws, the Working Group agreed that questionnaire

responses would be treated as confidential unless the

country examined decided to make public its own

responses. For example, the U.S. responses can be found

at www.usdoj.gov/criminal/fraud/fcpa/intagmt.htm. 

The questionnaire responses were circulated to participants in the Working Group and served as the primary

basis of analysis for each country examined. At the onset

of the monitoring process, each signatory provided the

OECD Secretariat with the names of two experts to serve

as lead examiners in monitoring implementation. The

secretariat thereafter developed a timetable for countries

to be examined. A team of lead examiners drawn from

two states conducted the examination with the assistance

of the secretariat.

Several weeks before each Working Group meeting

to examine implementing legislation, the OECD

Secretariat prepares a draft analysis and questions

based on the country's responses to the Phase I questionnaire. The designated lead examiners also prepare

advance written questions. The examined country then

provides written responses to the secretariat's analysis

and to the questions posed. At the beginning of each

segment of the monitoring meeting, the designated lead

examiners and the examined country have the opportunity to make general opening remarks. The lead examiners begin the questioning and discussion by raising

issues that were highlighted as problems during the

written exchange stage. Following discussion and consultation within the Working Group, the lead examiners

and the secretariat, in consultation with the examined

country, then prepare a summary report and a set of

recommendations that must be approved by the

Working Group. The summaries and recommendations

are confidential until the OECD Ministers have

approved publication of the reports.

From April 1999 through May 2000, the Working

Group completed the reviews of twenty-one signatory

countries and provided its first report to Ministers at the

June 26-27, 2000 Ministerial meeting. The report summarizing the results of the monitoring process and individual country assessments was subsequently derestricted and made available to the public on the OECD

website. Since then the implementing legislation of seven

additional Parties has been reviewed. The report on the

results of the monitoring process through the April 2001

Working Group meeting and individual assessments for

these seven additional Parties of the Working Group was

transmitted to Ministers at the May 15-17, 2001 OECD

Council meeting at Ministerial level and subsequently

derestricted and posted on the OECD website at

http://www.oecd.org//daf/nocorruption/instruments.htm.

The Commerce Department Trade Compliance Center

also maintains a link to these materials through its site at

http://www.mac.doc.gov/tcc. 

Phase II of the monitoring processóthe goal of

which is to study the structures in place to enforce the

laws and rules implementing the Convention and to assess

their application in practiceóbegins this year with the

review of Finland. Drafting of the Phase II questionnaire

and the procedures for conducting on-site visits was completed at the December 2000 Working Group meeting and

formally adopted by written procedure in January 2001. 

To carry out Phase II monitoring, the Working

Group will conduct an evaluation for each country that

has undergone a Phase I review, which will include an

on-site visit to the country in question in accordance

with established terms of reference or procedures. The

subsequent evaluation will be based on replies by the

country to the Phase II questionnaire, the results of the

on-site visits, deliberations within the Working Group,

76 Addressing the Challenges of International Bribery and Fair Competition, 2001
and discussions with the private sector. 

An objective of Phase II is to improve the capacity of

Parties to fight bribery in international business transactions through critical mutual evaluation of each Partyís

compliance with the requirements of the Convention and

Revised Recommendation. Shortcomings will be identified and effective approaches to implementation will be

shared with the other Group members.

In order to obtain an overall impression of the

functional equivalence of a Partyís efforts to implement

the Convention effectively, the questionnaire will

request information on how a Party has dealt with cases

under the Convention and examine the institutional

mechanisms that are in place to effectively enforce its

laws. In addition, the questionnaire will seek information on the promotional efforts the country has made to

educate the public on the Convention. Detailed responses will be required on a countryís application of its

implementing legislation as it relates to the elements of

the Convention and the Revised Recommendation. The

questionnaire is available on the OECD website at

http://www.oecd.org//daf/nocorruption/selfe2.htm. 

On-site examination teams will be comprised of one

to two members of the OECD Secretariat and up to three

experts from each of the two lead examining countries.

The on-site visits will take from two to three days. The

examiners will review questionnaire responses of the

country undergoing review and may request additional

information. The country undergoing review will be

expected to provide information concerning the application of its laws and practices implementing the

Convention. The on-site reviews will be an opportunity

to learn what remedial steps have been taken by those

countries found to have deficient implementation during

the Phase I review, and also to explore horizontal issues

which pertain to situations where Parties have implemented obligations of the Convention in widely divergent ways (e.g., varying statutes of limitations or sanctions). While the country undergoing review will not be

expected or required to disclose information otherwise

protected by the countryís laws and regulations, information on enforcement and prosecutions will greatly

improve the usefulness of on-site visits for the country

reviewed and the other members of the Working Group.

The secretariat and lead examiners will prepare a

preliminary draft report on the state of enforcement and

application of the Partyís laws and other measures implementing the Convention and Revised Recommendation

in the country undergoing evaluation. The country examined will then be given an opportunity to comment on the

draft report before its submission to the Working Group.

After discussion by the Working Group, during which the

country undergoing examination will be given an opportunity to make observations, a final report will be

adopted, which will include an evaluation by the

Working Group. Like Phase I reviews, the Phase II report

and evaluation may contain recommendations to the

country undergoing review on how to improve its domestic laws and practices to effectively combat bribery of

foreign public officials in international business transactions. As with Phase I evaluations, the reports will remain

confidential until transmitted to the OECD Ministers, at

which time they will be made available publicly.

As stated above, Finland volunteered to be the first

Convention Party to undergo review and evaluation,

expected before the end of 2001. It is envisioned that

examinations of all participants in the Working Group

will be completed by 2005 at the latest. The U.S. government believes that Phase II will be the true litmus test of

a Partyís commitment to the Convention and its eventual

effectiveness.

Although Working Group meetings and on-site visits

are confidential proceedings, the monitoring process will

provide opportunities for input by the private sector and

nongovernmental organizations. Throughout Phase I reviews, Transparency International has submitted its own

assessment of the implementing legislation of a number of

the examined countries and has provided input on various

other issues ranging from coverage of bribes to political

parties and candidates to recommendations for implementation of the accounting and auditing provisions of the

Convention and the Revised Recommendation. 

The Working Group also encourages private sector

input through other channels. It has had a number of

consultations concerning the Convention and related

issues with the Business and Industry Advisory

Committee and the Trade Union Advisory Committee

(two officially recognized OECD advisory bodies),

Transparency International, the International Chamber of

Commerce, and international bar groups. The United

States will continue to advocate broad public access to

information on implementation and enforcement of the

Convention. We will encourage countries undergoing

Phase II on-site examinations to provide opportunities for

the secretariat and lead examiners to meet with a broad

section of representatives of the private sector and civil

society to ascertain their views on implementation and

enforcement of the Convention and Revised

Recommendation. We will also continue to urge these

same groups to express their views and submit information to the Working Group when it meets to discuss and

finalize individual country reports and evaluations. 

Chapter 3: Review of Enforcement Measures 77
With Phase II monitoring about to get underway, the

Working Group is moving to a critical phase in making

the Convention an effective instrumentóensuring rigorous enforcement of the Conventionís obligations. The

United States takes monitoring of the Convention very

seriously and has committed significant resources to this

endeavor, at times through supplemental funding for the

Working Group. However, a lack of adequate funding for

the Working Group could jeopardize its ability to carry out

its mandate. The United States will continue to press for

adequate OECD funding for the Working Group, as it is

the responsibility of all OECD Members and Convention

signatories to support the work of the Group. 

Monitoring of the Convention By the

U.S. Government

Monitoring implementation and enforcement of the

Convention has been a priority for the U.S. government

since it entered into force. The Bush Administration is

equally committed to ensuring full compliance with

agreements with our trading partners. At the Commerce

Department, monitoring compliance with the Convention

óand international agreements generallyóremains a

high priority. Secretary Evans stated at his confirmation

hearing before the Senate Commerce Committee that

ìcompliance [with trade agreements such as the Convention] is going to be an absolute with me.î Other U.S.

agencies are also actively involved and making important

contributions. The Commerce, State, Justice, and

Treasury Departments and the staff of the SEC continue to

cooperate as an interagency team to monitor implementation and enforcement of the Convention. Each agency

brings its own expertise and has a valuable role to play.

Participation in the OECD Working Group on

Bribery is an important part of the U.S. government monitoring process. As part of that process, attorneys in the

Commerce Department's Office of General Counsel, the

State Department Legal Adviser's Office, and the Justice

Department's Criminal Division conduct an in-depth

review of each Party's implementing legislation.

Preparation of these annual reports to Congress is

also an integral part of the monitoring process within the

U.S. government. To fulfill the IAFCA's reporting

requirement, the Commerce Department organizes an

interagency task force early in the year to coordinate

work on the congressional report and review ongoing initiatives to monitor the Convention over the longer term.

U.S. embassies in signatory countries assist in this

process by obtaining information on host government

laws and assessing the progress in implementing the

Convention, taking into account the views of both government officials and private sector representatives.

These diplomatic reports provide valuable information

for our analysis.

The U.S. government has welcomed private sector

input in monitoring the Convention. As indicated in

Chapter 8, U.S. officials have had numerous contacts

with the business community and nongovernmental

organizations on the Convention. We highly value their

assessments and the expertise that they can bring to bear

on implementation issues in specific countries.

In the year ahead, the Department of Commerce, in

close collaboration with the State and Justice

Departments and other responsible agencies, plans to

continue its rigorous monitoring of the Convention.

However, because most signatories now have laws on the

books to implement the Convention, we will focus our

efforts to monitor enforcement of the Convention. The

following specific actions will be taken.

ï The Department of Commerce will continue to

ensure that there is an integrated approach to monitoring that includes legal assessments of implementing legislation, outreach to the private sector,

appropriate diplomatic initiatives, and timely

analysis of the latest developments on international

bribery and corruption.

ï The Trade Compliance Center, which has responsibility in the Commerce Department for monitoring

compliance with international trade agreements with

the United States, and the Office of General Counsel

will continue to give heightened attention to bribery

in international business transactions and implementation of the Convention. This effort will include

strong outreach to the U.S. business community and

nongovernmental organizations. The Trade Compliance Center will, in close cooperation with the

Office of General Counsel and interested U.S. agencies, also continue to oversee preparation of the

annual reports to Congress required by the IAFCA.

ï Enforcement of implementing legislation is critical

to ensuring that the Convention is effective in deterring the bribery of foreign public officials in international transactions. As almost all of the signatories

are now Parties to the Convention, we will enhance

our efforts to urge the relevant authorities in each

Party to address all credible allegations of bribery of

foreign public officials. When information is

received relating to acts of bribery that may fall

within the jurisdiction of other Parties to the

Convention, the information will be forwarded, as

appropriate, to national authorities for action.

78 Addressing the Challenges of International Bribery and Fair Competition, 2001
ï As Parties to the Convention, we must take preventive action when we learn bribes are being solicited in

an international tender. We will seek to engage other

Parties to take coordinated action when such allegations are made and approach such governments to let

them know our companies cannot pay bribes, will not

pay bribes, and that such tenders must be decided on

the commercial merits of the proposal. 

ï The Department of State will continue to use its

Advisory Committee on International Economic

Policy (ACIEP) to obtain private sector views concerning the Convention and to keep nongovernmental organizations abreast of progress in the fight

against corruption.

ï The Departments of Commerce and State, working

with other U.S. agencies, will continue to support

active diplomatic and public affairs efforts to promote the goals of the Convention. Senior officials

will continue to raise issues relating to the

Convention in their meetings with foreign government officials and speeches to U.S. and foreign audiences. U.S. diplomatic missions will be kept

informed of current developments on the Convention

so that they can effectively participate in the monitoring process and engage foreign governments in a

dialogue on key bribery-related issues.

The United States continues to have the most intensive monitoring program of the other signatory countries.

It is transparent and open to input from the private sector

and nongovernmental organizations. We expect other signatory countries to find it in their interest to ensure that

the other Parties to the Convention are complying with

the obligations of the Convention. As noted above, a

recent Canadian study recommends that the Canadian

government create a new body to coordinate federal anticorruption activities. We urge other Parties to bring

renewed energy to the global anticorruption agenda to

expose corrupt practicesóincluding bribery of foreign

public officialsóand bring the sunshine of public

scrutiny, where, ultimately, these practices cannot survive. Among other anticorruption initiatives, the U.S.

government will continue giving a high priority to monitoring implementation of the Convention so that U.S.

businesses can fully realize the benefits of this important

international agreement.

1Since 1977, the U.S. Department of Justice has prosecuted 15 additional cases involving bribery of foreign public

officials under federal criminal statutes other than the FCPA.

Chapter 3: Review of Enforcement Measures 79
80 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 81

The OECD Council made an important contribution

to the fight against bribery in 1996: it recommended that

member countries that had not yet disallowed the tax

deductibility of bribes to foreign public officials should

reexamine such treatment with the intention of denying

deductibility. This recommendation was reinforced in the

OECD Council's 1997 Revised Recommendation on

Combating Bribery in International Business Transactions, which laid the foundation for negotiation of the

OECD Antibribery Convention. All thirty-four signatories to the Convention have agreed to implement the

OECD Council's recommendation on denying the tax

deductibility of bribes. Substantial progress on implementing the Councilís recommendation has been made,

with only New Zealand reporting that it has not yet completed action necessary to disallow these deductions.

Nonetheless, deductibility in some countries that have

laws currently in effect may continue for one or more of

the reasons identified below.

As part of the monitoring process on the Convention

and the OECD Council's recommendation, the OECD

gathers information on signatories' laws implementing

the recommendation on tax deductibility. Information on

current and pending tax legislation regarding the tax

deductibility of bribes is available on the OECD website

(http:www.oecd.org/daf/nocorruption/instruments.htm).

Since 1998, the OECD has posted country-by-country

descriptions of the treatment of the tax deductibility of

bribes in signatory countries and a summary of pending

changes to their laws. The information on the website is

based entirely on reports that the signatories themselves

provide to the OECD Secretariat.

The U.S. Treasury Department has relied heavily on

these reports from signatories to prepare the report in

this chapter on OECD Convention signatoriesí laws prohibiting the tax deductibility of bribes. Treasury also

drew on information obtained from U.S. embassies on

this issue. This report provides the latest available information on signatories' tax laws that was available from

these sources.

We continue to seek more detailed information on

the signatories' tax and bribery laws so that we will have

a better understanding of how the disallowance of tax

deductibility will be applied in practice. As part of that

effort, the Treasury Department is working to ensure that

the Committee of Fiscal Affairs, the OECD body responsible for tax issues, takes a more active role in monitoring the progress of countries in implementing the OECD

Council's recommendation. Treasury is also providing

U.S. technical expertise to the Committee on Fiscal

Affairs in order to assist members in their monitoring

work. For example, with significant assistance from U.S.

Treasury officials, the Committee on Fiscal Affairs has

completed work on a Bribery Awareness Handbook. This

Laws Prohibiting Tax

Deduction of Bribes

4
handbook, which is designed to serve as a manual for tax

officials in signatory countries to assist them in detecting

bribes, includes a discussion of several specific factors

indicating when a bribe may have occurred and examines

techniques for uncovering bribes. 

We believe that our information will continue to

improve as the OECD's monitoring process creates and

makes available publicly a more complete record of each

signatory's legal, regulatory, and administrative framework for disallowing the tax deductibility of bribes.

Beginning in 2001, the Committee on Fiscal Affairs

will assist the Working Group on Bribery in designing

questions to ask Parties during Phase II reviews regarding their implementation of the Convention and the

Revised Recommendation. The Committee on Fiscal

Affairs will also participate in reviewing the responses to

these questions. In addition, the Committee on Fiscal

Affairs will continue to work with non-member countries

who have expressed an interest in the Convention and

related anticorruption issues and will review the capability of these countries to abide by the Convention and the

Councilís Recommendation. The Department of State

was instrumental in ensuring that adequate funds were

allocated to the Committee on Fiscal Affairs to support

this important monitoring work. 

Overall Status of Signatories' 

Laws Regarding the Tax 

Deductibility of Bribes

Signatories to the Convention have made substantial

progress on implementing the OECD Council's recommendation to disallow the tax deductibility of bribes, and

further progress is expected in the year ahead. Only one

OECD member country (New Zealand) has reported that

it has not yet completed action necessary to disallow

these deductions. Luxembourg adopted legislation denying deductibility for bribes in December 2000, and legislation previously adopted by the Swiss parliament

became effective on January 1, 2001. In addition, France

amended its legislation to remove "grandfather" provisions from its laws that might have allowed tax

deductibility to continue for contracts entered into before

the Convention entered into force for France.

Despite important positive steps taken by signatories

to the Convention, we remain concerned that tax

deductibility of bribery payments may still exist.

Deductibility in some signatory countries (e.g., Austria,

Belgium, Japan, the Netherlands) that have laws currently in effect may continue for one or more of the following reasons: the legal framework may disallow the

deductibility of only certain types of bribes or bribes by

companies above a certain size; the standard of proof for

denying a tax deduction (e.g., the requirement of a conviction for a criminal violation) may make effective

administration of such laws difficult; and the relevant

laws may not be specific enough to deny deductibility of

bribes effectively in all circumstances. The United States

has noted its concerns about the effectiveness of measures disallowing tax deductibility in diplomatic

exchanges with other Convention signatories and at

meetings of the OECD Working Group on Bribery and

the Committee on Fiscal Affairs.

The purpose of describing the limitations of country

laws concerning the tax deductibility of bribes is to

ensure continued focus on improving the situation.

Whatever the nature of the legal or administrative loophole that makes it possible to deduct a bribe to a foreign

public official, the practice must be addressed and eliminated. Further, it must be recognized that enactment of

rules denying deductibility is only the first step. Careful

monitoring is needed to ensure that the rules are

enforced.

Report on Country Laws Relating to the

Tax Deductibility of Bribes

Argentina

Tax deductibility of bribes paid to foreign public officials is not allowed.

Australia

On May 31, 2000, Australia enacted a new law

[(Taxation Laws Amendment (No. 2) 2000)] that amends

the Australian Income Tax Assessment Act of 1997 to

explicitly disallow the tax deductibility of losses or payments that are bribes to foreign public officials. The disallowance of such losses and payments became effective

on the date of enactment of the new law.

Austria

According to legislation passed in late October 1998,

bribes paid to foreign public officials are generally no

longer deductible for income tax purposes. The Tax

Amendment Law of 1998, published in Bundesgesetzblatt (Federal Law Gazette) number I/28 of

January 12, 1998, amended Section 20, paragraph 1, subparagraph 5 of the Income Tax Act. Under the new legislation, any cash or in-kind remuneration whose granting

or receipt is subject to criminal punishment is not

deductible from taxable income. The disallowance

82 Addressing the Challenges of International Bribery and Fair Competition, 2001
applies to bribes that are subject to criminal punishment

under the Criminal Code, which was amended in August

1998 to extend criminal liability to bribery of foreign

public officials. A deduction may be disallowed before a

finding of a criminal violation. However, if no criminal

violation is found in a court proceeding, the tax administration may have to allow the tax deduction.

Belgium

A bill aimed at criminalizing bribes to foreign public

officials and denying the deductibility of so-called

"secret commissions" paid in order to obtain or maintain

public contracts or administrative authorizations was

adopted by the Senate on July 9, 1998, and by the House

of Representatives on February 4, 1999. It was published

in the Official Journal on March 23, 1999, and entered

into force on April 3, 1999. However, the new law does

not disallow the deductibility of all bribes to foreign public officials.

Other types of commissions paid to foreign public

officials will remain deductible if such commissions do

not exceed reasonable limits, are necessary to compete

against foreign competition, and are recognized as a normal customary practice in the relevant country or business

sector (i.e., necessary, usual, and normal in the given sector). A tax equal to at least 20.6 percent of the commission

must be paid whether or not the commission is deductible.

The taxpayer must present a request and disclose to the

tax administration the amount and the purpose of the

commissions for the tax administration to decide whether

the commission is deductible. If all these conditions are

not fulfilled, the deductibility of the commissions is

denied, and they are added back to the taxable income of

the payer. If the payer is a company, it is liable to a special

tax equal to 309 percent of the amount of the bribe.

Brazil

Brazil does not allow tax deductibility of bribes to

foreign public officials.

Bulgaria

Bulgarian tax legislation does not allow tax

deductibility of bribes to foreign public officials. Bribery

is a criminal activity under Bulgaria's criminal code. The

deduction of bribes in the computation of domestic taxes

is not permitted. This disallowance, however, is not

explicit in Bulgaria's tax legislation.

Canada

Since 1991, the Income Tax Act has disallowed the

deduction as a business expense of payments in connection with a bribe in Canada of a foreign public official or

a conspiracy to do so. Specifically, effective for outlays

or expenses after July 13, 1990, Section 67.5 of the

Income Tax Act states that any payment that would be an

offense identified in several provisions of the criminal

code (including bribes and conspiracy to pay bribes to

foreign public officials, or persons or companies connected to foreign public officials) is not deductible for

income tax purposes. This provision also waives the normal statute of limitations so that an amount may be disallowed any time it is identified, no matter how long after

it has been paid.

Chile

Chilean tax legislation does not contain specific provisions or rules concerning bribes paid to foreign public

officials. Because bribe payments are not considered to

be compulsory payments, they are not deductible.

Czech Republic

Czech taxation law and regulations do not allow

deductions of bribes paid to foreign public officials.

Deductibility is not possible even in cases where the

bribe could be treated as a gift. Gifts are deductible only

in exceptional cases under two specific conditions. The

gift must be made for one of the following specific purposes: science, education, culture, fire protection, or

some other social, charitable, or humanitarian purposes.

The gift must not be above a strictly determined percentage of the tax basis. Only if both conditions are fulfilled

can the gift be treated as deductible for tax purposes.

Although Czech law has never permitted the deduction of

bribes, this prohibition was not previously explicit in legislation. The Czech Republic amended its laws on

December 12, 2000, however, to provide that payments

to foreign public officials are not deductible, even in

countries where such payments are tolerated or are not

considered an offense. 

Denmark

The Ministry of Taxation's Act No. 1097 of

December 29, 1997, which amended the Danish income

tax assessment act, repealed provisions allowing for tax

deductibility for bribes to public officials effective on

January 1, 1998.

Finland

Finland does not have statutory tax rules concerning bribes to foreign public officials. Similar payments

to domestic public officials are nondeductible on the

basis of case law and the practice of the tax administraChapter 4: Laws Prohibiting Tax Deduction of Bribes 83
tion. It is expected that this case law would also apply

to disallow deductions for bribes paid to foreign public

officials. On this basis, the tax administration in practice currently denies deductions for bribes to foreign

public officials.

France

The French parliament passed legislation denying

the tax deductibility of bribes to foreign public officials

on December 29, 1997, as part of the Corrective Finance

Bill for 1997. The law does not allow the deduction of

amounts paid or advantages granted directly or through

intermediaries to foreign public officials within the

meaning of Article 1.4 of the Convention. As originally

enacted, the legislation was "grandfathered," in that it

might have allowed tax deductibility to continue for contracts entered into before the Convention entered into

force for France.

Responding to criticism by other OECD members,

including the United States, the French parliament voted

in February 2000 to remove the grandfather provision in

the tax legislation. This amendment took effect on

September 29, 2000, the date the Convention entered into

force in France.

Germany

Under previous German tax law, deductions or bribes

were disallowed only if either the briber or the recipient

had been subject to criminal penalties or criminal

proceedings which were discontinued on the basis of a

discretionary decision by the prosecution. Legislation

adopted on March 24, 1999, eliminated these conditions

and denied the tax deductibility of bribes. The revised legislation is paragraph 4, Section 5, sentence 1, number 10

of the Einkommensteuergesetz in the Steuerentlastungsgesetz of March 24, 1999, as published in the

Bundesgesetzblatt dated March 31, 1999 (BGBl I S. 402).

Greece

Greece does not allow the deductibility of bribes to

foreign public officials.

Hungary

Hungary does not allow the deductibility of bribes to

foreign public officials, since only expenses covered in

the tax laws are deductible, and the tax laws do not

include a specific reference to bribes.

Iceland

Since June 1998, Iceland has not allowed the

deductibility of bribes to foreign as well as domestic public officials and officials of international organizations on

the basis of law (Section 52 of the Act No. 75/1981 on Tax

on Income and Capital as amended by Act No. 95/1998).

Ireland

It is the view of the Irish Revenue Commissioners,

on the basis of legal advice received, that bribes paid to

foreign public officials are not deductible in principle.

These authorities doubt that the conditions for deductibility could ever be met in practice in Ireland. Therefore,

Ireland has not considered it necessary to introduce

specific legislation to deny a deduction.

Italy

Italy does not allow deductions for bribes paid to

foreign public officials. Legislation enacted in 1994 made

gains from illicit sources taxable. The nondeductibility of

bribes was unaffected by this 1994 legislation.

Japan

Bribes to domestic public officials as well as foreign

public officials are treated as "entertainment expenses"

under Japanese law. Such expenses are generally not

deductible. However, small companies (with capital not

exceeding approximately $500,000) can get a deduction

for entertainment expenses. If a bribe is not recorded as

an entertainment expense, a penalty tax is imposed.

Korea

Korea does not allow deductions for bribes paid to

foreign public officials, since they are not considered to

be business-related expenses.

Luxembourg

The Luxembourg parliament adopted legislation on

December 14, 2000 that denies the deductibility of bribes.

Mexico

Mexico does not allow the deductibility of bribes to

foreign public officials, since they would not meet the general requirements to qualify as deductible expenses. Such

expenses must be strictly essential for the purposes of the

taxpayer's activities and must be formally documented.

Considering that bribes are treated as illicit activities, such

payments cannot meet the requirements set forth in the

Mexican Commerce Code. Therefore, the payment of a

bribe is not a business activity and is not a deductible item.

The Netherlands

The relevant tax laws do not expressly deny the tax

deductibility of bribes to foreign public officials. Instead,

84 Addressing the Challenges of International Bribery and Fair Competition, 2001
deductibility is denied only where there has been a conviction by a Dutch court or a settlement upon payment of

a fine, etc., with the Dutch prosecutor to avoid prosecution. On February 9, 2001, however, the Council of

Ministers approved the intention of the State Secretary of

Finance to prepare a bill amending the fiscal treatment of

bribes. If enacted, the new law will provide that tax officials can refuse the deduction of certain expenses where

they are reasonably convinced based on adequate indicators that the expenses consist of paid bribes, thus removing the requirement of a conviction. 

New Zealand

Legislation to prohibit the tax deductibility of

bribes is being drafted by the Inland Revenue

Department and is expected to be submitted to parliament later in 2001.

Norway

Under Section 44, paragraph 1, litra a, subparagraph 5 of the Norwegian Tax Law, which was passed

on December 10, 1996, Norway does not allow deductions for bribes paid to foreign private persons or public

officials.

Poland

Poland does not allow the deductibility of bribes

to foreign public officials. According to Polish law,

bribery is illegal and a punishable offense for both the

briber and the recipient of the bribe. The provisions of

the Corporate Tax Act and Personal Income Tax Act

are not applicable to illegal activities. Therefore,

gains and expenses connected with the offense of

bribery cannot be taken into account by the tax

authorities. As a result, the taxpayer is not allowed to

deduct them from his income expenses concerning

bribes to foreign officials.

Portugal

Portugal does not allow the deductibility of bribes to

foreign public officials. On December 20, 1997, parliament adopted new legislation, effective January 1, 1998,

to disallow any deduction relative to illegal payments,

such as bribes, to foreign public officials.

Slovak Republic

The Slovak Republic does not allow deductions of

bribes to foreign public officials or private persons.

Bribes are not considered businessñrelated expenses.

Recipients of bribes are liable to criminal prosecution

and expenses related to bribes are not tax deductible.

Spain

Spain does not allow deductions for bribes paid to

foreign public officials.

Sweden

A bill explicitly denying the deductibility of bribes

and other illicit payments to foreign public officials was

adopted by the Swedish parliament on March 25, 1999,

and became effective on July 1, 1999.

Switzerland

A draft bill on the denial of tax deductibility of bribes

to foreign public officials was submitted in spring 1998

to the cantons and other interested parties for consultation. (Matters of direct taxation are mostly within the

competence of the cantons.) The bill was then submitted

to the national parliament and passed in December 1999.

The bill entered into force and became effective as of

January 1, 2001. 

Turkey

Turkey does not allow deductions for bribes paid to

foreign public officials because there is no explicit rule

allowing the deductibility of bribes. Although a possible

loophole could allow Turkish corporations operating

overseas to deduct bribes in certain circumstances, legislation to implement the Convention, which is currently

being reviewed, would eliminate this loophole. 

United Kingdom

Under Section 577A of the Income and Corporations

Tax Act 1988, enacted under the U.K. Finance Act of

1993, the U.K. does not allow deductions for any bribe if

that bribe is a criminal offense, contrary to the Prevention

of Corruption Acts. The U.K. has declared that the

Prevention of Corruption Acts apply to bribes to foreign

public officials. If any part of the offense is committed in

the U.K.ófor example the offer, agreement to pay, the

soliciting, the acceptance, or the payment itselfósuch

action would violate the Prevention of Corruption Acts

and would then not qualify for tax relief. In addition,

U.K. tax laws also deny relief for all gifts and hospitality

given, whether or not for corrupt purposes.

United States

The United States does not allow deductions for

bribes paid to foreign government officials, if that bribe

is a criminal offense. Both before and after the United

States criminalized bribery of foreign government officials, the government denied tax deductions for such payments. Before the enactment of the Foreign Corrupt

Chapter 4: Laws Prohibiting Tax Deduction of Bribes 85
Practices Act of 1977, tax deductions were disallowed for

payments that were made to an official or employee of a

foreign government and that were either unlawful under

U.S. law, or would be unlawful if U.S. laws were applicable to such official or employee. The denial of the tax

deduction does not depend on a conviction in a criminal

bribery case.

After the United States criminalized bribery of foreign government officials, U.S. tax laws were changed to

disallow tax deductions for payments that are unlawful

under the Foreign Corrupt Practices Act of 1977 (FCPA).

With respect to U.S. tax provisions for Controlled

Foreign Corporations, any payment of a bribe by a foreign subsidiary is treated as taxable income to the U.S.

parent. Also, to the extent relevant for U.S. tax purposes,

bribes of foreign officials are not permitted to reduce a

foreign corporation's earnings and profits. U.S. denial of

tax deductibility or reduction of earnings and profits does

not depend on whether the person making the payment

has been convicted of a criminal offense. On tax

deductibility, the Treasury Department has the burden of

proving by clear and convincing evidence that a payment

is unlawful under the FCPA.

86 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 5: Adding New Signatories to the Convention 87

Adding New Signatories to the

Convention

5

As we approach complete ratification and implementation of the Convention, the Working Group and the

United States have concluded that a targeted expansion

of the Convention membership to appropriate states

could contribute to the elimination of bribery of foreign

public officials in international business transactions.

Therefore, the Working Group has developed criteria for

accession to the Convention, and since our last report,

one applicant country has been favorably considered for

accession. We expect a small number of additional qualified applicants to satisfy the conditions for Working

Group observership or full accession to the Convention

in the coming years.

Development of Accession Criteria

Article 13.2 of the Convention provides that it shall

be open to accession by nonsignatories that have become

full participants in the OECD Working Group on Bribery

or any successor to its functions. In addition, the OECD

Commentaries on the Convention encourages nonsignatories to participate in the Working Group provided that

they accept the 1997 OECD Revised Recommendation

of the Council on Combating Bribery in International

Business Transactions and the 1996 OECD Recommendation on the Tax Deductibility of Bribes to Foreign

Public Officials.

Faced with an increasing number of requests for

accession to the Convention, in mid-1999, the Working

Group began discussions on the subject and asked the

United States to lead an ad hoc group to define criteria

and entrance procedures for Working Group membership

and Convention accession. The ad hoc group produced

an approach intended to permit a selective increase in signatory states, while at the same time eliminating inappropriate motivations for membership or accession (e.g.,

use of accession as a prestige symbol or as a stepping

stone to participation in other OECD bodies). In presupposing a slow expansion and limiting it to carefully chosen states, the policy proposals also were intended to preserve the critically important ability of the Working

Group to continue its effective evaluation of Convention

implementation and, equally significant, to not hinder the

near-term start of enforcement reviews or broadening of

Working Group attention to new issues.

The proposals developed by the U.S.-led ad hoc

group were approved by the full Working Group in

October 1999, as set forth in an OECD Council resolution, the accession criteria require that signatory states be

"major players" and demonstrate that their inclusion

would be of "mutual benefit."

The Working Group also agreed that other factors

could be taken into account in order to provide some

flexibility. For example, it was agreed the term "major
player" should apply to states with regional importance

or significant market shares in particularly sensitive

export sectors where commercial bribery is prevalent.

Defense, aviation, construction, and telecommunications were cited as examples. In addition, "mutual benefit" not only was seen as encompassing a readiness to

participate constructively in Working Group deliberations, but also was regarded as dependent on the existing legal framework of a prospective signatory, including legislation for the criminalization of bribery.

Without such a legal infrastructure, serious doubts were

raised by many regarding the ability of a state to participate in the Working Group in a meaningful way.

A first step toward the enlargement of Convention

membership was taken at an outreach session on June 5,

2000. Fourteen states and Hong Kong1 responded to invitations issued by the OECD Secretariat. At this information session, accession criteria, Convention obligations,

and Working Group activities and admission procedures

were explained. All participants in the session were asked

to respond to a questionnaire seeking information on

entrance qualifications. Eight of these applicants

responded to this initial request for information and only

two, including Slovenia, responded to a later request for

additional information in a timely manner.

Application of Accession Criteria

In April 2001, the Working Group on Bribery completed its first examination of an applicant for accession

to the Bribery Convention. In response to instructions of

the OECD Council to provide a technical opinion on the

participation of Slovenia in the Working Group, the

group recommended that Slovenia be invited to become

a full participant in the Working Group. The group

judged that Slovenia is a "major player," as interpreted by

the Working Group, and that its accession would offer

necessary "mutual benefit."

Sloveniaís prospective accession will be historic. It

will mark the first time that Convention accession and

Working Group membership have been offered since

the Convention came into force in February 1999. In

part, this first expansion of membership is linked to the

fact that Convention ratification is now virtually complete. It is also key that implementation appears to be

well in hand and that Phase II examinations of

Convention enforcement are about to commence. Taken

as a whole, these factors appear to ensure that initiation

of expansion now will not detract from the overall goal

of maintaining a high-standard Convention with rigorous peer monitoring.

At the time of this writing, there are still nine countries in the applicant queue, and we anticipate that a

measured and targeted expansion may take place in the

next several years. However, in its report to Council on

Sloveniaís examination, the Working Group noted that

resource constraints will need to be factored into future

decisions on expansion. In addition, the Group cautioned

that the recommendation for immediate full participation

for Slovenia should not be regarded as a precedent for

future candidates. The Group determined that candidates

not as well qualified as Slovenia might expect to be

offered a period of observership in the Group, or be

advised to pursue association with other anticorruption

instruments. It is also apparent that the Group remains

concerned that applicant states not see accession as a

prestige symbol or as a stepping stone to participation in

other OECD bodies. Finally, the United States and other

members of the Working Group expressed special

interest in seeking more regional diversity among

prospective signatories.

Anticorruption Declaration

An earlier proposal for a possible anticorruption declaration has been shelved by the Working Group, at least

for the time being. The United States and some other delegations had viewed such an instrument as useful both

for current parties to the Convention and for nonsignatories interested in a closer association with anticorruption

activities. It was, among other things, viewed as a means

of letting nonsignatories demonstrate their commitment

to an improved investment climate and contribute to better governance standards worldwide. However, advances

concerning other anticorruption instruments over the past

year, including the decision to begin negotiation of a

comprehensive United Nations convention against corruption, have persuaded a majority of the Working Group

that an OECD anticorruption declaration for nonsignatories is unnecessary at this time. 

1Attendees were Benin, Colombia, Croatia, Estonia, Hong

Kong, Latvia, Lithuania, Malaysia, Peru, Romania, Russia,

Slovenia, South Africa, Thailand, and Venezuela.

88 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 6: Subsequent Efforts to Strengthen the Convention 89

During the negotiation of the Convention, the

United States sought to include coverage of bribes paid

to political parties, party officials, and candidates for

public office. These channels of bribery and corruption

are covered in the Foreign Corrupt Practices Act

(FCPA). They are not, however, specifically covered in

the Convention.

The United States has repeatedly expressed its

concern that failure to prohibit the bribery of political parties, party officials, and candidates for

office may create a loophole through which bribes

may be directed in the future. Although the FCPA

has prohibited the bribery of these persons and

organizations since 1977 and no such loophole in

U.S. law has existed, our experience shows that

firms do attempt to obtain or retain business with

bribes of this nature. The first case brought under

the FCPA involved a payment to a political party

and party officials. In the fight against corruption,

bribes to political parties, party officials, and candidates are no less pernicious than bribes to government officials.

