49–115

109TH CONGRESS EXEC. REPT.

2d Session " ! SENATE 109–18

UNITED NATIONS CONVENTION AGAINST CORRUPTION

(TREATY DOC. 109–6)

AUGUST 30, 2006.—Ordered to be printed

FILED UNDER AUTHORITY OF THE ORDER OF THE SENATE OF AUGUST 3, 2006.

Mr. LUGAR, from the Committee on Foreign Relations,

submitted the following

REPORT

[To accompany Treaty Doc. 109–6]

The Committee on Foreign Relations, to which was referred the

United Nations Convention Against Corruption (Treaty Doc. 109–

6), signed at Merida, Mexico on December 9, 2003, having considered the same, reports favorably thereon and recommends that the

Senate give its advice and consent to ratification thereof with two

reservations, and three declarations, as set forth in this report and

the accompanying resolution of advice and consent to ratification.

CONTENTS

Page

I. Purpose ........................................................................................................... 1

II. Background .................................................................................................... 2

III. Summary of Key Provisions .......................................................................... 2

IV. Implementing Legislation ............................................................................. 6

V. Committee Action .......................................................................................... 6

VI. Committee Recommendation and Comments .............................................. 6

VII. Resolution of Advice and Consent to Ratification ....................................... 9

VIII. Appendix: Hearing—United Nations Convention Against Corruption ...... 11

I. PURPOSE

The United Nations Convention Against Corruption (the ‘‘Corruption Convention’’ or ‘‘Convention’’) is designed to prevent and

suppress corruption, promote integrity and accountability, and facilitate international cooperation and technical assistance to prevent and combat corruption and to recover assets. It is the first

multilateral treaty to target corruption on a global basis and is also

the most comprehensive international legally-binding anti-corruption instrument in terms of the scope of activities covered.

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II. BACKGROUND

The Corruption Convention was adopted by the United Nations

General Assembly on October 31, 2003, and was signed by the

United States on December 9, 2003, at Merida, Mexico. The Convention, which entered into force on December 15, 2005, now has

60 parties. The first Conference of States Parties for the Convention will take place in Amman, Jordan in December 2006.

The Convention builds on the anti-corruption measures contained

in Articles 8 and 9 of the U.N. Convention Against Transnational

Organized Crime, which was approved by the Senate in 2005. The

Convention also expands on the provisions and geographical

breadth of the Organization for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and the Organization

of American States Inter-American Convention Against Corruption,

to which the Senate gave advice and consent in 1998 and 2000, respectively. As compared to these existing treaties, the Convention

adopts more expansive provisions to prevent and criminalize corruption and affords procedures for governments to recover assets

that were illicitly obtained by corrupt officials.

The Convention creates a regime for mutual legal assistance that

is equivalent to those embodied in other law enforcement treaties

to which the United States is a party. It would level the playing

field for U.S. companies, which are already prohibited by U.S. law

from bribing foreign officials. The Convention would improve the

tools available to U.S. law enforcement by enhancing its ability to

obtain assistance internationally in its efforts to investigate and

prosecute corruption and to recover illicitly acquired assets from

corrupt government officials. Further, it would support broader

U.S. efforts within the United Nations, the G–8, and elsewhere to

promote transparency, accountability and anti-corruption measures.

III. SUMMARY OF KEY PROVISIONS

A detailed article-by-article discussion of the Convention may be

found in the Letter of Submittal from the Secretary of State to the

President, which is reprinted in full in Treaty Document 109–6. A

summary of key provisions of the Convention is set forth below.

The Convention is divided into eight chapters containing (1) general provisions; (2) preventive measures; (3) criminalization and

law enforcement; (4) international co-operation; (5) asset recovery;

(6) technical assistance and information exchange; (7) mechanisms

for implementation; and (8) final provisions. Some measures are

mandatory, while others are discretionary. With the reservations

recommended by the committee, no new legislation will be required

for the United States to comply with the Convention upon ratification.

General Provisions. Chapter I sets forth the Convention’s objectives, as described above, and provides definitions of terms used

throughout the Convention. The definition of ‘‘public official’’ may

vary according to the domestic law of a State Party, and need not

necessarily include state or local officials, but the definition of ‘‘foreign public official’’ remains uniform, and includes ‘‘any person

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holding a legislative, administrative or judicial office of a foreign

country . . . [or] exercising a public function for a foreign country,

including for a public agency or public enterprise.’’

Preventive Measures. Chapter II contains measures Parties are to

take to minimize the potential for corruption. Many of the articles

in this chapter specify that the obligations are undertaken ‘‘in accordance with the fundamental principles’’ of each Party’s domestic

legal system. Parties are required to develop and implement or

maintain effective anti-corruption policies, to collaborate with other

States Parties and relevant international organizations to promote

and develop measures to prevent corruption (article 5), and to create bodies to carry out these functions that are free from undue influence and have the independence and resources necessary to

function effectively (article 6). Other articles address, among other

subjects, the hiring and conduct of civil servants (articles 7 and 8),

public procurement (article 9), and accounting standards in the private sector (article 12), as well as anti-money laundering regulatory

measures (article 14). Parties are specifically required to disallow

the tax deductibility of bribes of public officials, which Parties must

criminalize under articles 15 and 16(a) (article 12).

Criminal Prohibitions. Chapter III obligates Parties to outlaw

certain forms of corruption-related misconduct: bribery of national

public officials, bribery of foreign public officials or officials of public international organizations, embezzlement by public officials,

and certain offenses related to money laundering and obstruction

of justice (Articles 15, 16, 17, 23, and 25, respectively). U.S. federal

law already criminalizes these offenses. As explained in Section VI

below, at the suggestion of the executive branch the committee has

recommended that the United States reserve against these obligations with regard to the limited scope of conduct that is not within

U.S. federal jurisdiction and would not be adequately covered by

existing U.S. state laws.

Other articles in Chapter III call on Parties to consider establishing further offenses under their domestic law. U.S. law already

criminalizes several of these other offenses, such as private sector

embezzlement. There is no obligation to adopt these offenses, however, and the executive branch has affirmed that it does not intend

to seek any changes to existing U.S. law in this respect.

Article 31 obligates Parties to adopt measures, to the greatest extent possible within their legal systems, to enable confiscation of

proceeds of (or property of equivalent value to the proceeds), or

property used in or destined for use in, offenses established in accordance with the Convention.

Article 35 requires Parties to take measures, in accordance with

the principles of their domestic law, to ensure that persons who

have suffered damage as a result of an act of corruption have the

right to initiate legal proceedings against those responsible to obtain compensation. The United States, through an existing body of

laws, already provides legal avenues for claimants who have been

wronged by those who commit corrupt acts in certain transactions.

The Convention does not create a new cause of action in U.S.

courts. As the Secretary of State explained in transmitting the

Convention to the President:

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1Treaty Doc. 109–6, at 10.

2 Id. at 12.

[T]he travaux preparatoires clarify that Article 35 was

intended to address only legal proceedings against those

who commit acts of corruption, rather than those who may

be associated with others who commit acts of corruption.

The article intentionally provides the States Parties significant flexibility in its implementation. The article does

not restrict the right of a State Party to decide the precise

circumstances under which it will make its courts available, nor does it require or endorse a particular choice

made by a State Party in determining how it will meet its

obligations under this article.

Article 35 would not have any direct effect on the potential exposure of U.S. companies or others in private litigation in the United States. The current laws and practices

of the United States are in compliance with Article 35, and

the United States does not construe Article 35 to require

broadening or enhancing current U.S. law and practice in

any way. U.S. jurisprudence permits persons who have

suffered from criminal acts such as bribery to seek damages from the offenders under various theories. These remedies are sufficient to comply with this article. It should be

noted that nothing in this article should be interpreted as

requiring the United States to create a private right of action under the Foreign Corrupt Practices Act or as expanding the scope of the Alien Tort Statute to permit foreigners

to litigate corruption claims in U.S. courts.1

The committee agrees with this interpretation of Article 35. As

explained in Section VI below, at the suggestion of the executive

branch the committee has recommended that a declaration be included in the resolution of advice and consent clarifying that the

provisions of the Convention (with the exception of articles 44 and

46) are non-self-executing, and that none of the provisions of the

Convention creates a private right of action.

International Cooperation. Chapter IV of the Convention addresses international cooperation, including extradition and mutual legal

assistance among the parties. Article 44 of the Convention adds the

crimes established in accordance with the Convention to those offenses for which extradition may be sought under extradition treaties in force among parties to the Convention, and permits, but

does not require, Parties to use the Convention as a basis for extradition in the absence of such treaties. For the United States, the

Convention will not provide an independent legal basis for extradition, which will continue to be based on U.S. domestic law and

applicable bilateral treaties.2 In accordance with paragraph 6 of

this Article, the executive branch will provide notification of this

fact to the depositary at the time of ratification. The Convention

will, however, effectively expand the scope of offenses covered

under certain existing U.S. bilateral extradition treaties (those that

specifically list the offenses for which extradition may be granted).

Article 46 addresses mutual legal assistance between the Parties.

Paragraph 1 requires Parties to provide each other the widest

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measure of mutual legal assistance in investigations, prosecutions

and judicial proceedings in relation to the offenses covered by the

Convention. The article provides that existing mutual legal assistance treaties (‘‘MLATs’’) between the Parties will not be affected,

and will continue to be applied by the Parties where they exist.

Where no such agreement exists, the Parties will make and receive

requests for mutual legal assistance under the provisions of Article

46, paragraphs 9 through 29. The procedures in paragraphs 9–29

of this article are analogous to those contained in U.S. bilateral

and multilateral treaties approved by the Senate in recent years,

but contain somewhat broader grounds for refusal of assistance.

Paragraph 9(b) of article 46 gives Parties the ability to decline

to provide assistance with regard to a request for coercive measures, such as search and seizure, if the offense being investigated

does not also constitute a crime under its laws (‘‘dual criminality’’).

A Party must provide assistance with regard to requests for noncoercive measures in the absence of dual criminality where the assistance requested is ‘‘consistent with the basic concepts of its legal

system,’’ but can refuse such requests of a de minimis nature or if

the cooperation requested is available under other provisions of the

Convention. In addition, paragraph 21 of this article provides four

specific grounds upon which any request for assistance may be refused: (a) if the request does not conform to the requirements of article 46; (b) if the requested Party considers that compliance is likely to prejudice its sovereignty, security, ordre public, or other essential interests; (c) if the Party would be prohibited by its own law

from taking the action requested with regard to any similar offense

under its own jurisdiction; or (d) if granting the request would be

contrary to the legal system of the requested Party relating to mutual legal assistance. In this regard, the executive branch has testified that these grounds for refusal authorize the United States to

refuse assistance where it considers that a request is politically motivated or that execution of a request would impinge on U.S. Constitutional protections, such as the freedom of speech.

Asset Recovery. Chapter V of the Convention provides procedures

for the Parties to cooperate in the recovery of assets that have been

illicitly acquired by corrupt officials.

Article 52 obligates Parties to adopt preventive measures to detect corrupt transactions involving public officials, including requiring their financial institutions to verify customer identity and

apply enhanced scrutiny to accounts held by current or former

prominent public officials.

Article 53 requires each Party to allow other Parties to bring

civil actions in its courts to recover property and to enable courts

to award damages and evaluate Parties’ claims over property confiscated for offenses established in accordance with the Convention.