The United States has been unable to convince

other Convention signatories to include this broader

coverage of bribery in the Convention. We did succeed,

however, in getting signatories to keep this issue and

certain other issues under study. Five issues were identified by the OECD Council in December 1997 for additional examination: 

ï Bribery acts in relation to foreign political parties.

ï Advantages promised or given to any person in

anticipation of that person becoming a foreign

public official.

ï Bribery of foreign public officials as a predicate

offense for money laundering legislation.

ï The role of foreign subsidiaries in bribery 

transactions.

ï The role of off-shore centers in bribery 

transactions.

Although not addressed by the OECD Council, private sector bribery and the question of whether the obligations of the Convention should be extended to include

an explicit prohibition of payments to immediate family

members of foreign public officials are also of interest to

the United States. 

The United States has continued to express its

concern at OECD meetings about the need to

broaden coverage of the Convention and also with

signatory governments on a bilateral basis; it has

insisted that this subject remain on the OECD

agenda for further discussion. Over the past year,

important work was undertaken within in the

Working Group and under the sponsorship of

Transparency International.

Subsequent Efforts to

Strengthen the Convention

6
Outstanding Issues Relating to the

Convention

Political Parties, Party Officials, and

Candidates

The United States has kept the issues of bribes to

foreign political parties, and candidates for office on the

OECD's agenda. Nevertheless, we continue to face

indifference and even strong resistance from many other

countries. This resistance seems to arise in part from the

fact that many countries implemented the Convention by

simply amending their domestic corruption laws, rather

than enacting a freestanding law such as the FCPA. These

countries, in particular, have resisted expanding their

definition of "public official" to include political parties,

party officials, and candidates, in large part due to the

potential effect upon domestic corruption law. In addition, other countries have argued that such bribes are

already covered by their national laws (e.g., through laws

on trading in influence). We are concerned, however, that

these laws may not be sufficiently comprehensive to

encompass all corrupt payments to political parties, party

officials, and candidates. Nevertheless, most countries

are of the view that Parties should implement the

Convention as it is and monitor implementation over

time to see whether changes are necessary.

In successive ministerial communiques, OECD

ministers have called for attention to these and the other

three issues. In addressing these issues, the 2001 communique indicated that ministers expected progress

towards final action on these issues: ìOECD will move

ahead on related issues: bribery acts in relation with foreign political parties; advantages promised or given to

any person in anticipation of that person becoming a foreign public official; bribery of foreign public officials as

a predicate offense for money laundering legislation; and

the role of foreign subsidiaries and of off-shore centers in

bribery transactions.î The U.S. delegation has been

adamant in having the issues of bribes to political parties

and candidates carefully analyzed by the Working Group.

It has regularly raised the question of further coverage of

the Convention at Working Group meetings and has

pressed to keep these issues on the agenda. 

In October 2000, at La Pietra, Italy, Transparency

International (TI) convened a meeting of twenty-eight

individuals from nine countries representing the private

sector, public institutions, and civil society to review issues

relating to corruption and political party financing. The

U.S. government participated in these discussions which

resulted in the ìLa Pietra Recommendationsîófive proposals intended to address concerns that payments to political parties may be used to circumvent the intentions of the

Convention. An informal Working Group consultation

with civil society, the private sector, and trade union representatives was held in February 2001 to consider possible

future actions on the bribery of political parties and candidates. Experts drawn from the group of participants at La

Pietra presented the recommendations and sought to illustrate potential problem areas due to the lack of coverage of

the Convention of certain bribe payments made to political

parties and their officials. While many Working Group

members are still reluctant to engage in further discussion

of revising the Convention, we were successful in making

progress on exploring these issues further. Recognizing

that such a gap in Convention coverage would be potentially a serious problem, the Working Group agreed to

issue a questionnaire to signatories to determine whether

their laws implementing the Convention applied to bribes

to political parties and candidates. The questionnaire also

will request information concerning bribery transactions

involving foreign subsidiaries. We expect the questionnaire to be circulated in late summer 2001. 

Bribery as a Predicate Offense to Money

Laundering

Article 7 of the Convention requires a Party that has

made bribery of its own public officials a predicate

offense for applying its money-laundering legislation do

so on the same terms for the bribery of a foreign public

official. Based on the reviews of implementing legislation, most signatory countries do make bribery of a

foreign public official a predicate offense for application

of money-laundering legislation in accordance with this

standard. However, some signatories have not made

bribery of their public officials a predicate offense; other

signatories have placed conditions on the application of

their money-laundering legislation. For these reasons,

there are differences among the signatories with respect

to money-laundering that could result in uneven application of the Convention. 

Many signatory countries, particularly the European

and civil law countries, define money laundering as the

concealment of proceeds from all "serious crimes," as

that term is defined under their domestic legislation.

Others, like the United States, define predicate crimes by

listing specific offenses or statutory provisions.

How jurisdictions define "serious" cannot be generalized. Definitions are based on individual domestic

legal systems in each country (i.e., punishable by imprisonment of a certain period of time or roughly the dis90 Addressing the Challenges of International Bribery and Fair Competition, 2001
tinction between a misdemeanor and a felony).

Therefore, if all parties to the Convention would

make bribery a serious offense for the purposes of domestic money-laundering legislation, there would seem to be

no need for going beyond the requirements in Article 7 of

the Convention. Language endorsing the application of

bribery as a predicate offense for money laundering was

included in the G-8 conclusions at Moscow in October

1999. Since then, a consensus appears to have emerged

within the OECD Working Group on Bribery on the need

to make bribery a predicate offense for money-laundering

legislation. In its June 2000 ministerial communique

OECD ministers recommended that bribery of foreign

public officials should be made a serious crime for triggering the application of money-laundering legislation.

The 2001 ministerial communique included money laundering among the issues that the OECD will address further in the coming year. The Working Group has committed to review any action the Financial Action Task Force

has taken regarding the recommendation of ministers and

will examine this issue during Phase II reviews.

In the United States, bribery of a foreign public official in violation of the FCPA is a predicate offense for

purposes of the Money Laundering Control Act. As part

of the National Money Laundering Strategy, on January

16, 2001, the U.S. government released new guidance to

help U.S. financial institutions avoid transactions that

might involve the proceeds of official corruption. The

Guidance on Enhanced Scrutiny for Transactions That

May Involve the Proceeds of Foreign Official Corruption

encourages U.S. financial institutions to scrutinize large

accounts and transactions that may involve the proceeds

of corruption by senior political figures, their immediate

families, or close associates. The guidance, issued by the

Department of the Treasury, the Board of Governors of

the Federal Reserve System, the Office of the

Comptroller of the Currency, the Federal Deposit

Insurance Corporation, the Office of Thrift Supervision,

and the Department of State, is available on the Internet

at www.treas.gov/press/releases/ps1123.htm. 

In addition, on October, 30, 2000, eleven major U.S.

and European private banks concluded their year-long

effort to establish money-laundering guidelines. The

Global Anti-Money Laundering Guidelines for Private

Banking, also known as the Wolfsberg AML Principles,

stipulate that the banks will conduct due diligence on the

source of wealth and the source of funds and will accept

only those clients reasonably established to be legitimate. The principles, which were discussed at the

December 2000 Working Group meeting, can be viewed

at www.wolfsbergprinciples.com. 

The Role of Foreign Subsidiaries

Foreign-incorporated subsidiaries are potentially

subject to the law of the country in which they are incorporated and the law of any country in which they operate,

or where they take any action in furtherance of an unlawful payment. For example, a foreign-incorporated subsidiary of an American companyójust like any foreign

companyóis subject to the FCPA if it takes any act in

furtherance of the offer, promise to pay, payment, or

authorization of an offer, promise, or payment of a bribe

within U.S. territory. We understand that other Parties to

the Convention may assert a similar form of territorial

jurisdiction, although there are some gaps in the coverage

of extraterritorial acts by corporations.

No OECD member country holds parent corporations absolutely liable for the criminal acts of their subsidiaries. In the United States and other Convention signatories that impose liability on legal persons, parent

corporations may be held liable only for the acts of their

subsidiaries that are authorized, directed, or controlled by

the parent corporation. The United States has, therefore,

urged further examination of strong standards of corporate governance, business ethics, and international

accounting standards to ensure that foreign subsidiaries

do not use their independence to obtain business through

means prohibited to their parents. 

The Working Group has recommended that countries

introduce the concept of corporate responsibility of the

parent in the supervision of the activities of the foreign

subsidiary. It also has considered whether civil sanctions

arising from the lack of effective supervision merited

further examination. The Group also recommended the

encouragement of corporate governance programs to

promote self-regulation. The Working Group will focus on

the nature and the extent of the issues concerning bribery

transactions that involve foreign subsidiaries when it

issues the questionnaire to signatories in late summer 2001

with regard to bribes to political parties and candidates.

The Role of Offshore Financial Centers

There appears to be broad agreement on the need to

encourage adherence to internationally accepted minimum standards regarding anti-money laundering, financial regulation, company law, and mutual legal assistance.

These issues are not exclusive to off-shore centers, nor are

they restricted to the fight against bribery and corruption.

The Working Group has dedicated several sessions to the

issue of off-shore centers to determine the significance of

the problem as it relates to bribery of foreign public

officials and whether there are aspects of the problem not

being dealt with in other forums that might benefit from

Chapter 6: Subsequent Efforts to Strengthen the Convention 91
Working Group activity. This work continues.

Compliance with international norms is a focal point

of the Financial Stability Forum's Working Group on Offshore Financial Centers, while the Financial Action Task

Force's Ad Hoc Group on Noncooperative Countries and

Territories is concentrating on the ability and willingness

of jurisdictions to cooperate in the fight against money

laundering. Other international forums with related initiatives are the United Nations, the European Union, the

Council of Europe, and the G-8. Bribery transactions frequently are carried out, at least in part, in jurisdictions that

do not participate in arrangements for international cooperation. This greatly complicates multilateral efforts to

promote transparency in financial and commercial transactions and greater mutual legal assistance.

Other Issues Relating to Coverage

Immediate Family Members of Foreign

Public Officials

In the Working Group on Bribery, the United States

has informally raised the question of whether the

Convention provides adequate coverage of bribes paid to

immediate family members of foreign public officials.

There is general agreement that bribes paid to a government official through a family memberóeither at the

direction of a corrupt foreign official, or where there is an

understanding that the family member will pay some or

all of the bribe to the official, or the official will otherwise

benefitóis adequately covered by the Convention. Since

all other bribes paid to officials through intermediaries are

already covered by the Convention, we thus far have

found no support for expanding the Convention to provide

for an explicit prohibition against bribes paid to immediate family members in the absence of the direction of a

government official or absent the intent or expectation of

the bribe payor that all or a part of the bribe will be paid

to a government official or the official will otherwise benefit. Indeed, we do not provide in our FCPA for coverage

of payments to family members apart from such cases.

In the ongoing process within the OECD of reviewing the implementation and enforcement of the

Convention by each party, we will continue to examine

whether bribes paid to immediate family members may

provide a loophole of sufficient magnitude so as to undermine effective implementation of the Convention.

Private Sector Corruption and Other Issues

The issue of private sector corruption, which goes

beyond the scope of the Convention, has been addressed

in sessions of the Working Group and in informal consultations with representatives of civil society, notably

the OECD Trade Union Advisory Committee (TUAC)

and the Business and Industry Advisory Committee

(BIAC). The Working Group concluded in July 1999 that

the question of bribery within the private sector was

largely undefined and unexplored, but nevertheless

important. A summary and conclusions of the

International Chamber of Commerce study on ìprivate to

private briberyî are expected to be presented to the

Working Group after its finalization in the autumn of

2001. The Working Group has not addressed the question

of corruption of officials for purposes other than to obtain

or retain business.

The Working Group sessions with TUAC and BIAC

also have dealt with the solicitation of bribes and the

protection of whistle blowers (either within government

or business) who come forward to expose corruption.

Solicitation remains on the agenda of the Working Group

as an area of concern and possible followup in the context

of the Revised Recommendation. Whistle blowing is a

subject that goes beyond the scope of bribery of foreign

public officials. Nonetheless, in considering further

actions to explore the potential problems of solicitation

and the role played by whistle blowing in the fight against

corruption, the Working Group agreed to include questions related to both subjects in the Phase II questionnaire. 

In addition, the Working Group has been examining

private sector corruption in terms of the relationship

between the Convention and related OECD anticorruption initiatives and the OECD Guidelines for

Multinational Enterprises (the Guidelines). The OECD

guidelines offer yet another vehicle for advancing the

goals of the Convention. Originally adopted in 1976, the

Guidelines are non-binding recommendations to enterprises, made by the thirty-three governments that adhere

to them. Their aim is to help Multinational Enterprises

(MNEs) operate in harmony with government policies

and with societal expectations. In the most recent revision adopted by the OECD ministers on June 27, 2000,

an entire chapter on combating bribery that tracks closely

the key provisions of the Convention was inserted into

the text of the Guidelines. While the Guidelines are voluntary and not legally enforceable, they draw attention to

the pernicious effects of bribery and corruption and

encourage companies to take a proactive approach to

addressing the problems. The follow-up mechanism

described in the Procedural Guidance details how the

National Contact Points for the guidelines can assist parties in resolving issues pertaining to the Guidelines.

92 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 7: Antibribery Programs and Transparency in International Organizations 93

Congress directed that the annual report should

include an assessment of antibribery programs and

transparency with respect to international organizations

covered by the International Anti-Bribery and Fair

Competition Act (IAFCA). More than eighty organizations fall within the IAFCA's purview. They include

large institutions, such as the World Bank, International

Monetary Fund (IMF) and the World Trade

Organization (WTO), as well as smaller and less wellknown technical bodies.

Under the Convention, any official or agent of a

public international organization is considered a "foreign public official" and thus must be covered by a legal

prohibition against bribery. Since the Foreign Corrupt

Practices Act (FCPA) did not include officials of public

international organizations in its definition of a "foreign

official," the United States needed to amend the FCPA

to bring it into conformity with the Convention. The

amendment, embodied in the IAFCA, applies this provision to all public international organizations designated by executive order under Section 1 of the International Organizations Immunities Act (22 U.S.C. 288)

(IOIA) and to any other international organization designated by the President by executive order for the purposes of the FCPA.

U.S. agencies have selected for review several major

international organizations that have the potential to

affect international bribery on a large scale through their

policies and activities. International financial institutions

óincluding the IMF, the World Bank, and regional

development banksóare particularly important because

they extend financial assistance or fund commercial contracts amounting to billions of dollars annually in countries around the world. These organizations need to take

particular care to guard against bribery and corruption in

the countries where they operate. We have included the

WTO, the United Nations, the Organization of American

States (OAS), the OECD and the Organization for

Security and Cooperation in Europe (OSCE) because of

their active work in promoting international antibribery

initiatives and encouraging national governments to

strengthen relevant domestic laws. In light of Section 5 of

the IAFCA, we have also examined the policies on

bribery and transparency of INTELSAT and the

International Telecommunications Union (ITU), since

their operations can have a significant impact on competition in satellite communication services.

As a matter of policy, the United States seeks to

encourage all public international organizations to maintain high standards of ethics, transparency, and good

business practices in their operations. The greater attention given to international bribery issues over the past

several years, in the OECD and other forums, has helped

to promote positive change in many organizations.

Antibribery Programs and

Transparency in International

Organizations

7
International Telecommunications

Organizations

INTELSAT

This section of the report addresses the request for

information on antibribery programs and transparency

with respect to the International Telecommunications

Satellite Organization (INTELSAT), an international

organization covered by the IAFCA. Chapter 10 of this

report assesses the advantages in terms of immunities,

market access, or otherwise of INTELSAT as an international satellite organization described in Section 5 of the

IAFCA. Overall, we find that INTELSAT has the requisite tools in place to address antibribery and transparency

issues in its policies and programs.

INTELSAT is on track to privatize by July 18, 2001,

following a November 2000 decision by representatives

of INTELSATís 144 member governments to proceed

with privatization. The privatized INTELSAT will consist of entirely new companies that will take over the

operating assets and liabilities of the existing intergovernmental entity. The companies created will be ordinary

national corporations. A small residual intergovernmental

organization, to be known by the new acronym ITSO,

will remain to monitor the companyís performance of its

public service obligations, but will not have the structure,

procurement responsibilities, or other commercial decisionmaking functions of the current organization that are

referenced below. What follows addresses the request for

information on antibribery programs and transparency

with respect to INTELSAT as it exists today, prior to privatization.

INTELSAT, as established under the terms of the

Agreement Relating to the International Telecommunications Satellite Organization ("INTELSAT

Agreement"), has four organs. These include: (1) the

Assembly of Parties, the principal organ of INTELSAT

composed of all INTELSAT Parties (national member

governments); (2) the Meeting of Signatories, composed

of all INTELSAT Signatories (the Parties or the telecommunications entities designated by each Party to invest in

and participate in the commercial operations of INTELSAT); (3) the Board of Governors, composed of governors representing certain Signatories and groups of

Signatories; and (4) INTELSAT management, the executive organ, responsible to the Board of Governors, which

handles the day-to-day business operations of the organization. The following discussion focuses on the Board of

Governors and INTELSAT management, as these two

organs have virtually all responsibility for the organization's business decisions and transactions (subject to ultimate oversight by the Parties).

Decisionmaking in the Board of Governors

Most of INTELSAT's major business decisions are

made within the INTELSAT Board of Governors. The

Board is composed typically of just over twenty-five

members representing Signatories that each hold more

than a specified investment share in the organization,

and groupings of a number of Signatories with smaller

investments. In addition, mechanisms exist within the

INTELSAT Agreement to promote representation of

each of the geographic regions defined by the

Plenipotentiary Conference of the International

Telecommunication Union (Montreux, 1965). As of

March 1, 2001, the Board was composed of twentyeight members representing approximately 115 INTELSAT Signatories.1

Decisions by the Board are generally made on the

basis of consensus, without calling for a vote. If votes

are necessary for a decision on a substantive question,

decisions are taken either by an affirmative vote cast by

at least four governors having two-thirds or more of the

total voting participation of all Signatories and groups

of Signatories represented on the Board, or by an affirmative vote by the total number of governors minus

three, without regard to the amount of their voting participation. Through the U.S. Signatory COMSAT, a

wholly owned subsidiary of Lockheed Martin, the

United States has the largest investment share in

INTELSAT (approximately 21.8 percent as of March 1,

2001) and the largest proportional voting share within

the Board of Governors.2

In addition, Article X(b)(i) of the INTELSAT

Agreement provides that the Board of Governors is

required to "give due and proper consideration to resolutions, recommendations, and views addressed to it

by the Assembly of Parties or the Meeting of

Signatories." This provides a mechanism for Parties

and Signatories to oversee or otherwise affect the

actions of the Board of Governors and, in doing so, the

operations of the organization. Moreover, the U.S.

government, and increasingly other governments, send

representatives to the Board meetings accredited as

part of their Signatory delegations. (The U.S. representatives are present as part of the U.S. government

"instructional process" created pursuant to statute and

executive order to provide policy guidance to COMSAT for its participation in the Board and other

INTELSAT meetings.)

94 Addressing the Challenges of International Bribery and Fair Competition, 2001
INTELSAT Provisions Regarding Procurement

Procurements of telecommunications satellites and

related assets are among INTELSAT's largest business

transactions. The Board of Governors is required to adopt

procurement procedures, regulations, and terms and conditions that are consistent with procurement provisions of

the INTELSAT Agreement and Operating Agreement. It

reviews and approves individual major procurements and

any substantive deviations from INTELSAT's standard

terms and conditions that are considered significant

departures from INTELSAT practice, or which raise significant policy issues. These procurement decisions, and

decisions on more minor procurement matters, are carried out by the INTELSAT management.

INTELSAT's Administrative Policies and

Procedures Manual (ADM), which sets forth the official

policy of the INTELSAT management, includes a particular section addressing inappropriate conduct in the

procurement process. It provides detailed guidelines for

procurement and the reporting of any concerns or inappropriate actions on the part of proposers or staff during

or prior to the procurement process. Moreover, the

INTELSAT Agreement establishes a process under

which, in general, the award of INTELSAT procurement contracts is based on responses to open international invitations to tender, and is made to bidders offering the best combination of quality, price, and the most

favorable delivery time.

In certain exceptional circumstances, the INTELSAT Board of Governors may decide to procure goods

and services other than on the basis of responses to

open international invitations to tender. Exceptions

can be made when the estimated value of the contract

does not exceed a certain dollar value determined by

the Meeting of Signatories, or when other particular

circumstances described in Article 16 of the

Operating Agreement exist. Article 16 provides for

exceptions where procurement is required urgently to

meet an emergency situation involving the operational viability of the INTELSAT space segment;

where the requirement is of a predominantly administrative nature best suited to local procurement; and

where there is only one source of supply to a specification that is necessary to meet the requirements of

INTELSAT or where the sources of supply are so

severely restricted in number that it would be neither

feasible nor in the best interest of INTELSAT to incur

the expenditure and time involved in open international tender, provided that where there is more than

one source they will all have the opportunity to bid on

an equal basis.

Policy on Conflicts of Interest and Contributions

INTELSAT established in 1991 (and revised in

1997) a Statement of INTELSAT on Conflicts of Interest

and Contributions. This policy, adopted by the Board of

Governors and set forth in the ADM, applies to all

INTELSAT staff, including staff on regular, fixed-term,

part-time, or temporary appointments. The policy specifically addresses the potential for improper payments,

contributions, or other transactions and establishes a policy under which INTELSAT employees may not pay or

offer any monies, gratuities, or favors from INTELSAT

funds to government officials or personnel of any country or to any individual or organization. Contributions

may not be made from INTELSAT funds to any political

party, politician, or candidate for public office of any

country. Gifts from INTELSAT funds of greater than a

nominal value must be properly documented and

approved by the Director General and CEO or an officer

designated by him. INTELSAT employees may not

accept cash gifts. The policy establishes clear guidelines

for handling nonmonetary gifts and the review of any

gifts of greater than nominal value by the General

Counsel and the Director General and CEO.

The policy on conflicts of interest includes an annual

reporting requirement for all employees, requiring all

employees to certify annually in writing that they have

reviewed the policy and that they have been and are complying with it in all respects. The Director General and

CEO then reports to the Board of Governors his determinations of any actual or potential conflict of interest

reported, based on written recommendations by the Vice

President and General Counsel. The Board generally

reviews these determinations at its December quarterly

meeting.

INTELSAT Audit Procedures 

There are three separate vehicles for auditing

INTELSAT activities and/or records on a regular basis.

First, INTELSAT has an Internal Audit Department to

serve an independent appraisal function. The audit

department has been given broad authority to review

INTELSAT activities and records and to provide analyses, recommendations, and other comments to the management following its review. Second, the INTELSAT

Board of Governors has established an Audit Committee

of the Board, to help ensure the soundness of

INTELSAT's financial administration, audit, and reporting process. Finally, Article 12 of the INTELSAT

Operating Agreement provides that "The accounts of

INTELSAT shall be audited annually by independent

auditors appointed by the Board of Governors. Any

Chapter 7: Antibribery Programs and Transparency in International Organizations 95
Signatory shall have the right of inspection of INTELSAT accounts." In recent years, Arthur Andersen LLP has

audited the balance sheet and related financial statements

of INTELSAT.3

International Telecommunication Union

The International Telecommunication Union (ITU)

facilitates cooperation among 189 member states on the

improvement and rational use of international telecommunications of all kinds. The ITU also encourages participation of other organizations and private sector entities in the activities of the ITU and promotes their

cooperation with Member States (i.e., governments that

are party to the constituting instruments of the ITU) to

advance ITU goals.

Structure of the ITU

Member States, private sector entities, and other

interested organizations participate in the work of each

ITU sector. The Telecommunication Standardization

Sector studies technical, operating, and tariff questions

and issues recommendations. Matters of particular concern to developing countries are studied by the

Development Sector. The Radiocommunication Sector

facilitates the rational, equitable, efficient and economical use of the radiofrequency spectrum.

Recommendations issued by the sectors are not binding

on members but are generally recognized by governments and private sector companies as global standards

for the design of equipment and services. 

The Secretary General and the Deputy Secretary

General are responsible for managing the ITU secretariat.

In addition to providing staff for meetings and conferences, the secretariat makes the necessary financial and

administrative arrangements and prepares materials used

for a report on the policies and strategic plan of the ITU.

The three sector directors administer specialized secretariats that support the work of study groups within their

respective sectors. The United States is generally satisfied with the services and support provided by the secretariat for ITU meetings.

Decision Making in the ITU

The ITU decision-making process is essentially

transparent and open to review and oversight by all

Member States. ITU members consider the views of governments, private sector entities, and other organizations

when undertaking activities that result in regulations,

procedures, and recommendations on the operation of

global telecommunication systems and services. ITU

staff serve as the secretariat for ITU meetings and have

responsibility for coordinating and publishing telecommunication service data needed for the operation of services. Important decisions, however, are made by the

Member States themselves, not by the secretariat.

Member States meet approximately every four years

at a Plenipotentiary Conference. At this conference,

members elect the Secretary General, the Deputy

Secretary General, and the Directors of the three sector

Bureau (the Radiocommunication Bureau, the

Telecommunication Standardization Bureau, and the

Development Bureau). The Plenipotentiary Conference

also elects the ITU Council, which meets annually, and

the Radio Regulations Board. The Council is responsible

for overseeing ITU activities between conferences.

World Radiocommunication Conferences are held every

two to three years to revise the Radio Regulations that

allocate global frequencies and establish procedures for

countries to assign frequencies and orbit positions. Radio

Regulations are adopted in a transparent manner by a

consensus of the Member States.

Tracking of Finances in the ITU 

The Central Audit Office of the Swiss Confederation

serves as the External Auditor of the ITU and these services are provided on a permanent basis in accordance

with an agreement with the host country. The External

Auditor conducts an annual audit of ITU accounts and

the accounts of ITU Telecom Exhibitions. The findings

are presented to the ITU Council in the form of a detailed

report identifying problems uncovered in the course of

the audit. In addition to inspecting and certifying the

accounts, the reports of the External Auditor usually

address issues related to the financial management practices and procedures of the General Secretariat.

The Joint Inspection Unit (JIU) and the Internal

Auditor, who is in charge of auditing, inspecting and

investigating, also provide external oversight. In particular, upon instructions from the Secretary General, the

Internal Auditor may conduct investigations of allegations or the presumption of fraud or mismanagement.

The Internal Auditor reports to the Secretary General,

who submits the report to the ITU Council for information.

The reports of the External and Internal Auditors are

available to any Member State upon request.

Policy on Conflict of Interest

The ITUís policy on conflict of interest is covered in

Regulation 1.6 on "Outside Activities and Interests" in

the Staff Regulations and Staff Rules. In particular,

Regulation 1.6b clearly states that: "Apart from their

96 Addressing the Challenges of International Bribery and Fair Competition, 2001
work in the service of the Union, staff members shall not

participate in any manner nor have any financial interest

whatsoever in any enterprise connected with telecommunications. They may not accept any gratuities or favors

from firms or private individuals concerned with

telecommunications or having commercial relations with

the Union." There is also Service Order 69 prohibiting

supplementary payments to staff by Member States or

any other entity.

International Financial Institutions

Recognizing the importance of corruption as an

international development and financial issue, the United

States has, in cooperation with other shareholder countries, aggressively pressed the international financial

institutions to implement anticorruption strategies, policies, and programs. As a result, major financial institutionsóthe International Monetary Fund, the World Bank,

and the African, Asian, Inter-American, and European

regional multilateral development banksóare playing a

growing role in promoting good governance, transparency, and accountability. While significant progress

has been achieved, more needs to be done. The following

sections, prepared by the Treasury Department, provide a

summary of steps taken by the six major international

financial institutions.

International Monetary Fund (IMF) 

The IMF works to improve transparency and governance at the IMF itself; it strongly encourages member countries to enhance transparency, strengthen governance, and take other steps to combat corruption. It is

important to note, however, that IMF financing is provided to central banks in the form of general support to

address balance of payments difficulties. Therefore, the

IMF does not fund specific projects in member countries such as improving transparency and anticorruption

programs. The IMF has, however, taken a number of

steps to ensure that the integrity of its resources is safeguarded; it actively promotes transparency, good governance, and sound government financial practices among

member countries.

Building on the emphasis on governance issues in

its 1996 Declaration on ìPartnership for Sustainable

Global Growth,î the IMF has demonstrated a strong

commitment to good governance. Guidelines published

in August 1997, inter alia, instruct IMF staff to place a

high priority on promoting good governance and outline

ways this might be accomplished. A February 2001,

IMF Executive Board discussion reaffirmed the importance of governance issues and the general appropriateness of the 1997 Guidance Note. Consistent with this

guidance, attention to good governance is reflected

throughout a range of IMF work, including (1) the promotion of codes and standards embodying good practices with respect to transparency and governance and

(2) the use of conditions in lending programs to further

objectives in specific countries.

The IMFís emphasis on transparency and free markets can reduce the opportunities for corruption and

enhance good governance throughout its membership.

The IMFís fiscal policy advice, embodied in surveillance

and country programs, promotes transparency and

stronger fiscal management systems. Measures to liberalize trade and exchange regimes and to eliminate price

controlsówhich are among the key components of IMF

reform programsócan also reduce opportunities for corruption. The establishment of central bank independence

can help end directed credits, preferential lending, and

inflationary quasi-fiscal financing. Private sector development can help build respect for contracts and transparent rules of the game.

Specific IMF efforts to encourage transparency and

good governance among member countries include the

promotion of codes and standards. Countries are encouraged by a number of international organizations to adopt

codes and standards on a wide range of good governance,

financial, and economic practices. The IMF focuses on

three areas: (1) provision of high quality and reliable data

through the Special Data Dissemination Standard

(SDDS) and the General Data Dissemination Standard

(GDDS); (2) openness in fiscal policy through its Code

of Good Practices on Fiscal Transparency; and (3) openness in monetary and financial policy through its Code of

Good Practices on Transparency in Monetary and

Financial Policies.

In some cases, implementation of codes and standards by countries is aided by IMF technical assistance in

the design and implementation of fiscal and monetary

policies; the development of key domestic institutions

such as central banks, treasuries, and statistical services;

the development of economic and financial legislation;

and the implementation of other structural reform measures. IMF technical assistance is funded both by the IMF

itself and through contributions from individual IMF

member countries.

To further enhance transparency, the IMF now

allows and encourages countries to make public staff

reports on regular surveillance ("Article IV") reports

covering exchange rate, balance-of-payment, and overall macroeconomic developments. As of the end of

Chapter 7: Antibribery Programs and Transparency in International Organizations 97
April 2001, 86 such reports had been released. In addition, Public Information Notices (PINs) on IMF surveillance of member country economies, summarizing

both staff assessments and Executive Board discussions, were published for over three-quarters of the

Fund membership in 2000. 

Applying Principles to Country Cases

Consistent with the IMFís increased emphasis on

promoting good governance, measures to strengthen

governance and eliminate corruption are now regularly

included as conditions for IMF programs. Recent examples include the following:

ï Uganda has taken several steps on governance

consistent with its Poverty Reduction and Growth

Facility (PRGF) program with the IMF. These

include increases in the budget for anticorruption,

enabling the Office of the Inspector General of

Government to increase its professional staff from

40 to 100 and to establish regional offices to investigate allegations of corruption at the district level.

Going forward under its Fund program, Uganda is

reforming its procurement policy, working to enact

legislation requiring public officials to disclose

their assets, and making further improvements in

key areas.

ï Kenya's previous IMF program was suspended

in August 1997, primarily over governance/transparency issues. Prior to the establishment of a

new program in July 2000, anticorruption efforts

were the subject of significant discussion. Several

steps toward implementing anticorruption

measures were taken before the program was

approved: the letter of intent (LOI) for the

program includes strengthened governance measures. Subsequent failure on the part of the

government to achieve the governance-related

conditions of its IMF program has resulted in the

cessation of further disbursements until the conditions are met.

ï In Albaniaís January 2000 PRGF review, civil

service reform, improved budgetary management,

and customs reforms were discussed as areas crucial to a functioning market economy and to

Albaniaís medium-term growth prospects. In its

May 2000 LOI, the Albanian government committed to a number of steps (all were made prior

actions, i.e., required conditions for commencing or

continuing IMF financing) to strengthen governance and reduce opportunities for corruption,

especially in the customs area.

World Bank 

The World Bank has taken a high profile among

development banks in elevating the corruption issue. At

the 1996 annual meetings of the World Bank and the

IMF, World Bank President James Wolfensohn highlighted the "cancer of corruption" and pledged to address

corruption on all fronts. In September 1997, the

Executive Board approved a multifaceted plan to:

ï Prevent fraud and corruption within Bank-financed

projects.

ï Help countries that request Bank assistance to

reduce corruption.

ï Take corruption more explicitly into account in

country lending strategies and project design.

ï Increase the Bank's cooperative support of efforts

by other international organizations.

Since that time, the Bank has pressed forward on a

number of fronts, including a detailed anticorruption

action plan to build on previous efforts.

The action plan calls for:

ï Assisting countries that request Bank support.

ï Mainstreaming anticorruption in the Bank's operations.

ï Increasing knowledge and awareness about corruption.

ï Controlling corruption in Bank-financed projects.

ï Making in-house improvements.

ï Supporting international efforts and partnerships.

The International Development Association replenishment (IDA-12) agreement strengthens the linkage

between new lending and borrower performance, including explicit consideration of good governance and efforts

to combat corruption.

The World Bank participates with the regional development banks in the Multilateral Development Bank

Coordinating Committee on Governance, Corruption,

and Capacity Building.

Internal Staff Ethics

The Bank's Code of Professional Ethics addresses

conflicts of interest, the use of Bank resources, and staff

accountability. The Ethics Office has been strengthened,

and the Bank has moved forward to investigate alleged

staff corruption. In 1999, the Bank's Code of Professional

Ethics was updated, and an ethics helpline and an ethics

webpage were launched. New harassment guidelines

were issued that include sections on retaliation and confidentiality. A new grievance policy/process that emphasizes the role of informal dispute resolution (including

mediation) has been developed and was implemented in

1999-2000. A confidential telephone hotline with multi98 Addressing the Challenges of International Bribery and Fair Competition, 2001
lingual capabilities and a call-collect number is available

for use by Bank staff and the public (1-800-831-0463).

The Bank is taking steps to make the hotline better

known. The Bank has also established several additional

mechanisms, e.g., an e-mail hotline address and a drop

box to mail in allegations. 

Monitoring and investigations have been enhanced,

including the use of outside experts, in an attempt to

locate any problem areas within the Bank. To date, investigations have turned up very few cases of in-house corruption, and these have been vigorously pursued by the

Bank. Remedies include lawsuits and staff dismissals. In

2001, the newly created Department of Institutional

Integrity, arising from the merger of the Anti-Corruption

and Fraud Investigations Unit and the Office of Business

Ethics and Integrity, will assume responsibility for conducting all investigations on behalf of the Bank Group

into allegations of fraud or corruption. This new department reports directly to the President. 

Procurement and Financial Management 

Special emphasis has been placed on procurement

financed by the Bank. In 1996 and 1997, the Bank took

the lead among the multilateral development banks by

adding specific fraud and corruption language to its rules

for procurement of goods and services and for selection

and employment of consultants. The amendments require

that all borrowers, bidders, suppliers, and contractors

under Bank contracts must "observe the highest standards of ethics during the procurement and execution of

contracts." The strengthened rules state that the Bank will

reject award proposals if it is determined that the bidder

engaged in corrupt or fraudulent practices. It will cancel

any portion of a loan allocated to a contract that was

involved in corrupt or fraudulent practices. Firms will be

ineligible for future Bank-funded contracts if they are

determined to have engaged in corrupt activities.

Procurement contracts may include provisions allowing

the Bank to inspect suppliers' and contractors' accounts

and records.

In September 1997, agreement was reached on a "nobribery undertaking," which could be included at a borrowing country's request and as part of a country's anticorruption program on certain Bank-financed contracts.

The Bank also is developing standard bidding documents

(SBDs) for specialized procurement in information technology and pharmaceuticals. SBDs have an impact far

wider than IBRD-financed contracts, since World Bank

standard bidding documents are sometimes used by borrowing country governments for their own national public sector procurement. Disclosure of any commissions

and gratuities paid in association with a bid or a contract

is now included in the standard bidding documents.

The World Bank actively participates in a working

group of procurement officials from all of the international financial institutions. This Group has completed a

best-practice Multilateral Development Bank Master

Bidding Document for the Procurement of Goods (which

is available on the World Bank's website) and has made

significant progress in other areas. Additional steps will

be identified through the working group to achieve agreement on uniform best-practice procurement documents

and rules among international financial institutions.

As part of the stepped-up campaign against corruption, projects are being audited by independent firms

hired by the Bank. As a result of these audits, the Bank

has declared misprocurement on a number of contracts.