Article 54 requires Parties to put in place a legal framework for

providing assistance to other Parties with regard to recovery of assets acquired through or involved in the commission of offenses established in accordance with the Convention. This framework must

include mechanisms enabling their competent authorities to execute confiscation orders issued by the courts of another Party, and

to order confiscation of such foreign origin property through adjudication of money laundering or other offenses that may be within

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3The edited transcript of the hearing is attached to this report (page 11).

its jurisdiction. In addition, Parties must be able to freeze or seize

property based on a freezing or seizure order issue by a court or

competent authority of another Party or upon a request by another

Party, where sufficient grounds are provided for taking such actions.

Under article 55, Parties receiving requests for assistance in

asset recovery must use the mechanisms established in accordance

with articles 31 and 54. Paragraph 3 of this article states that the

provisions of article 46 apply to such requests, which includes the

grounds for denial of mutual legal assistance requests. Paragraph

7 provides an additional safeguard, authorizing refusal of cooperation where the requesting Party does not provide sufficient and

timely evidence or the property at issue is of a de minimis value.

Paragraph 9 clarifies that nothing in this article shall be construed

to prejudice the rights of bona fide third parties.

Article 57 provides a detailed framework for the return and disposal of assets confiscated by one Party at the request of another.

IV. IMPLEMENTING LEGISLATION

No implementing legislation is required for the Convention. An

existing body of federal and state laws will suffice to implement the

obligations of the Convention, although two narrow reservations

are needed, as explained below in section VI.

V. COMMITTEE ACTION

The Convention was transmitted to the Senate for advice and

consent to ratification on October 27, 2005 (see Treaty Doc. 109–

6). The Committee on Foreign Relations held a public hearing on

this instrument on June 21, 2006, at which it heard testimony from

representatives of the Departments of State and Justice, as well as

the National Foreign Trade Council and Transparency International.3 On August 1, 2006, the committee considered the Convention and ordered it favorably reported by voice vote, with a

quorum present and without objection, with the recommendation

that the Senate give advice and consent to ratification of the Convention, subject to the reservations and declarations contained in

the resolution of advice and consent.

VI. COMMITTEE RECOMMENDATION AND COMMENTS

The Committee on Foreign Relations believes that the Convention is in the interest of the United States and urges the Senate

to act promptly to give advice and consent to ratification, subject

to the two reservations and three declarations contained in the resolution of advice and consent. U.S. ratification of the Corruption

Convention is supported by the executive branch, the U.S. business

community, the American Bar Association, and anti-corruption organizations. The United States already conducts itself in a manner

consistent with the Convention through an existing body of law as

well as federal and state policies, and therefore no implementing

legislation is required.

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The Convention supports the international fight against corruption, an important foreign and economic policy priority for the

United States. By becoming a party to the Convention, the United

States will enhance its leadership role in the global anti-corruption

effort, help ensure that the Convention is implemented properly by

other countries, and cooperate with treaty partners in the investigation and prosecution of corruption-related offenses.

With 60 parties and 140 signatories, the Convention has already

become a global instrument and reference point for the international community. Widespread ratification of the Convention by

other countries would benefit U.S. businesses by helping to level

the playing field for U.S. companies, which are already prohibited

by U.S. law from bribing foreign officials. In addition to putting

U.S. businesses at a disadvantage, corruption can impede business

transactions and negatively affect their financial results. Implementation of the anti-corruption measures required by the Convention would promote the integrity of foreign markets, creating opportunities for U.S. investment.

The Convention strengthens the ability of U.S. law enforcement

to combat corruption. It requires other Parties to criminalize corruption-related offenses consistent with U.S. law, and includes provisions to facilitate the ability of U.S. prosecutors to obtain assistance from other countries in U.S. criminal investigations and prosecutions of such offenses.

U.S. ratification of the Convention would also support broader

U.S. efforts, within the United Nations, the G–8, and elsewhere to

promote transparency, accountability, and anti-corruption measures. The United States has a strong national security interest in

opposing corruption and bribery worldwide. Bribery of public officials is one of the most plausible means through which a terrorist

might gain access to weapons of mass destruction.

Full realization of all of the benefits of the Convention will require not only widespread ratification of the Convention, but also

full implementation of its provisions by the Parties. Therefore, the

committee urges the executive branch, with input from the private

sector and non-governmental organizations, to promote widespread

adherence and to work with other treaty partners to create an effective, transparent, and viable system to monitor implementation

of the Convention. The executive branch should also keep the committee informed of its progress in this regard.

The committee has included a number of reservations and declarations in the resolution of advice and consent. Section two of the

resolution contains two reservations. The first relates to the federal

system in the United States and concerns the preventive measures

and criminalization obligations of the Convention (Chapters II and

III). With regard to the criminalization obligations, although U.S.

federal law prohibits the conduct proscribed by the Convention, federal criminal law generally covers conduct involving interstate or

foreign commerce or another important federal interest. U.S. state,

not federal law, would therefore apply to a narrow category of conduct that does not implicate a foreign, interstate, or other federal

interest. Not all forms of conduct proscribed by the Convention,

however, are criminalized by all U.S. states in the manner required

by the Convention. Similarly, the obligations undertaken with reVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 109-18.TXT SFRELA2 PsN: SFRELA2
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gard to preventive measures relating to state and local officials

generally would be addressed in the United States at the state and

local level. State and local governments may in some cases regulate

these issues differently than the Convention. Therefore, the executive branch recommended that the United States reserve against

these obligations in these narrow circumstances. The committee

agrees with this recommendation.

The second reservation concerns the scope of the Convention. Article 42 of the Convention requires each Party to establish jurisdiction in respect of the offenses established under the Convention

when committed in its territory or on board a vessel flying its flag

or an aircraft registered under its laws. U.S. law does not expressly

extend U.S. jurisdiction over these particular crimes when committed on board U.S. vessels and aircraft outside of U.S. territory,

although in certain cases U.S. jurisdiction may exist on other jurisdictional bases. Because the United States cannot ensure its ability

to exercise jurisdiction in all such cases, the committee concurs

with an executive branch recommendation that the United States

enter a reservation limiting the obligation of the United States consistent with the reach of U.S. law.

Section three of the resolution contains three declarations. The

first declaration relates to U.S. implementation of the Convention

under existing U.S. law. The executive branch recommended that

the United States include an understanding to clarify that the

United States intends to comply with the Convention based on existing law. The committee has included such a statement in the

resolution, formulated as a declaration in accordance with recent

committee practice.

The second declaration relates to dispute settlement. Article 66

of the Convention establishes a mechanism for the Parties to settle

disputes concerning the interpretation or application of the Convention. Paragraph 2 of the article provides that if such a dispute

cannot be settled within a reasonable time through negotiation, a

Party may submit it to arbitration and, if the disputing Parties are

unable to agree on the organization of the arbitration within six

months, a Party may submit the dispute to the International Court

of Justice. Paragraph 3 permits each Party to declare, at the time

of its ratification, that it does not consider itself bound by paragraph 2 of this article. The executive branch recommended that the

United States make such a declaration, and the committee concurs

with this recommendation.

The third declaration, consistent with an executive branch recommendation, clarifies that the provisions of the Convention (with

the exception of articles 44 and 46) are non-self-executing, and that

none of the provisions of the Convention creates a private right of

action. The committee notes that Articles 44 and 46 of the Convention on extradition and mutual legal assistance are intended to operate in the same way as similar provisions contained in bilateral

extradition and mutual legal assistance treaties. As with such provisions in bilateral treaties, these provisions are self-executing.

They will be implemented by the United States in conjunction with

applicable federal statutes. The lack of a private right of action

does not affect the ability of a person whose extradition is sought

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to raise any available defense in the context of the extradition proceeding.

VII. RESOLUTION OF ADVICE AND CONSENT TO RATIFICATION

Resolved (two-thirds of the Senators present concurring therein),

SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO RESERVATIONS AND DECLARATIONS

The Senate advises and consents to the ratification of the United

Nations Convention Against Corruption (hereinafter in this resolution referred to as the ‘‘Convention’’), adopted by the United Nations General Assembly on October 31, 2003, and signed by the

United States on December 9, 2003, at Merida, Mexico (T. Doc.

109–6), subject to the reservations in section 2 and the declarations

in section 3.

SECTION 2. RESERVATIONS

The advice and consent of the Senate under section 1 is subject

to the following reservations, which shall be included in the United

States instrument of ratification:

(1) The United States of America reserves the right to assume obligations under the Convention in a manner consistent

with its fundamental principles of federalism, pursuant to

which both federal and state criminal laws must be considered

in relation to the conduct addressed in the Convention. U.S.

federal criminal law, which regulates conduct based on its effect on interstate or foreign commerce, or another federal interest, serves as an important component of the legal regime

within the United States for combating corruption and is

broadly effective for this purpose. Federal criminal law does

not apply where such criminal conduct does not so involve

interstate or foreign commerce, or another federal interest.

There are conceivable situations involving offenses of a purely

local character where U.S. federal and state criminal law may

not be entirely adequate to satisfy an obligation under the

Convention. Similarly, in the U.S. system, the states are responsible for preventive measures governing their own officials. While the states generally regulate their own affairs in

a manner consistent with the obligations set forth in the chapter on preventive measures in the Convention, in some cases

they may do so in a different manner. Accordingly, there may

be situations where state and federal law will not be entirely

adequate to satisfy an obligation in Chapters II and III of the

Convention. The United States of America therefore reserves to

the obligations set forth in the Convention to the extent they

(1) address conduct that would fall within this narrow category

of highly localized activity or (2) involve preventive measures

not covered by federal law governing state and local officials.

This reservation does not affect in any respect the ability of the

United States to provide international cooperation to other

States Parties in accordance with the provisions of the Convention.

(2) The United States of America reserves the right not to

apply in part the obligation set forth in Article 42, paragraph

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1(b) with respect to the offenses established in accordance with

the Convention. The United States does not provide for plenary

jurisdiction over offenses that are committed on board ships

flying its flag or aircraft registered under its laws. However, in

many circumstances, U.S. law provides for jurisdiction over

such offenses committed on board U.S.-flagged ships or aircraft

registered under U.S. law. Accordingly, the United States shall

implement paragraph 1(b) to the extent provided for under its

federal law.

SECTION 3. DECLARATIONS

(a) The advice and consent of the Senate under section 1 is subject to the following declaration:

The United States of America declares that, in view of its

reservations, current United States law, including the laws of

the States of United States, fulfills the obligations of the Convention for the United States. Accordingly, the United States

of America does not intend to enact new legislation to fulfill its

obligations under the Convention.

(b) The advice and consent of the Senate under section 1 is subject to the following declarations, which shall be included in the

United States instrument of ratification:

(1) In accordance with Article 66, paragraph 3, the United

States of America declares that it does not consider itself

bound by the obligation set forth in Article 66, paragraph 2.

(2) The United States declares that the provisions of the

Convention (with the exception of Articles 44 and 46) are nonself-executing. None of the provisions of the Convention creates

a private right of action.

(11)

VIII. APPENDIX: HEARING—UNITED NATIONS CONVENTION AGAINST

CORRUPTION

UNITED NATIONS CONVENTION AGAINST

CORRUPTION

WEDNESDAY, JUNE 21, 2006

U.S. SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, DC.

The committee met, pursuant to notice, at 9:32 a.m., in room

SD–419, Dirksen Senate Office Building, Hon. Richard Lugar

(chairman of the committee) presiding.

Present: Senator Lugar.

OPENING STATEMENT OF HON. RICHARD G. LUGAR, U.S.