Numerous firms and individuals have been declared ineligible to be awarded a World Bank-financed contract for

specified periods or indefinitely because they were found

to have violated the fraud and corruption provisions of

the procurement guidelines or the consultant guidelines.

It is Bank policy to publish the names of these firms and

individuals on its external webpage (http://www.worldbank.org/html/opr/procure/debarr.html).

In November 2000, the corruption investigationsí

function was strengthened by the newly reorganized

Corporate Committee on Fraud and Corruption Policy.

This Committee has policy-level coordinative responsibility for all of the Bankís programs intended to address

problems of fraud and corruption, with the objective of

ensuring that the Bank develops anticorruption policies

and implementation strategies that are well-designed,

comprehensive, coordinated, and effective.

Research and Analysis 

The Bank's current initiatives are rooted in part in its

concerns about key influences affecting foreign direct

investment and governance in developing countries. The

Bank's 1992 Guidelines on the Treatment of Foreign

Direct Investment call upon member countries to take

steps to prevent and control corrupt business practices, to

promote accountability and transparency in dealings with

foreign investors, and to cooperate with other countries in

developing international procedures and mechanisms. In

its reports on governance in 1992 and again in 1994, the

Bank identified public sector management, accountability, legal frameworks, and transparency and information

as areas of ongoing and future Bank work.

The Bank has become the focal point for developing

innovative methods for analyzing and quantifying corruption in individual countries. The World Bank Institute

Chapter 7: Antibribery Programs and Transparency in International Organizations 99
has created "diagnostic" approaches to measure and better understand the nature and scope of corruption. The

analysis focuses on shortcomings in policies and institutions and contributes directly to design of strategies to

improve governance. The Bank approach seeks to

involve the broad participation of representatives of civil

society as well as the government in the analysis and

related workshops and task forces in order to develop a

firm grassroots commitment to transparency and the

reform process. Many countries are engaged in serious

empirical diagnostic exercises, and others have expressed

to the World Bank an interest in pursuing such in-depth

analysis as a prelude to mounting anticorruption

strategies. Information on the Bankís anticorruption work

may be found on the Bankís website (http://www.world

bank.org/wbi/governance; and http://www.worldbank

.org/publicsector/anticorrupt/)

The Bank is enhancing its dialogue with borrowing

countries about the importance of reforming the management of their public sectors. Public expenditure reviews,

country procurement assessment reports (CPARs),

country financial accountability assessments (CFAAs),

and institutional reviews are fundamental building blocks

in the Bank's efforts to strengthen good governance.

These diagnostic reviews are essential for the formulation of borrowers' action plans to address weaknesses in

public sector budgeting, financial management, purchasing, and auditing.

The CPAR procedure, which was broadened and

strengthened in June 1998, focuses on evaluating the

quality of the countryís public procurement system, its

weaknesses, and the actions needed to improve the system. An objective of the CPAR process is to promote dialogue with the borrowing country government on the

reforms necessary to make the countryís public procurement systems and general commercial environment more

efficient and transparent and more in tune with international practice. The CPAR is intended to provide key

inputs to the World Bankís Country Assistance Strategy

for the Bank to aid in the reform process. Another objective is to review existing borrowing country legislation

and its compatibility with Bank policies to detect practices not acceptable under Bank-financed projects. The

CPAR seeks to assess actual compliance with the country

laws and regulations.

The CFAA is designed to enhance the World Bankís

knowledge of financial accountability arrangements in

the public and private sectors in borrower countries.

The CFAA documents existing laws and practices, and

compares them against accepted international

standards, such as the International Monetary Fundís

Code of Fiscal Transparency, International Accounting

Standards Committeeís (IASC) International

Accounting Standards, or the International Standards of

Auditing of the International Federation of Accountants. Guided by country circumstances, CFAAs focus

on such public sector issues as budgeting, accounting

and financial reporting, internal control, use of information technology, and auditing. Legislative scrutiny of

public sector financial management as well as private

sector financial accounting and auditing practices, corporate governance and financial accountability, public

access to information on public sector financial

management, and regulations and activities relating to

non-governmental organizations are also addressed.

The CFAA supports both the exercise of the Bankís

fiduciary responsibilities and the achievement of its

development objectives through assessing the strengths

and weaknesses of accountability arrangements and

identifying the risk that these may pose to the use of

Bank funds. 

Assistance to Member Countries

As an increasing number of members are prepared

to acknowledge and combat corruption in their countries, the Bank is undertaking to integrate anticorruption measures into its mainstream operational work

through training, technical assistance, and loans.

Bank assistance to countries has expanded rapidly

since 1998. The Bank is working with governments

and/or civil society, at their invitation, to help understand and address problems of public sector performance and corruption systematically. Sometimes this is

done under the rubric of a specific "anticorruption

program" and sometimes under the more general

umbrella of public sector institutional reform. As of

late 1999, the Bank was engaged in ongoing assistance to implement credible, concrete reforms in

about ninety-five countries. A June 2000 report entitled Helping Countries to Combat CorruptionProgress at the World Bank Since 1997 is available on

the World Bank Groupís website and provides more

detailed information on the program. 

The Bank also has suspended or withheld assistance

to certain countries where governments resisted implementing effective anticorruption programs. With the

implementation of IDA-12, governance and social policies are factors in determining the amount of IDA lending. Poor governance led to the postponement of a large

Heavily Indebted Poor Countries (HIPC) grant, a temporary halt in lending to a country, and no lending to

another country.

100 Addressing the Challenges of International Bribery and Fair Competition, 2001
African Development Bank 

Corruption is having an extremely negative impact

on economic development in many African nations. Poor

governance and corruption are hindering proper resource

management, undermining efforts to reduce poverty, and

obstructing sound private sector development by discouraging both domestic and foreign private investment.

The African Development Bank (AFDB) has responded

to this problem and taken a leadership role in promoting

good governance and combating corruption in Africa.

In 1999, the AFDB approved a formal policy on

good governance. The new policy focuses on accountability, transparency, participation, as well as legal and

judicial reform, and gives increased attention to the roles

of the productive private sector and of nongovernmental

organizations, such as Transparency International and the

Global Coalition for Africa. Beyond this, formal agreement was recently reached with the AFDB shareholders

to take a variety of governance and corruption issues into

account in all aspects of its operations, including as a

basis for lending allocations through the country performance assessment process.

The AFDB participates with the World Bank and

other regional development banks in the Multilateral

Development Bank Coordinating Committee on

Governance, Corruption, and Capacity Building.

Internal Staff Ethics

The Articles of Agreement of the AFDB require that

the Bank ensures the efficient use of its resources and limits the use of those resources to the legitimate purposes of

the institution and for projects and programs approved by

the Board of Directors. The AFDB is mandated by its

shareholders to maintain control mechanisms that preclude all forms of fraud and corruption from its lending

and technical assistance operations. The AFDB is committed to high standards of transparency and accountability among its own staff and is working with international

agencies and both foreign and African nongovernmental

organizations to eliminate corruption. Internal controls

have been enhanced and will be strengthened furtherófor

example, through specific anticorruption training.

Procurement and Financial Management

The AFDB has focused on the importance of an efficient and competitive procurement process, both in

Bank-financed projects and public sector procurement in

member countries. In 1996, the AFDB significantly

revised and improved its rules of procedure for the procurement of goods and services. The AFDB requires the

use of standard bidding documentation for international

competitive bids and has improved procedures to ensure

that procurement under AFDB projects is as transparent

as possible. The AFDB has overhauled its procurement

review process and Procurement Review Committee to

improve monitoring.

In 1999, the AFDB Board approved explicit fraud

and corruption amendments to the AFDB rules. The

amendments require that all borrowers of Bank loans,

bidders, suppliers, contractors, and concessionaires under

AFDB contracts must "observe the highest standards of

ethics during the procurement and execution of contracts." The AFDB requires that borrowers include provisions against corrupt practices in the bidding documents.

Under the strengthened rules, the AFDB will reject

award proposals if it is determined that the bidder engaged

in corrupt or fraudulent practices. The AFDB will also

cancel the portion of a loan allocated to a contract that was

involved in corrupt or fraudulent practices. Firms will be

ineligible for future AFDB-funded contracts, if they are

determined to have engaged in corrupt activities.

Procurement contracts may include provisions allowing

the AFDB to inspect accounts and records of suppliers

and contractors. A "no-bribery undertaking" could be

included at a borrowing country's request and as part of a

country's anticorruption program, on certain AFDBfinanced contracts. The AFDB requires that borrowers use

AFDB standard bidding documents. The Bank has taken

action to enforce its policies. As part of the accelerated

campaign against corruption, seven firms have been

declared ineligible to be awarded an AFDB-financed contract for specified periods because they were found to

have violated the fraud and corruption provisions of the

procurement guidelines or the consultant guidelines.

The AFDB actively participates in a working group

of procurement officials from all the international financial institutions. The working group has completed a

best-practice Multilateral Development Bank Master

Bidding Document for the Procurement of Goods and

has made significant progress on three other documents.

However, additional steps need to be taken through the

working group of procurement officials from the multilateral development banks to achieve agreement on uniform best-practice procurement documents and rules

among international financial institutions.

Since 1999 the AFDBís Internal Audit Department

has carried out assessments (known as country approach

audits) of borrowing countriesí public sector management systems. These assessments have addressed, as

appropriate, the countryís financial and budget management systems, procurement systems, auditing systems,

and management capacity.

Chapter 7: Antibribery Programs and Transparency in International Organizations 101
Analysis and Research and Outreach

The AFDB is committed to supporting research by

both national and regional research centers to study the

causes and implications of corruption in African societies. It is strengthening its own institutional capacity for

analysis of governance issues and corruption in African

member countries. In addition, the AFDB, World Bank,

and IMF recently established a joint institute in Abidjan

that will provide a forum for more effective cooperation

in analysis of the full range of Africa's economic challenges, including corruption.

The AFDB also is working to increase awareness of

the negative effects of corruption and in NovemberDecember 1998 hosted an important conference on

"Public Procurement Reform in Africa," which was

attended by ministers and other high-level officials from

thirty-two African countries. The conference was a

watershed event in opening a dialogue on public procurement to promote improvements in how public

resources in Africa are managed. The conference emphasized the need for commitment to the reform process at

the highest levels of government in order to support legal,

organizational, and professional institutional changes. To

bring the issue of governance to the forefront of Africaís

development agenda, the Bank plans to devote its 2001

ìAfrican Development Reportî to the imperatives of

good governance. 

Assistance to Member Countries

The AFDB has been taking corruption and governance into account in its country strategy papers. This

work is now being expanded as the AFDB explicitly

incorporates governance into its country performance

assessments and subsequent resource allocation decisions. It has focused especially on support of civil service, legal, and judicial reforms to raise the level of human

resources and technical know-how of procurement and

law enforcement officials and thereby improve the detection and punishment of corrupt practices. The new policy

emphasis on governance is expected to link lending programs directly to commitments to formal governance

efforts by the borrowing countries.

Asian Development Bank 

The 1998 annual report of the Asian Development

Bank (ADB) states that corruption played "a central role

in weakening governance institutions that contributed to

the Asian financial crisis" and was "one of the key problems behind the currency turmoil, corporate bankruptcies, and falling stock markets that have plagued the

region since July 1997."

In July 1998, the ADB adopted an official anticorruption policy built around three objectives: (1) supporting competitive markets and efficient, accountable, transparent public administration; (2) supporting promising

anticorruption efforts and improving the quality of the

ADB's dialogue with its developing member countries on

governance, including corruption issues; and (3) ensuring

that the ADB's staff, projects, and programs all adhere to

the highest ethical standards.

The anticorruption policy is an extension of the

ADB's formal Good Governance Policy adopted in 1995.

That policy represents an institutional commitment to

making governance a fundamental concern and focus of

ADB operations. It sets forth four principles of good governanceóaccountability, transparency, predictability,

and participationóand commits the ADB to integrating

governance activities into its operations, programs, and

technical assistance. The Bank has drafted an action plan

to deepen and broaden its work in promoting good governance. 

The ADB created an Anticorruption Unit within the

Office of the General Auditor in 1999. The unit is responsible for screening allegations of fraud and corruption

and conducting investigations. The procedural guidelines

for processing complaints and allegations and for conducting investigations were issued in July 2000. Since its

establishment, the unit has received 114 allegations of

fraud and corruption, resulting in 13 sanctions being

imposed. The ADB also participates with the World Bank

and other regional development banks in a Multilateral

Development Bank Coordinating Committee on

Governance, Corruption, and Capacity Building.

Internal Staff Ethics

The ADB has updated and strengthened its code of

conduct for staff and has issued staff guidelines addressing anticorruption issues. It also has created internal

mechanisms to address allegations of corruption and to

improve recruitment, regulations, procedures, and management. In particular, the ADB has recruited a core of

specialists in public sector management, forensic

accounting, and institutional development. Training programs on ethics and forensic accounting have been developed. New rules also have been adopted to protect whistle blowers and enforce sanctions, including possible

dismissal and prosecution for staff found to be involved

in fraud and other forms of corruption.

Procurement and Financial Management

The ADB has strengthened its auditing functions and

capacities. The Office of the General Auditor conducts

102 Addressing the Challenges of International Bribery and Fair Competition, 2001
independent appraisals and audits of the Bankís financial,

accounting, and administrative operations. The Bank is

required to take necessary measures to ensure that the

proceeds of any loan made, guaranteed, or participated in

by the ADB are used only for the purposes for which the

loan was granted. The loan documents require that the

borrower furnish to the ADB certified copies of such

audited accounts and financial statements no later than 12

months after the end of each fiscal year. The ADB will

impose sanctions if this 12-month limit is surpassed. 

The ADB also has strengthened its procurement

rules. Amendments approved in 1998 and 1999 add specific language on fraud and corruption and no-bribery

pledges and require the use of ADB standard bidding

documents. In the rules, the definition of corrupt practice

includes the behavior of private as well as public officials. Contract documents must include an undertaking

by the contractor that no fees, gratuities, rebates, gifts,

commissions, or other payments, other than those shown

in the bid, have been given or received in connection with

the procurement process or in the contract execution.

The ADB also takes steps to analyze the procurement

and audit capacities of its member countries. It does this

through TA (technical assistance), through governance

assessments, and through information obtained from

other organizations, including the World Bankís Country

Procurement Assessment Reports (CPARs), and Country

Financial Accountability Assessments (CFAAs). In 2000,

the Bank completed diagnostic studies of accounting and

auditing issues in seven member countries (Cambodia,

China, Mongolia, Pakistan, Papua New Guinea,

Uzbekistan, and Vietnam). The studies provide benchmarks against which these participating countries could

measure their progress in improving financial management and governance arrangements, and identify potential actions that these governments could take to rectify

weaknesses. 

The ADB actively participates in a working group of

procurement officials from all of the international financial institutions. The working group has completed a

best-practice Multilateral Development Bank Master

Bidding Document for the Procurement of Goods and

has made significant progress on three other documents.

Additional steps will be identified through the working

group to achieve agreement on uniform best-practice procurement documents and rules among international

financial institutions.

Research and Analysis

The ADB's activist stance on corruption responds in

part to new research showing that corruption has significantly reduced the performance of the Asian economies

by distorting public investment, discouraging private

investment, and wasting resources. The ADB has identified a variety of corrupt practices in the region. These

include illicit payments and misappropriations of funds,

outright theft and sale of posts or promotions, procurement fraud, disclosure of false financial information,

extortion, abuse of judicial and tax offices, and design

and selection of uneconomical projects to create opportunities for kickbacks. The ADB's new policies are aided by

efforts now made by all ADB members to prohibit the

bribery of public officials.

The ADB's analytical priorities are to improve its

understanding of the unique corruption problems in individual Asian countries, provide more effective delivery

of anticorruption assistance to ADB members, and learn

from approaches to fighting corruption and establishing

norms for good practices in other parts of the world.

Assistance to Member Countries

The ADB has identified six key areas of governance

for special attention in its assistance to members: (1)

participation, civil society, and social capital; (2) law and

development; (3) the interface of the public and private

sectors; (4) project and sector assistance; (5) core

government functions at the national level; and (6) decentralization. The emphasis and precise form of future assistance to borrowers will vary depending on the country. 

Recent examples of projects already containing governance and anticorruption components are loans for

financial sector reform in Indonesia, Korea, and Thailand

and for corporate governance and enterprise reform in the

Kyrgyz Republic. Examples of anticorruption technical

assistance are capacity building in project accounting in

Kazakhstan, the Kyrgyz Republic, and Uzbekistan. A

governance reform program for Mongolia was approved

in 1999. A series of public reform/civil service streamlining programs are taking place in several Pacific Island

countries. Legal reform and training work are being carried out in China, Tajikistan, and Pakistan. Ongoing

assistance to increase public accountability includes

regional technical assistance to review the auditing and

accounting practices in Cambodia, China, Mongolia,

Pakistan, Papua New Guinea, Uzbekistan, Vietnam,

Kyrgyz Republic, Marshall Islands, and Sri Lanka. In

Indonesia, the ADB is assisting in professionalizing public sector procurement. The ADB also finances technical

assistance projects aimed at strengthening supreme audit

institutions in its borrowing countries. 

The ADBís law and development activities continue

to support operations such as energy regulation, promoChapter 7: Antibribery Programs and Transparency in International Organizations 103
tion of public participation in the reform of agriculture

and forestry, reform of banking and capital market laws,

and strengthening of bankruptcy and liquidation

regulation.

Like the World Bankís International Development

Association replenishment (IDA-12), the Asian

Development Fundís Seventh Replenishment (referred to

as ADF-8) incorporated good governance criteria for

allocating its resources. The Donorsí Report, agreed on

September 7, 2000, included the introduction for the first

time of a performance-based allocation system, including

a 30 percent weighting for governance.

European Bank for Reconstruction and

Development 

The European Bank for Reconstruction and

Development (EBRD) operates in Central and Eastern

Europe, including the Newly Independent States. Unlike

the other regional banks that concentrate on assistance to

developing countries, the EBRD's recipient members are

countries in transition from centrally planned to marketoriented economies. EBRD funds are used strictly to

finance projects that meet sound banking criteria, would

not be fully financed by the private sector on appropriate

terms, and have transition impact. The EBRD does not do

program or structural adjustment lending. It has no soft

concessional window. The EBRD is aware that rapid

political and economic change in these countries, including large-scale privatization of state-owned companies,

has created widespread opportunities for the diversion of

both financial assets and exportable commodities, corruption in public works concessions, and serious economic crimes such as fraud and embezzlement. 

As most of its projects are carried out with the private

sector, the EBRD has directed substantial effort to

improving corporate governance through increased

accountability, transparency, and respect for the rights of

minority shareholders. In the aftermath of the Russian

financial crisis, the EBRD intensified its effort to

improve the soundness and application of corporate law

in its countries of operations. The EBRD vigorously

defends its investments and, on several occasions, has

taken legal action against investee companies in cases

where EBRDís investments have suffered from asset

stripping or poor corporate governance. The EBRD has

reinforced its court actions by strongly advocating sound

and independent judicial, regulatory, and supervisory

frameworks in its public statements and dialogue with

national and local authorities. The EBRD has also

increased its scrutiny of countries' legal codes and has

made corporate governance a central priority in its country strategies and project documents. In response to the

Russian crisis, the EBRD has completed a thorough

review of its portfolio including due diligence on clients'

management practices. 

The EBRD participates with the World Bank and

other regional development banks in the Multilateral

Development Bank Coordinating Committee on

Governance, Corruption, and Capacity Building.

Internal Staff Ethics

The EBRD has focused on encouraging a culture of

ethical behavior within its own organization. In addition

to educating its staff on how to recognize fraud and corruption, the EBRD has also established rules and procedures for avoiding and detecting corrupt practices in

EBRD-financed projects (which are predominantly private sector projects) and technical assistance.

The EBRD established a strong code of conduct for

its staff. The code broadly defines corrupt practices. Staff

are required to file statements of compliance with the

code. The receipt of gifts and honoraria is strictly controlled, and illegal or improper payments are forbidden.

Fraud investigation and disciplinary procedures are also

in place. Monitoring and enforcement of conduct-related

matters involve certain senior Bank managers, including

the general counsel, the vice president of personnel and

administration, and the head of internal audit, with all

matters ultimately going to the president of the EBRD. In

2000, the Bank appointed a chief compliance officer

responsible for ensuring that the highest standards of

integrity are applied throughout all Bank activities. The

independence of the chief compliance officer is supported by his reporting directly to the Bankís President.

Procurement and Financial Management

To increase transparency and accountability within

the EBRD, there is a system of checks and balances

involving an independent internal auditor, an external

auditor, and the audit committee of the board of directors.

The EBRD routinely performs due diligence on

prospective private and public sector clients. Its due diligence process verifies that procurement and contracting

are carried out with no conflict of interest and that purchasing methods that ensure a sound selection of goods

and services at fair market prices have been applied in the

best interest of the EBRD's clients. Loan and certain other

agreements between the EBRD and clients typically

include a number of covenants (such as compliance with

international accounting standards, annual external audits

of accounts, and strict limits on lending to affiliated parties), supported by appropriate EBRD procedures, which

104 Addressing the Challenges of International Bribery and Fair Competition, 2001
further limit the opportunity for corrupt practices and

money laundering or which would enable the EBRD to

detect their occurrence. Among the multilateral development banks, the EBRD has developed cutting-edge

approaches to due diligence on private sector operations. 

The EBRD's procurement rules were strengthened in

February 1998. New fraud and corruption language is

aimed at the procurement process as well as the execution of contracts for goods, works, and services in the

areas of public sector operations, the selection of concessionaires, and the selection of consultants. The rules were

amended to allow the EBRD to reserve the right to consider corruption in the context of contracts not financed

by the EBRD. Furthermore, the EBRD may impose certain sanctions, including blacklisting, against clients or

firms found by a judicial process or other official enquiry

to have engaged in corrupt or fraudulent practices. In

1999, the EBRD strengthened the standard terms and

conditions of loan agreements that govern the EBRD's

legal options in cases of money laundering and poor corporate governance.

The working group of procurement officials from all

of the multilateral development banks provides a good

forum to achieve agreement on uniform best-practice procurement documents and rules among international financial institutions. The EBRD actively participates in this

working group, which has completed a best-practice

Multilateral Development Bank Master Bidding Document for the Procurement of Goods and has made significant progress on three other documents. Additional steps

will be identified through the Working Group to achieve

agreement on uniform best-practice procurement documents and rules among international financial institutions.

Assistance to Member Countries

The EBRD helps countries to develop a legal framework that supports promotion of private sector activities

and transition towards market-oriented economic policies. Through its Legal Transition Program, the EBRD

has provided technical assistance on secured transactions

law, bankruptcy law, company law, telecommunications

law and concessions law, and developed guidelines on

good corporate governance. Helping transition countries

to create a predictable environment, based on the rule of

law, will increase transparency and accountability and

reduce opportunities for corruption.

Outreach

The EBRD has begun to cooperate with other

national and international organizations to combat financial crimes and money laundering. In particular, the

EBRD closely monitors the work of the OECD and FATF

working groups on money laundering and tax evasion. If

there are questions on good standing of prospective

clients, EBRD works with governments and private

investigators to fully understand project sponsors and

sources of funds.

Inter-American Development Bank

The Inter-American Development Bank (IDB) is

aware of the effects of corruption on economic and social

development and has addressed the issue in various ways

through its lending program over the last several years.

Its lending activities reflect the clear consensus that has

formed among all its shareholders on the need for

modernization and reform of the public sector and

national economies, and on the role of a smaller, efficient

government that operates with accountability and transparency. The activities funded by the Bank to implement

this consensus are intended to reform those regulatory or

institutional frameworks and governmental structures or

mechanisms that are most susceptible to public corruption and fraud.

Over the last few years, the effort to combat corruption has been discussed more explicitly in the context of

governance and state reform. The Bank has been focusing

on the issue of corruption itself more explicitly through:

(a) supporting activities in specific member countries or in

specific sub-regions on a case by case basis; (b) ensuring

that Bank-funded projects and programs and Bank staff

maintain the highest standards; and (c) participating in the

international dialogue on corruption, to ensure that the

issue is highlighted and addressed internationally.

On February 28, 2001, the Bankís Board of

Executive Directors adopted a strategy, ìStrengthening A

Systemic Framework Against Corruption for the IDB.î

The policy paper reiterates the IDBís commitment to

address corruption comprehensively, dealing with three

separate but closely linked areas:

ï ensuring that Bank staff act in accordance with the

highest levels of integrity and that the institutionís

internal policies and procedures are committed to

this goal;

ï ensuring that activities financed by the Bank are

free of fraud and corruption and executed in a proper

control environment; and

ï supporting programs that will help the borrowing

member countries of the Bank strengthen good

governance, enforce the rule of law and combat

corruption.

An action plan of activities is underway to implement this anticorruption framework. Concerning internal

Chapter 7: Antibribery Programs and Transparency in International Organizations 105
administration, the Bank will update its Code of Ethics,

take steps to make staff and consultants more familiar

with the code, and review its current policies and procedures for internal procurement. 

Regarding the Bankís project control environment,

the strategy emphasizes the need to upstream preventive

controls in Bank projects and to have proper risk controls

during the project cycle. The anticorruption action plan

incorporates implementation of assessments of borrowing

country public sector fiduciary managementóincluding

financial management and procurement and corruption

risk assessments. There will be more monitoring of fiduciary risk during the execution of Bank projects. 

In its lending programs, the Bank will expand its

focus on civil service reform, support of corporate governance structures, and upgrading of accounting and auditing standards. Increased support will also be emphasized

for anti-money laundering programs of the borrowing

country members. The Bank will continue its ongoing

programs in support of modernization of the state, including justice systems, good governance, strengthening of

civil society, and increased competitiveness.

To monitor anticorruption activities at the Bank, an

independent Oversight Committee on Corruption and

Fraud was established in March 2001. The committee

consists of the Executive Vice President, the Vice

President for Planning and Administration, the General

Counsel and the Auditor General. The Committee will be

responsible for handling allegations of fraud and corruption against bank staff or in the Bankís activities. 

The Bankís strategy to strengthen its anticorruption

efforts is available on the IDBís Internet Website:

http://www.iadb.org/LEG/corruption.pdf

Internal Staff Ethics

The IDB has in place a code of ethics to ensure the

integrity of its employees. Alleged impropriety is investigated by the Office of the Auditor General. Additional

safeguards are provided through an ethics committee, a

conduct review committee, and an independent investigation mechanism composed of a permanent roster of

expert investigators. Cases of malfeasance are few but

have resulted in forced terminations. As mentioned

above, the February 2001 Anticorruption Strategy

includes an update of the Code of Ethics, and steps to

make staff and consultants more familiar with the code.

Procurement and Auditing 

In January 1998, the IDB strengthened its basic procurement policies and procedures by adding specific

fraud and corruption language. Under the new policy, if

it is demonstrated that there have been corrupt practices,

the IDB will reject a proposal to award a contract, declare

a firm ineligible for future contracts under IDB-financed

projects, and/or cancel a portion of the loan or grant. The

IDB may require that bid documents include provisions

that allow the IDB to audit suppliers' and contractors'

accounting records and financial statements pertaining to

the execution of a contract. At the request of the borrowing country, a "no-bribery pledge" may be included in the

bid documents.

The working group of procurement officials from all

of the multilateral development banks provides a good

forum to achieve agreement on uniform best-practice

procurement documents and rules among international

financial institutions. The IDB actively participates in

this working group which has completed a best-practice

Multilateral Development Bank Master Bidding

Document for the Procurement of Goods and has made

significant progress on three other documents.

Additional steps will be identified through the working

group to achieve agreement on uniform best-practice

procurement documents and rules among international

financial institutions.

In April 2001, the IDB hosted a seminar on the

Implementation of International Standards for

Accounting and Auditing. Improving accounting and

financial disclosure through the development and implementation of higher standards of accounting and auditing

are key to enhanced transparency and will support development of a more stable global financial environment.

Research and Analysis

In February 1998, the IDB hosted a seminar on

Efficiency and Transparency in Public Sector

Procurement that was attended by ministers and other

high-level officials from many countries in Latin

America and the Caribbean. The conference focused on

four key procurement-related areasólegal frameworks,

state reform, information technology, and financial managementóto promote a more open dialogue on public

procurement and the fight against corruption.

In May 2000, the IDB hosted a Conference on

Transparency and Development in Latin America and the

Caribbean. The conference covered a variety of topics,

including the IDB's policy on corruption, regional anticorruption initiatives, and the future of the InterAmerican Convention Against Corruption.

Assistance to Borrowers

The Bank has financed programs, provided technical assistance, and sponsored other activities that have

106 Addressing the Challenges of International Bribery and Fair Competition, 2001
assisted its borrowers in, inter alia, (a) reforming tax

and budgetary systems; (b) modernizing the public

sector; (c) redefining the state's role and involvement in

the various sectors of the economy; (d) strengthening

the institutions of the executive, judicial and legislative

branches; and (e) establishing appropriate regulatory

and governmental supervisory functions. As a result of

this focus on programs linked to governance, state

reform and capacity-building issues, the Bank has long

been active in reducing the opportunities for corruption

to flourish.

In addition, the Bank is funding specific anticorruption activities on a case-by-case basis, as requested by

borrowing member countries. In Colombia, the Bank is

actively involved in supporting the newly installed government's efforts to develop a national anticorruption

strategy. In other countries, such as Argentina and the

Dominican Republic, recently approved projects or

upcoming projects that deal with public sector reform

contain components explicitly addressing anticorruption

activities. In Central America, the IDB is supporting

efforts to maximize the integrity and transparency of the

reconstruction efforts underway in the wake of Hurricane

Mitch. Also on a regional basis, the Bank is proceeding

with a program to support national general controllers'

offices in detecting fraud and corruption. Another

regional technical cooperation will support the use of

information technology and communications for greater

transparency in public procurement.

Special mention should be made of the Bank's

efforts to address the serious problem of asset laundering in the region. In December 1994, the IDB was given

a clear mandate by hemispheric leaders at the Summit

of the Americas to assist countries in combating corruption. In initial fulfillment of that mandate, the IDB created in 1996 a Task Force on Corruption and Other

Financial Crimes. During the Bank's 1998 Annual

Meeting, it hosted a seminar on international money

laundering, inviting representatives from various international entities, including the OECD's Financial

Action Task Force (FATF), and academicians to speak

on the issue. The Bank funded a training program for

banking regulators and bank officials in the region,

whose executing agency was the Organization of

American Statesí (OAS) International Commission for

the Control of Drug Abuse (CICAD). The Bank also

funded a study with CICAD for judges and prosecutors

in the region who supported training activities in prosecuting asset-laundering cases. There are ongoing discussions with various national governments regarding

anti-asset laundering programs to be executed on a

national or subregional basis. The Bank also signed a

letter-agreement with the Vienna-based United Nations

Office for Drug Control for increased cooperation in

various areas, including asset laundering.

The Inter-American Convention Against

Corruption: OAS and IDB Cooperation

The Bankís shareholders have indicated their

political will by jointly attacking corruption. Under

the auspices of the OAS in 1996, the countries of the

hemisphere signed the first regional convention

specifically designed to attack corruptionóthe InterAmerican Convention Against Corruption. The

Convention calls for collective action in various

areas, including transnational bribery, illicit enrichment, extradition, judicial cooperation, the exchange

of evidence and the seizure and forfeiture of property,

in relation to crimes of corruption. Furthermore, the

Organization of American States General Assembly

adopted in 1997 an inter-American program for the

cooperation against corruption that lays out a common set of goals and activities for the member states

of the institution. 

The OAS and the Inter-American Development

Bank signed a cooperative agreement on March 26,

1999, which led to the OAS/IDB project, ìThe State

of Criminal Legislation vis-‡-vis the Inter-American

Convention Against Corruption.î This project will

support twelve OAS member countries in incorporating the Inter-American Convention Against

Corruption into their domestic legislation, in particular, as regards the provisions of criminal law. This initiative will be carried out through technical investigations that will analyze the state of criminal law

vis-‡-vis the terms of the Inter-American Convention

that will then be expanded upon at workshops organized for that purpose. Organizations representing civil

society will be invited to participate both during the

implementation of this project and in its followup.

The intended result is the creation of an exchange network for information and cooperation which could, in

turn, promote a broader debate on this issue. 

On October 5-6, 2000, a follow-up workshop to

the Implementation Program for the Inter-American

Convention against Corruption was held in Santiago,

Chile. Both the General Secretary of the OAS and the

President of the IDB attended the meeting. The workshop marked the beginning of a new cycle of technical meetings that will analyze the adequacy of the

penal laws in countries that have ratified the InterAmerican Convention. 

Chapter 7: Antibribery Programs and Transparency in International Organizations 107
Major International Organizations

Organization of American States 

The Organization of American States (OAS) continues to play an active role in the fight against bribery and

corruption in the Western Hemisphere. In public statements and joint resolutions, the OAS has emphasized its

concern about the negative impact of corrupt practices on

good governance, economic development, and other

national interests. OAS members are aware that corrupt

practices thwart the process of economic and social

development and pose an obstacle to the observance of

human rights. 

Debate in the 1994 OAS General Assembly sparked

a long-term commitment to address the problems of

bribery and corruption in the hemisphere. Members

called for stronger efforts to fight corruption, improve the

efficiency of government operations, and promote transparency in the management of public funds. To advance

these goals, the General Assembly adopted a resolution

establishing the Probity and Public Ethics Working

Group with a mandate to study issues related to good

governance and ethics.

The first Summit of the Americas held in Miami in

1994 included as one of its major themes the need to

address corruption. Democratically elected leaders of

OAS member states issued a Summit Plan of Action that,

among other things, mandated negotiation of an InterAmerican Convention Against Corruption (InterAmerican Convention). The convention was successfully

negotiated and signed by twenty-one countries on March

29, 1996. Eight additional countries later signed the InterAmerican Convention, including the United States, which

signed on June 2, 1996. The Convention entered into force

on March 6, 1997. The United States has actively supported this OAS initiative. Twenty-two countries have

deposited instruments of ratification with the OAS as of

June 2001. The United States ratified the Inter-American

Convention on September 15, 2000, and deposited its

instrument of ratification on September 29, 2000.

The Inter-American Convention addresses a broad

range of corrupt acts, including purely domestic corruption and transnational bribery. Signatories agree to enact

legislation making it a crime for individuals to offer

bribes to public officials and for public officials to solicit

and accept bribes. It is, therefore, considerably broader

in scope than the OECD Convention, which covers only

the offering, promising, or giving of bribes to foreign

public officials. 

Reflecting continued member interest in unethical

practices, the OAS also adopted in 1997 an InterAmerican Program for Cooperation in the Fight Against

Corruption. The program called for several initiatives:

ï Adopting a strategy to secure prompt ratification of

the Convention.

ï Conducting comparative studies of legal provisions in member states.

ï Drafting codes of conduct for public officials.

ï Implementing a system of consultations with international organizations.

ï Conducting media campaigns.

ï Formulating educational programs.

In June 2000, the OAS General Assembly approved

Resolution AG/RES.1723 which instructed the

Permanent Council:

to analyze existing regional and international followup mechanisms with a view to recommending, by the

end of 2000, the most appropriate model that States

Parties could use, if they think fit, to monitor implementation of the Convention. That recommendation

will be transmitted to the States Parties to the

Convention for them to choose the course of action

they deem most appropriate.

This mandate was referred to the Working Group on

Probity and Public Ethics which convened on September

7, 2000. By the end of the year the Working Group recommended the creation of a body of experts as the mechanism to promote the implementation of the InterAmerican Convention and to ìfacilitate technical

cooperation activities, the exchange of information,

experience and best practices, and the harmonization of

the anticorruption legislation of the States Parties.î

On January 18, 2001, the Permanent Council

accepted the Working Groupís recommendations and

transmitted them to the States Parties in Resolution

CP/RES.783. The States Parties met on March 21-23,

2001 in Washington, D.C. to enhance and clarify the

terms of the mechanism. At a meeting in Buenos Aires on

May 2-4, 2001, the States Parties agreed upon a mechanism that their representatives formally agreed to establish on June 4, 2001, on the margins of the OAS General

Assembly meeting in San Jose, Costa Rica.

The mechanism creates a Committee of Experts that

will be responsible for several duties, including the selection of topics under the Inter-American Convention to be

reviewed and the countries to be evaluated, and the

issuance of a report on each State Party analyzed. These

reports will be made public. The Conference of the States

Parties that have ratified the Inter-American Convention

will have the overall responsibility for the successful

108 Addressing the Challenges of International Bribery and Fair Competition, 2001
implementation of the mechanism. The Committee will

have the responsibility for adequate civil society participation in the monitoring process. 