SENATOR FROM INDIANA

The CHAIRMAN. This hearing of the Senate Foreign Relations

Committee is called to order. The committee meets today to review

the United Nations Convention Against Corruption, which was

signed by the United States in December 2003 and transmitted to

the Senate for advice and consent last October. This treaty targets

corruption on a global basis. It obliges parties to take measures designed to prevent corruption, to criminalize bribery and other corruption-related offenses, to cooperate in the investigation and prosecution of such offenses, and to adopt procedures to recover assets

stolen by corrupt officials. The Convention also improves the tools

through which our law enforcement agencies can investigate and

prosecute money laundering, which can and has been used to fund

terrorism.

By requiring parties to strengthen their anticorruption efforts,

the Convention would help level the playing field for U.S. companies, which are already prohibited by U.S. law from bribing foreign

officials. The Convention would also provide mechanisms to assist

U.S. law enforcement in obtaining overseas evidence and suspects

in domestic corruption-related cases. The administration has indicated that U.S. law already complies with the obligations of this

treaty, with no need for further legislation.

The Convention entered into force on December 15, 2005, and

currently has 55 parties. The United States is among 88 countries

that have signed, but not yet ratified the Convention. The first conference of the parties is scheduled for December 2006.

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The Convention builds on other treaties to which the United

States is a party, namely the OECD’s Convention on Combating

Bribery of Foreign Public Officials in International Business Transactions and the Inter-American Convention Against Corruption.

The Convention is also consistent with the Bush administration’s

efforts within the G–8 to promote transparency, accountability, and

anticorruption measures.

Corruption has been a major concern of this committee. The

World Bank has identified corruption as ‘‘the single greatest obstacle to economic and social development.’’ We have held five hearings over the past 2 years to consider how to thwart corruption related to multilateral development bank financing, and we will hold

a sixth hearing in the coming weeks. My MDB reform bill, S. 1129,

which was passed unanimously by the Senate Foreign Relations

Committee, became law in November 2005. This law contains many

reforms aimed at achieving more transparency and accountability

in the banks’ operations.

The United States has a strong national security interest in opposing corruption and bribery worldwide. For example, we want to

prevent foreign officials from accepting bribes that might lead to a

dangerous container being allowed onto a ship bound for our

shores. We want to prevent bribes that might help a criminal or

terrorist gain access to our country. And we want to prevent bribes

that might provide terrorists with access to nuclear material, chemical and biological weapons, MANPADS, or other dangerous items.

For almost 15 years, I have traveled through the former Soviet

Union and beyond in support of the Nunn-Lugar Cooperative

Threat Reduction program. On many occasions, I have seen WMD

storage facilities that were imperfectly secured. At the Shchuchye

chemical weapons facility in Russia, for example, 1.9 million chemical weapons shells, many small enough to fit in a briefcase, were

stacked like wine bottles on racks in ordinary wood frame buildings. The facility was lightly guarded by U.S. standards and was

surrounded by an unimpressive fence which had several holes in it.

Through the work of dedicated Russians and Americans, security

at this facility and many others has been improved immeasurably.

But safeguarding weapons continues to depend on the actions of

those who are entrusted to operate and guard such facilities, and

bribery is one of the most plausible means through which a terrorist might gain access to a weapon of mass destruction.

Last year I surveyed 85 top nonproliferation experts on proliferation threats and responses. And among my many questions, I asked

their opinion of the most likely method through which terrorists

might acquire nuclear weapons or weapons-grade material. By an

overwhelming margin, they responded that black market activity

was the most likely method. They judged such a corruption-driven

transfer to be far more plausible than other scenarios, including

the outright theft of a weapon by a terrorist group or the deliberate

transfer of a weapon from nuclear weapon states to a terrorist

group.

The ratification of this Corruption Convention might not prevent

a specific foreign official from taking a particular bribe. But fundamental U.S. national security interests demand the United States

work hard to establish a global climate of intolerance for corruption

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and bribery. Ratifying this Convention is an essential element in

that campaign. If we fail to ratify, not only will the chances of a

national security disaster increase, our advocacy on numerous

anticorruption issues, including those involving U.N. reform, MDB

reform, the transparency of international development assistance,

and the dispensation of huge profits flowing into the hands of oilrich regimes around the world, would be diluted.

Failure to ratify would also be a loss to U.S. businesses and

workers. We do not want to give global economic competitors any

excuse to fail to adopt the strong anticorruption laws that already

prevail in our country. We want nations that are in direct competition with us to ratify this Convention so that their legal framework

addresses corruption with the same vigor that ours does. We do not

want to lose contracts, markets, and jobs to corrupt activities overseas. If we fail to promptly ratify this Convention, it will keep us

from fully influencing the monitoring mechanisms for the Convention, which will be considered at the conference of parties in December 2006.

Today, we are pleased to be joined by two distinguished panels.

First, Samuel Witten, Deputy Legal Adviser at the Department of

State, and Bruce Swartz, Deputy Assistant Attorney General in the

Criminal Division of the Department of Justice, will share the

Bush administration’s views with regard to the Convention Against

Corruption. On our second panel, we will have the benefit of the

expert testimony of Alan Larson, chairman of Transparency International–USA, and William Reinsch, president of the National Foreign Trade Council.

We welcome all of our witnesses, and we look forward to their

testimony.

I will ask you to testify in the order that I introduced you, which

would be Mr. Witten and then Mr. Swartz. Your full statements

will be made a part of the record. You may proceed with summaries or as you wish. I thank you for coming, and would you

please proceed, Mr. Witten.

STATEMENT OF SAMUEL M. WITTEN, DEPUTY LEGAL ADVISER,

U.S. DEPARTMENT OF STATE, WASHINGTON, DC

Mr. WITTEN. Thank you very much, Mr. Chairman. I am very

pleased to appear before the committee today to testify in support

of Senate approval of the United Nations Convention Against Corruption. The Department of State greatly appreciates this opportunity to address this important international instrument, and we

appreciate the committee’s deciding to hold a hearing at this time.