Organization for Economic Cooperation

and Development 

The OECD has been a leader in the global fight

against bribery and corruption. It has served as a key

forum for industrial countries in developing an international consensus on combating corruption. Through its

activities, the OECD addresses corruption from the perspective of both the recipients of illicit payments, for

example by promoting public ethics and good governance, and the providers of illicit payments, by promoting initiatives to stop the flow of such payments at their

source. The OECD membership is currently composed of

thirty countries (the Slovak Republic recently became a

member), including most of the major trading partners of

the United States. OECD members share a commitment

to market-oriented policies, good governance, and democratic practices. Because of these common interests, consensus for joint action has often been more practical to

achieve within the OECD than within larger, more

diverse international organizations.

The OECD has achieved several important breakthroughs in the fight against corrupt practices. In 1996, its

members adopted a recommendation that all members

should prohibit the tax deductibility of bribes to foreign

public officials. Prior to that, a majority of members had

refused to consider eliminating such practices because

bribes to foreign public officials were widely accepted in

many parts of the world. A year later, at the May 1997

Ministerial, members agreed on a recommendation to

negotiate a Convention on Combating Bribery of Foreign

Public Officials in International Business Transactions, in

conformity with an already agreed upon set of common

elements. These elements, with a few significant exceptions, closely follow the provisions of the FCPA.

On November 21, 1997, negotiators from thirty-four

countries (all OECD member states and Argentina, Brazil,

Bulgaria, Chile, and the Slovak Republic) adopted the

Convention at the OECD in Paris. It was signed on

December 17, 1997. (Australia signed the Convention a

year later after having completed required consultations

with its parliament.) On February 15, 1999, the

Convention went into effect for the twelve countries that

had deposited instruments of ratification with the OECD.

In less than two and a half years, this important anticorruption instrument is nearing full ratification; thirty countries now have laws on the books that make it a crime to

bribe foreign public officials in international business

transactions, and thirty-two have deposited instruments of

ratification with the OECD Secretariat. The OECD

Working Group on Bribery is monitoring implementation

of the Convention and following up on several important

issues that were not included in the final text. In addition,

the U.S. Government has established a program to monitor implementation of the Convention, of which the preparation of this annual report to Congress is an integral part.

For a complete report on implementation of the OECD

Bribery Convention, including progress towards denying

the tax deductibility of bribes, please refer to the relevant

sections of this report.

OECD support for international anticorruption initiatives has gone beyond negotiating the Convention and

monitoring its implementation. A number of these initiatives have been undertaken by the OECD AntiCorruption Division, the OECD Development Center,

and the Trade Committee.

The Anti-Corruption Division serves as the focal

point within the OECD Secretariat to support the work of

the OECD in the fight against bribery and corruption in

international business transactions. Its work is directed

by the Working Group on Bribery, which is made up of

experts from signatory countries, and it is responsible for

implementing a program of systematic followup to monitor and promote full implementation of the Convention

and related instruments. (See Chapter 3, Monitoring

Process for the Convention.) In addition, the Division

provides extensive information on the Convention and

anticorruption issues in general and engages in outreach

activities with non-member countries. 

The Divisionís Anticorruption Ring Online (AnCorR

Web) offers access to more than 5,000 selected references to books, journals, papers, reports, and other documents dealing with corruption and bribery, as well as a

large range of downloadable electronic resources. Its

resources cover a wide range of topics, including studies

on the nature, cause, and impact of corruption; corporate

governance and business self-regulation; public ethics,

governance and management; regional initiatives; and

laws and legal studies. Documents include the text of

antibribery laws in OECD and non-OECD countries, as

well as international treaties and conventions dealing

with bribery and corruption. AnCorR Web's goal is to disseminate information on all aspects of corrupt practices

and efforts to address them. This information, available

to governments, businesses, and civil society is made

available to help them understand and effectively implement policies and practices in the area of anticorruption

and to promote increased understanding and collaboration between these groups. 

Chapter 7: Antibribery Programs and Transparency in International Organizations 109
The purpose of the Divisionís outreach activities is to

expand the range of countries that incorporate the standards of the Convention and other anticorruption instruments, to raise awareness of the problems of corruption,

and to strengthen the cooperation between the various

stakeholders involved in the fight against corruption. The

activities rely on the development of partnerships among

major anticorruption participants such as governments,

the business community, NGOs and civil society, the

media, and international organizations. In developing

outreach programs, the Division has collaborated with

many public and private sector groups, including the U.S.

Agency for International Development, the Asian

Development Bank (ADB), the European Union (EU),

the Organization for Security and Cooperation in Europe

(OSCE), and Transparency International. In addition to

organizing its own workshops, conferences, and seminars, the Anti-Corruption Division participated in other

international forums to disseminate information about the

Convention and promote its objectives.

Initiatives included among the outreach are the

Stability Pact Anticorruption Initiative for South East

Europe (SPAI), the Anticorruption Network for

Transition Economies, and the joint ADB/OECD Forum

on Combating Corruption in the Asia-Pacific Region.

Several important outreach events took place in

2000-2001, including an informal meeting with Russian

officials and civil society representatives on February 26-

27, 2001, in Moscow to assess current efforts to fight corruption in the Russian Federation. The Anti-Corruption

Network for Transition Economies, which focuses on

strategies to reduce corruption in the public sector, was

re-activated this year with a successful meeting in

Istanbul on March 20-22, 2001. Participants agreed to

pursue a more systematic approach to anticorruption

efforts in four strategic areas including the rule of law

and civic action. Two important anticorruption programs,

the ADB/OECD Initiative for Asia-Pacific and the

Stability Pact Initiative for South East Europe, continue

to provide a framework for diagnosing regional corruption problems and identifying solutions. The Asia-Pacific

Initiative was launched at a workshop held in Manila in

October 1999, and was followed by a conference held in

Seoul, Korea in December 2000, at which participants

formally endorsed the initiative. On May 23-25, 2001,

experts from nine Asian countries and officials of the

ADB, the OECD, and other interested parties met in

Manila, the Philippines, which resulted in a working draft

of an Anti-Corruption Action Plan for the Asia -Pacific

region. The proposed Action Plan contains legally nonbinding principles and standards for strengthening

national and regional efforts to combat corruption. The

draft text prepared by the experts will be proposed to

interested countries of the region for their consideration

and possible endorsement at the next annual conference,

hosted by the government of Japan in Tokyo on

November 28-30, 2001.

Other important anticorruption work has been undertaken in the OECD outside the Division. With a view to

taking measures to deter bribery in officially supported

export credits, the OECD Working Party on Export

Credits and Credit Guarantees agreed in November 2000

on an Action Statement on Bribery and Officially

Supported Export Credits. Among other things, such

action may include informing applicants requesting support about the legal consequences of bribery in international business transactions, having an applicant provide

an antibribery undertaking or declaration, and refusal to

approve credit, cover or other support if there is sufficient

evidence that bribery was involved in the award of the

export contract. The Action Statement can be viewed on

the OECD website at http://www.oecd.org/ech/-

docs/bribery-en.pdf.

The OECD Development Center has conducted policy-oriented research on corruption in developing countries since 1996. Recognizing that in many developing

countries customs efficiency is hampered by widespread

corruption, which creates a major disincentive and obstacle to trade expansion among other consequences, the

Development Center examined the nature of customs

corruption and released a Technical Paper in April 2001

that suggests some practical paths to integrity. The Paper

was based on fact-finding studies of recent experience of

customs reform in Bolivia, Pakistan, and the Philippines.

Seeking to build on the experience in the OECD, and

given the deep-seated relationship of bribery and corruption to the entire global trading system, the U.S. government has strongly supported work in the OECD Trade

Committee on corruption as it relates to trade. An objective of such work is to identify the practices or characteristics of a trade regime that may be susceptible to bribery

and corruption. To move forward on this issue, the Trade

Committee has undertaken an inspection of the available

data sources regarding to corruption in customs processing, import licensing, pre-shipment inspection, and government procurement. This inventory of data should help

the Trade Committee decide whether further traderelated analysis is desirable and, if so, in which particular

fields. 

The OECD Guidelines for Multinational Enterprises

(the Guidelines) offer yet another vehicle for advancing

the goals of the Convention. Originally adopted in 1976,

110 Addressing the Challenges of International Bribery and Fair Competition, 2001
the Guidelines are non-binding recommendations to

enterprises made by the thirty-three governments that

adhere to them. Their aim is to help multinational enterprises (MNEs) operate in harmony with government

policies and with societal expectations. In the most recent

revision adopted by the OECD ministers on June 27,

2000, an entire chapter on combating bribery that tracks

closely the key provisions of the Convention was inserted

into the text of the Guidelines. While the Guidelines are

voluntary and not legally enforceable, they draw attention to the pernicious effects of bribery and corruption

and encourage companies to take a proactive approach to

addressing the problems. The follow-up mechanism

described in the Procedural Guidance details how the

National Contact Points for the guidelines can assist parties in resolving issues pertaining to the Guidelines. 

The OECD has also collaborated with the World

Bank on a series of public/private sector roundtables

aimed at improving corporate governance and identifying possible assistance needs. Roundtables have been

established in Asia, Eurasia, Latin America, and Russia;

the 2001 meetings will take place in Argentina,

Singapore, Tbilisi (Georgia), and Russia. 

The OECD and the European Union (EU) established the Support for Improvement in Governance and

Management in Central and Eastern European Countries

(SIGMA) program to help thirteen countries in the region

reform public administration and strengthen the integrity

of state institutions. The SIGMA program was established to provide assistance to governments on developing a professional civil service with high standards of ethical conduct; improving independent audit and financial

controls; establishing transparent, fair public procurement systems; improving the government service to the

public and businesses; and enhancing the effectiveness of

laws and regulations. The SIGMA program has been

"reinvented" to strengthen its approach to EU candidate

countries and change the management of technical assistance to others, but the programs will retain their anticorruption focus.

The Organization for Security and

Cooperation in Europe

The Organization for Security and Cooperation in

Europe (OSCE) is a regional security organization whose

fifty-five participating states are in Europe, the former

Soviet Union, and North America. The United States is

one of the organization's founding members. Established

under the authority of Chapter VIII of the United Nations

Charter, the OSCE serves as a primary instrument for

early warning, conflict prevention, crisis management,

and post-conflict rehabilitation in the European and

Eurasian region. The OSCE addresses a wide range of

security-related issues, including arms control, preventive diplomacy, confidence-building and security-building measures, human rights, election monitoring, and

economic and environmental security.

The OSCE has established as one of its priorities

consolidating the participating states' common values

and helping build fully democratic civil societies based

on the rule of law. The OSCE continues to provide active

support for promoting democracy, the rule of law, and

respect for human rights throughout the OSCE area.

Over the past two years, the United States has sought

to focus attention to the threats posed by organized crime

and corruption in OSCE participating states, particularly

those in economic and political transition. At the annual

meeting of the OSCE Parliamentary Assembly in 1999,

the U.S. delegation called for convening an OSCE

Ministerial meeting to develop a strategy to address these

threats. In November 1999, at the initiative of the United

States, the OSCE Istanbul Summit Charter on European

Security identified corruption as a significant challenge

to stability of the region. The Summit requested the

OSCE Permanent Council to review activities against

corruption in other global and regional forums, and determine what steps the OSCE should take in response to this

problem. In addition, the OSCE Parliamentary Assembly

focused on "OSCE Challenges in the 21st Century-Good

Governance: Regional Cooperation, Strengthening

Democratic Institutions, Promoting Transparency,

Enforcing the Rule of Law and Combating Corruption"

at its annual meeting in Bucharest on July 6-10, 2000. In

November 2000, the Permanent Council approved a

report by the chairman-in-office that identified OSCE

activities and its missions in member states to promote

measures against corruption. Governance and corruption

were the subjects of the OSCE Economic Forum held in

Prague in May 2001, after three preparatory seminars in

Almaty, Brussels and Bucharest. The U.S. Government

has announced that it will provide financial support to

OSCE anticorruption projects proposed by OSCE

Missions. In addition, the U.S. Department of Commerce

has offered to cooperate with OSCE Missions in implementing bilateral programs to promote business ethics. 

The U.S. Commission on Security and Cooperation

in Europe, the Congressional-Executive Branch body

that monitors U.S. participation in the OSCE (commonly

known as the ìHelsinki Commissionî), has supported the

organization's initiatives to combat corruption. The

Commission, created by Congress in 1976, consists of

nine members from the United States Senate, nine memChapter 7: Antibribery Programs and Transparency in International Organizations 111
bers from the U.S. House of Representatives, and one

member each from the Departments of State, Defense,

and Commerce. At a hearing of the Commission held on

March 23, 2000, Commission Chairman Rep.

Christopher H. Smith testified that widespread corruption

in the countries of the OSCE "threatens their ability to

provide strong independent legal regimes, market-based

economies and social well-being for their citizens." The

full text of the testimony is available at

www.house.gov/csce/.

United Nations 

As an international organization with broad membership, the United Nations can play an especially useful

role in educating governments on the importance of good

governance and the need for strong anticorruption programs. While UN resolutions on bribery and corruption

are nonbinding, they have brought increased attention to

the problem of corrupt practices and have encouraged

member states to take action through national legislation

and adherence to international agreements, such as the

OECD Antibribery Convention and the Inter-American

Convention Against Corruption.

Over the past decade, the United Nations has undertaken a variety of initiatives to promote discussion of corruption and its damaging effects and to assist member

states in their efforts to address the problem. Both the

General Assembly and the Economic and Social

Commission have debated these issues at length and

endorsed a number of resolutions in support of corrective

action. Corruption and bribery have also been the subject

of specialized meetings, such as the 2001 UN Crime

Commission.

In 1996, the General Assembly adopted an

International Code of Conduct for Public Officials and

recommended that member states use the code as a tool

to guide their efforts against corruption. That same year,

the General Assembly approved the United Nations

Declaration against Corruption and Bribery in

International Commercial Transactions. In the declaration, member states pledged to criminalize bribery of foreign public officials in an effective and coordinated manner. Acting in parallel with the OECD, the General

Assembly also endorsed denying the tax deductibility of

bribes paid by any private or public corporation or individual of a member state to any public official or elected

representative of another country.

The General Assembly reiterated its interest in promoting business integrity in 1998 with the adoption of a

new resolution calling for international cooperation

against corruption and bribery in international commercial transactions. The resolution urged member states to

implement the Declaration Against Corruption and

Bribery in International Commercial Transactions and

the International Code of Conduct for Public Officials

and to ratify, where appropriate, existing instruments

against corruption. On December 22, 1999, the General

Assembly adopted the U.S.-sponsored "Business and

Development" resolution (54/204) calling upon governments to undertake anticorruption and antibribery efforts

in order to create an enabling environment for business.

At the same session, the General Assembly also adopted

a complementary Guyana resolution (54/205) that supports strengthening national and international capacities

to combat corrupt practices and bribery in international

transactions.

The United States led a successful effort in 1999 to

include a provision on official bribery in the Convention

on Transnational Organized Crime. The provision obligates parties to the convention to establish as criminal

offenses acts of bribery involving domestic public officials. The Convention also addresses bribery of foreign

public officials, but this provision is not mandatory. 

In addition, the General Assembly approved a resolution in December 2000, recommended by the Crime

Commission in April 2000, to negotiate under UN auspices a global instrument against corruption. The Crime

Commission Secretariat analyzed existing international

instruments, recommendations, and discussions relating

to corruption; it also prepared a study for the Crime

Commissionís regular session in May 2001. At that session, the Commission issued a report that comprises recommendations and guidance for an experts group that

will meet at the end of July to develop the terms of reference for the future instrument against corruption. An ad

hoc committee to begin negotiations, open to all UN

members, will meet in Vienna in early 2002.

The Center for International Crime Prevention

(CICP), the UN secretariat for crime matters, has developed a Global Program Against Corruption that is now

being implemented in several countries. This program

begins with detailed studies as to the extent of the corruption problem in each participating country, and uses

CICP experts to help participating governments create

detailed action plans for addressing identified problems.

The United Nations Commission on International

Trade Law (UNCITRAL) continues to provide valuable

legal assistance to countries interested in improving their

procurement laws and regulations and thus limiting the

opportunities for bribery and corruption. In 1994, UNCITRAL approved a Model Law on Procurement of Goods,

Construction, and Services, aimed at preventing bribery

112 Addressing the Challenges of International Bribery and Fair Competition, 2001
and corruption. Several countries have based their procurement laws or standards on provisions of the UNCITRAL Model Law. Many of the new democracies in

Eastern Europe and the Newly Independent States have

benefitted from UNCITRAL projects. Albania and

Poland, for example, have already enacted legislation

based on the UNCITRAL model law.

World Trade Organization

Bribery and corruption can affect international trade

in many different ways. If left unchecked, they can

negate market access gained through trade negotiations,

undermine the foundations of the rules-based international trading system, and frustrate broader economic

reforms and stabilization programs. U.S. firms report a

variety of problems, but two key issues involve customs

and government procurement. Bribes or "facilitation

fees" from foreign customs officials can be an every day

element of the customs importation process in many

countries. Another consistent complaint is that U.S.

firms' experiences in bidding for foreign government procurement contracts suggest that corruption frequently

plays a significant role in determining how and to whom

those contracts are awarded.

The United States has pressed the World Trade

Organization (WTO) to take action to help prevent corruption in both these areas. With strong U.S. leadership,

the WTO Working Party on Preshipment Inspection

issued a report in 1999 that included several immediate

actions to be undertaken by members to strengthen the

operation of the Agreement on Preshipment Inspection.

The United States has also led an initiative to ensure full

and timely implementation of the WTO Agreement on

Customs Valuation. At the WTO Import Licensing

Committee, the United States continues to promote transparency and openness by urging all members of the WTO

to implement the Agreement on Import Licensing

Procedures by notifying any and all import licensing

regimes as well as their intended purpose. Finally, as part

of the followup to the 1996 WTO Singapore Ministerial

decision to undertake exploratory and analytical work on

the simplification of trade and customs procedures, the

United States has identified customs integrity as a priority item.

At the WTO Ministerial Conference in Singapore,

the United States succeeded in securing agreement to

initiate work on transparency in government procurement. The focus on transparency offers many potential benefits. One in particular is that corruption cannot

survive in an environment of openness and accountability where individual decisions are made in accordance

with a predictable set of rules. Since the Singapore

Ministerial Conference, the WTO Working Group on

Transparency in Government Procurement has made

great progress on its mandate to study how WTO

members can ensure transparency in government procurement, and to develop elements for inclusion in a

potential multilateral agreement.

1See BG138-2, "List of Participants and Composition of

the Board of Governors, International Telecommunications

Satellite Organization, One Hundred Thirty Eighth Meeting, 2-

9 March 2001."

2See MS-32-17, ì1 March 2001 Determination of

Investment Shares.î

3See INTELSAT Annual Reports of 1997, 1998, 1999.

Chapter 7: Antibribery Programs and Transparency in International Organizations 113
114 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 8: Private Sector Involvement in Monitoring and Implementation 115

The U.S. government has actively sought to involve

the private sector in efforts to combat the bribery of

foreign public officials and support the Convention and

effective antibribery policy and legislation. The U.S.

private sector played a key advisory role throughout the

negotiation of the Convention. Private sector support

proved to be of great importance in achieving international agreement on the Convention and encouraging

signatories to pass implementing legislation. This productive collaboration has continued since the Convention

came into force. The private sector has helped to publicize

the Convention, bring attention to the problem of

corruption and bribery in international business, and to

provide useful information on progress that signatories

are making in combating corrupt practices. We will continue to encourage the private sector and nongovernmental organizations play an active role in monitoring and

implementation of the Convention as we move to Phase

II, the enforcement phase of monitoring the Bribery

Convention. The Bush Administration values input from

the private sector, and will make every effort to inform the

private sector of its anticorruption policies, particularly

concerning the implementation and enforcement of the

Bribery Convention. The active participation of the private sector and nongovernmental organizations will be

instrumental in the effectiveness of the Convention. 

In the Omnibus Trade and Competitiveness Act of

1988, Congress directed the executive branch to pursue

an agreement with trading partners of the United States

in the OECD to criminalize bribery of foreign public

officials in international business transactions, along the

lines of the FCPA. Since that time, the U.S. government

has sought to involve the private sector in antibribery

initiatives. For the past thirteen years, U.S. officials have

met frequently with the private sector about international

bribery and have both sponsored and participated in anticorruption conferences around the world. U.S. officials

have also hosted and attended many government-private

sector informational meetings on anticorruption matters.

They have also solicited the views of many individual

private sector entities regarding international anticorruption strategies in the OECD and other international

forums, including the United Nations, the World Trade

Organization, the Organization of American States, and

the Asia-Pacific Economic Cooperation forum. In short,

the U.S. government has sought to ensure that the private sector plays an active role in shaping U.S. anticorruption strategy.

Efforts to Engage the Private Sector 

on the Convention

The Bush Administration has already spoken out and

initiated an active dialogue with the private sector on how

Private Sector Involvement 

in Monitoring and

Implementation

8
to address the problem of bribery of foreign public officials and support effective implementation of the

Convention.

Secretary Donald L. Evans, Secretary Colin L.

Powell and Attorney General John Ashcroft have raised

the Convention and bribery issues in different contacts

with private sector groups. At the May 2001, OECD

Ministerial, Secretary Evans made it clear that the Bush

Administration is determined to fight bribery and corruption in international business transactions. Recognizing

that the OECD Antibribery Convention was a significant

step to eliminate these activities, the Secretary in meetings with business and labor representatives committed

the Commerce Department to continue to promote efforts

to have the Convention implemented and enforced by

every signatory and urged the groupsí support on this and

other issues.

In May 2001, at the Council of the Americas 31st

Washington Conference, Secretary Colin L. Powell urged

participants to fight corruption, noting that corruption can

destroy the strongest democracy if it is not dealt with

effectively. Also, in May 2001, in a speech delivered during the Second Global Forum held in the Netherlands,

which many private sector representatives attended, U.S.

Attorney General John Ashcroft urged countries not to

wait for further anticorruption studies or additional international agreements before implementing their existing

treaty obligations. In addition, he recommended widespread adoption of mutual evaluations of a country's anticorruption regimes. 

On separate occasions, other senior Commerce,

State, and Justice officials have also engaged private

sector representatives in discussions on the Convention

and the need for strong enforcement of antibribery legislation. In addition to these senior-level contacts, officials of the Commerce, Justice, State, and Treasury

departments have been communicating with the private

sector on Convention-related issues in a variety of

other channels.

U.S. officials have provided information on the

Convention to the private sector by participating in

numerous meetings on the Convention held by corporations, law firms, and business associations, such as the

National Association of Manufacturers and the Business

Roundtable. In addition, U.S. officials attend meetings

with groups that have a strong interest in combating

international corruption, including Transparency

International, the American Bar Association Task Force

on International Standards for Corrupt Practices, the U.S.

Council for International Business, and the International

Organization of Employers.

U.S. agencies are also making use of the existing

advisory committee structure as a forum for dialogue

with the private sector when discussions go beyond the

exchange of information and into the solicitation of recommendations of advice on specific matters of policy.

For example, the Department of Commerce maintains an

ongoing dialogue with the private sector through its regularly scheduled meetings of Industry Sector Advisory

Committees, Industry Functional Advisory Committees,

and the President's Export Council. Commerce has raised

the issue of international bribery before the Transatlantic

Business Dialogue (TABD), a public/private partnership

in which U.S. and European Union businesses meet to

discuss transatlantic trade barriers and relay their findings

to governments. TABD members continue to stress the

importance of fighting corruption and bribery at their

annual conferences. The State Department receives input

on bribery issues through its Advisory Committee on

International Economic Policy.

In addition, the U.S. private sector has participated in

monitoring the Convention through international business groups, such as the OECD's Business and Industry

Advisory Committee (BIAC), an officially recognized

advisory group composed of private sector representatives from OECD member countries. BIAC has strongly

supported the Convention and spoken out frequently on

the need to fight corruption and bribery. The OECD's

Trade Union Advisory Committee has also endorsed the

Convention and its effective implementation.

The U.S. government greatly values its ongoing

working relationship with the private sector and nongovernmental organizations, like Transparency International, and will seek to include other organizations in

its dialogue on corruption issues. The International Trade

Administration's Trade Compliance Center has used its

Compliance Liaison Program and other private sector

initiatives to enlist the cooperation of the private sector in

monitoring bribery of foreign public officials and implementation of the Convention. Importantly, the business

community and nongovernmental organizations can help

our anticorruption efforts by reporting instances of

alleged bribery and possible violations of Convention

obligations directly on the Trade Compliance Center's

Trade Complaint Hotline at mac.doc.gov/tcc.

The U.S. government, for its part, will continue to

share as much information as possible about the monitoring process with the private sector. We are of the firm

opinion that private sector participation in Phase II of

the monitoring process is crucial and will continue to

advocate for openness and transparency in the process.

U.S. officials respond to public inquiries on the

116 Addressing the Challenges of International Bribery and Fair Competition, 2001
Convention and the status of its implementation on a

daily basis. The Commerce, Justice, and State departments have posted the Convention and related

commentaries, as well as the full text of the IAFCA and

other background materials, on their websites. The

Justice Department has also posted on its website the

responses of the United States to the OECD Phase I

Questionnaire on our implementing legislation and the

full text of the FCPA. Commerce has provided detailed

information on the status of the implementation of the

Convention by our trading partners. Commerce's Trade

Compliance Center has included on its website an

Exporters' Guide to help businesses understand key

provisions of the Convention. In addition, the U.S.

Office of Government Ethics has a website with

information on anticorruption issues. The Department

of State has issued a new 2001-03 edition of Fighting

Global Corruption: Business Risk Management. This

publication is designed to assist businesses and organizations in navigating the international anticorruption

environment.

The U.S. government has strived over the years to

build a strong working relationship with the U.S. private

sector in order to combat international bribery and corruption. U.S. officials are committed to maintaining this

valuable relationship as they seek to ensure effective

implementation and enforcement of the Convention. 

Chapter 8: Private Sector Involvement in Monitoring and Implementation 117
118 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 9: Additional Information on Enlarging the Scope of the Convention 119

The International Anti-Bribery and Fair Competition

Act (IAFCA) directs the Department of Commerce to

review additional means to enlarge the scope of the

Convention or otherwise increase its effectiveness, while

taking into account the views of private sector participants and representatives of nongovernmental organizations. Such additional means are to include, but not be

limited to, improved record keeping provisions and the

possible expansion of the applicability of the Convention

to additional individuals and organizations. The IAFCA

also asks that the report assess the impact on U.S. business of Section 30A of the Securities Exchange Act of

1934 and Sections 104 and 104A of the Foreign Corrupt

Practices Act (FCPA.)

Additional Individuals and

Organizations and Other Means of

Enlarging the Convention

Chapter 6 reviewed U.S. efforts to strengthen the

Convention by broadening its prohibitions. The U.S.

government has focused on expanding coverage explicitly to include a prohibition of the bribery of foreign

political parties, party officials, and candidates for public

office as in the FCPA. Failure to cover such bribes may

prove to be a significant loophole. The OECD Working

Group on Bribery is charged with examining these issues

as it reviews the five outstanding issues on the

Convention: bribery acts in relation with foreign political

parties; advantages promised or given to any person in

anticipation of that person becoming a foreign public

official; bribery of foreign public officials as a predicate

offense for money laundering legislation; the role of foreign subsidiaries in bribery transactions; and the role of

off-shore centers in bribery transactions. In successive

ministerial communiques, OECD ministers have called

for attention to these issues and indicated in the 2001

communique that the "OECD will move ahead on" these

issues. In the context of these discussions, the issue of

payments to immediate family members has also been

raised by the United States informally with Working

Group members. As noted earlier in the report, however,

most signatories do not support any changes in the scope

of the Convention's coverage at this time. They prefer to

monitor implementation of the Convention before making any decisions on amendments to the Convention.

Nonetheless, over the past year important work advancing some of these issuesóprimarily work towards the

issuance of questionnaires to review the potential scope

of the problemsóhas been undertaken by the Working

Group. (See Chapter 6.)

In the year ahead, we will continue to work to

advance the outstanding issues on the Working Groupís

agenda of key concern to the United States. Particularly

Additional Information on

Enlarging the Scope of the

Convention

9
now that the Working Group is going to review country

responses to a questionnaire specifically concerning the

issue of bribe payments to political parties and candidates, we will make further efforts to convince other signatory countries that there is at least a potential loophole

which should be explored and addressed.

After we have more experience with monitoring

implementation and enforcement of the Convention, we

will be in a better position to assess its effectiveness in

combating international bribery. In making our assessment, we will continue to consult with representatives of

the private sector and nongovernmental organizations to

obtain their views.

Improved Record Keeping

The provisions of Article 8 of the Convention on

accounting practices are not as comprehensive as those in

Section V of the 1997 Revised Recommendation of the

Council on Combating Bribery in International Business

Transactions (Revised Recommendation). Article 8

directs signatories to take certain measures regarding the

maintenance of books and records, financial statement

disclosures, and accounting and auditing standards in

order to prohibit certain practices that might facilitate the

bribing of foreign public officials or of hiding such

bribery. The Revised Recommendation, however,

addresses a wider range of safeguards against corruption,

including accounting requirements, independent external

audits, and internal company controls.

The United States would like to see signatories to the

Convention implement all elements of Section V of the

Revised Recommendation. OECD members had

previously accepted the Revised Recommendation, and

the United States will continue to encourage them to

institute those practices without delay. Article X of the

1997 recommendation instructs the OECDís Committee

on International Investment and Multinational

Enterprises (CIME), through the Working Group, to

review the Revised Recommendation within three years

of its adoption. The Working Group will consider proposals for carrying out such a review at its June 2001

meeting. As part of the process, the Working Group will

consult informally with representatives of the private

sector, the OECDís Business and Industry Advisory

Council (BIAC), the Trade Union Advisory Council

(TUAC), and civil society to examine ways to strengthen

the monitoring of accounting and auditing related commitments under the Convention and the Revised

Recommendation. To contribute to the process, a task

force organized by Transparency International (TI) has

analyzed data in the areas of books and records, internal

controls, and auditing practices and documented current

practices in 16 countries, including the 11 largest

exporters. The task TI force has developed country-specific observations which are included in a report entitled,

Country Analysis and Observations. In addition, certain

overall observations developed by the task force are

included in the report. The Working Group will consider

the findings of this report when it addresses this issue at

the June 2001 Working Group meeting. The report can be

found on the TI-USA website at http://www.trans

parency_usa.org/Overall%20Obser.htm 

Impact on U.S. Business

The U.S. government has long been aware of the

problems that the bribery of foreign public officials poses

for international business and good governance. In the

1970s, widely publicized incidents of bribery by U.S.

companies damaged the reputation of U.S. business. It

was because of such problems that Congress enacted the

FCPA to bring a halt to the bribery of foreign officials and

to restore public confidence in the integrity of the

American business system. Through the FCPA, the

United States declared that American companies must act

ethically in obtaining foreign contracts.

The FCPA's impact was widely felt. One positive

effect was that the law contributed to the perception that

U.S. firms operate with greater integrity in the international market. In addition, U.S. businesses were induced

to compete on the strength and quality of their goods and

services, which helped them to be more competitive

throughout the world. But the FCPA also left U.S. firms

at a disadvantage relative to their foreign competitors

who were able to bribe foreign officials without fear of

penalty and even benefitted from being able to deduct

such bribes from their taxes. This disparity was one of the

reasons the U.S. government sought to convince other

countries to prohibit bribes to foreign public officials and

enact legislation similar to the FCPA.

Over the past several years, the U.S. government has

received reports indicating that the bribery of foreign

public officials influenced the awarding of billions of

dollars in contracts around the world. While it is not possible to verify the accuracy or completeness of all these

reports, we believe that they are indicative of how widespread the bribery of foreign public officials has been in

recent years. Based on information available from a variety of sources, we estimate that in the period from May

1994 through April 2001, the competition for 414 contracts valued at $202 billion may have been affected by

120 Addressing the Challenges of International Bribery and Fair Competition, 2001
bribery involving foreign firms. U.S. firms are believed

to have lost at least 101 of these contracts, worth approximately $30 billion, to foreign competitors offering

bribes. In just the last year, from May 1, 2000 to April 30,

2001, the competition for 61 contracts worth $37 billion

may have been affected by bribery of foreign officials,

and of these U.S. firms are believed to have lost at least

nine contracts, worth approximately $4 billion. Firms,

from Convention signatory countries continue to account

for about 70 percent of these allegations. In other cases,

we understand that U.S. firms withdrew from contract

competitions because foreign officials demanded bribes

or do not even seek business in countries where bribery

is prevalent. Rampant bribery in some countries is particularly dissuasive to small and medium-sized exporters.

These exporters can least afford to expend the extensive

resources often required to make bids, if they must take

the chance that the outcome of their efforts will not be

determined entirely by commercial considerations.

Bribery allegations were connected to contracts in several sectors, including energy, telecommunications, construction, transportation, and military procurement.

According to available information, firms from fiftythree countries are alleged to have offered bribes, and

officials in 112 countries are alleged to have received

them in the period from May 1994 through April 2001.

The largest number of incidents, about 30 percent of the

total, was reported to have occurred in Asia. Among the

alleged bribe recipients in other regions, 24 percent were

in Latin America; 19 percent in Europe; 14 percent in

Sub-Saharan Africa; and 13 percent in the Middle East.

The amount of reported bribe offers was worth up to

30 percent of a contract's value. Firms alleged to have

offered bribes won nearly all the contracts in the deals for

which we have information on the outcome. When companies alleged to have offered bribes lost a competition

for a contract, it usually was to other firms alleged to

have offered bribes. 

We are disturbed by the continuing reports of alleged

bribery of foreign public officials by firms based in countries for which the Convention is in force. Therefore, in

the coming year we will redouble our efforts to encourage the relevant authorities in each Party to address all

credible allegations of bribery of foreign public officials.

In addition, the Phase II monitoring reviews of national

enforcement mechanisms and practices will provide further opportunities for the United States to emphasize the

importance of making the Convention a truly effective

instrument in the battle against international bribery. 

We recognize that governments can also take preventive actions when we learn bribes are being unlawfully solicited in an international tender. We will seek to

engage other signatory governments to take coordinated

action to approach the tendering governments to let them

know our companies cannot pay bribes, will not pay

bribes, and that such tenders must be decided based on

the commercial merits of the proposal.

In his statement on corruption submitted to the

Second Global Forum on Fighting Corruption at The

Hague on May 28-31, 2001, President Bush emphasized

that recent anticorruption efforts are exposing corrupt

practices to the light of day where they cannot survive.

Increasing accountability and transparency in governance around the world is an important foreign policy

objective for the Bush Administrationóas is creating a

level playing field for lawful business activities.

U.S. agencies will continue to take measures to help

U.S. business deal with the problem of international

bribery. As noted elsewhere in this report, U.S. officials

are intensifying their outreach to the private sector to

solicit its views on how best to implement the

Convention and to share information on signatories' laws

and policies regarding bribery. Special attention is being

given to the needs of small and medium-size exporters,

which face an especially difficult challenge in dealing

with international bribery and corruption. 

The Commerce Department offers several services to

aid U.S. businesses seeking to address transnational business related corruption issues. For example, the

Commercial Service of the Commerce Department has

several programs to assist U.S. companies in conducting

due diligence when choosing business partners or agents

overseas. The U.S. Commercial Service can be reached

directly through its offices in every major U.S. and foreign city, or through its Website at www.usatrade.gov.

Also, the Departments of Commerce and State provide

worldwide support for qualified U.S. companies bidding

on foreign government contracts. Problems, including

corruption by foreign governments or competitors,

encountered by U.S. companies in seeking such foreign

business opportunities can be brought to the attention of

appropriate U.S. government officials. The Commerce

Department Advocacy Center can be reached through the

Department of Commerce International Trade Administration in Washington (202-482-3896), or its main website at www.doc.gov. Advice on business advocacy is also

available at the Department of State through the Office of

Commercial and Business Affairs (202-647-1625) and on

the business page of the Departmentís web site at

www.state.gov.

The U.S. Government also regularly publishes information to help keep the private sector informed about

Chapter 9: Additional Information on Enlarging the Scope of the Convention 121
anticorruption activities. For example, in May 2001, the

State Department, in cooperation with the Commerce and

Justice Departments, re-published a brochure for

businesses titled Fighting Global Corruption: Business

Risk Management that contains information about the

benefits of good governance and strong corporate antibribery programs and policies, the requirements of the

FCPA and the Convention, and the various international

initiatives underway to combat business bribery and official public corruption. In an introductory message to this

brochure, Secretary of State Powell enlists the support of

the private sector and nongovernmental organizations to

work with governments in public-private partnerships to

find solutions to the common challenges in our fight

against corruption.

There is also a joint Commerce-Justice brochure

summarizing the antibribery provisions of the FCPA,

which is reprinted in Appendix C of this report. This joint

FCPA brochure was updated after the 1998 amendments

to the FCPA implementing the OECD Bribery

Convention. This handbook has been useful to many

companies, especially small firms and those that are new

to exporting. Another Commerce Department publication

is the Anti-Corruption Review, an internet document

located on the Office of the Chief Counsel for

International Commerce website at the Department of

Commerce at www.ita.doc.gov/legal. Most of the material in the Review does not relate to the FCPA but to international developments, such as those in the OECD,

Organization of American States, the Council of Europe,

and by nongovernmental organizations such as

Transparency International. 

Furthermore, individuals and companies are encouraged to report problems with bribery directly to the

Commerce Department on the Trade Complaint Hotline

of the Trade Compliance Center (http://www.mac.-

doc.gov/tcc). Only through enhanced reporting of credible allegations of bribery will the proper authorities

become aware and able to pursue many cases of bribery.

We urge other signatory countries to establish similar

mechanisms for reporting and encourage companies,

trade unions, and other interested parties to take

advantage of them. 

In addition, the Department of Justice's Foreign

Corrupt Practices Act Opinion Procedure enables U.S.

firms and individuals to obtain an opinion as to whether

specific prospective conduct conforms to its FCPA

enforcement policy. These procedures are available to

assist firms and individuals in determining whether a particular transaction falls within the purview of the law.

The opinion procedure is set forth at 28 C.F.R. Part 80. It

is also available on the Fraud Section website at

http://www.usdoj.gov/criminal/fraud/fcpa.html. Recipients of a favorable opinion are entitled to a presumption

of compliance in any subsequent enforcement action

under the FCPA. 

We will continue to assess the impact of the

Convention on U.S. business in determining our policies

on implementation of the Convention and on efforts to

strengthen its provisions. Promoting political and economic stability, upholding core democratic values, ending the reign of dictators, and creating a level playing

field for lawful business activities are important objectives of the Bush Administration.

122 Addressing the Challenges of International Bribery and Fair Competition, 2001
Chapter 10: Advantages to International Satellite Organizations 123

This chapter responds to the reporting requirements

in Section 6(7) of the International Anti-Bribery and

Fair Competition Act (IAFCA) which requests information on the advantagesóin terms of immunities, market

access, or otherwiseóenjoyed by the international

satellite organizations (ISOs), the International

Telecommunications Satellite Organization (INTELSAT), and the International Mobile Satellite

Organization (Inmarsat); the reason for such advantages; and an assessment of progress toward fulfilling

the policy described in Section 5 of the IAFCA. The

first report in July 1999 provided a historical perspective of the ISOs and the advantages that they have

enjoyed. The second report issued in July 2000 updated

the findings of the July 1999 report. This report is likewise intended to update the findings of previous reports.

This chapter was prepared by the National

Telecommunications and Information Administration

(NTIA) of the U.S. Department of Commerce. As in previous years, NTIA issued a Request for Comments (RFC)

in the Federal Register to assist in the preparation of this

report.1 NTIA sought the views of interested parties

through this notice. The RFC as well as the comments

received in response are posted on NTIAís website.2 The

State Department also sent requests to U.S. embassies for

information regarding any favorable treatment to

INTELSAT or its signatories in foreign countries. In

preparing its analysis, NTIA considered the comments

received from its Federal Register notice, responses to

the State Departmentís request, and filings at the Federal

Communications Commission (Commission). 

INTELSAT is a treaty-based global communications

satellite cooperative with 144 member countries. INTELSAT was created to enhance global communications and

to spread the risks of creating a global satellite system

across telephone operating companies from many countries (mostly national telephone companies). Inmarsat

was created to improve the global maritime communications satellite system that would provide distress, safety,

and communications services to seafaring nations in a

cooperative, cost-sharing entity. COMSAT Corporation,

a wholly owned subsidiary of Lockheed Martin

Corporation, is the U.S. signatory to INTELSAT and formerly to Inmarsat. Signatories3óentities designated by

member governments to participate in the commercial

operations of the ISOsócan be private companies, the

government, or an agency within the government. While

the majority of signatories are private companies, in

some instances, the government owns a significant share

in the telecommunications company that is the signatory

to INTELSAT. It is difficult to determine the advantages

that government ownership may provide when certain

advantages are not obvious or readily apparent.

We note that separate legislation passed in 2000 entiAdvantages to International

Satellite Organizations

10
tled the Open-Market Reorganization for the Betterment

of International Telecommunications Act ("ORBIT Act")4

also addresses the ISOs. The ORBIT Act seeks to "promote a fully competitive global market for satellite communications services...by fully privatizing...INTELSAT

[and Inmarsat]"5 and to "secure a pro-competitive privatization of INTELSAT [and Inmarsat]."6 The ORBIT Act

contains a number of criteria for the timely pro-competitive privatization of INTELSAT and Inmarsat.7 The

ORBIT Act requires the President and the Commission to

provide annual reports to Congress on the progress of privatization in relation to the objectives, purposes, and provisions of that Act including the "[v]iews of the industry

and consumers on privatization" and the "[i]mpact privatization has had on United States industry, United States

jobs, and United States industryís access to the global

marketplace."8

It was noted in the July 1999 report that since the

passage of the IAFCA, Inmarsat completed its privatization, and as a result, there is no intergovernmental participation, including by the U.S. Executive Branch, in the

Inmarsat private company. Consequently, past reports

have focused on INTELSAT. This year, however,

Motient Services, Inc. (Motient) filed comments stating

that Inmarsat has not met its privatization criteria because

it has not conducted an Initial Public Offering (IPO), and

because officers or managers of Inmarsat still have direct

financial interests in former Inmarsat signatories.9

Motientís comments, however, fail to address any advantages, in terms of immunities, market access, or otherwise, enjoyed by Inmarsat. Thus, this report will continue

to focus primarily on INTELSAT and its signatories.

INTELSAT plans to be fully privatized by July 18,

2001. In comments filed in response to NTIAís RFC,

INTELSAT states that it has made several filings to the

Commission with respect to its plans and progress

towards privatization.10 Specifically, INTELSAT incorporates by reference a December 18, 2000 filing in which

INTELSAT describes the commitments made by the 25th

Assembly of Parties to privatize by July 18, 2001.

Significant work has been completed to prepare the

organization for privatization, and INTELSAT remains

on schedule to meet the planned July 18 transition date. 

It is anticipated that full privatization of INTELSAT

will eliminate any of the advantages that ordinarily

attach to intergovernmental organizations. The privatized INTELSAT (the company is to be known by the

lower cased acronym "Intelsat") will not have any privileges or immunities. Reports from U.S. embassies

abroad indicate that governments are overwhelmingly

supportive of INTELSAT privatization; once INTELSAT has been privatized, Intelsat will be treated the

same as other private companies, with no advantages in

terms of immunities, market access, or otherwise.

Market Access

Market access continues to be the area in which it

appears that INTELSAT and its signatories hold the most

advantaged position vis-a-vis private competitors.

Although global and national trends in telecommunications liberalization and privatization and commitments

made under the WTO/Group on Basic Telecom

Agreement have improved market access conditions in

many countries, competitors continue to voice concerns

regarding market access. Market access advantages historically may have resulted from other advantages

addressed in this report such as privileges and immunities,

preferential tax treatment, national contracts, and access

to spectrum and orbital slots. Barriers to market access

may take many forms such as exclusivity contracts, legislative barriers to market entry, or government-owned

telecommunications providers that will not permit private

companies to provide service. PanAmSat, for example,

argues that both obvious and subtle forms of market entry

barriers exist in countries that will only authorize INTELSAT to provide fixed-satellite services.11

We note that PanAmSat was the only entity that filed

comments this year alleging an advantaged position of

INTELSAT and its signatories in terms of market access.

In fact, PanAmSat argues that market access remains one

of the primary issues facing U.S. satellite operators.12

PanAmSat states that contrary to ostensible policy in certain countries, customers that have requested authority to

uplink to PanAmSat satellites have been told that

INTELSAT is the only authorized provider of fixed-satellite service.13 PanAmSat also argues that even if the

national law sets out conditions for competitive telecommunications entry, the reality is that the license granted to

the monopoly national operator often predates the new

competitive law.14 Thus, according to PanAmSat, in

many cases the licenses held by the national operator "are

grandfathered under the new laws."15

PanAmSat proposes an approach to gathering information on market access that includes a survey to be

conducted by the International Telecommunications

Union (ITU) of its Member states to assess market

access.16 PanAmSat also recommends that NTIA and the

Commission work with the ITU and the Departments of

Commerce and State to gather information on market

access for satellite providers.17 Finally, PanAmSat "proposes the creation of an organization comprised of indus124 Addressing the Challenges of International Bribery and Fair Competition, 2001
try representatives, satellite user groups, and national and

international regulatory authorities from the [sic] around

the world to help foster the development of open and

competitive satellite markets."18

The reports received from U.S. embassies abroad

show that in at least 17 countries, the monopoly telecommunications operators, which are also INTELSAT signatories, continue to favor INTELSAT in the provision of

certain satellite services. It is reported in some countries,

however, that signatories are nearing the end of periods

of exclusivity for the provision of services and consequently market access barriers are likely to dissolve. 

Privileges and Immunities

The July 1999 report provides a historical perspective of the necessity for privileges and immunities for

ISOs. Briefly restated here, when INTELSAT was created, there was no experience with international satellite

communications. Because of the commercial risk associated with international satellite communications, and

because of the public service obligations to be undertaken by INTELSAT,19 privileges and immunities were

provided to give INTELSAT protection and to increase

its chances of success. Thus, as reported in prior years,

INTELSAT and its signatories, when acting in their

capacity as Signatories to INTELSAT, benefit from privileges and immunities not otherwise available to private

companies. While it is expected that INTELSAT, the

intergovernmental organization, will continue to enjoy

privileges and immunities, Intelsat, the private entity, will

not enjoy any privileges or immunities and will operate

as a normal commercial company. 

The ORBIT Act establishes a list of licensing criteria

to be applied by the Commission in the licensing of,

among others, Intelsat. One of those licensing criteria

stipulates that the privileged and immune treatment

currently enjoyed by INTELSAT shall not be extended to

Intelsat.20 The ORBIT Act also makes it clear that COMSAT is not entitled, under U.S. law, to any privileges or

immunities that derive from its status as U.S. signatory to

INTELSAT or Inmarsat (except when carrying out written instructions from the U.S. government).21 Moreover,

INTELSAT states that the privatized entity will be

organized under national law and subject to the requirements and obligations of the jurisdictions in which it

organizes and operatesó"just like any other private company."22 Thus, the successor entity will not enjoy international governmental organization (IGO) based privileges

or immunities.23 A residual IGO that will not have any

commercial functions will retain its status as an IGO, but

only for the limited purpose of supervising performance

of public service obligations.24

Preferential Tax Treatment

In the United States, INTELSAT, as an intergovernmental organization, is presently exempt from federal,

state, and local taxation. INTELSATís U.S. Signatory,

COMSAT, does not enjoy similar tax treatment.

In other countries, tax treatment varies according to

the laws of the particular country. Accordingly, the

reports from U.S. embassies show that while some signatories receive no preferential tax treatment, others

enjoy various forms of preferential tax treatment depending on national law. State-owned post, telephone, and

telegraph (PTT) operating companies are generally tax

exempt. There is still no evidence suggesting preferential

or advantageous national tax treatment for ISO signatories simply because of their status as ISO signatories.

Moreover, no private company filed comments asserting

that signatories enjoy preferential tax treatment because

of their status as ISO signatories. 

In the last report, we noted the unresolved issue as to

whether the FCC could collect regulatory fees from

COMSAT pursuant to Section 9(a) of the Communications Act, as amended.25 At that time, COMSAT challenged the Commissionís authority to impose the fee, and

argued that Section 9 space station fees may only be

assessed to recover costs expended in regulating stations

as "radio facilities" pursuant to 47 CFR Part 25.26 COMSAT also argued that INTELSAT satellites are neither

licensed nor regulated by the Commission pursuant to 47

CFR Part 25, thus the Commission bears no costs in regulating INTELSAT space stations as "radio facilities."27

Since that time, the Commission released a Report and

Order making it clear that COMSAT was subject to

Section 9 space station fees because "costs attributable to

space station oversight include costs directly related to

INTELSAT signatory activities."28 Moreover, the ORBIT

Act gives the Commission authority to impose regulatory

fees on COMSAT which it imposes on other entities providing similar service.29

National Contracts–Preference for ISOs

Neither comments received nor embassy reports

revealed any indication of improper preference given to

INTELSAT or its signatories for national contracts.30 It

may be assumed, however, that where state-owned or

monopoly providers exist, they are more likely to be the

recipients of such contracts.

Chapter 10: Advantages to International Satellite Organizations 125
There is also no evidence that the ISOs or their signatories have received undue preference in the award of

contracts from the U.S. government.

Access to Spectrum and Orbital Slots

Access to certain spectrum and orbital slots has been

easier for the ISOs because they were the original market

entrants and, therefore, had first choice of available

resources. In last yearís report, we noted that two private

competitors raised concerns about INTELSAT using its

status to expand its satellites and orbital slots, and to

warehouse orbital locations.31 The concern was that

INTELSAT was using this strategy for the benefit of its

privatized successor. We note that this issue was not

addressed by commenters this year. It may be assumed

that this issue is less of a concern this year because of

INTELSATís progress toward privatization. With respect

to signatories, we may assume that they enjoy various

levels of advantaged access to spectrum and orbital slots.

Conclusion

There were no significant findings or changes in this

yearís report. We note that there were fewer comments

filed, and that there were fewer issues raised as to the

advantages of INTELSAT or its signatories. As recognized in last yearís report, advantages continue to diminish as the forces of privatization and globalization

increase. This is a result of the combined forces of ISO

privatization, global and national trends in telecommunications liberalization and privatization, the WTO/Group

on Basic Telecom Agreement, and the on-going attention

of U.S. industry and government. The ORBIT Act has

also offered another vehicle to monitor the extent to

which privatization reduces the advantages traditionally

accorded ISOs. Following INTELSAT privatization

scheduled for July 18, 2001, we can expect to see an even

greater reduction in these advantages reflected in next

yearís report, and an increasingly level playing field for

satellite service providers.

1Market for Satellite Communications and the Role

of Intergovernmental Satellite Organizations, Notice and

Request for Comments, Docket No. 000410098-1077-02, 66

Fed. Reg. 17686 (April 3, 2001). 

2http://www.ntia.doc.gov

3In the case of INTELSAT, "[e]ach Signatory contributes

capital to INTELSAT and receives capital repayments and

compensation for the use of capital in proportion to its investment share. The investment share of a Signatory is approximately equal to its usage of capacity on the system. Signatories

also have certain opportunities to invest beyond their percentage of their usage of INTELSAT system capacity." In the

Matter of Lockheed Martin Corporation, Comsat

Government Systems, LLC and Comsat Corporation

Application for Transfer of Control of COMSAT

Corporation and Its Subsidiaries, Licensees of Various

Satellite, Earth Station Pirvate Land Mobile Radio and

Experimental Licenses, and Holders of International

Section 214 Authorizations, File Nos. SAT-T/C -20000323-

00078, SAT-STA-20000323-00073, Order and Authorization

(rel. July 31, 2000).

4Pub. L. No. 106-180, 114 Stat. 48 (2000).

5ORBIT Act at ß 2.

6Id. at ß 621.

7Privatization, as used herein, means that the entity no

longer exists as an international governmental organization. It

does not necessarily mean that the entity is wholly owned by

private parties.

8ORBIT Act at ß 646(b)(3) and (4).

9Motient Comments at 3.

10INTELSAT Comments at 2.

11PanAmSat Comments at 1-2.

12Id. at 1.

13Id. at 1-2 (PanAmSat identifies Bolivia, the Central

African Republic, Madagascar, Senegal, and Uruguay as countries where this practice has occurred).

14Id. at 2 (PanAmSat notes that Kenya employs this barrier to market access).

15Id.

16Id. at 4.

17Id.

18Id. at 4-5.

19INTELSAT is obligated to provide global connectivity

on a non-discriminatory basis to all parts of the world, and to

pay particular attention to less developed countries. See

Agreement Relating to the International Satellite Organization,

Aug. 20, 1971, 23 U.S.T. 3813; see also 47 U.S.C. 701.

20ORBIT Act at ß 621(3)(A).

21ORBIT Act at ß 642(b).

22Application of Intelsat LLC for Authority to Operate,

and to Further Construct, Launch and Operate C-Band and KuBand Satellites That Form a Global Communications System

in Geostationary Orbit, Supplemental Information at 19 (filed

December 18, 2000).

23Id. at 20.

126 Addressing the Challenges of International Bribery and Fair Competition, 2001
24Id.

25See Notice of Proposed Rulemaking, In re

Assessment and Collection of Regulatory Fees for Fiscal

Year 2000, FCC 00-117, MD Docket No. 00-58, para. 1 (rel.

April 3, 2000)(NPRM); see 47 U.S.C. ß 159(a)(Commission

authorized to assess these fees to recover the costs it incurs in

carrying out enforcement, policy and rulemaking, international, and user information activity).

26See Addressing the Challenges of International

Bribery and Fair Competition 2000: The Second Annual

Report Under Section 6 of the International Anti-Bribery

and Fair Competition Act of 1998 at 98, U.S. Department

of Commerce, International Trade Administration, July 2000.

27Id.

28See Report and Order, In re Assessment and

Collection of Regulatory Fees for Fiscal Year 2000, FCC

00-240, MD Docket No. 00-58, para . 24 (rel. July 10, 2000).

The Commissionís decision was consistent with the decision of

the U.S. Circuit Court for the District of Columbia which ruled

that Comsat was not exempt from Section 9 regulatory fees.

See PanAmSat Corp. v. F.C.C., 198 F.3d 890 (D.C. Cir.

1999).

29Section 642(c) of the ORBIT Act provides that

"[n]otwithstanding any other law or executive agreement, the

Commission shall have the authority to impose similar regulatory fees on the United States signatory which it imposes on

other entities providing similar services." (codified at 47

U.S.C. ß 765a(c)).

30Certain signatories enjoy exclusive contracts for the provision of telecommunications services. That issue is discussed

in the market access section of this report.

31See note 24 supra at 99.

Chapter 10: Advantages to International Satellite Organizations 127
128 Addressing the Challenges of International Bribery and Fair Competition, 2001
Appendix A: International Anti-Bribery and Fair Competition Act of 1998 129

One Hundred Fifth Congress of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday, the

twenty-seventh day of January, one thousand nine

hundred and ninety-eight

An Act

To amend the Securities Exchange Act of 1934 and the Foreign

Corrupt Practices Act of 1977 to improve the competitiveness

of American business and promote foreign commerce, and for

other purposes.

Be it enacted by the Senate and House of Representatives

of the United States of America in Congress assembled,

SEC. 1. SHORT TITLE.

This Act may be cited as the ëInternational Anti-Bribery and

Fair Competition Act of 1998í.

SEC. 2. AMENDMENTS TO THE FOREIGN CORRUPT PRACTICES ACT GOVERNING ISSUERS.

(a) PROHIBITED CONDUCT.óSection 30A(a) of the

Securities Exchange Act of 1934 (15 U.S.C. 78dd-1(a)) is

amendedó

(1) by amending subparagraph (A) of paragraph (1) to read

as follows:

ë(A)(i) influencing any act or decision of such foreign

official in his official capacity, (ii) inducing such foreign

official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper

advantage; orí;

(2) by amending subparagraph (A) of paragraph (2) to read

as follows:

ë(A)(i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing

such party, official, or candidate to do or omit to do an act

in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; orí; and

(3) by amending subparagraph (A) of paragraph (3) to read

as follows:

ë(A)(i) influencing any act or decision of such foreign

official, political party, party official, or candidate in his

or its official capacity, (ii) inducing such foreign official,

political party, party official, or candidate to do or omit to

do any act in violation of the lawful duty of such foreign

official, political party, party official, or candidate, or (iii)

securing any improper advantage; orí.

(b) OFFICIALS OF INTERNATIONAL ORGANIZATIONS.óParagraph (1) of section 30A(f) of the Securities

International Anti-Bribery and

Fair Competition Act of 1998

A
130 Addressing the Challenges of International Bribery and Fair Competition, 2001

Exchange Act of 1934 (15 U.S.C. 78dd-1(f)(1)) is amended to

read as follows:

ë(1)(A) The term ëforeign officialí means any officer or

employee of a foreign government or any department,

agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department,

agency, or instrumentality, or for or on behalf of any such

public international organization.

ë(B) For purposes of subparagraph (A), the term ëpublic

international organizationí meansó

ë(i) an organization that is designated by Executive order

pursuant to section 1 of the International Organizations

Immunities Act (22 U.S.C. 288); or

ë(ii) any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.í.

(c) ALTERNATIVE JURISDICTION OVER ACTS OUTSIDE THE UNITED STATES.óSection 30A of the Securities

Exchange Act of 1934 (15 U.S.C. 78dd-1) is amendedó

(1) by adding at the end the following:

ë(g) ALTERNATIVE JURISDICTION.ó

ë(1) It shall also be unlawful for any issuer organized under

the laws of the United States, or a State, territory, possession,

or commonwealth of the United States or a political subdivision thereof and which has a class of securities registered

pursuant to section 12 of this title or which is required to file

reports under section 15(d) of this title, or for any United

States person that is an officer, director, employee, or agent

of such issuer or a stockholder thereof acting on behalf of

such issuer, to corruptly do any act outside the United States

in furtherance of an offer, payment, promise to pay, or

authorization of the payment of any money, or offer, gift,

promise to give, or authorization of the giving of anything of

value to any of the persons or entities set forth in paragraphs

(1), (2), and (3) of subsection (a) of this section for the purposes set forth therein, irrespective of whether such issuer or

such officer, director, employee, agent, or stockholder makes

use of the mails or any means or instrumentality of interstate

commerce in furtherance of such offer, gift, payment, promise, or authorization.

ë(2) As used in this subsection, the term ëUnited States personí means a national of the United States (as defined in section 101 of the Immigration and Nationality Act (8 U.S.C.

1101)) or any corporation, partnership, association, jointstock company, business trust, unincorporated organization,

or sole proprietorship organized under the laws of the United

States or any State, territory, possession, or commonwealth

of the United States, or any political subdivision thereof.í;

(2) in subsection (b), by striking ëSubsection (a)í and inserting ëSubsections (a) and (g)í; and

(3) in subsection (c), by striking ësubsection (a)í and inserting ësubsection (a) or (g)í.

(d) PENALTIES.óSection 32(c) of the Securities Exchange

Act of 1934 (15 U.S.C. 78ff(c)) is amendedó

(1) in paragraph (1)(A), by striking ësection 30A(a)í and

inserting ësubsection (a) or (g) of section 30Aí;

(2) in paragraph (1)(B), by striking ësection 30A(a)í and

inserting ësubsection (a) or (g) of section 30Aí; and

(3) by amending paragraph (2) to read as follows:

ë(2)(A) Any officer, director, employee, or agent of an issuer,

or stockholder acting on behalf of such issuer, who willfully

violates subsection (a) or (g) of section 30A of this title shall be

fined not more than $100,000, or imprisoned not more than 5

years, or both.

ë(B) Any officer, director, employee, or agent of an issuer, or

stockholder acting on behalf of such issuer, who violates subsection (a) or (g) of section 30A of this title shall be subject to

a civil penalty of not more than $10,000 imposed in an action

brought by the Commission.í.

SEC. 3. AMENDMENTS TO THE FOREIGN 

CORRUPT PRACTICES ACT GOVERNING 

DOMESTIC CONCERNS.

(a) PROHIBITED CONDUCT.óSection 104(a) of the

Foreign Corrupt Practices Act of 1977 (15 U.S.C. 78dd-2(a)) is

amendedó

(1) by amending subparagraph (A) of paragraph (1) to read

as follows:

ë(A)(i) influencing any act or decision of such foreign

official in his official capacity, (ii) inducing such foreign

official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper

advantage; orí;

(2) by amending subparagraph (A) of paragraph (2) to read

as follows:

ë(A)(i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing

such party, official, or candidate to do or omit to do an act

in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; orí; and

(3) by amending subparagraph (A) of paragraph (3) to read

as follows:

ë(A)(i) influencing any act or decision of such foreign

official, political party, party official, or candidate in his
Appendix A: International Anti-Bribery and Fair Competition Act of 1998 131

or its official capacity, (ii) inducing such foreign official,

political party, party official, or candidate to do or omit to

do any act in violation of the lawful duty of such foreign

official, political party, party official, or candidate, or (iii)

securing any improper advantage; orí.

(b) PENALTIES.óSection 104(g) of the Foreign Corrupt

Practices Act of 1977 (15 U.S.C. 78dd-2(g)) is amendedó

(1) by amending subsection (g)(1) to read as follows:

ë(g)(1)(A) PENALTIES.óAny domestic concern that is

not a natural person and that violates subsection (a) or (i)

of this section shall be fined not more than $2,000,000.

ë(B) Any domestic concern that is not a natural person and

that violates subsection (a) or (i) of this section shall be subject to a civil penalty of not more than $10,000 imposed in

an action brought by the Attorney General.í; and

(2) by amending paragraph (2) to read as follows:

ë(2)(A) Any natural person that is an officer, director,

employee, or agent of a domestic concern, or stockholder

acting on behalf of such domestic concern, who willfully

violates subsection (a) or (i) of this section shall be fined

not more than $100,000 or imprisoned not more than 5

years, or both.

ë(B) Any natural person that is an officer, director,

employee, or agent of a domestic concern, or stockholder

acting on behalf of such domestic concern, who violates

subsection (a) or (i) of this section shall be subject to a

civil penalty of not more than $10,000 imposed in an

action brought by the Attorney General.í.

(c) OFFICIALS OF INTERNATIONAL ORGANIZATIONS.óParagraph (2) of section 104(h) of the Foreign

Corrupt Practices Act of 1977 (15 U.S.C. 78dd-2(h)) is

amended to read as follows:

ë(2)(A) The term ëforeign officialí means any officer or

employee of a foreign government or any department,

agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department,

agency, or instrumentality, or for or on behalf of any such

public international organization.

ë(B) For purposes of subparagraph (A), the term ëpublic

international organizationí meansó

ë(i) an organization that is designated by Executive

order pursuant to section 1 of the International

Organizations Immunities Act (22 U.S.C. 288); or

ë(ii) any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.í.

(d) ALTERNATIVE JURISDICTION OVER ACTS OUTSIDE THE UNITED STATES.óSection 104 of the Foreign

Corrupt Practices Act of 1977 (15 U.S.C. 78dd-2) is further

amendedó

(1) by adding at the end the following:

ë(i) ALTERNATIVE JURISDICTION.ó

ë(1) It shall also be unlawful for any United States person to

corruptly do any act outside the United States in furtherance

of an offer, payment, promise to pay, or authorization of the

payment of any money, or offer, gift, promise to give, or

authorization of the giving of anything of value to any of the

persons or entities set forth in paragraphs (1), (2), and (3) of

subsection (a), for the purposes set forth therein, irrespective of whether such United States person makes use of the

mails or any means or instrumentality of interstate commerce in furtherance of such offer, gift, payment, promise,

or authorization.

ë(2) As used in this subsection, the term ëUnited States personí means a national of the United States (as defined in section 101 of the Immigration and Nationality Act (8 U.S.C.

1101)) or any corporation, partnership, association, jointstock company, business trust, unincorporated organization,

or sole proprietorship organized under the laws of the United

States or any State, territory, possession, or commonwealth

of the United States, or any political subdivision thereof.í;

(2) in subsection (b), by striking ëSubsection (a)í and inserting ëSubsections (a) and (i)í;

(3) in subsection (c), by striking ësubsection (a)í and inserting ësubsection (a) or (i)í; and

(4) in subsection (d)(1), by striking ësubsection (a)í and

inserting ësubsection (a) or (i)í.

(e) TECHNICAL AMENDMENT.óSection 104(h)(4)(A) of

the Foreign Corrupt Practices Act of 1977 (15 U.S.C. 78dd2(h)(4)(A)) is amended by striking ëFor purposes of paragraph

(1), theí and inserting ëTheí.

SEC. 4. AMENDMENTS TO THE FOREIGN 

CORRUPT PRACTICES ACT GOVERNING 

OTHER PERSONS.

Title I of the Foreign Corrupt Practices Act of 1977 is

amended by inserting after section 104 (15 U.S.C. 78dd2) the following new section:

ëSEC. 104A. PROHIBITED FOREIGN TRADE PRACTICES BY PERSONS OTHER THAN ISSUERS OR

DOMESTIC CONCERNS.

ë(a) PROHIBITION.óIt shall be unlawful for any person

other than an issuer that is subject to section 30A of the
132 Addressing the Challenges of International Bribery and Fair Competition, 2001

Securities Exchange Act of 1934 or a domestic concern (as

defined in section 104 of this Act), or for any officer, director, employee, or agent of such person or any stockholder

thereof acting on behalf of such person, while in the territory

of the United States, corruptly to make use of the mails or

any means or instrumentality of interstate commerce or to do

any other act in furtherance of an offer, payment, promise to

pay, or authorization of the payment of any money, or offer,

gift, promise to give, or authorization of the giving of anything of value toó

ë(1) any foreign official for purposes of

ë(A)(i) influencing any act or decision of such foreign

official in his official capacity, (ii) inducing such foreign

official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper

advantage; or

ë(B) inducing such foreign official to use his influence

with a foreign government or instrumentality thereof to

affect or influence any act or decision of such government or instrumentality,

ëin order to assist such person in obtaining or retaining business

for or with, or directing business to, any person;

ë(2) any foreign political party or official thereof or any candidate for foreign political office for purposes ofó

ë(A)(i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do

an act in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; or

ë(B) inducing such party, official, or candidate to use its

or his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of

such government or instrumentality,

ëin order to assist such person in obtaining or retaining business

for or with, or directing business to, any person; or

ë(3) any person, while knowing that all or a portion of such

money or thing of value will be offered, given, or promised,

directly or indirectly, to any foreign official, to any foreign

political party or official thereof, or to any candidate for foreign political office, for purposes ofó

ë(A)(i) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its

official capacity, (ii) inducing such foreign official, political

party, party official, or candidate to do or omit to do any act

in violation of the lawful duty of such foreign official, political party, party official, or candidate, or (iii) securing any

improper advantage; or

ë(B) inducing such foreign official, political party, party

official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or

influence any act or decision of such government or

instrumentality,

ëin order to assist such person in obtaining or retaining business

for or with, or directing business to, any person.

ë(b) EXCEPTION FOR ROUTINE GOVERNMENTAL

ACTION.óSubsection (a) of this section shall not apply to

any facilitating or expediting payment to a foreign official,

political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental

action by a foreign official, political party, or party official.

ë(c) AFFIRMATIVE DEFENSES.óIt shall be an affirmative

defense to actions under subsection (a) of this section tható

ë(1) the payment, gift, offer, or promise of anything of value

that was made, was lawful under the written laws and regulations of the foreign officialís, political partyís, party officialís, or candidateís country; or

ë(2) the payment, gift, offer, or promise of anything of value

that was made, was a reasonable and bona fide expenditure,

such as travel and lodging expenses, incurred by or on behalf

of a foreign official, party, party official, or candidate and

was directly related toó

ë(A) the promotion, demonstration, or explanation of

products or services; or

ë(B) the execution or performance of a contract with a

foreign government or agency thereof.

ë(d) INJUNCTIVE RELIEF.ó

ë(1) When it appears to the Attorney General that any person

to which this section applies, or officer, director, employee,

agent, or stockholder thereof, is engaged, or about to engage,

in any act or practice constituting a violation of subsection

(a) of this section, the Attorney General may, in his discretion, bring a civil action in an appropriate district court of the

United States to enjoin such act or practice, and upon a

proper showing, a permanent injunction or a temporary

restraining order shall be granted without bond.

ë(2) For the purpose of any civil investigation which, in the

opinion of the Attorney General, is necessary and proper to

enforce this section, the Attorney General or his designee are

empowered to administer oaths and affirmations, subpoena

witnesses, take evidence, and require the production of any

books, papers, or other documents which the Attorney

General deems relevant or material to such investigation.

The attendance of witnesses and the production of documentary evidence may be required from any place in the

United States, or any territory, possession, or commonwealth

of the United States, at any designated place of hearing.
Appendix A: International Anti-Bribery and Fair Competition Act of 1998 133

ë(3) In case of contumacy by, or refusal to obey a subpoena

issued to, any person, the Attorney General may invoke

the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of

witnesses and the production of books, papers, or other

documents. Any such court may issue an order requiring

such person to appear before the Attorney General or his

designee, there to produce records, if so ordered, or to give

testimony touching the matter under investigation. Any

failure to obey such order of the court may be punished by

such court as a contempt thereof.

ë(4) All process in any such case may be served in the judicial district in which such person resides or may be found.

The Attorney General may make such rules relating to civil

investigations as may be necessary or appropriate to implement the provisions of this subsection.

ë(e) PENALTIES.ó

ë(1)(A) Any juridical person that violates subsection (a) of

this section shall be fined not more than $2,000,000.

ë(B) Any juridical person that violates subsection (a) of

this section shall be subject to a civil penalty of not more

than $10,000 imposed in an action brought by the

Attorney General.

ë(2)(A) Any natural person who willfully violates subsection

(a) of this section shall be fined not more than $100,000 or

imprisoned not more than 5 years, or both.

ë(B) Any natural person who violates subsection (a) of

this section shall be subject to a civil penalty of not more

than $10,000 imposed in an action brought by the

Attorney General.

ë(3) Whenever a fine is imposed under paragraph (2) upon any

officer, director, employee, agent, or stockholder of a person,

such fine may not be paid, directly or indirectly, by such person.

ë(f) DEFINITIONS.óFor purposes of this section:

ë(1) The term ëpersoní, when referring to an offender,

means any natural person other than a national of the

United States (as defined in section 101 of the Immigration

and Nationality Act (8 U.S.C. 1101) or any corporation,

partnership, association, joint-stock company, business

trust, unincorporated organization, or sole proprietorship

organized under the law of a foreign nation or a political

subdivision thereof.

ë(2)(A) The term ëforeign officialí means any officer or

employee of a foreign government or any department,

agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department,

agency, or instrumentality, or for or on behalf of any such

public international organization.

ë(B) For purposes of subparagraph (A), the term ëpublic

international organizationí meansó

ë(i) an organization that is designated by Executive

order pursuant to section 1 of the International

Organizations Immunities Act (22 U.S.C. 288); or

ë(ii) any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.

ë(3)(A) A personís state of mind is knowing, with respect to

conduct, a circumstance or a result ifó

ë(i) such person is aware that such person is engaging

in such conduct, that such circumstance exists, or that

such result is substantially certain to occur; or

ë(ii) such person has a firm belief that such circumstance exists or that such result is substantially certain

to occur.

ë(B) When knowledge of the existence of a particular circumstance is required for an offense, such knowledge is

established if a person is aware of a high probability of

the existence of such circumstance, unless the person

actually believes that such circumstance does not exist.

ë(4)(A) The term ëroutine governmental actioní means only

an action which is ordinarily and commonly performed by a

foreign official inó

ë(i) obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign

country;

ë(ii) processing governmental papers, such as visas

and work orders;

ë(iii) providing police protection, mail pick-up and

delivery, or scheduling inspections associated with

contract performance or inspections related to transit

of goods across country;

ë(iv) providing phone service, power and water supply,

loading and unloading cargo, or protecting perishable

products or commodities from deterioration; or

ë(v) actions of a similar nature.

ë(B) The term ëroutine governmental actioní does not

include any decision by a foreign official whether, or on

what terms, to award new business to or to continue business with a particular party, or any action taken by a foreign official involved in the decision-making process to

encourage a decision to award new business to or continue business with a particular party.
134 Addressing the Challenges of International Bribery and Fair Competition, 2001

ë(5) The term ëinterstate commerceí means trade, commerce,

transportation, or communication among the several States,

or between any foreign country and any State or between any

State and any place or ship outside thereof, and such term

includes the intrastate use ofó

ë(A) a telephone or other interstate means of communication, or

ë(B) any other interstate instrumentality.í.

SEC. 5. TREATMENT OF INTERNATIONAL

ORGANIZATIONS PROVIDINGCOMMERCIAL

COMMUNICATIONS SERVICES.

(a) DEFINITION.óFor purposes of this section:

(1) INTERNATIONAL ORGANIZATION PROVIDING

COMMERCIAL COMMUNICATIONS SERVICES.óThe

term ëinternational organization providing commercial communications servicesí meansó

(A) the International Telecommunications Satellite

Organization established pursuant to the Agreement

Relating to the International Telecommunications

Satellite Organization; and

(B) the International Mobile Satellite Organization established pursuant to the Convention on the International

Maritime Satellite Organization.

(2) PRO-COMPETITIVE PRIVATIZATION.óThe term

ëpro-competitive privatizationí means a privatization that the

President determines to be consistent with the United States

policy of obtaining full and open competition to such organizations (or their successors), and nondiscriminatory market

access, in the provision of satellite services.