The international fight against corruption is an important foreign policy priority for the United States. As President Bush stated

in his submission of the treaty to the Senate, corruption ‘‘hinders

the sustainable development, erodes confidence in democratic institutions, and facilitates transnational crime and terrorism.’’ Corruption debilitates and destabilizes government institutions. Its effect

on impoverished nations is especially devastating. Corruption also

undermines the ability of businesses of the United States and other

countries to operate in a transparent, honest, and predictable environment. Fighting corruption must be an integral component of

14

U.S. diplomacy and our international efforts to work with other

countries to combat crime.

This morning I will just summarize briefly the importance of the

U.N. Convention Against Corruption, amplifying several key points

from my more detailed written testimony.

Mr. Chairman, there are three primary reasons why ratification

of this Convention is so important for the United States. First, the

Convention represents international anticorruption commitments

undertaken by the international community, the first such commitments undertaken on such a global scale. Over 130 countries were

involved in the negotiation of the Convention, and as of this month,

140 countries have signed the Convention and 55 have already become parties. This is a remarkable result given that 11 years ago

there were no existing international corruption instruments at all.

Second, the commitments in this Convention are comprehensive,

recognizing that the fight against corruption requires simultaneous

action on a number of fronts. The parties commit themselves to institute effective measures to criminalize corruption, to take appropriate measures to prevent corruption from happening, and to deny

safe haven to corrupt actors through international cooperation and

asset recovery. The Convention wisely avoids several other more

complex substantive areas that are less appropriate for multilateral

solutions.

Third, the Convention will begin the process of bringing a good

portion of the world community up to the anticorruption standards

already in place in the United States. For example, the Convention

in effect globalizes commitments made by the United States and

other countries in the OECD Convention on Combating Bribery of

Foreign Public Officials in International Business Transactions.

The Convention before the Senate requires governments to criminalize matters already covered under U.S. law, such as bribery of

foreign officials, and pushes countries to institute procedures for

enhanced scrutiny and to establish effective asset-forfeiture mechanisms.

Making laws around the world as tough as our own benefits the

world community as well as the United States by establishing a

common framework for international anticorruption cooperation

and expanding existing law enforcement and other relationships.

As a party, our ability to continue to assert the leadership role we

have held since the 1977 enactment of the Foreign Corrupt Practices Act, the FCPA, would be strengthened.

In contrast, as you mentioned, Mr. Chairman, our absence from

this treaty regime would be conspicuous and could detract from our

ability to exert influence on the various states that are a party to

implement the Convention and take effective action against corruption.

U.S. business will benefit in a global economy from legal regimes

that are designed to address the problem of corruption. Many of

the Nation’s major business groups, in addition to anticorruption

groups, have already urged rapid Senate approval of this agreement.

As my colleague, Mr. Swartz, will explain, this Convention has

many helpful provisions to assist in the extradition of fugitives to

and from the United States and to facilitate the ability of U.S.

15

prosecutors to obtain assistance from other countries in U.S. criminal investigations and prosecutions.

For the United States, the Convention will not create new extradition relationships, but it will broaden some of our older existing

treaties by expanding their scope to include the offenses described

in the Convention.

By contrast, we will be able to use the Convention as a basis for

legal assistance requests to countries with which we lack bilateral

mutual legal assistance treaties, particularly in parts of Asia, Africa, and the Middle East. In this connection, the Convention fully

incorporates safeguards the United States insists on in our bilateral MLATs, and thereby ensures that we may deny requests that

are contrary to our essential interests or are improperly motivated.

Mr. Chairman, the Convention would not require implementing

legislation for the United States, and in this connection, the administration recommends that the Senate include in its resolution of

advice and consent to ratification two reservations, an understanding, and two declarations. If the United States makes the proposed reservations, the existing body of Federal and State law and

regulations will be adequate to satisfy the Convention’s requirements for legislation, and further legislation will not be required

for the United States to implement this Convention.

U.S. law already incorporates the measures found in the Convention, and our interests will be well-served by wide implementation

of the Convention throughout the world. As a governmental leader

in the international anticorruption movement, the United States

has been actively promoting the Convention, already, as the cornerstone for regional multilateral anticorruption action, including,

most recently, within the Group of 8, the Asia-Pacific Economic Cooperation forum, the Organization of American States, and in the

United Nations Development Programme–OECD’s Initiative on

Good Governance for Development in the Middle East and North

Africa.

As you mentioned, Mr. Chairman, a Conference of the States

Parties will convene in December of this year, the 1-year anniversary of the Convention’s entering into force, to discuss what governments can do to promote implementation, and we’re working

with other governments to develop some realistic options. Our ability to play a leading role at that Conference in December will be

enhanced if the United States ratifies the Convention prior to the

conference.

Mr. Chairman, with that I’ll conclude my remarks. We very

much appreciate the committee’s decision to consider this important treaty. As you know, Mr. Chairman, the United States helped

develop many of the treaty’s provisions, and we consulted extensively with the private sector, including the business and legal

communities, and are confident that the Convention enjoys widespread support.

I’ll be happy to answer any questions the committee may have.

[The prepared statement of Mr. Witten follows:]

PREPARED STATEMENT OF SAMUEL M. WITTEN, DEPUTY LEGAL ADVISER, U.S.

DEPARTMENT OF STATE, WASHINGTON, DC

Mr. Chairman and members of the committee, I am pleased to appear before you

today to testify in support of the United Nations Convention against Corruption.

16

The Department of State greatly appreciates this opportunity to address this international instrument.