(b) TREATMENT AS PUBLIC INTERNATIONAL ORGANIZATIONS.ó

(1) TREATMENT.óAn international organization providing commercial communications services shall be treated as

a public international organization for purposes of section

30A of the Securities Exchange Act of 1934 (15 U.S.C.

78dd-1) and sections 104 and 104A of the Foreign Corrupt

Practices Act of 1977 (15 U.S.C. 78dd-2) until such time as

the President certifies to the Committee on Commerce of the

House of Representatives and the Committees on Banking,

Housing and Urban Affairs and Commerce, Science, and

Transportation that such international organization providing

commercial communications services has achieved a procompetitive privatization.

(2) LIMITATION ON EFFECT OF TREATMENT.óThe

requirement for a certification under paragraph (1), and any

certification made under such paragraph, shall not be construed

to affect the administration by the Federal Communications

Commission of the Communications Act of 1934 in authorizing the provision of services to, from, or within the United

States over space segment of the international satellite organizations, or the privatized affiliates or successors thereof.

(c) EXTENSION OF LEGAL PROCESS:

(1) IN GENERAL: Except as required by international agreements to which the United States is a party, an international

organization providing commercial communications services,

its officials and employees, and its records shall not be

accorded immunity from suit or legal process for any act or

omission taken in connection with such organizationís capacity as a provider, directly or indirectly, of commercial telecommunications services to, from, or within the United States.

(2) NO EFFECT ON PERSONAL LIABILITY: Paragraph

(1) shall not affect any immunity from personal liability of any

individual who is an official or employee of an international

organization providing commercial communications services.

(3) EFFECTIVE DATE: This subsection shall take effect on

May 1, 1999.

(d) ELIMINATION OR LIMITATION OF EXCEPTIONS:

(1) ACTION REQUIRED: The President shall, in a manner

that is consistent with requirements in international agreements to which the United States is a party, expeditiously take

all appropriate actions necessary to eliminate or to reduce substantially all privileges and immunities that are accorded to an

international organization described in subparagraph (A) or

(B) of subsection (a)(1), its officials, its employees, or its

records, and that are not eliminated pursuant to subsection (c).

(2) DESIGNATION OF AGREEMENTS: The President

shall designate which agreements constitute international

agreements to which the United States is a party for purposes

of this section.

(e) PRESERVATION OF LAW ENFORCEMENT AND

INTELLIGENCE FUNCTIONS.óNothing in subsection (c)

or (d) of this section shall affect any immunity from suit or

legal process of an international organization providing commercial communications services, or the privatized affiliates or

successors thereof, for acts or omissions-

(1) under chapters 119, 121, 206, or 601 of title 18,United

States Code, the Foreign Intelligence Surveillance Act of

1978 (50 U.S.C. 1801 et seq.), section 514 of the

Comprehensive Drug Abuse Prevention and Control Act of

1970 (21 U.S.C. 884), or Rules 104, 501, or 608 of the

Federal Rules of Evidence;

(2) under similar State laws providing protection to service

providers cooperating with law enforcement agencies pursuant to State electronic surveillance or evidence laws, rules,

regulations, or procedures; or

(3) pursuant to a court order.
(f) RULES OF CONSTRUCTION.ó

(1) NEGOTIATIONS.óNothing in this section shall affect

the Presidentís existing constitutional authority regarding the

time, scope, and objectives of international negotiations.

(2) PRIVATIZATION.óNothing in this section shall be

construed as legislative authorization for the privatization

of INTELSAT or Inmarsat, nor to increase the Presidentís

authority with respect to negotiations concerning such

privatization.

SEC. 6. ENFORCEMENT AND MONITORING.

(a) REPORTS REQUIRED.óNot later than July 1 of 1999

and each of the 5 succeeding years, the Secretary of Commerce

shall submit to the House of Representatives and the Senate a

report that contains the following information with respect to

implementation of the Convention:

(1) RATIFICATION.óA list of the countries that have ratified the Convention, the dates of ratification by such countries, and the entry into force for each such country.

(2) DOMESTIC LEGISLATION.óA description of domestic laws enacted by each party to the Convention that implement commitments under the Convention, and assessment of

the compatibility of such laws with the Convention.

(3) ENFORCEMENT.óAs assessment of the measures

taken by each party to the Convention during the previous

year to fulfill its obligations under the Convention and

achieve its object and purpose includingó

(A) an assessment of the enforcement of the domestic

laws described in paragraph (2);

(B) an assessment of the efforts by each such party to

promote public awareness of such domestic laws and the

achievement of such object and purpose; and

(C) an assessment of the effectiveness, transparency, and

viability of the monitoring process for the Convention,

including its inclusion of input from the private sector

and non-governmental organizations.

(4) LAWS PROHIBITING TAX DEDUCTION OF

BRIBES.óAn explanation of the domestic laws enacted by

each party to the Convention that would prohibit the deduction

of bribes in the computation of domestic taxes.

(5) NEW SIGNATORIES.óA description of efforts to

expand international participation in the Convention by

adding new signatories to the Convention and by assuring that

all countries which are or become members of the

Organization for Economic Cooperation and Development are

also parties to the Convention.

(6) SUBSEQUENT EFFORTS.óAn assessment of the status of efforts to strengthen the Convention by extending the

prohibitions contained in the Convention to cover bribes to

political parties, party officials, and candidates for political

office.

(7) ADVANTAGES.óAdvantages, in terms of immunities,

market access, or otherwise, in the countries or regions

served by the organizations described in section 5(a), the reason for such advantages, and an assessment of progress

toward fulfilling the policy described in that section.

(8) BRIBERYAND TRANSPARENCY.óAn assessment of

anti-bribery programs and transparency with respect to each

of the international organizations covered by this Act.

(9) PRIVATE SECTOR REVIEW.óA description of the

steps taken to ensure full involvement of United States private sector participants and representatives of nongovernmental organizations in the monitoring and implementation

of the Convention.

(10) ADDITIONAL INFORMATION.óIn consultation

with the private sector participants and representatives of

nongovernmental organizations described in paragraph (9), a

list of additional means for enlarging the scope of the

Convention and otherwise increasing its effectiveness. Such

additional means shall include, but not be limited to,

improved recordkeeping provisions and the desirability of

expanding the applicability of the Convention to additional

individuals and organizations and the impact on United

States business of section 30A of the Securities Exchange

Act of 1934 and sections 104 and 104A of the Foreign

Corrupt Practices Act of 1977.

(b) DEFINITION.óFor purposes of this section, the term

ìConventionî means the Convention on Combating Bribery of

Foreign Public Officials in International Business Transactions

adopted on November 21, 1997, and signed on December 17,

1997, by the United States and 32 other nations.

Appendix A: International Anti-Bribery and Fair Competition Act of 1998 135
136 Addressing the Challenges of International Bribery and Fair Competition, 2001
Appendix B: Anti-Bribery, Books and Records Provisions of the Foreign Corrupt Practices Act 137

UNITED STATES CODE 

TITLE 15. COMMERCE AND TRADE

CHAPTER 2BóSECURITIES EXCHANGES

ß 78m. Periodical and other reports

(a) Reports by issuer of security; contents

Every issuer of a security registered pursuant to section 78l of

this title shall file with the Commission, in accordance with

such rules and regulations as the Commission may prescribe as

necessary or appropriate for the proper protection of investors

and to insure fair dealing in the securityó

(1) such information and documents (and such copies

thereof) as the Commission shall require to keep reasonably

current the information and documents required to be

included in or filed with an application or registration statement filed pursuant to section 78l of this title, except that the

Commission may not require the filing of any material contract wholly executed before July 1, 1962.

(2) such annual reports (and such copies thereof), certified if

required by the rules and regulations of the Commission by

independent public accountants, and such quarterly reports

(and such copies thereof), as the Commission may prescribe.

Every issuer of a security registered on a national securities

exchange shall also file a duplicate original of such information, documents, and reports with the exchange.

(b) Form of report; books, records, and internal accounting; directives

* * *

(2) Every issuer which has a class of securities registered

pursuant to section 78l of this title and every issuer which is

required to file reports pursuant to section 78o(d) of this title

shalló

(A) make and keep books, records, and accounts,

which, in reasonable detail, accurately and fairly reflect

the transactions and dispositions of the assets of the

issuer; and

(B) devise and maintain a system of internal accounting

controls sufficient to provide reasonable assurances tható

(i) transactions are executed in accordance with managementís general or specific authorization;

(ii) transactions are recorded as necessary (I) to permit preparation of financial statements in conformity

with generally accepted accounting principles or any

other criteria applicable to such statements, and (II) to

maintain accountability for assets;

(iii) access to assets is permitted only in accordance with managementís general or specific

authorization; and

(iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to

any differences.

Anti-Bribery and Books and

Records Provisions of the 

Foreign Corrupt Practices Act1

B
138 Addressing the Challenges of International Bribery and Fair Competition, 2001

(3) (A)With respect to matters concerning the national

security of the United States, no duty or liability under

paragraph (2) of this subsection shall be imposed upon

any person acting in cooperation with the head of any

Federal department or agency responsible for such matters if such act in cooperation with such head of a department or agency was done upon the specific, written directive of the head of such department or agency pursuant to

Presidential authority to issue such directives. Each directive issued under this paragraph shall set forth the specific

facts and circumstances with respect to which the provisions of this paragraph are to be invoked. Each such

directive shall, unless renewed in writing, expire one year

after the date of issuance.

(B) Each head of a Federal department or agency of the

United States who issues a directive pursuant to this paragraph shall maintain a complete file of all such directives

and shall, on October 1 of each year, transmit a summary

of matters covered by such directives in force at any time

during the previous year to the Permanent Select

Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of

the Senate.

(4) No criminal liability shall be imposed for failing to comply with the requirements of paragraph (2) of this subsection

except as provided in paragraph (5) of this subsection.

(5) No person shall knowingly circumvent or knowingly fail

to implement a system of internal accounting controls or

knowingly falsify any book, record, or account described in

paragraph (2).

(6) Where an issuer which has a class of securities registered pursuant to section 78l of this title or an issuer

which is required to file reports pursuant to section 78o(d)

of this title holds 50 per centum or less of the voting

power with respect to a domestic or foreign firm, the provisions of paragraph (2) require only that the issuer proceed in good faith to use its influence, to the extent reasonable under the issuerís circumstances, to cause such

domestic or foreign firm to devise and maintain a system

of internal accounting controls consistent with paragraph

(2). Such circumstances include the relative degree of the

issuerís ownership of the domestic or foreign firm and the

laws and practices governing the business operations of

the country in which such firm is located. An issuer which

demonstrates good faith efforts to use such influence shall

be conclusively presumed to have complied with the

requirements of paragraph (2).

(7) For the purpose of paragraph (2) of this subsection,

the terms ìreasonable assurancesî and ìreasonable

detailî mean such level of detail and degree of assurance

as would satisfy prudent officials in the conduct of their

own affairs.

* * *

ß 78dd-1. Prohibited foreign trade practices by

issuers

(a) Prohibition

It shall be unlawful for any issuer which has a class of securities

registered pursuant to section 78l of this title or which is required

to file reports under section 78o(d) of this title, or for any officer,

director, employee, or agent of such issuer or any stockholder

thereof acting on behalf of such issuer, to make use of the mails

or any means or instrumentality of interstate commerce corruptly

in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to

give, or authorization of the giving of anything of value toó

(1) any foreign official for purposes ofó

(A) (i) influencing any act or decision of such foreign

official in his official capacity, (ii) inducing such foreign

official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper

advantage; or

(B) inducing such foreign official to use his influence

with a foreign government or instrumentality thereof to

affect or influence any act or decision of such government or instrumentality,

in order to assist such issuer in obtaining or retaining business

for or with, or directing business to, any person;

(2) any foreign political party or official thereof or any candidate for foreign political office for purposes ofó

(A) (i) influencing any act or decision of such party,

official, or candidate in its or his official capacity, (ii)

inducing such party, official, or candidate to do or omit

to do an act in violation of the lawful duty of such party,

official, or candidate, or (iii) securing any improper

advantage; or

(B) inducing such party, official, or candidate to use its or

his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of

such government or instrumentality,

in order to assist such issuer in obtaining or retaining business

for or with, or directing business to, any person; or

(3) any person, while knowing that all or a portion of such

money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official, to any

foreign political party or official thereof, or to any candidate for foreign political office, for purposes ofó

(A) (i) influencing any act or decision of such foreign

official, political party, party official, or candidate in
Appendix B: Anti-Bribery, Books and Records Provisions of the Foreign Corrupt Practices Act 139

his or its official capacity, (ii) inducing such foreign

official, political party, party official, or candidate to do

or omit to do any act in violation of the lawful duty of

such foreign official, political party, party official, or

candidate, or (iii) securing any improper advantage; or

(B) inducing such foreign official, political party, party

official, or candidate to use his or its influence with a

foreign government or instrumentality thereof to affect

or influence any act or decision of such government or

instrumentality,

in order to assist such issuer in obtaining or retaining business

for or with, or directing business to, any person.

(b) Exception for routine governmental action

Subsections (a) and (g) of this section shall not apply to any

facilitating or expediting payment to a foreign official, political

party, or party official the purpose of which is to expedite or to

secure the performance of a routine governmental action by a

foreign official, political party, or party official.

(c) Affirmative defenses

It shall be an affirmative defense to actions under subsection

(a) or (g) of this section tható

(1) the payment, gift, offer, or promise of anything of value

that was made, was lawful under the written laws and regulations of the foreign officialís, political partyís, party officialís, or candidateís country; or

(2) the payment, gift, offer, or promise of anything of value

that was made, was a reasonable and bona fide expenditure,

such as travel and lodging expenses, incurred by or on behalf

of a foreign official, party, party official, or candidate and

was directly related toó

(A) the promotion, demonstration, or explanation of

products or services; or

(B) the execution or performance of a contract with a foreign government or agency thereof.

(d) Guidelines by Attorney General

Not later than one year after August 23, 1988, the Attorney

General, after consultation with the Commission, the

Secretary of Commerce, the United States Trade Representative, the Secretary of State, and the Secretary of the

Treasury, and after obtaining the views of all interested persons through public notice and comment procedures, shall

determine to what extent compliance with this section would

be enhanced and the business community would be assisted

by further clarification of the preceding provisions of this section and may, based on such determination and to the extent

necessary and appropriate, issueó

(1) guidelines describing specific types of conduct, associated with common types of export sales arrangements and

business contracts, which for purposes of the Department of

Justiceís present enforcement policy, the Attorney General

determines would be in conformance with the preceding

provisions of this section; and

(2) general precautionary procedures which issuers may use

on a voluntary basis to conform their conduct to the

Department of Justiceís present enforcement policy regarding the preceding provisions of this section.

The Attorney General shall issue the guidelines and procedures

referred to in the preceding sentence in accordance with the

provisions of subchapter II of chapter 5 of Title 5 and those

guidelines and procedures shall be subject to the provisions of

chapter 7 of that title.

(e) Opinions of Attorney General

(1) The Attorney General, after consultation with appropriate

departments and agencies of the United States and after

obtaining the views of all interested persons through public

notice and comment procedures, shall establish a procedure

to provide responses to specific inquiries by issuers concerning conformance of their conduct with the Department of

Justiceís present enforcement policy regarding the preceding

provisions of this section. The Attorney General shall, within

30 days after receiving such a request, issue an opinion in

response to that request. The opinion shall state whether or

not certain specified prospective conduct would, for purposes of the Department of Justiceís present enforcement

policy, violate the preceding provisions of this section.

Additional requests for opinions may be filed with the

Attorney General regarding other specified prospective conduct that is beyond the scope of conduct specified in previous requests. In any action brought under the applicable provisions of this section, there shall be a rebuttable

presumption that conduct, which is specified in a request by

an issuer and for which the Attorney General has issued an

opinion that such conduct is in conformity with the

Department of Justiceís present enforcement policy, is in

compliance with the preceding provisions of this section.

Such a presumption may be rebutted by a preponderance of

the evidence. In considering the presumption for purposes of

this paragraph, a court shall weight all relevant factors,

including but not limited to whether the information submitted to the Attorney General was accurate and complete and

whether it was within the scope of the conduct specified in

any request received by the Attorney General. The Attorney

General shall establish the procedure required by this paragraph in accordance with the provisions of subchapter II of

chapter 5 of Title 5 and that procedure shall be subject to the

provisions of chapter 7 of that title.

(2) Any document or other material which is provided to,

received by, or prepared in the Department of Justice or any
140 Addressing the Challenges of International Bribery and Fair Competition, 2001

other department or agency of the United States in connection with a request by an issuer under the procedure established under paragraph (1), shall be exempt from disclosure

under section 552 of Title 5 and shall not, except with the

consent of the issuer, be made publicly available, regardless of whether the Attorney General responds to such a

request or the issuer withdraws such request before receiving a response.

(3) Any issuer who has made a request to the Attorney

General under paragraph (1) may withdraw such request

prior to the time the Attorney General issues an opinion in

response to such request. Any request so withdrawn shall

have no force or effect.

(4) The Attorney General shall, to the maximum extent

practicable, provide timely guidance concerning the

Department of Justiceís present enforcement policy with

respect to the preceding provisions of this section to potential exporters and small businesses that are unable to obtain

specialized counsel on issues pertaining to such provisions.

Such guidance shall be limited to responses to requests under

paragraph (1) concerning conformity of specified prospective conduct with the Department of Justiceís present

enforcement policy regarding the preceding provisions of

this section and general explanations of compliance responsibilities and of potential liabilities under the preceding provisions of this section.

(f) Definitions

For purposes of this section:

(1) (A) The term ìforeign officialî means any officer or

employee of a foreign government or any department,

agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department,

agency, or instrumentality, or for or on behalf of any such

public international organization.

(B) For purposes of subparagraph (A), the term ìpublic

international organizationî meansó

(i) an organization that is designated by Executive Order

pursuant to section 1 of the International Organizations

Immunities Act (22 U.S.C. ß 288); or

(ii) any other international organization that is designated

by the President by Executive order for the purposes of

this section, effective as of the date of publication of such

order in the Federal Register.

(2) (A) A personís state of mind is ìknowingî with respect to

conduct, a circumstance, or a result ifó

(i) such person is aware that such person is engaging in

such conduct, that such circumstance exists, or that such

result is substantially certain to occur; or

(ii) such person has a firm belief that such circumstance

exists or that such result is substantially certain to occur.

(B) When knowledge of the existence of a particular circumstance is required for an offense, such knowledge is

established if a person is aware of a high probability of the

existence of such circumstance, unless the person actually

believes that such circumstance does not exist.

(3) (A) The term ìroutine governmental actionî means only

an action which is ordinarily and commonly performed by a

foreign official inó

(i) obtaining permits, licenses, or other official documents

to qualify a person to do business in a foreign country;

(ii) processing governmental papers, such as visas and

work orders;

(iii) providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract

performance or inspections related to transit of goods

across country;

(iv) providing phone service, power and water supply,

loading and unloading cargo, or protecting perishable

products or commodities from deterioration; or

(v) actions of a similar nature.

(B) The term ìroutine governmental actionî does not include

any decision by a foreign official whether, or on what terms,

to award new business to or to continue business with a particular party, or any action taken by a foreign official

involved in the decision-making process to encourage a

decision to award new business to or continue business with

a particular party.

(g) Alternative Jurisdiction

(1) It shall also be unlawful for any issuer organized under

the laws of the United States, or a State, territory, possession,

or commonwealth of the United States or a political subdivision thereof and which has a class of securities registered

pursuant to section 12 of this title or which is required to file

reports under section 15(d) of this title, or for any United

States person that is an officer, director, employee, or agent

of such issuer or a stockholder thereof acting on behalf of

such issuer, to corruptly do any act outside the United States

in furtherance of an offer, payment, promise to pay, or

authorization of the payment of any money, or offer, gift,

promise to give, or authorization of the giving of anything of

value to any of the persons or entities set forth in paragraphs

(1), (2), and (3) of this subsection (a) of this section for the

purposes set forth therein, irrespective of whether such

issuer or such officer, director, employee, agent, or stockholder makes use of the mails or any means or instrumentality of interstate commerce in furtherance of such offer, gift,

payment, promise, or authorization.
Appendix B: Anti-Bribery, Books and Records Provisions of the Foreign Corrupt Practices Act 141

(2) As used in this subsection, the term ìUnited States personî means a national of the United States (as defined in section 101 of the Immigration and Nationality Act (8 U.S.C. ß

1101)) or any corporation, partnership, association, jointstock company, business trust, unincorporated organization,

or sole proprietorship organized under the laws of the United

States or any State, territory, possession, or commonwealth

of the United States, or any political subdivision thereof.

ß 78dd-2. Prohibited foreign trade practices by 

domestic concerns

(a) Prohibition

It shall be unlawful for any domestic concern, other than an

issuer which is subject to section 78dd-1 of this title, or for any

officer, director, employee, or agent of such domestic concern

or any stockholder thereof acting on behalf of such domestic

concern, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an

offer, payment, promise to pay, or authorization of the payment

of any money, or offer, gift, promise to give, or authorization

of the giving of anything of value toó

(1) any foreign official for purposes ofó

(A) (i) influencing any act or decision of such foreign

official in his official capacity, (ii) inducing such foreign

official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper

advantage; or

(B) inducing such foreign official to use his influence

with a foreign government or instrumentality thereof to

affect or influence any act or decision of such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person;

(2) any foreign political party or official thereof or any candidate for foreign political office for purposes ofó

(A) (i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do an

act in violation of the lawful duty of such party, official,

or candidate, or (iii) securing any improper advantage; or

(B) inducing such party, official, or candidate to use its or

his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of

such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person;

(3) any person, while knowing that all or a portion of such

money or thing of value will be offered, given, or promised,

directly or indirectly, to any foreign official, to any foreign

political party or official thereof, or to any candidate for foreign political office, for purposes ofó

(A) (i) influencing any act or decision of such foreign

official, political party, party official, or candidate in his

or its official capacity, (ii) inducing such foreign official,

political party, party official, or candidate to do or omit to

do any act in violation of the lawful duty of such foreign

official, political party, party official, or candidate, or (iii)

securing any improper advantage; or

(B) inducing such foreign official, political party, party

official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or

influence any act or decision of such government or

instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person.

(b) Exception for routine governmental action

Subsections (a) and (i) of this section shall not apply to any

facilitating or expediting payment to a foreign official, political

party, or party official the purpose of which is to expedite or to

secure the performance of a routine governmental action by a

foreign official, political party, or party official.

(c) Affirmative defenses

It shall be an affirmative defense to actions under subsection

(a) or (i) of this section tható

(1) the payment, gift, offer, or promise of anything of value

that was made, was lawful under the written laws and regulations of the foreign officialís, political partyís, party officialís, or candidateís country; or

(2) the payment, gift, offer, or promise of anything of value

that was made, was a reasonable and bona fide expenditure,

such as travel and lodging expenses, incurred by or on behalf

of a foreign official, party, party official, or candidate and

was directly related toó

(A) the promotion, demonstration, or explanation of

products or services; or

(B) the execution or performance of a contract with a foreign government or agency thereof.

(d) Injunctive relief

(1) When it appears to the Attorney General that any domestic concern to which this section applies, or officer, director,

employee, agent, or stockholder thereof, is engaged, or about

to engage, in any act or practice constituting a violation of

subsection (a) or (i) of this section, the Attorney General

may, in his discretion, bring a civil action in an appropriate

district court of the United States to enjoin such act or prac-
142 Addressing the Challenges of International Bribery and Fair Competition, 2001

tice, and upon a proper showing, a permanent injunction or

a temporary restraining order shall be granted without bond.

(2) For the purpose of any civil investigation which, in the

opinion of the Attorney General, is necessary and proper to

enforce this section, the Attorney General or his designee are

empowered to administer oaths and affirmations, subpoena

witnesses, take evidence, and require the production of any

books, papers, or other documents which the Attorney

General deems relevant or material to such investigation.

The attendance of witnesses and the production of documentary evidence may be required from any place in the

United States, or any territory, possession, or commonwealth

of the United States, at any designated place of hearing.

(3) In case of contumacy by, or refusal to obey a subpoena

issued to, any person, the Attorney General may invoke the

aid of any court of the United States within the jurisdiction

of which such investigation or proceeding is carried on, or

where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, or other documents. Any such

court may issue an order requiring such person to appear

before the Attorney General or his designee, there to produce

records, if so ordered, or to give testimony touching the matter under investigation. Any failure to obey such order of the

court may be punished by such court as a contempt thereof.

All process in any such case may be served in the judicial district in which such person resides or may be found. The

Attorney General may make such rules relating to civil investigations as may be necessary or appropriate to implement the

provisions of this subsection.

(e) Guidelines by Attorney General

Not later than 6 months after August 23, 1988, the Attorney

General, after consultation with the Securities and Exchange

Commission, the Secretary of Commerce, the United States

Trade Representative, the Secretary of State, and the Secretary

of the Treasury, and after obtaining the views of all interested

persons through public notice and comment procedures, shall

determine to what extent compliance with this section would

be enhanced and the business community would be assisted by

further clarification of the preceding provisions of this section

and may, based on such determination and to the extent necessary and appropriate, issueó

(1) guidelines describing specific types of conduct, associated with common types of export sales arrangements and

business contracts, which for purposes of the Department of

Justiceís present enforcement policy, the Attorney General

determines would be in conformance with the preceding provisions of this section; and

(2) general precautionary procedures which domestic concerns may use on a voluntary basis to conform their conduct

to the Department of Justiceís present enforcement policy

regarding the preceding provisions of this section.

The Attorney General shall issue the guidelines and procedures

referred to in the preceding sentence in accordance with the

provisions of subchapter II of chapter 5 of Title 5 and those

guidelines and procedures shall be subject to the provisions of

chapter 7 of that title.

(f) Opinions of Attorney General

(1) The Attorney General, after consultation with appropriate

departments and agencies of the United States and after

obtaining the views of all interested persons through public

notice and comment procedures, shall establish a procedure

to provide responses to specific inquiries by domestic concerns concerning conformance of their conduct with the

Department of Justiceís present enforcement policy regarding the preceding provisions of this section. The Attorney

General shall, within 30 days after receiving such a request,

issue an opinion in response to that request. The opinion

shall state whether or not certain specified prospective conduct would, for purposes of the Department of Justiceís present enforcement policy, violate the preceding provisions of

this section. Additional requests for opinions may be filed

with the Attorney General regarding other specified prospective conduct that is beyond the scope of conduct specified in

previous requests. In any action brought under the applicable

provisions of this section, there shall be a rebuttable presumption that conduct, which is specified in a request by a

domestic concern and for which the Attorney General has

issued an opinion that such conduct is in conformity with the

Department of Justiceís present enforcement policy, is in

compliance with the preceding provisions of this section.

Such a presumption may be rebutted by a preponderance of

the evidence. In considering the presumption for purposes of

this paragraph, a court shall weigh all relevant factors,

including but not limited to whether the information submitted to the Attorney General was accurate and complete and

whether it was within the scope of the conduct specified in

any request received by the Attorney General. The Attorney

General shall establish the procedure required by this paragraph in accordance with the provisions of subchapter II of

chapter 5 of Title 5 and that procedure shall be subject to the

provisions of chapter 7 of that title.

(2) Any document or other material which is provided to,

received by, or prepared in the Department of Justice or any

other department or agency of the United States in connection with a request by a domestic concern under the procedure established under paragraph (1), shall be exempt from

disclosure under section 552 of Title 5 and shall not, except

with the consent of the domestic concern, be made publicly

available, regardless of whether the Attorney General

response to such a request or the domestic concern with-
Appendix B: Anti-Bribery, Books and Records Provisions of the Foreign Corrupt Practices Act 143

draws such request before receiving a response.

(3) Any domestic concern who has made a request to the

Attorney General under paragraph (1) may withdraw such

request prior to the time the Attorney General issues an opinion in response to such request. Any request so withdrawn

shall have no force or effect.

(4) The Attorney General shall, to the maximum extent practicable, provide timely guidance concerning the Department

of Justiceís present enforcement policy with respect to the

preceding provisions of this section to potential exporters

and small businesses that are unable to obtain specialized

counsel on issues pertaining to such provisions. Such guidance shall be limited to responses to requests under paragraph (1) concerning conformity of specified prospective

conduct with the Department of Justiceís present enforcement policy regarding the preceding provisions of this section and general explanations of compliance responsibilities

and of potential liabilities under the preceding provisions of

this section.

(g) Penalties

(1) (A) Any domestic concern that is not a natural person and

that violates subsection (a) or (i) of this section shall be fined

not more than $2,000,000.

(B) Any domestic concern that is not a natural person and

that violates subsection (a) or (i) of this section shall be

subject to a civil penalty of not more than $10,000

imposed in an action brought by the Attorney General.

(2) (A) Any natural person that is an officer, director,

employee, or agent of a domestic concern, or stockholder

acting on behalf of such domestic concern, who willfully

violates subsection (a) or (i) of this section shall be fined not

more than $100,000 or imprisoned not more than 5 years, or

both.

(B) Any natural person that is an officer, director,

employee, or agent of a domestic concern, or stockholder

acting on behalf of such domestic concern, who violates

subsection (a) or (i) of this section shall be subject to a

civil penalty of not more than $10,000 imposed in an

action brought by the Attorney General.

(3) Whenever a fine is imposed under paragraph (2) upon

any officer, director, employee, agent, or stockholder of a

domestic concern, such fine may not be paid, directly or

indirectly, by such domestic concern.

(h) Definitions

For purposes of this section:

(1) The term ìdomestic concernî meansó

(A) any individual who is a citizen, national, or resident

of the United States; and

(B) any corporation, partnership, association, joint-stock

company, business trust, unincorporated organization, or

sole proprietorship which has its principal place of business in the United States, or which is organized under the

laws of a State of the United States or a territory, possession, or commonwealth of the United States.

(2) (A) The term ìforeign officialî means any officer or

employee of a foreign government or any department,

agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department,

agency, or instrumentality, or for or on behalf of any such

public international organization.

(B) For purposes of subparagraph (A), the term ìpublic

international organizationî meansó

(i) an organization that has been designated by

Executive order pursuant to Section 1 of the

International Organizations Immunities Act (22

U.S.C. ß 288); or

(ii) any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.

(3) (A) A personís state of mind is ìknowingî with respect to

conduct, a circumstance, or a result ifó

(i) such person is aware that such person is engaging

in such conduct, that such circumstance exists, or that

such result is substantially certain to occur; or

(ii) such person has a firm belief that such circumstance

exists or that such result is substantially certain to occur.

(B) When knowledge of the existence of a particular circumstance is required for an offense, such knowledge is

established if a person is aware of a high probability of

the existence of such circumstance, unless the person

actually believes that such circumstance does not exist.

(4) (A) The term ìroutine governmental actionî means only

an action which is ordinarily and commonly performed by a

foreign official inó

(i) obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign

country;

(ii) processing governmental papers, such as visas

and work orders;

(iii) providing police protection, mail pick-up and

delivery, or scheduling inspections associated with

contract performance or inspections related to transit

of goods across country;
144 Addressing the Challenges of International Bribery and Fair Competition, 2001

(iv) providing phone service, power and water supply,

loading and unloading cargo, or protecting perishable

products or commodities from deterioration; or

(v) actions of a similar nature.

(B) The term ìroutine governmental actionî does not

include any decision by a foreign official whether, or on

what terms, to award new business to or to continue business with a particular party, or any action taken by a foreign official involved in the decision-making process to

encourage a decision to award new business to or continue business with a particular party.

(5) The term ìinterstate commerceî means trade, commerce,

transportation, or communication among the several States,

or between any foreign country and any State or between any

State and any place or ship outside thereof, and such term

includes the intrastate use ofó

(A) a telephone or other interstate means of communication, or

(B) any other interstate instrumentality.

(i) Alternative Jurisdiction

(1) It shall also be unlawful for any United States person to

corruptly do any act outside the United States in furtherance

of an offer, payment, promise to pay, or authorization of the

payment of any money, or offer, gift, promise to give, or

authorization of the giving of anything of value to any of the

persons or entities set forth in paragraphs (1), (2), and (3) of

subsection (a), for the purposes set forth therein, irrespective

of whether such United States person makes use of the mails

or any means or instrumentality of interstate commerce in

furtherance of such offer, gift, payment, promise, or authorization.

(2) As used in this subsection, a ìUnited States personî

means a national of the United States (as defined in section

101 of the Immigration and Nationality Act (8 U.S.C. ß

1101)) or any corporation, partnership, association, jointstock company, business trust, unincorporated organization,

or sole proprietorship organized under the laws of the United

States or any State, territory, possession, or commonwealth

of the United States, or any political subdivision thereof.

ß 78dd-3. Prohibited foreign trade practices by persons other than issuers or domestic concerns

(a) Prohibition

It shall be unlawful for any person other than an issuer that is

subject to section 30A of the Securities Exchange Act of 1934

or a domestic concern, as defined in section 104 of this Act), or

for any officer, director, employee, or agent of such person or

any stockholder thereof acting on behalf of such person, while

in the territory of the United States, corruptly to make use of

the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance of an offer, payment, promise to pay, or authorization of the payment of any

money, or offer, gift, promise to give, or authorization of the

giving of anything of value toó

(1) any foreign official for purposes ofó

(A) (i) influencing any act or decision of such foreign

official in his official capacity, (ii) inducing such foreign

official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper

advantage; or

(B) inducing such foreign official to use his influence

with a foreign government or instrumentality thereof to

affect or influence any act or decision of such government or instrumentality,

in order to assist such person in obtaining or retaining business

for or with, or directing business to, any person;

(2) any foreign political party or official thereof or any candidate for foreign political office for purposes ofó

(A) (i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do an

act in violation of the lawful duty of such party, official,

or candidate, or (iii) securing any improper advantage; or

(B) inducing such party, official, or candidate to use its or

his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of

such government or instrumentality,

in order to assist such person in obtaining or retaining business

for or with, or directing business to, any person; or

(3) any person, while knowing that all or a portion of such

money or thing of value will be offered, given, or promised,

directly or indirectly, to any foreign official, to any foreign

political party or official thereof, or to any candidate for foreign political office, for purposes ofó

(A) (i) influencing any act or decision of such foreign

official, political party, party official, or candidate in his

or its official capacity, (ii) inducing such foreign official,

political party, party official, or candidate to do or omit to

do any act in violation of the lawful duty of such foreign

official, political party, party official, or candidate, or (iii)

securing any improper advantage; or

(B) inducing such foreign official, political party, party

official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or

influence any act or decision of such government or

instrumentality,
in order to assist such person in obtaining or retaining business

for or with, or directing business to, any person.

(b) Exception for routine governmental action

Subsection (a) of this section shall not apply to any facilitating

or expediting payment to a foreign official, political party, or

party official the purpose of which is to expedite or to secure

the performance of a routine governmental action by a foreign

official, political party, or party official.

(c) Affirmative defenses

It shall be an affirmative defense to actions under subsection

(a) of this section tható

(1) the payment, gift, offer, or promise of anything of value

that was made, was lawful under the written laws and regulations of the foreign officialís, political partyís, party officialís, or candidateís country; or

(2) the payment, gift, offer, or promise of anything of value

that was made, was a reasonable and bona fide expenditure,

such as travel and lodging expenses, incurred by or on behalf

of a foreign official, party, party official, or candidate and

was directly related toó

(A) the promotion, demonstration, or explanation of

products or services; or

(B) the execution or performance of a contract with a foreign government or agency thereof.

(d) Injunctive relief

(1) When it appears to the Attorney General that any person

to which this section applies, or officer, director, employee,

agent, or stockholder thereof, is engaged, or about to engage,

in any act or practice constituting a violation of subsection

(a) of this section, the Attorney General may, in his discretion, bring a civil action in an appropriate district court of the

United States to enjoin such act or practice, and upon a

proper showing, a permanent injunction or a temporary

restraining order shall be granted without bond.

(2) For the purpose of any civil investigation which, in the

opinion of the Attorney General, is necessary and proper to

enforce this section, the Attorney General or his designee are

empowered to administer oaths and affirmations, subpoena

witnesses, take evidence, and require the production of any

books, papers, or other documents which the Attorney

General deems relevant or material to such investigation.

The attendance of witnesses and the production of documentary evidence may be required from any place in the

United States, or any territory, possession, or commonwealth

of the United States, at any designated place of hearing.

(3) In case of contumacy by, or refusal to obey a subpoena

issued to, any person, the Attorney General may invoke the

aid of any court of the United States within the jurisdiction

of which such investigation or proceeding is carried on, or

where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, or other documents. Any such

court may issue an order requiring such person to appear

before the Attorney General or his designee, there to produce records, if so ordered, or to give testimony touching

the matter under investigation. Any failure to obey such

order of the court may be punished by such court as a contempt thereof.

(4) All process in any such case may be served in the judicial

district in which such person resides or may be found. The

Attorney General may make such rules relating to civil

investigations as may be necessary or appropriate to implement the provisions of this subsection.

(e) Penalties

(1) (A) Any juridical person that violates subsection (a) of

this section shall be fined not more than $2,000,000.

(B) Any juridical person that violates subsection (a) of

this section shall be subject to a civil penalty of not more

than $10,000 imposed in an action brought by the

Attorney General.

(2) (A) Any natural person who willfully violates subsection

(a) of this section shall be fined not more than $100,000 or

imprisoned not more than 5 years, or both.

(B) Any natural person who violates subsection (a) of this

section shall be subject to a civil penalty of not more than

$10,000 imposed in an action brought by the Attorney

General.

(3) Whenever a fine is imposed under paragraph (2) upon

any officer, director, employee, agent, or stockholder of a

person, such fine may not be paid, directly or indirectly, by

such person.

(f) Definitions

For purposes of this section:

(1) The term ìperson,î when referring to an offender, means

any natural person other than a. national of the United States

(as defined in 8 U.S.C. ß 1101) or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship organized

under the law of a foreign nation or a political subdivision

thereof.

(2) (A) The term ìforeign officialî means any officer or

employee of a foreign government or any department,

agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department,

agency, or instrumentality, or for or on behalf of any such

public international organization.

Appendix B: Anti-Bribery, Books and Records Provisions of the Foreign Corrupt Practices Act 145
(B) For purposes of subparagraph (A), the term ìpublic

international organizationî meansó

(i) an organization that has been designated by

Executive Order pursuant to Section 1 of the

International Organizations Immunities Act (22

U.S.C. ß 288); or

(ii) any other international organization that is designated by the President by Executive order for the purposes of this section, effective as of the date of publication of such order in the Federal Register.

(3) (A) A personís state of mind is ìknowingî with respect to

conduct, a circumstance, or a result ifó

(i) such person is aware that such person is engaging

in such conduct, that such circumstance exists, or that

such result is substantially certain to occur; or

(ii) such person has a firm belief that such circumstance exists or that such result is substantially certain

to occur.

(B) When knowledge of the existence of a particular circumstance is required for an offense, such knowledge is

established if a person is aware of a high probability of

the existence of such circumstance, unless the person

actually believes that such circumstance does not exist.

(4) (A) The term ìroutine governmental actionî means only

an action which is ordinarily and commonly performed by a

foreign official inó

(i) obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign

country;

(ii) processing governmental papers, such as visas

and work orders;

(iii) providing police protection, mail pick-up and

delivery, or scheduling inspections associated with

contract performance or inspections related to transit

of goods across country;

(iv) providing phone service, power and water supply,

loading and unloading cargo, or protecting perishable

products or commodities from deterioration; or

(v) actions of a similar nature.

(B) The term ìroutine governmental actionî does not

include any decision by a foreign official whether, or on

what terms, to award new business to or to continue business with a particular party, or any action taken by a foreign official involved in the decision-making process to

encourage a decision to award new business to or continue business with a particular party.

(5) The term ìinterstate commerceî means trade, commerce,

transportation, or communication among the several States,

or between any foreign country and any State or between any

State and any place or ship outside thereof, and such term

includes the intrastate use ofó

(A) a telephone or other interstate means of communication, or

(B) any other interstate instrumentality.

ß 78ff. Penalties

(a) Willful violations; false and misleading statements

Any person who willfully violates any provision of this

chapter (other than section 78dd-1 of this title), or any rule

or regulation thereunder the violation of which is made

unlawful or the observance of which is required under the

terms of this chapter, or any person who willfully and

knowingly makes, or causes to be made, any statement in

any application, report, or document required to be filed

under this chapter or any rule or regulation thereunder or

any undertaking contained in a registration statement as

provided in subsection (d) of section 78o of this title, or by

any self-regulatory organization in connection with an

application for membership or participation therein or to

become associated with a member thereof, which statement was false or misleading with respect to any material

fact, shall upon conviction be fined not more than

$1,000,000, or imprisoned not more than 10 years, or both,

except that when such person is a person other than a natural person, a fine not exceeding $2,500,000 may be

imposed; but no person shall be subject to imprisonment

under this section for the violation of any rule or regulation if he proves that he had no knowledge of such rule or

regulation.

(b) Failure to file information, documents, or reports

Any issuer which fails to file information, documents, or

reports required to be filed under subsection (d) of section

78o of this title or any rule or regulation thereunder shall forfeit to the United States the sum of $100 for each and every

day such failure to file shall continue. Such forfeiture, which

shall be in lieu of any criminal penalty for such failure to file

which might be deemed to arise under subsection (a) of this

section, shall be payable into the Treasury of the United

States and shall be recoverable in a civil suit in the name of

the United States.

(c) Violations by issuers, officers, directors, stockholders, employees, or agents of issuers

(1) (A) Any issuer that violates subsection (a) or (g) of section 30A of this title shall be fined not more than $2,000,000.

146 Addressing the Challenges of International Bribery and Fair Competition, 2001
(B) Any issuer that violates subsection (a) or (g) of section 30A of this title shall be subject to a civil penalty of

not more than $10,000 imposed in an action brought by

the Commission.

(2) (A) Any officer, director, employee, or agent of an issuer,

or stockholder acting on behalf of such issuer, who willfully

violates subsection (a) or (g) of section 30A of this title shall

be fined not more than $100,000, or imprisoned not more

than 5 years, or both.

(B) Any officer, director, employee, or agent of an issuer,

or stockholder acting on behalf of such issuer, who violates subsection (a) or (g) of section 30A of this title shall

be subject to a civil penalty of not more than $10,000

imposed in an action brought by the Commission.

(3) Whenever a fine is imposed under paragraph (2) upon

any officer, director, employee, agent, or stockholder of an

issuer, such fine may not be paid, directly or indirectly, by

such issuer.

1As posted on http://www.usdoj.gov/criminal/fraud/fcpa/fcpastat.htm,

accessed June 15, 2000.

Appendix B: Anti-Bribery, Books and Records Provisions of the Foreign Corrupt Practices Act 147
148 Addressing the Challenges of International Bribery and Fair Competition, 2001
Appendix C: Brochure on the Foreign Corrupt Practices Act 149

INTRODUCTION

The 1988 Trade Act directed the Attorney General to provide

guidance concerning the Department of Justice's enforcement

policy with respect to the Foreign Corrupt Practices Act of

1977 (FCPA), 15 U.S.C. sec. 78dd-1, et seq., to potential

exporters and small businesses that are unable to obtain specialized counseling on issues related to FCPA. The guidance

is limited to responses to requests under the Department of

Justiceís Foreign Corrupt Practices Act Opinion Procedure

and to general explanations of compliance responsibilities

and potential liabilities under the FCPA. This brochure constitutes the Department of Justice's general explanation of 

the FCPA.

U.S. firms seeking to do business in foreign markets must be

familiar with the FCPA. In general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business. The Department of Justice is the

chief enforcement agency, with a coordinate role played by

the Securities and Exchange Commission (SEC). The Office

of General Counsel of the Department of Commerce also

answers general questions from U.S. exporters concerning

the FCPA's basic requirements and constraints. 

BACKGROUND

As a result of SEC investigations in the mid-1970's, over 400

U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties. The abuses ran the

gamut from bribery of high foreign officials to secure some

type of favorable action by a foreign government to so-called

facilitating payments that allegedly were made to ensure that

government functionaries discharged certain ministerial or

clerical duties. Congress enacted the FCPA to bring a halt to the

bribery of foreign officials and to restore public confidence in

the integrity of the American business system. 

The FCPA was intended to have and has had an enormous

impact on the way American firms do business. Several firms

that paid bribes to foreign officials have been the subject of

criminal and civil enforcement actions, resulting in large fines

and suspension and debarment from federal procurement contracting, and their employees and officers have gone to jail. To

avoid such consequences, many firms have implemented

detailed compliance programs intended to prevent and to detect

any improper payments by employees and agents.

Following the passage of the FCPA, the Congress became

concerned that American companies were operating at a disadvantage compared to foreign companies who routinely paid

Text of Brochure on the 

Anti-Bribery Provisions of the

Foreign Corrupt Practices Act

C

This brochure is intended to provide a general description of the

FCPA and is not intended to substitute for the advice of private

counsel on specific issues related to the FCPA.
150 Addressing the Challenges of International Bribery and Fair Competition, 2001

bribes and, in some countries, were permitted to deduct the cost

of such bribes as business expenses on their taxes. Accordingly,

in 1988, the Congress directed the Executive Branch to

commence negotiations in the Organization of Economic

Cooperation and Development (OECD) to obtain the agreement

of the United Statesí major trading partners to enact legislation

similar to the FCPA. In 1997, almost ten years later, the United

States and thirty-three other countries signed the OECD

Convention on Combating Bribery of Foreign Public Officials in

International Business Transactions. The United States ratified

this Convention and enacted implementing legislation in 1998.

(See Convention and Commentaries on the DOJ web site.)

The antibribery provisions of the FCPA make it unlawful for a

U.S. person, and certain foreign issuers of securities, to make a

corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to,

any person. Since 1998, they also apply to foreign firms and

persons who take any act in furtherance of such a corrupt payment while in the United States.

The FCPA also requires companies whose securities are listed

in the United States to meet its accounting provisions. (See 15

U.S.C. sec. 78m.) These accounting provisions, which were

designed to operate in tandem with the antibribery provisions

of the FCPA, require corporations covered by the provisions to

make and keep books and records that accurately and fairly

reflect the transactions of the corporation and to devise and

maintain an adequate system of internal accounting controls.

This brochure discusses only the antibribery provisions.

ENFORCEMENT

The Department of Justice is responsible for all criminal

enforcement and for civil enforcement of the antibribery provisions with respect to domestic concerns and foreign companies and nationals. The SEC is responsible for civil enforcement of the antibribery provisions with respect to issuers.

ANTIBRIBERY PROVISIONS

BASIC PROHIBITION

The FCPA makes it unlawful to bribe foreign government officials to obtain or retain business. With respect to the basic prohibition, there are five elements which must be met to constitute a violation of the Act:

1. WhoóThe FCPA potentially applies to any individual, firm,

officer, director, employee, or agent of a firm and any stockholder acting on behalf of a firm. Individuals and firms may

also be penalized if they order, authorize, or assist someone

else to violate the antibribery provisions or if they conspire to

violate those provisions. 

Under the FCPA, U.S. jurisdiction over corrupt payments to

foreign officials depends upon whether the violator is an

ìissuer,î a ìdomestic concern,î or a foreign national or business.

An ìissuerî is a corporation that has issued securities that have

been registered in the United States or who is required to file

periodic reports with the SEC. A ìdomestic concernî is any

individual who is a citizen, national, or resident of the United

States, or any corporation, partnership, association, joint-stock

company, business trust, unincorporated organization, or sole

proprietorship which has its principal place of business in the

United States, or which is organized under the laws of a State

of the United States, or a territory, possession, or commonwealth of the United States. 

Issuers and domestic concerns may be held liable under the

FCPA under either territorial or nationality jurisdiction principles. For acts taken within the territory of the United States,

issuers and domestic concerns are liable if they take an act in

furtherance of a corrupt payment to a foreign official using the

U.S. mails or other means or instrumentalities of interstate

commerce. Such means or instrumentalities include telephone

calls, facsimile transmissions, wire transfers, and interstate or

international travel. In addition, issuers and domestic concerns

may be held liable for any act in furtherance of a corrupt payment taken outside the United States. Thus, a U.S. company or

national may be held liable for a corrupt payment authorized by

employees or agents operating entirely outside the United

States, using money from foreign bank accounts, and without

any involvement by personnel located within the United States.

Prior to 1998, foreign companies, with the exception of those

who qualified as ìissuers,î and foreign nationals were not covered by the FCPA. The 1998 amendments expanded the FCPA

to assert territorial jurisdiction over foreign companies and

nationals. A foreign company or person is now subject to the

FCPA if it causes, directly or through agents, an act in furtherance of the corrupt payment to take place within the territory of

the United States. There is, however, no requirement that such

act make use of the U.S. mails or other means or instrumentalities of interstate commerce.

Finally, U.S. parent corporations may be held liable for the acts

of foreign subsidiaries where they authorized, directed, or controlled the activity in question, as can U.S. citizens or residents,

themselves ìdomestic concerns,î who were employed by or

acting on behalf of such foreign-incorporated subsidiaries. 

2. Corrupt intentóThe person making or authorizing the payment must have a corrupt intent, and the payment must be

intended to induce the recipient to misuse his official position

to direct business wrongfully to the payer or to any other person. You should note that the FCPA does not require that a corrupt act succeed in its purpose. The offer or promise of a corrupt payment can constitute a violation of the statute. The
Appendix C: Brochure on the Foreign Corrupt Practices Act 151

FCPA prohibits any corrupt payment intended to influence any

act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official to use his or her influence

im-properly to affect or influence any act or decision.

3. PaymentóThe FCPA prohibits paying, offering, promising to

pay (or authorizing to pay or offer) money or anything of value.

4. RecipientóThe prohibition extends only to corrupt payments to a foreign official, a foreign political party or party

official, or any candidate for foreign political office. A ìforeign

officialî means any officer or employee of a foreign government, a public international organization, or any department or

agency thereof, or any person acting in an official capacity. You

should consider utilizing the Department of Justice's Foreign

Corrupt Practices Act Opinion Procedure for particular questions as to the definition of a ìforeign official,î such as whether

a member of a royal family, a member of a legislative body, or

an official of a state-owned business enterprise would be considered a ìforeign official.î

The FCPA applies to payments to any public official, regardless of rank or position. The FCPA focuses on the purpose of

the payment instead of the particular duties of the official

receiving the payment, offer, or promise of payment, and there

are exceptions to the antibribery provision for ìfacilitating

payments for routine governmental actionî (See below).

5. Business Purpose TestóThe FCPA prohibits payments

made in order to assist the firm in obtaining or retaining business for or with, or directing business to, any person. The

Department of Justice interprets ìobtaining or retaining businessî broadly, such that the term encompasses more than the

mere award or renewal of a contract. It should be noted that the

business to be obtained or retained does not need to be with a

foreign government or foreign government instrumentality.

THIRD PARTY PAYMENTS

The FCPA prohibits corrupt payments through intermediaries.

It is unlawful to make a payment to a third party, while knowing that all or a portion of the payment will go directly or indirectly to a foreign official. The term “knowing” includes conscious disregard and deliberate ignorance. The elements of an

offense are essentially the same as described above, except that

in this case the ìrecipientî is the intermediary who is making

the payment to the requisite ìforeign official.î

Intermediaries may include joint venture partners or agents.

To avoid being held liable for corrupt third party payments,

U.S. companies are encouraged to exercise due diligence and

to take all necessary precautions to ensure that they have

formed a business relationship with reputable and qualified

partners and representatives. Such due diligence may include

investigating potential foreign representatives and joint venture partners to determine if they are in fact qualified for the

position, whether they have personal or professional ties to the

government, the number and reputation of their clientele, and

their reputation with the U.S. Embassy or Consulate and with

local bankers, clients, and other business associates. In addition,

in negotiating a business relationship, the U.S. firm should be

aware of so-called ìred flags,î i.e., unusual payment patterns or

financial arrangements, a history of corruption in the country, a

refusal by the foreign joint venture partner or representative to

provide a certification that it will not take any action in furtherance of an unlawful offer, promise, or payment to a foreign public official and not take any act that would cause the U.S. firm

to be in violation of the FCPA, unusually high commissions,

lack of transparency in expenses and accounting records, apparent lack of qualifications or resources on the part of the joint

venture partner or representative to perform the services

offered, and whether the joint venture partner or representative

has been recommended by an official of the potential governmental customer.

You should seek the advice of counsel and consider utilizing

the Department of Justice's Foreign Corrupt Practices Act

Opinion Procedure for particular questions relating to third

party payments.

PERMISSIBLE PAYMENTS AND 

AFFIRMATIVE DEFENSES

The FCPA contains an explicit exception to the bribery prohibition for ìfacilitating paymentsî for ìroutine governmental

actionî and provides affirmative defenses which can be used to

defend against alleged violations of the FCPA.

FACILITATING PAYMENTS FOR ROUTINE 

GOVERNMENTAL ACTIONS

There is an exception to the antibribery prohibition for payments to facilitate or expedite performance of a ìroutine governmental action.î The statute lists the following examples:

obtaining permits, licenses, or other official documents; processing gove-rnmental papers, such as visas and work orders;

providing police protection, mail pick-up and delivery; providing phone service, power and water supply, loading and

unloading cargo, or protecting perishable products; and scheduling inspections associated with contract performance or

transit of goods across country.

Actions “similar” to these are also covered by this exception. If you have a question about whether a payment falls

within the exception, you should consult with counsel. You

should also consider whether to utilize the Justice

Department's Foreign Corrupt Practices Opinion Procedure,

described below.
152 Addressing the Challenges of International Bribery and Fair Competition, 2001

ìRoutine governmental actionî does not include any decision

by a foreign official to award new business or to continue business with a particular party.

AFFIRMATIVE DEFENSES

A person charged with a violation of the FCPA's antibribery

provisions may assert as a defense that the payment was lawful under the written laws of the foreign country or that the

money was spent as part of demonstrating a product or performing a contractual obligation.

Whether a payment was lawful under the written laws of the

foreign country may be difficult to determine. You should consider seeking the advice of counsel or utilizing the Department

of Justice's Foreign Corrupt Practices Act Opinion Procedure

when faced with an issue of the legality of such a payment.

Moreover, because these defenses are ìaffirmative defenses,î

the defendant is required to show in the first instance that the

payment met these requirements. The prosecution does not

bear the burden of demonstrating in the first instance that the

payments did not constitute this type of payment.

SANCTIONS AGAINST BRIBERY

CRIMINAL

The following criminal penalties may be imposed for violations of the FCPAís antibribery provisions: corporations and

other business entities are subject to a fine of up to $2,000,000;

officers, directors, stockholders, employees, and agents are subject to a fine of up to $100,000 and imprisonment for up to five

years. Moreover, under the Alternative Fines Act, these fines

may be actually quite higheróthe actual fine may be up to twice

the benefit that the defendant sought to obtain by making the corrupt payment. You should also be aware that fines imposed on

individuals may not be paid by their employer or principal.

CIVIL

The Attorney General or the SEC, as appropriate, may bring a

civil action for a fine of up to $10,000 against any firm as well

as any officer, director, employee, or agent of a firm, or stockholder acting on behalf of the firm, who violates the antibribery

provisions. In addition, in an SEC enforcement action, the court

may impose an additional fine not to exceed the greater of (i) the

gross amount of the pecuniary gain to the defendant as a result

of the violation, or (ii) a specified dollar limitation. The specified

dollar limitations are based on the egregiousness of the violation,

ranging from $5,000 to $100,000 for a natural person and

$50,000 to $500,000 for any other person.

The Attorney General or the SEC, as appropriate, may also

bring a civil action to enjoin any act or practice of a firm whenever it appears that the firm (or an officer, director, employee,

agent, or stockholder acting on behalf of the firm) is in violation (or about to be) of the antibribery provisions.

OTHER GOVERNMENTAL ACTION

Under guidelines issued by the Office of Management and

Budget, a person or firm found in violation of the FCPA may

be barred from doing business with the Federal government.

Indictment alone can lead to suspension of the right to do business with the government. The President has directed that no

executive agency shall allow any party to participate in any

procurement or nonprocurement activity if any agency has

debarred, suspended, or otherwise excluded that party from

participation in a procurement or nonprocurement activity.

In addition, a person or firm found guilty of violating the FCPA

may be ruled ineligible to receive export licenses; the SEC may

suspend or bar persons from the securities business and impose

civil penalties on persons in the securities business for violations of the FCPA; the Commodity Futures Trading

Commission and the Overseas Private Investment Corporation

both provide for possible suspension or debarment from agency

programs for violation of the FCPA; and a payment made to a

foreign government official that is unlawful under the FCPA

cannot be deducted under the tax laws as a business expense.

PRIVATE CAUSE OF ACTION

Conduct that violates the antibribery provisions of the FCPA

may also give rise to a private cause of action for treble damages under the Racketeer Influenced and Corrupt Organizations

Act (RICO), or to actions under other federal or state laws. For

example, an action might be brought under RICO by a competitor who alleges that the bribery caused the defendant to win

a foreign contract.

GUIDANCE FROM THE GOVERNMENT

The Department of Justice has established a Foreign Corrupt

Practices Act Opinion Procedure by which any U.S. company or

national may request a statement of the Justice Departmentís

present enforcement intentions under the antibribery provisions

of the FCPA regarding any proposed business conduct. The

details of the opinion procedure may be found at 28 CFR Part 80.

Under this procedure, the Attorney General will issue an opinion

in response to a specific inquiry from a person or firm within

thirty days of the request. (The thirty-day period does not run until

the Department of Justice has received all the information it

requires to issue the opinion.) Conduct for which the Department

of Justice has issued an opinion stating that the conduct conforms

with current enforcement policy will be entitled to a presumption,

in any subsequent enforcement action, of conformity with the
FCPA. Copies of releases issued regarding previous opinions are

available on the Department of Justiceís FCPA web site.

For further information from the Department of Justice about

the FCPA and the Foreign Corrupt Practices Act Opinion

Procedure, contact Peter B. Clark, Deputy Chief, or Philip

Urofsky, Senior Trial Attorney, Fraud Section, Criminal

Division, U.S. Department of Justice, P.O. Box. 28188,

McPherson Square, Washington, D.C. 20038 (202) 514-7023.

Although the Department of Commerce has no enforcement role

with respect to the FCPA, it supplies general guidance to U.S.

exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information from the Department of Commerce about the FCPA contact Eleanor Roberts Lewis, Chief Counsel for International

Commerce, or Arthur Aronoff, Senior Counsel, Office of the

Chief Counsel for International Commerce, U.S. Department of

Commerce, Room 5882, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 20230 (202) 482-0937.

UNITED STATES DEPARTMENT OF JUSTICE

Fraud Section, Criminal Division

P.O. Box 28188, McPherson Square

Washington, D.C. 20038

Telephone: (202) 514-7023

Fax: (202) 514-7021

Internet: www.usdoj.gov/criminal/fraud/fcpa

E-mail: FCPA.fraud@usdoj.gov

UNITED STATES DEPARTMENT OF COMMERCE

Office of the Chief Counsel for International Commerce

14th Street and Constitution Avenue, NW

Room 5882

Washington, D.C. 20230

Telephone: (202) 482-0937

Fax: (202) 482-4076

Internet: www.ita.doc.gov/legal

Appendix C: Brochure on the Foreign Corrupt Practices Act 153
154 Addressing the Challenges of International Bribery and Fair Competition, 2001
OECD Documents

OECD Convention on Combating Bribery of Foreign Public Officials 

in International Business Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OECD Commentaries on the Convention on Combating Bribery of 

Foreign Public Officials in International Business Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Revised Recommendation of the OECD Council on Combating Bribery in 

International Business Transations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recommendation of the OECD Council on the Tax Deductibility of Bribes to

Foreign Public Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appendix D: OECD Documents 155

D 
156 Addressing the Challenges of International Bribery and Fair Competition, 2001

Preamble 

The Parties,

Considering that bribery is a widespread phenomenon in international business transactions, including trade and investment,

which raises serious moral and political concerns, undermines

good governance and economic development, and distorts

international competitive conditions; 

Considering that all countries share a responsibility to combat

bribery in international business transactions; 

Having regard to the Revised Recommendation on Combating

Bribery in International Business Transactions, adopted by the

Council of the Organization for Economic Cooperation and

Development (OECD) on 23 May 1997, C(97)123/FINAL,

which, inter alia, called for effective measures to deter, prevent

and combat the bribery of foreign public officials in connection

with international business transactions, in particular the prompt

criminaliza-tion of such bribery in an effective and coordinated

manner and in conformity with the agreed common elements

set out in that Recommendation and with the jurisdictional and

other basic legal principles of each country;

Welcoming other recent developments which further advance

international understanding and cooperation in combating

bribery of public officials, including actions of the United

Nations, the World Bank, the International Monetary Fund, the

World Trade Organization, the Organization of American States,

the Council of Europe and the European Union; 

Welcoming the efforts of companies, organizations and trade

unions as well as other non-governmental organizations to

combat bribery; 

Recognizing the role of governments in the prevention of

solicitation of bribes from individuals and enterprises in international business transactions; 

Recognizing that achieving progress in this field requires not

only efforts on a national level but also multilateral cooperation, monitoring and follow-up; 

Recognizing that achieving equivalence among the measures

to be taken by the Parties is an essential object and purpose of

the Convention, which requires that the Convention be ratified

without derogations affecting this equivalence; 

Have agreed as follows: 

Article 1 - The Offense of Bribery of 

Foreign Public Officials 

1. Each Party shall take such measures as may be necessary

to 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 international business. 

2. Each Party shall take any measures necessary to establish that complicity in, including incitement, aiding and

abetting, or authorization of an act of bribery of a foreign

public official shall be a criminal offense. Attempt and conspiracy to bribe a foreign public official shall be criminal

offenses to the same extent as attempt and conspiracy to

bribe a public official of that Party. 

3. The offenses set out in paragraphs 1 and 2 above are hereinafter referred to as ìbribery of a foreign public official.î 

4. For the purpose of this Convention: 

a. ìforeign public officialî means 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 enterprise; and any official or agent of a public international organization; 

b. ìforeign countryî includes all levels and subdivisions of

government, from national to local; 

c. ìact or refrain from acting in relation to the performance of

official dutiesî includes any use of the public officialís position,

whether or not within the officialís authorized competence.

OECD Convention on Combating Bribery 

of Foreign Public Officials in 

International Business Transactions

(Signed December 17, 1997)
Appendix D: OECD Documents 157

Article 2 - Responsibility of Legal Persons 

Each Party shall take such measures as may be necessary, in

accordance with its legal principles, to establish the liability of

legal persons for the bribery of a foreign public official.

Article 3 - Sanctions 

1. The bribery of a foreign public official shall be punishable

by effective, proportionate and dissuasive criminal penalties.

The range of penalties shall be comparable to that applicable

to the bribery of the Partyís own public officials and shall, 

in the case of natural persons, include deprivation of 

liberty sufficient to enable effective mutual legal assistance 

and extradition. 

2. In the event that, under the legal system of a Party, criminal responsibility is not applicable to legal persons, that 

Party shall ensure that legal persons shall be subject to effective, proportionate and dissuasive non-criminal sanctions,

including monetary sanctions, for bribery of foreign 

public officials. 

3. Each Party shall take such measures as may be necessary to

provide that the bribe and the proceeds of the bribery of a foreign public official, or property the value of which corresponds

to that of such proceeds, are subject to seizure and confiscation

or that monetary sanctions of comparable effect are applicable. 

4. Each Party shall consider the imposition of additional civil

or administrative sanctions upon a person subject to sanctions

for the bribery of a foreign public official.

Article 4 - Jurisdiction 

1. Each Party shall take such measures as may be necessary

to establish its jurisdiction over the bribery of a foreign public official when the offense is committed in whole or in part

in its territory. 

2. Each Party which has jurisdiction to prosecute its nationals

for offenses committed abroad shall take such measures as

may be necessary to establish its jurisdiction to do so in

respect of the bribery of a foreign public official, according to

the same principles. 

3. When more than one Party has jurisdiction over an alleged

offense described in this Convention, the Parties involved shall,

at the request of one of them, consult with a view to determining

the most appropriate jurisdiction for prosecution. 

4. Each Party shall review whether its current basis for jurisdiction is effective in the fight against the bribery of foreign

public officials and, if it is not, shall take remedial steps. 

Article 5 - Enforcement 

Investigation and prosecution of the bribery of a foreign public

official shall be subject to the applicable rules and principles of

each Party. They shall not be influenced by considerations of

national economic interest, the potential effect upon relations

with another State or the identity of the natural or legal persons

involved. 

Article 6 - Statute of Limitations 

Any statute of limitations applicable to the offence of bribery of

a foreign public official shall allow an adequate period of time

for the investigation and prosecution of this offence. 

Article 7 - Money Laundering 

Each Party which has made bribery of its own public official a

predicate offence for the purpose of the application of its

money laundering legislation shall do so on the same terms for

the bribery of a foreign public official, without regard to the

place where the bribery occurred.

Article 8 - Accounting 

1. In order to combat bribery of foreign public officials effectively,

each Party shall take such measures as may be necessary, within

the framework of its laws and regulations regarding the maintenance of books and records, financial statement disclosures, and

accounting and auditing standards, to prohibit the establishment of

off-the-books accounts, the making of off-the-books or inadequately identified transactions, the recording of nonexistent expenditures, the entry of liabilities with incorrect identification of their

object, as well as the use of false documents, by companies subject to those laws and regulations, for the purpose of bribing foreign public officials or of hiding such bribery. 

2. Each Party shall provide effective, proportionate and dissuasive civil, administrative or criminal penalties for such

omissions and falsifications in respect of the books, records,

accounts and financial statements of such -companies. 

Article 9 - Mutual Legal Assistance 

1. Each Party shall, to the fullest extent possible under its

laws and relevant treaties and arrangements, provide prompt

and effective legal assistance to another Party for the purpose

of criminal investigations and proceedings brought by a Party

concerning offences within the scope of this Convention and

for non-criminal proceedings within the scope of this

Convention brought by a Party against a legal person. The

requested Party shall inform the requesting Party, without

delay, of any additional information or documents needed to

support the request for assistance and, where requested, of the

status and outcome of the request for assistance. 
158 Addressing the Challenges of International Bribery and Fair Competition, 2001

2. Where a Party makes mutual legal assistance conditional

upon the existence of dual criminality, dual criminality shall be

deemed to exist if the offence for which the assistance is sought

is within the scope of this Convention. 

3. A Party shall not decline to render mutual legal assistance for

criminal matters within the scope of this Convention on the

ground of bank secrecy. 

Article 10 - Extradition 

1. Bribery of a foreign public official shall be deemed to be

included as an extraditable offence under the laws of the

Parties and the extradition treaties between them. 

2. If a Party which makes extradition conditional on the existence of an extradition treaty receives a request for extradition

from another Party with which it has no extradition treaty, it may

consider this Convention to be the legal basis for extradition in

respect of the offence of bribery of a foreign public official. 

3. Each Party shall take any measures necessary to assure

either that it can extradite its nationals or that it can prosecute

its nationals for the offence of bribery of a foreign public official. A Party whicha declines a request to extradite a person for

bribery of a foreign public official solely on the ground that the

person is its national shall submit the case to its competent

authorities for the purpose of prosecution. 

4. Extradition for bribery of a foreign public official is subject to

the conditions set out in the domestic law and applicable treaties

and arrangements of each Party. Where a Party makes extradition

conditional upon the existence of dual criminality, that condition

shall be deemed to be fulfilled if the offence for which extradition

is sought is within the scope of Article 1 of this Convention. 

Article 11 - Responsible Authorities 

For the purposes of Article 4, paragraph 3, on consultation,

Article 9, on mutual legal assistance and Article 10, on extradition, each Party shall notify to the SecretaryñGeneral of the

OECD an authority or authorities responsible for making and

receiving requests, which shall serve as channel of communication for these matters for that Party, without prejudice to

other arrangements between Parties. 

Article 12 - Monitoring and Follow-up 

The Parties shall cooperate in carrying out a program of systematic follow-up to monitor and promote the full implementation of this Convention. Unless otherwise decided by consensus of the Parties, this shall be done in the framework of the

OECD Working Group on Bribery in International Business

Transactions and according to its terms of reference, or within

the framework and terms of reference of any successor to its

functions, and Parties shall bear the costs of the program in

accordance with the rules applicable to that body. 

Article 13 - Signature and Accession 

1. Until its entry into force, this Convention shall be open for

signature by OECD members and by non-members which have

been invited to become full participants in its Working Group

on Bribery in International Business Transactions. 

2. Subsequent to its entry into force, this Convention shall be

open to accession by any non-signatory which is a member of

the OECD or has become a full participant in the Working

Group on Bribery in International Business Transactions or any

successor to its functions. For each such non-signatory, the

Convention shall enter into force on the sixtieth day following

the date of deposit of its instrument of accession. 

Article 14 - Ratification and Depositary 

1. This Convention is subject to acceptance, approval or ratification by the Signatories, in accordance with their respective laws. 

2. Instruments of acceptance, approval, ratification or

accession shall be deposited with the Secretary-General of

the OECD, who shall serve as Depositary of this

Convention. 

Article 15 - Entry into Force 

1. This Convention shall enter into force on the sixtieth

day following the date upon which five of the ten countries

which have the ten largest export shares (see annex), and

which represent by themselves at least sixty per cent of the

combined total exports of those ten countries, have

deposited their instruments of acceptance, approval, or ratification. For each signatory depositing its instrument after

such entry into force, the Convention shall enter into force

on the sixtieth day after deposit of its instrument.

2. If, after 31 December 1998, the Convention has not

entered into force under paragraph 1 above, any signatory

which has deposited its instrument of acceptance, approval

or ratification may declare in writing to the Depositary its

readiness to accept entry into force of this Convention

under this paragraph 2. The Convention shall enter into

force for such a signatory on the sixtieth day following the

date upon which such declarations have been deposited by

at least two signatories. For each signatory depositing its

declaration after such entry into force, the Convention

shall enter into force on the sixtieth day following the date

of deposit. 
Appendix D: OECD Documents 159

Article 16 - Amendment 

Any Party may propose the amendment of this Convention.

A proposed amendment shall be submitted to the

Depositary which shall communicate it to the other Parties

at least sixty days before convening a meeting of the

Parties to consider the proposed amendment. An amendment adopted by consensus of the Parties, or by such other

means as the Parties may determine by consensus, shall

enter into force sixty days after the deposit of an instrument

of ratification, acceptance or approval by all of the Parties,

or in such other circumstances as may be specified by the

Parties at the time of adoption of the amendment.

Article 17 - Withdrawal 

A Party may withdraw from this Convention by submitting

written notification to the Depositary. Such withdrawal shall

be effective one year after the date of the receipt of the notification. After withdrawal, cooperation shall continue between

the Parties and the Party which has withdrawn on all requests

for assistance or extradition made before the effective date of

withdrawal which remain pending.

ANNEX

STATISTICS ON OECD EXPORTS

1990–96 1990–96 1990–96

US$ million % of total OECD % of total 10

United States 287,118 15.9 19.7 

Germany 254,746 14.1 17.5 

Japan 212,665 11.8 14.6

France 138,471 7.7 9.5

United Kingdom 121,258 6.7 8.3

Italy 112,449 6.2 7.7

Canada 91,215 5.1 6.3

Korea (1) 81,364 4.5 5.6

Netherlands 81,264 4.5 5.6

Belgium-Luxembourg 78,598 4.4 5.4

Total 10 1,459,148 81.0 100.0

Spain 42,469 2.4

Switzerland 40,395 2.2

Sweden 36,710 2.0

Mexico (1) 34,233 1.9

Australia 27,194 1.5

Denmark 24,145 1.3

Austria* 22,432 1.2

Norway 21,666 1.2

Ireland 19,217 1.1

Finland 17,296 1.0

Poland (1) ** 12,652 0.7

Portugal 10,801 0.6

Turkey * 8,027 0.4

Hungary ** 6,795 0.4

New Zealand 6,663 0.4

Czech Republic *** 6,263 0.3

Greece * 4,606 0.3

Iceland 949 0.1

Total OECD 1,801,661 100.0

Notes: * 1990-1995; ** 1991-1996; *** 1993-1996 

Source: OECD, (1) IMF 

Concerning Belgium-Luxembourg: Trade statistics for Belgium and Luxembourg are available only on a combined basis for

the two countries. For purposes of Article 15, paragraph 1 of the Convention, if either Belgium or Luxembourg deposits its

instrument of acceptance, approval or ratification, or if both Belgium and Luxembourg deposit their instruments of acceptance,

approval or ratification, it shall be considered that one of the countries which have the ten largest exports shares has deposited

its instrument and the joint exports of both countries will be counted towards the 60 percent of combined total exports of those

ten countries, which is required for entry into force under this provision.
160 Addressing the Challenges of International Bribery and Fair Competition, 2001

General: 

1. This Convention deals with what, in the law of some countries, is called ìactive corruptionî or ìactive bribery,î meaning

the offense committed by the person who promises or gives the

bribe, as contrasted with ìpassive bribery,î the offense committed by the official who receives the bribe. The Convention

does not utilize the term ìactive briberyî simply to avoid it

being misread by the non-technical reader as implying that the

briber has taken the initiative and the recipient is a passive victim. In fact, in a number of situations, the recipient will have

induced or pressured the briber and will have been, in that

sense, the more active. 

2. This Convention seeks to assure a functional equivalence

among the measures taken by the Parties to sanction bribery of

foreign public officials, without requiring uniformity or

changes in fundamental principles of a Partyís legal system. 