THE FIGHT AGAINST CORRUPTION AS A FOREIGN POLICY PRIORITY

As noted by President Bush in his message transmitting the Convention to the

Senate for its advice and consent to ratification, the international fight against corruption is an important foreign policy priority for the United States. In the President’s words, corruption ‘‘hinders sustainable development, erodes confidence in

democratic institutions, and facilitates transnational crime and terrorism.’’ Corruption debilitates and destabilizes government institutions. The toll on impoverished

nations is especially devastating and real. Money that could have been spent to improve the lives of the underprivileged and improve health, energy, or other infrastructure is frittered away for personal enrichment. Corruption also undermines the

ability of businesses of the United States and other countries to operate in a transparent, honest, and predictable environment. Because corruption’s effects are wideranging and pernicious, fighting corruption must be an integral component of U.S.

diplomacy and our international efforts to work with other countries to combat

crime.

THE IMPORTANCE OF THE U.N. CONVENTION AGAINST CORRUPTION

I will first focus on the importance of the U.N. Convention against Corruption to

the U.S. Government’s international anticorruption efforts.

First, the Convention represents the first set of international anticorruption commitments undertaken by the international community, with the leadership of the

United States, on a truly global scale. The sheer size of the group of nations involved in negotiating the instrument in 2002 and 2003—over 130 countries—was a

good sign that this Convention would be applied widely throughout the globe. However, interest in the Convention has even gone beyond expectations—as of this

month, 140 countries had signed the Convention and 55 had already become parties.

The Convention’s support is all the more remarkable considering that 11 years ago

there were no existing international anticorruption instruments and the development of a global instrument on the subject was not viewed as a realistic option.

Second, the Convention is by far the most comprehensive set of international commitments relating to corruption. Previous international anticorruption agreements

are relatively limited in their geographic scope and substantive coverage. The Convention recognizes that the fight against corruption requires simultaneous action on

a number of fronts. Parties are obligated to ensure that law enforcement against

corruption is effective and active, and they are also obligated to take appropriate

measures to prevent corruption from happening in the first place and to deny safe

haven to corrupt actors through international cooperation and asset recovery. The

Convention avoids obligations regarding complex substantive areas that are less appropriate or unripe for multilateral solutions, such as political party financing and

criminalization of purely private sector corruption, that are currently handled by individual nations under their domestic laws.

The breadth of the chapter of the Convention addressing the prevention of corruption is a good example of the broad yet flexible nature of this instrument. Under

this set of articles, which contains both mandatory and discretionary provisions,

parties to the Convention commit themselves to build a more ethical public service,

work toward effective transparency and controls in public procurement and spending, increase civil society access to government, and promote integrity in the private

sector without burdening the private sector with new laws or regulations. The goal

of all these and other measures in the Convention is to make the risk of corruption

greater than any reward it may bring.

Third, and very importantly, the Convention will begin the process of bringing a

good portion of the world community up to the anticorruption standards already in

place for the United States. For example, the Convention, in effect, globalizes commitments made by the United States and other countries in the Organization for

Economic Cooperation and Development (OECD) Convention on Combating Bribery

of Foreign Public Officials in International Business Transactions, which has now

been in force for more than 7 years. The Convention before the Senate requires governments to criminalize bribery of foreign officials and officials of public international organization in the course of international business and also requires governments to establish minimal ‘‘books and records’’ requirements for the private sector—matters already covered under U.S. law. The asset recovery chapter, as another

example, pushes countries to institute procedures for enhanced scrutiny and to establish effective asset forfeiture mechanisms. All of these are common tools already

used and well-established in the United States.

17

The United States already conducts itself consistently with the Convention’s provisions, so our work related to implementation will largely involve ensuring that the

Convention is implemented properly by others and cooperating in appropriate cases

that are covered under the Convention. A Conference of the States Parties will convene in December 2006 to discuss what governments can do to promote implementation, and because of our central role in the drafting of the Convention and our leadership in this area, we are working with other governments to develop some realistic options. The United States delegation can and should play a leading role at

that conference, and of course our ability to do so will be enhanced if we have already ratified the Convention prior to the conference.

The United Nations Convention against Corruption is quickly becoming a focal

point for U.S. and international anticorruption action. The U.S. Government is a

leader in the international anticorruption movement, and the Convention represents

an extremely useful tool to help us further our goals in this area. We have been

actively promoting the Convention as the cornerstone for regional multilateral

anticorruption action, including, most recently, within the G–8, the Asia-Pacific Economic Cooperation forum, the Organization of American States, and in the United

Nations Development Programme–OECD’s Initiative on Good Governance for Development in Arab Countries. Using the Convention as an internationally created and

accepted guideline for taking action against corruption will bolster our current efforts—using the Millennium Challenge Account, the various regional initiatives just

mentioned, and our foreign assistance programs—to encourage and help other governments build effective anticorruption regimes. By becoming a party to the Convention, the United States will be even better placed to encourage and promote its effective implementation.

BENEFITS OF U.S. RATIFICATION

With this, I return to where I began—the benefits to the United States from becoming a party to the Convention. First, becoming a party would strengthen the

ability of the United States to continue to assert a leadership role in this area,

which it has held ever since the enactment in 1977 of the Foreign Corrupt Practices

Act (FCPA). Given the strong position the United States has historically taken in

opposition to corruption, and the fact that our laws and policies on this issue are

at the forefront internationally, our absence from this treaty regime would be conspicuous and could detract from our ability to exert pressure on the various states

that are party to implement the Convention and take effective action against corruption.

Second, U.S. business will benefit in the global economy from legal regimes that

are designed to address the problem of corruption. The corruption of governmental

officials significantly hinders business transactions and yields economic inefficiencies. Corruption causes investors either to flee or never show up in the first place.

We understand that many of the Nation’s major business groups, in addition to

anticorruption groups, have already contacted this committee to urge rapid Senate

approval of this agreement.