Article 1. The Offense of Bribery of Foreign Public

Officials: 

Re paragraph 1: 

3. Article 1 establishes a standard to be met by Parties, but does

not require them to utilize its precise terms in defining the

offense under their domestic laws. A Party may use various

approaches to fulfil its obligations, provided that conviction of

a person for the offense does not require proof of elements

beyond those which would be required to be proved if the

offense were defined as in this paragraph. For example, a

statute prohibiting the bribery of agents generally which does

not specifically address bribery of a foreign public official, and

a statute specifically limited to this case, could both comply

with this Article. Similarly, a statute which defined the offense

in terms of payments ìto induce a breach of the officialís dutyî

could meet the standard provided that it was understood that

every public official had a duty to exercise judgement or discretion impartially and this was an ìautonomousî definition not

requiring proof of the law of the particular officialís country. 

4. It is an offense within the meaning of paragraph 1 to bribe to

obtain or retain business or other improper advantage whether

or not the company concerned was the best qualified bidder or

was otherwise a company which could properly have been

awarded the business. 

5. ìOther improper advantageî refers to something to which

the company concerned was not clearly entitled, for example,

an operating permit for a factory which fails to meet the statutory requirements. 

6. The conduct described in paragraph 1 is an offense whether

the offer or promise is made or the pecuniary or other advantage is given on that personís own behalf or on behalf of any

other natural person or legal entity. 

7. It is also an offense irrespective of, inter alia, the value of the

advantage, its results, perceptions of local custom, the tolerance of such payments by local authorities, or the alleged

necessity of the payment in order to obtain or retain business or

other improper advantage. 

8. It is not an offense, however, if the advantage was permitted

or required by the written law or regulation of the foreign public officialís country, including case law. 

9. Small ìfacilitationî payments do not constitute payments

made ìto obtain or retain business or other improper advantageî within the meaning of paragraph 1 and, accordingly, are

also not an offense. Such payments, which, in some countries,

are made to induce public officials to perform their functions,

such as issuing licenses or permits, are generally illegal in the

foreign country concerned. Other countries can and should

address this corrosive phenomenon by such means as support

for programs of good governance. However, criminalization by

other countries does not seem a practical or effective complementary action. 

10. Under the legal system of some countries, an advantage

promised or given to any person, in anticipation of his or her

becoming a foreign public official, falls within the scope of the

offenses described in Article 1, paragraph 1 or 2. Under the

legal system of many countries, it is considered technically distinct from the offenses covered by the present Convention.

However, there is a commonly shared concern and intent to

address this phenomenon through further work. 

Re paragraph 2: 

11. The offenses set out in paragraph 2 are understood in terms

of their normal content in national legal systems. Accordingly,

if authorization, incitement, or one of the other listed acts,

Commentaries on the Convention on Combating Bribery

of Foreign Public Officials in International Business

Transactions

Adopted by the Negotiating Conference on 

November 21, 1997
Appendix D: OECD Documents 161

which does not lead to further action, is not itself punishable

under a Partyís legal system, then the Party would not be

required to make it punishable with respect to bribery of a foreign public official.

Re paragraph 4: 

12. ìPublic functionî includes any activity in the public interest, delegated by a foreign country, such as the performance of

a task delegated by it in connection with public procurement. 

13. A ìpublic agencyî is an entity constituted under public law

to carry out specific tasks in the public interest. 

14. A ìpublic enterpriseî is any enterprise, regardless of its

legal form, over which a government, or governments, may,

directly or indirectly, exercise a dominant influence. This is

deemed to be the case, inter alia, when the government or

governments hold the majority of the enterpriseís subscribed

capital, control the majority of votes attaching to shares

issued by the enterprise or can appoint a majority of the

members of the enterpriseís administrative or managerial

body or supervisory board. 

15. An official of a public enterprise shall be deemed to perform a public function unless the enterprise operates on a normal commercial basis in the relevant market, i.e., on a basis

which is substantially equivalent to that of a private enterprise,

without preferential subsidies or other -privileges. 

16. In special circumstances, public authority may in fact be

held by persons (e.g., political party officials in single party

states) not formally designated as public officials. Such persons, through their de facto performance of a public function,

may, under the legal principles of some countries, be considered to be foreign public officials. 

17. ìPublic international organizationî includes any international organization formed by states, governments, or other

public international organizations, whatever the form of organization and scope of competence, including, for example, a

regional economic integration organization such as the

European Communities. 

18. ìForeign countryî is not limited to states, but includes any

organized foreign area or entity, such as an autonomous territory or a separate customs territory. 

19. One case of bribery which has been contemplated under

the definition in paragraph 4.c is where an executive of a

company gives a bribe to a senior official of a government, in

order that this official use his officeóthough acting outside

his competenceóto make another official award a contract to

that company. 

Article 2. Responsibility of Legal Persons: 

20. In the event that, under the legal system of a Party, criminal

responsibility is not applicable to legal persons, that Party shall

not be required to establish such criminal responsibility. 

Article 3. Sanctions: 

Re paragraph 3: 

21. The ìproceedsî of bribery are the profits or other benefits

derived by the briber from the transaction or other improper

advantage obtained or retained through bribery. 

22. The term ìconfiscationî includes forfeiture where applicable and means the permanent deprivation of property by order

of a court or other competent authority. This paragraph is without prejudice to rights of victims. 

23. Paragraph 3 does not preclude setting appropriate limits to

monetary sanctions. 

Re paragraph 4: 

24. Among the civil or administrative sanctions, other than noncriminal fines, which might be imposed upon legal persons for

an act of bribery of a foreign public official are: exclusion from

entitlement to public benefits or aid; temporary or permanent

disqualification from participation in public procurement or

from the practice of other commercial activities; placing under

judicial supervision; and a judicial winding-up order. 

Article 4. Jurisdiction: 

Re paragraph 1: 

25. The territorial basis for jurisdiction should be interpreted

broadly so that an extensive physical connection to the bribery

act is not required. 

Re paragraph 2: 

26. Nationality jurisdiction is to be established according to the

general principles and conditions in the legal system of each

Party. These principles deal with such matters as dual criminality. However, the requirement of dual criminality should be

deemed to be met if the act is unlawful where it occurred, even

if under a different criminal statute. For countries which apply

nationality jurisdiction only to certain types of offenses, the

reference to ìprinciplesî includes the principles upon which

such selection is based. 

Article 5. Enforcement: 

27. Article 5 recognizes the fundamental nature of national
162 Addressing the Challenges of International Bribery and Fair Competition, 2001

regimes of prosecutorial discretion. It recognizes as well that,

in order to protect the independence of prosecution, such discretion is to be exercised on the basis of professional motives

and is not to be subject to improper influence by concerns of a

political nature. Article 5 is complemented by paragraph 6 of

the Annex to the 1997 OECD Revised Recommendation on

Combating Bribery in International Business Transactions,

C(97)123/FINAL (hereinafter, ì1997 OECD Recommendationî), which recommends, inter alia, that complaints of

bribery of foreign public officials should be seriously investigated by competent authorities and that adequate resources

should be provided by national governments to permit effective prosecution of such bribery. Parties will have accepted this

Recommendation, including its monitoring and follow-up

arrangements. 

Article 7. Money Laundering: 

28. In Article 7, ìbribery of its own public officialî is intended

broadly, so that bribery of a foreign public official is to be made

a predicate offense for money laundering legislation on the

same terms, when a Party has made either active or passive

bribery of its own public official such an offense. When a Party

has made only passive bribery of its own public officials a

predicate offense for money laundering purposes, this article

requires that the laundering of the bribe payment be subject to

money laundering legislation. 

Article 8. Accounting: 

29. Article 8 is related to section V of the 1997 OECD

Recommendation, which all Parties will have accepted and

which is subject to follow-up in the OECD Working Group

on Bribery in International Business Transactions. This

paragraph contains a series of recommendations concerning accounting requirements, independent external audit

and internal company controls the implementation of which

will be important to the overall effectiveness of the fight

against bribery in international business. However, one

immediate consequence of the implementation of this

Convention by the Parties will be that companies which are

required to issue financial statements disclosing their material contingent liabilities will need to take into account the

full potential liabilities under this Convention, in particular

its Articles 3 and 8, as well as other losses which might

flow from conviction of the company or its agents for

bribery. This also has implications for the execution of professional responsibilities of auditors regarding indications

of bribery of foreign public officials. In addition, the

accounting offenses referred to in Article 8 will generally

occur in the companyís home country, when the bribery

offense itself may have been committed in another country,

and this can fill gaps in the effective reach of the

Convention. 

Article 9. Mutual Legal Assistance: 

30. Parties will have also accepted, through paragraph 8 of the

Agreed Common Elements annexed to the 1997 OECD

Recommendation, to explore and undertake means to improve

the efficiency of mutual legal assistance. 

Re paragraph 1: 

31. Within the framework of paragraph 1 of Article 9, Parties

should, upon request, facilitate or encourage the presence or

availability of persons, including persons in custody, who consent to assist in investigations or participate in proceedings.

Parties should take measures to be able, in appropriate cases, to

transfer temporarily such a person in custody to a Party

requesting it and to credit time in custody in the requesting

Party to the transferred personís sentence in the requested

Party. The Parties wishing to use this mechanism should also

take measures to be able, as a requesting Party, to keep a transferred person in custody and return this person without necessity of extradition proceedings. 

Re paragraph 2: 

32. Paragraph 2 addresses the issue of identity of norms in the

concept of dual criminality. Parties with statutes as diverse as a

statute prohibiting the bribery of agents generally and a statute

directed specifically at bribery of foreign public officials

should be able to cooperate fully regarding cases whose facts

fall within the scope of the offenses described in this

Convention. 

Article 10. Extradition 

Re paragraph 2: 

33. A Party may consider this Convention to be a legal basis for

extradition if, for one or more categories of cases falling within

this Convention, it requires an extradition treaty. For example,

a country may consider it a basis for extradition of its nationals

if it requires an extradition treaty for that category but does not

require one for extradition of non-nationals. 

Article 12. Monitoring and Follow-up: 

34. The current terms of reference of the OECD Working

Group on Bribery which are relevant to monitoring and followup are set out in Section VIII of the 1997 OECD Recommendation. They provide for: 

i) receipt of notifications and other information submitted to it

by the [participating] countries; 

ii) regular reviews of steps taken by [participating] countries to

implement the Recommendation and to make proposals, as
Appendix D: OECD Documents 163

appropriate, to assist [participating] countries in its implementation; these reviews will be based on the following complementary systems: 

ï a system of self evaluation, where [participating] countriesí

responses on the basis of a questionnaire will provide a basis

for assessing the implementation of the Recommendation; 

ï a system of mutual evaluation, where each [participating]

country will be examined in turn by the Working Group on

Bribery, on the basis of a report which will provide an objective assessment of the progress of the [participating] country in

implementing the Recommendation. 

iii) examination of specific issues relating to bribery in international business transactions; 

...v) provision of regular information to the public on its work

and activities and on implementation of the Recommendation. 

35. The costs of monitoring and follow-up will, for OECD

Members, be handled through the normal OECD budget

process. For non-members of the OECD, the current rules create an equivalent system of cost sharing, which is described in

the Resolution of the Council Concerning Fees for Regular

Observer Countries and Non-Member Full Participants in

OECD Subsidiary Bodies, C(96)223/FINAL. 

36. The follow-up of any aspect of the Convention which is not

also follow-up of the 1997 OECD Recommendation or any

other instrument accepted by all the participants in the OECD

Working Group on Bribery will be carried out by the Parties to

the Convention and, as appropriate, the participants party to

another, corresponding instrument. 

Article 13. Signature and Accession: 

37. The Convention will be open to non-members which

become full participants in the OECD Working Group on

Bribery in International Business Transactions. Full participation by non-members in this Working Group is encouraged and

arranged under simple procedures. Accordingly, the requirement of full participation in the Working Group, which follows

from the relationship of the Convention to other aspects of the

fight against bribery in international business, should not be

seen as an obstacle by countries wishing to participate in that

fight. The Council of the OECD has appealed to non-members

to adhere to the 1997 OECD Recommendation and to participate in any institutional follow-up or implementation

mechanism, i.e., in the Working Group. The current procedures

regarding full participation by non-members in the Working

Group may be found in the Resolution of the Council

concerning the Participation of Non-Member Economies 

in the Work of Subsidiary Bodies of the Organization,

C(96)64/REV1/FINAL. In addition to accepting the Revised

Recommendation of the Council on Combating Bribery, a full

participant also accepts the Recommendation on the Tax

Deductibility of Bribes of Foreign Public Officials, adopted on

11 April 1996, C(96)27/FINAL.
164 Addressing the Challenges of International Bribery and Fair Competition, 2001

THE COUNCIL

Having regard to Articles 3), 5a) and 5 b) of the Convention on

the Organization for Economic Cooperation and Development

of 14 December 1960;

Considering that bribery is a widespread phenomenon in international business transactions, including trade and investment,

raising serious moral and political concerns and distorting

international competitive conditions;

Considering that all countries share a responsibility to combat

bribery in international business transactions;

Considering that enterprises should refrain from bribery of

public servants and holders of public office, as stated in the

OECD Guidelines for Multinational Enterprises;

Considering the progress which has been made in the

implementation of the initial Recommendation of the Council

on Bribery in International Business Transactions adopted on

27 May 1994, C(94)75/FINAL and the related

Recommendation on the tax deductibility of bribes of foreign

public officials adopted on 11 April 1996, C(96)27/FINAL;

as well as the Recommendation concerning Anti-corruption

Proposals for Bilateral Aid Procurement, endorsed by the

High Level Meeting of the Development Assistance

Committee on 7 May 1996;

Welcoming other recent developments which further advance

international understanding and co-operation regarding bribery

in business transactions, including actions of the United

Nations, the Council of Europe, the European Union and the

Organization of American States;

Having regard to the commitment made at the meeting of the

Council at Ministerial level in May 1996, to criminalize the

bribery of foreign public officials in an effective and coordinated manner; 

Noting that an international convention in conformity with the

agreed common elements set forth in the Annex, is an appropriate instrument to attain such criminalization rapidly.

Considering the consensus which has developed on the measures which should be taken to implement the 1994

Recommendation, in particular, with respect to the modalities

and international instruments to facilitate criminaliza-tion of

bribery of foreign public officials; tax deductibility of bribes to

foreign public officials; accounting requirements, external

audit and internal company controls; and rules and regulations

on public procurement; 

Recognizing that achieving progress in this field requires not

only efforts by individual countries but multilateral co-operation, monitoring and follow-up; 

General

I. RECOMMENDS that Member countries take effective measures to deter, prevent and combat the bribery of foreign public

officials in connection with international business transactions.

II. RECOMMENDS that each Member country examine the

following areas and, in conformity with its jurisdictional and

other basic legal principles, take concrete and meaningful steps

to meet this goal: 

i) criminal laws and their application, in accordance with section III and the Annex to this Recommendation;

ii) tax legislation, regulations and practice, to eliminate any

indirect support of bribery, in accordance with section IV;

iii) company and business accounting, external audit and internal

control requirements and practices, in accordance with section V;

iv) banking, financial and other relevant provisions, to ensure

that adequate records would be kept and made available for

inspection and investigation;

v) public subsidies, licences, government procurement contracts

or other public advantages, so that advantages could be denied as

a sanction for bribery in appropriate cases, and in accordance with

section VI for procurement contracts and aid procurement;

vi) civil, commercial, and administrative laws and regulations,

so that such bribery would be illegal;

vii) international co-operation in investigations and other legal

proceedings, in accordance with section VII, Criminalization

of Bribery of Foreign Public Officials

Revised Recommendation of the 

OECD Council on Combating Bribery in International

Business Transactions

Adopted by the Council on May 23, 1997
Appendix D: OECD Documents 165

III. RECOMMENDS that Member countries should crim-inalize the bribery of foreign public officials in an effective and

coordinated manner by submitting proposals to their legislative

bodies by 1 April 1998, in conformity with the agreed common

elements set forth in the Annex, and seeking their enactment by

the end of 1998.

DECIDES, to this end, to open negotiations promptly on an

international convention to criminalize bribery in conformity

with the agreed common elements, the treaty to be open for

signature by the end of 1997, with a view to its entry into force

twelve months thereafter.

Tax Deductibility

IV. URGES the prompt implementation by Member countries

of the 1996 Recommendation which reads as follows: ìthat

those Member countries which do not disallow the deductibility of bribes to foreign public officials re-examine such treatment with the intention of denying this deductibility. Such

action may be facilitated by the trend to treat bribes to foreign

officials as illegal.î

Accounting Requirements, External Audit and

Internal Company Controls

V. RECOMMENDS that Member countries take the steps necessary so that laws, rules and practices with respect to accounting requirements, external audit and internal company controls

are in line with the following principles and are fully used in

order to prevent and detect bribery of foreign public officials in

international business.

A. Adequate accounting requirements 

i) Member countries should require companies to maintain

adequate records of the sums of money received and expended

by the company, identifying the matters in respect of which the

receipt and expenditure takes place. Companies should be prohibited from making off-the-books transactions or keeping offthe-books accounts.

ii) Member countries should require companies to disclose in

their financial statements the full range of material contingent

liabilities.

iii) Member countries should adequately sanction accounting

omissions, falsifications and fraud. 

B. Independent External Audit

i) Member countries should consider whether requirements to

submit to external audit are adequate. 

ii) Member countries and professional associations should maintain adequate standards to ensure the independence of external

auditors which permits them to provide an objective assessment of

company accounts, financial statements and internal controls.

iii) Member countries should require the auditor who discovers

indications of a possible illegal act of bribery to report this discovery to management and, as appropriate, to corporate monitoring bodies.

iv) Member countries should consider requiring the auditor to

report indications of a possible illegal act of bribery to competent authorities. 

C. Internal company controls

i) Member countries should encourage the development and

adoption of adequate internal company controls, including

standards of conduct. 

ii) Member countries should encourage company management

to make statements in their annual reports about their internal

control mechanisms, including those which contribute to preventing bribery. 

iii) Member countries should encourage the creation of monitoring bodies, independent of management, such as audit committees of boards of directors or of supervisory boards.

iv) Member countries should encourage companies to provide

channels for communication by, and protection for, persons not

willing to violate professional standards or ethics under

instructions or pressure from hierarchical superiors. 

Public procurement

VI. RECOMMENDS: 

i) Member countries should support the efforts in the World

Trade Organization to pursue an agreement on transparency in

government procurement; 

ii) Member countriesí laws and regulations should permit

authorities to suspend from competition for public contracts

enterprises determined to have bribed foreign public officials

in contravention of that Memberís national laws and, to the

extent a Member applies procurement sanctions to enterprises

that are determined to have bribed domestic public officials,

such sanctions should be applied equally in case of bribery of

foreign public officials.(1)

iii) In accordance with the Recommendation of the

Development Assistance Committee, Member countries

should require anti-corruption provisions in bilateral aidfunded procurement, promote the proper implementation of

anti-corruption provisions in international development institu-
166 Addressing the Challenges of International Bribery and Fair Competition, 2001

tions, and work closely with development partners to combat

corruption in all development co-operation efforts.(2)

International Cooperation

VII. RECOMMENDS that Member countries, in order to combat bribery in international business transactions, in conformity with their jurisdictional and other basic legal principles,

take the following actions:

i) consult and otherwise cooperate with appropriate authorities

in other countries in investigations and other legal proceedings

concerning specific cases of such bribery through such means

as sharing of information (spontaneously or upon request), provision of evidence and extradition;

ii) make full use of existing agreements and arrangements for

mutual international legal assistance and where necessary,

enter into new agreements or arrangements for this purpose;

iii) ensure that their national laws afford an adequate basis for

this cooperation and, in particular, in accordance with paragraph 8 of the Annex. 

Follow-up and Institutional Arrangements

VIII. INSTRUCTS the Committee on International Investment

and Multinational Enterprises, through its Working Group on

Bribery in International Business Transactions, to carry out a

program of systematic follow-up to monitor and promote the

full implementation of this Recommendation, in co-operation

with the Committee for Fiscal Affairs, the Development

Assistance Committee and other OECD bodies, as appropriate.

This follow-up will include, in particular:

i) receipt of notifications and other information submitted to it

by the Member countries;

ii) regular reviews of steps taken by Member countries to implement the Recommendation and to make proposals, as appropriate, to assist Member countries in its implementation; these

reviews will be based on the following complementary systems:

a system of self-evaluation, where Member countriesí responses

on the basis of a questionnaire will provide a basis for assessing

the implementation of the Recommendation; a system of mutual

evaluation, where each Member country will be examined in

turn by the Working Group on Bribery, on the basis of a report

which will provide an objective assessment of the progress of the

Member country in implementing the Recommendation.

iii) examination of specific issues relating to bribery in international business transactions; 

iv) examination of the feasibility of broadening the scope of the

work of the OECD to combat international bribery to include

private sector bribery and bribery of foreign officials for reasons other than to obtain or retain business;

v) provision of regular information to the public on its work

and activities and on implementation of the Recommendation. 

IX. NOTES the obligation of Member countries to cooperate

closely in this follow-up program, pursuant to Article 3 of the

OECD Convention.

X. INSTRUCTS the Committee on International Investment

and Multinational Enterprises to review the implementation of

Sections III and, in co-operation with the Committee on Fiscal

Affairs, Section IV of this Recommendation and report to

Ministers in Spring 1998, to report to the Council after the first

regular review and as appropriate there after, and to review this

Revised Recommendation within three years after its adoption.

Cooperation with Nonmembers 

XI. APPEALS to non-member countries to adhere to the

Recommendation and participate in any institutional follow-up

or implementation mechanism.

XII. INSTRUCTS the Committee on International Investment

and Multinational Enterprises through its Working Group on

Bribery, to provide a forum for consultations with countries

which have not yet adhered, in order to promote wider participation in the Recommendation and its follow-up.

Relations with International Governmental and

Nongovernmental Organizations

XIII. INVITES the Committee on International Investment and

Multinational Enterprises through its Working Group on Bribery,

to consult and co-operate with the international organizations and

international financial institutions active in the combat against

bribery in international business transactions and consult regularly with the nongovernmental organizations and representatives

of the business community active in this field.

Notes.

1. Member countriesí systems for applying sanctions for

bribery of domestic officials differ as to whether the determination of bribery is based on a criminal conviction, indictment

or administrative procedure, but in all cases it is based on substantial evidence.

2. This paragraph summarizes the DAC recommendation

which is addressed to DAC members only, and addresses it to

all OECD Members and eventually nonmember countries

which adhere to the Recommendation.
Appendix D: OECD Documents 167

The Council

Having regard to Article 5 b) of the Convention on the

Organization for Economic Cooperation and Development of

14th December 1960; 

Having regard to the OECD Council Recommendation on

Bribery in International Business Transactions [C(94)75]; 

Considering that bribery is a widespread phenomenon in international business transactions, including trade and investment,

raising serious moral and political concerns and distorting

international competitive conditions; 

Considering that the Council Recommendation on Bribery called

on Member countries to take concrete and meaningful steps to

combat bribery in international business transactions, including

examining tax measures which may indirectly favor bribery;

On the proposal of the Committee on Fiscal Affairs and the

Committee on International Investment and Multinational

Enterprises: 

I. RECOMMENDS that those Member countries which do not

disallow the deductibility of bribes to foreign public officials

re-examine such treatment with the intention of denying this

deductibility. Such action may be facilitated by the trend to

treat bribes to foreign officials as illegal. 

II. INSTRUCTS the Committee on Fiscal Affairs, in cooperation with the Committee on International Investment and

Multinational Enterprises, to monitor the implementation of

this Recommendation, to promote the Recommendation in the

context of contacts with nonmember countries and to report to

the Council as appropriate. 

Recommendation of the OECD Council on the Tax

Deductibility of Bribes to Foreign Public Officials

Adopted by the Council on April 11,1996
168 Addressing the Challenges of International Bribery and Fair Competition, 2001
Appendix E: Websites Relevant to the Convention and Anticorruption Issues 169

United States Government

Department of CommerceóCommerce Home

Page: (www.doc.gov). Market Access and Compliance/Trade Compliance Center: Annual Reports to

Congress on Implementation of the OECD Bribery

Convention, Trade Complaint Hotline, Trade and Related

Agreements Database (TARA), Exporter's Guides,

Market Access Reports, Market Monitor, and "Market

Access and Compliance-Rule of Law for Business

Initiatives" (www.mac.doc.gov/tcc). Also, Country

Commercial reports and guides, trade and export-related

information (www.ita.doc.gov/ita_home/itacnreg.htm);

trade counseling and other services in other countries (1-

800-USA-TRADE); Office of the Chief Counsel for

International Commerce, Information on Legal Aspects

of International Trade and Investment, The AntiCorruption Review, the FCPA, and other anticorruption

materials (www.ita.doc.gov/legal).

Department of StateóInformation on the OECD

Bribery Convention and First Global Forum on Fighting

Corruption Materials; documents related to the OECD

Bribery Convention (www.state.gov/www/issues/-

economic/bribery.html); First Global Forum on Fighting

Corruption and Safeguarding Integrity, Washington,

D.C., February 1999 (www.state.gov) and Second Global

Forum, The Hague, The Netherlands, May 28-31, 2001

(www.gfcorruption.org). A copy of the First Global

Forum Final Conference Report and Guiding Principles

for Fighting Corruption and Safeguarding Integrity

among Justice and Security Officials can also be purchased from the U.S. Government Printing Office (ISBN

0-16-050150-4); Country Reports, Economic Practices

and Trade Practices (www.state.gov). 

Department of Justice, Fraud Sectionó

Comprehensive information on the FCPA, legislative history of FCPA, 1998 amendments, opinion procedures,

and international agreements (www.usdoj.gov/criminal/-

fraud.html). 

Office of Government Ethics (OGE)óInformation

on ethics, latest developments in ethics, ethics programs,

and informational and educational materials including

OECD Public Service Management (PUMA)

(www.usoge.gov/). 

Department of the TreasuryóInformation on

money laundering, customs, and international financial

institutions (www.treas.gov). 

Securities and Exchange Commission (SEC)ó

Information about SEC enforcement, actions, Complaint

Websites Relevant to the

Convention, Anticorruption, Ethics,

Transparency, and Corporate

Compliance Programs

E
Center, and further information for accountants and auditors (www.sec.gov).

Agency for International Development

(USAID)óCenter for Democracy and Governance,

USAID's Efforts on Anticorruption, Handbook on

Fighting Corruption (www.info.usaid.gov/democracy/-

anticorruption). 

Inter-Governmental Organizations

Organization for Economic Cooperation and

Development (OECD)óAnticorruption-OECD Bribery

Convention. Country compliance assessment reports

(www.oecd.org/daf/nocorruption); ANCORRSEB, the

OECD Anticorruption Ring Online, a collection of

materials on effective policies and practices

(http://www.oecd.org/daf/nocorruptionweb/index.htm). 

Financial Action Task Force on Money

Laundering (FATF)ó(www.oecd.org/fatf/). 

International Criminal Police Organization

(INTERPOL)ó(www.interpol.int). 

Council of Europe (COE)óCOE Anticorruption

Convention, related programs, and resources

(www.coe.fr).

Organization for Security and Cooperation in

Europe (OSCE)óCharter for European Security, Rule

of Law and Fight Against Corruption (www.osce.org).

Stability Pact for South Eastern EuropeóSpecial

Coordinator of the Stability Pact for South Eastern

Europe, Anticorruption Initiative and Compact of the

Stability Pact (http://www.stabilitypact.org). 

Organization of American States (OAS)óThe

Fight Against Corruption in the Americas; InterAmerican Convention Against Corruption; resolutions of

the General Assembly, studies, and supporting documents (www.oas.org). 

Middle East and North Africa (MENA)óThe

World Bank Group (http://wbln0018.worldbank.org/-

mna/mena.nsf), World Bank Institute, Anticorruption

(http://www.worldbank.org/wbi/governance/links.htm). 

Asia-Pacific Economic Cooperation (APEC)ó

Information on the Transparency Initiative, investment,

government procurement, and customs

(www.apecsec.org). 

Association of Southeast Asian Nations

(ASEAN)ó(www.aseansec.org). 

United NationsóCentre for International Crime

Prevention (CICP), Global Program Against Corruption

(www.UNCJIN.org/CICP/cicp.html); UN Development

Program (UNDP), Management Development and

Governance Division (www.magnet.undp.org).

World Trade Organization (WTO)óWorking

Group on Transparency in Government Procurement

Practices (www.wto.org). 

The Global Corporate Governance ForumóAn

OECD and World Bank Initiative to help countries

improve corporate governance standards and corporate

ethics (www.worldbank.org/html/extdr/extme/2217.htm);

OECD Principles of Corporate Governance

(www.oecd.org/daf/governance/principles.htm). 

World Customs Organization (WCO)ó

(www.wcoomd.org).

International Financial Institutions

The World BankóPublic Sector Group, World

Bank Anticorruption Strategy, information on preventing

corruption in WB projects, helping countries reduce

corruption, and supporting international efforts

(www.worldbank.org/publicsector/anticorrupt/); Economic Development Institute (EDI), World Bank

Anticorruption Diagnostic Surveys (www.worldbank.-

org/wbi/governance). 

International Monetary Fund (IMF)óCodes of

Good Practices in Monetary and Financial Policies

(www.imf.org/external/np/mae/mft/index.htm). 

Inter-American Development Bank (IDB)ó

(www.iadb.org). 

Asian Development Bank (ADB)ó(www.adb.org).

African Development Bank (AfDB)ó

(www.afbd.org). 

European Bank for Reconstruction and

Development (EBRD)ó(www.ebrd.com).

170 Addressing the Challenges of International Bribery and Fair Competition, 2001
Other Organizations

U.S. Chamber of Commerce (USCOC)óCenter

for International Private Enterprise (CIPE), an affiliate of

the USCOC, information on corporate governance and

anticorruption (www.cipe.org). 

International Chamber of Commerce (ICC)ó

Rules of Conduct and Bribery, ICC Commercial Crime

Services, and due diligence (www.iccwbo.org). 

Transparency International (TI)óTI Corruption

Index and Bribe Propensity Index; TI Source Book on

anticorruption strategies and other international

initiatives by governments, NGOs, and the private sector

(www.transparency.de) and TI-USA (www.transparencyusa.org). 10TH IACC (www.10iacc.org). 

U.S. International Council for Businessó

(www.uscib.org). 

The Conference BoardóInformation on corporate

ethics (www.conference-board.org). 

American Bar Association (ABA)óTaskforce on

International Standards on Corrupt Practices

(www.abanet.org/intlaw/divisions/public/corrupt.html);

ABA-Central and East European Law Initiative (CEELI)

(www.abanet.org/ceeli/). 

Ethics Resource Centeró(www.ethics.org). 

COSOóThe Committee of Sponsoring Organizations of the Treadway Commission (www.coso.org). The

COSO ("Treadway Commission") is a volunteer private

sector organization consisting of the five major financial

professional associations dedicated to improving the

quality of financial reporting through business ethics,

effective internal controls, and corporate governance.

The five associations are: the American Accounting

Association (AAA) (www.AAA-edu.org); the American

Institute of Certified Public Accountants (AICPA)

(www.aicpa.org); the Financial Executives Institute (FEI)

(www.fei.org); the Institute of Internal Auditors (IIA)

(www.theiia.org); and the Institute of Management

Accountants (IMA) (www.imanet.org). 

The Association of Government Accountants

(AGA)ó(www.agacgfm.org); Sites Directory for U.S.

and International Accounting Associations and State CPA

Societies (taxsites.com/associations2.html). 

International Organization of Supreme Audit

Organizations (INTOSAI)ó(www.intosai.org). 

Global Coalition for Africa (GCA)óPrinciples to

Combat Corruption in Africa Countries; Collaborative

Frameworks to Address Corruption (www.gca-cma.org/-

ecorrtion.htm). 

South Asian Association for Regional

Cooperationó(www.saarc.org). 

Pacific Basin Economic Council (PBEC)óAn

association of senior business leaders, which represents

more than 1,200 businesses in 20 economies in the

Pacific Basin region (www.pbec.org). 

Americas' Accountability/Anti-Corruption

(AAA) Projectó(www.respondanet.com). 

Anti-Corruption Network for Transition

Economiesó(www.nobribes.org). 

Inter-Parliamentary Unionó(www.ipu.org). 

World Forum on Democracyó(www.-

fordemocracy.net). 

National Democratic Institute for International

Affairs (NDI)ó(www.ndi.org). 

The International Republican Institute (IRI)ó

(www.iri.org). 

International Center for Journalistsó

(www.icfj.org); World Association of Newspapers

(www.fiej.org). 

The Carter Centeró(www.cartercenter.org). 

The Asia Foundationó(www.asiafoundation.com).

The National Endowment for Democracy

(NED)ó(www.ned.org). 

Websites with Country-Specific ConventionRelated Legislation

Implementing legislation of many Parties can be

down-loaded directly from the OECD website

(www.oecd.org/daf/nocorruption/links1.htm). Several

countries also have posted legislation on their governAppendix E: Websites Relevant to the Convention and Anticorruption Issues 171
ment websites. Legislation of the following countries is

available from one or more of these sources. 

Australia

The government response (tabled in the Senate on

March 11, 1999) to the Treaties Committee Report on the

OECD Convention and the Draft Implementing

Legislation may be found at http://www.aph.gov.au/-

hansard/hanssen.htm (Select March 11, 1999 and go to

p.2634). The Criminal Code Amendment (Bribery of

Foreign Public Officials) Bill 1999 is at

http://www.aph.gov.au/parlinfo/billsnet/main.htm.

(Search ìcurrent bills.î) The Billís Explanatory

Memorandum is also on that site.

Austria

The German text of the Austrian implementing legislation (Strafrechtsanderungsgesetz 1998 BGBI No. I

153) is available in pdf format on the OECD website.

Belgium

The text of the law passed on February 10, 1999, is

available in pdf format on the OECD website. 

Brazil

The English text of two relevant legal documents

(Law no. 9.613, passed on March 3, 1998, and Decree

1171 of June 1994) is available in pdf format on the

OECD website. 

Canada

Access to the legislation can be obtained through the

website for the Department of Justice/MinistËre de la Justice

(http://canada.justice.gc.ca/Loireg/index_en.html).

Alternatively, the Act concerning the Corruption of

Foreign Public Officials is located at

http://www.parl.gc.ca/36/1/parlbus/chambus/house/bills/

government/S-21/S-21_4/S-21_cover-E.html. The English

text is also available in pdf format on the OECD website.

Denmark

Implementing legislation can be found on the

Department of Justice web site (in Danish only) at

http://www.jm.dk/forslag/.

Finland

Implementing legislation can be found on the government web site (in Finnish and Swedish) at

http://www.vn.fi/vn/english/index.htm Excerpts showing

amendments to the Finnish Penal Code are also available

in pdf format on the OECD website.

France

The draft law modifying the penal code and the penal

procedure code relating to combating bribery and corruption can be found on the website of Legifrance (in French

only) at http://www.legifrance.gouv.fr/citoyen/index.ow.

The French text of the legislation is also available in pdf

format on the OECD website.

Germany

The English and German texts of the implementing

legislation dated September 10, 1998, the relevant criminal code, and the Administrative Offence Act are available in pdf format on the OECD website.

Greece

The French text of the implementing legislation

dated November 11, 1998, and the English text of the

Greek law No. 2331 on money laundering of August

1995 are both available in pdf format on the OECD website.

Hungary

The English text of the relevant implementing legislation is available in pdf format the the OECD website.

Iceland

The English text of the Icelandic Extradition and

other Assistance in Criminal Proceedings Act (Law no. 3

of April 17, 1984, and relevant articles of the Icelandic

Penal Code are available in pdf format on the OECD

website.

Japan

An unofficial English translation of the Japanese

implementing legislation (the amended Unfair

Competition Act, adopted on September 18, 1998, is

available in pdf format on the OECD website.

Korea

An English translation of the Korean implementing

legislation (The Act on Preventing Bribery of Foreign

Public Officials in International Business Transactions) is

available in pdf format on the OECD website. 

Norway

The implementing legislation (Amendments to the

Norwegian Penal Code of May 22, 1902, chapter 2, para.

128) is available in pdf format at the OECD website and

also on the Norwegian government website:

(www.lovdata.no/all/). 

172 Addressing the Challenges of International Bribery and Fair Competition, 2001
Spain

The provisions to the Spanish Penal Code, implementing the Convention, is available in pdf format on the

OECD website.

Sweden

The Swedish implementing legislation is available in

pdf format on the OECD website.

Switzerland

Swiss laws can be found on Recueil Systématique du

Droit Fédéral (available in French, German and Italian

only) at (http://www.admin.ch/ch/f/rs/rs.html). Search for

the Swiss Penal Code of December 21, 1937, which will

soon be amended to comply with the Convention. The

following legislation is available in French on the OECD

website: modification of the Swiss Penal Code and the

Amendments to the Swiss Penal Code; the Law of April

19, 1999, authorizing the ratification of the Convention;

and Recueil Systématique du Droit Fédéral.

Appendix E: Websites Relevant to the Convention and Anticorruption Issues 173