Third, the Convention augments existing mechanisms for international cooperation in law enforcement matters. Corruption facilitates terrorism, drug trafficking,

organized crime, money laundering, and illicit international money transfers, which

can be used to support mechanisms for international terrorists. As my colleague

from the Justice Department will explain, this Convention has many helpful provisions to assist in the extradition of fugitives to and from the United States and to

facilitate the ability of U.S prosecutors to obtain assistance from other countries in

U.S. criminal investigations and prosecutions. indeed, many countries, particularly

in the developing world, lack existing bilateral extradition or mutual legal assistance treaty relationships with one another, but now will be able to rely on this Convention to fill that legal gap for many corruption crimes.

For the United States, the Convention will not create new extradition relationships, as we will continue to rely on our extensive web of bilateral treaties for that

purpose, but it will broaden some of our older existing treaties by expanding their

scope to include the offenses described in the Convention. By contrast, we will be

able to use the Convention as a basis for legal assistance requests to countries with

which we lack bilateral mutual legal assistance treaties (MLATs), primarily those

in parts of Asia, Africa, and the Middle East. In this connection, the Convention

fully incorporates all the safeguard provisions the United States insists upon in our

bilateral MLATs and thereby ensures that we may deny requests that are contrary

to our essential interests or are improperly motivated.

18

U.S. IMPLEMENTATION

The Convention would not require implementing legislation for the United States.

As discussed at length in the Department of State’s Detailed Analysis of the Provisions of the Convention, the administration recommends that the Senate include in

its resolution of advice and consent to ratification two reservations, an understanding, and two declarations. If the United States makes the proposed reservations, the existing body of Federal and State law and regulations will be adequate

to satisfy the Convention’s requirements for legislation, and, thus, further legislation will not be required for the United States to implement the Convention.

Mr. Chairman, we very much appreciate the committee’s decision to consider this

important treaty. The United States is proud to have actively participated in the

negotiation of the Convention and to have helped develop many of its provisions.

We have consulted extensively with the private sector, including the business and

legal communities, and we are confident that the Convention enjoys widespread

support.

I will be happy to answer any questions the committee may have.

The CHAIRMAN. We thank you very much, Mr. Witten for your

testimony. I’d like to call now on Mr. Swartz, if you would proceed.

STATEMENT OF BRUCE C. SWARTZ, DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT

OF JUSTICE, WASHINGTON, DC

Mr. SWARTZ. Thank you, Mr. Chairman. Mr. Chairman, I am

pleased to appear before you here today on behalf of the U.S. Department of Justice to testify in favor of the United Nations Convention Against Corruption.

Mr. Chairman, as you noted, the United States has a strong national security interest in fighting corruption, and this Convention

will directly advance our national security and law enforcement interests in that regard. As former Attorney General Ashcroft said at

the signing ceremony in Merida, Mexico: ‘‘The fight against corruption is critical to realizing our shared and essential interests. Corruption . . . undermines the legitimacy of democratic governments,

and can, in its extreme forms, even threaten democracy itself.’’

This morning I would like to take the opportunity to discuss

briefly the importance of this treaty from a Federal criminal law

enforcement perspective. Specifically, I would like to discuss the

core criminalization provisions set forth in chapter III, the provisions related to international law enforcement cooperation set forth

in chapter IV, the provisions related to asset recovery in chapter

V, and the technical assistance provisions in chapter VI.

Turning first, briefly, to the core criminalization provisions, as

the committee is aware, the Convention requires that five offenses

be criminalized by every State Party to this Convention. First, it

requires criminalization of bribery of public officials domestically.

Second, it requires countries to criminalize bribery of foreign public

officials. Third, it requires criminalization of embezzlement by public officials. Fourth, it requires criminalization of money laundering

and requires countries to expand the reach of their money-laundering statutes to make certain that the predicate offenses associated with this Convention are predicate offenses for the purposes

of their money-laundering offenses. Finally, the Convention requires criminalization of obstruction of justice related to the offenses set forth in the Convention.

As Mr. Witten has noted, the United States does not need to

enact any new legislation to implement these or any other proviVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00018 Fmt 6601 Sfmt 6602 109-18.TXT SFRELA2 PsN: SFRELA2
19

sions of this Convention. Rather than placing a burden on the

United States to change its laws, this Convention, in essence, puts

the burden on other countries around the world to enact

anticorruption provisions like those that the United States already

has in place.

This will directly benefit U.S. economic, law enforcement, and security interests. First, it will benefit U.S. businesses operating

abroad by ensuring that everyone is playing by the same rules.

Under the United States Foreign Corrupt Practices Act, for instance, it is illegal for U.S. companies to bribe foreign government

officials. The Convention effectively requires all States Parties to

adopt a foreign corrupt practices act of their own.

Second, the Convention will directly advance U.S. law enforcement interests in this regard by helping to ensure that we have

stable, noncorrupt law enforcement partners in other parts of the

world.

Finally, the Convention will help advance U.S. security interests

by helping to prevent destabilization of foreign democracies

through corruption, as well as cutting off funding that flows from

corruption to domestic criminal and terrorist groups, and to international terrorist groups as well. And, finally, it will help ensure

that the kind of corruption that exposes us to the danger of weapons of mass destruction, as noted by the chairman, is directly addressed by the countries themselves in the first instance.

The second set of provisions that will be of direct assistance to

law enforcement in the United States are the international cooperation provisions of chapter IV of the Convention. This chapter

provides critical new tools to Federal law enforcement by creating

mechanisms for extradition and mutual legal assistance. At the

same time, the provisions contain safeguards found in all of our

modern extradition and mutual legal assistance treaties that we

have on a bilateral basis and that we have put in place in our more

recent multilateral treaties.

With regard to extradition, the United States will continue to

make extradition contingent upon the existence of a bilateral treaty, as the Convention permits. But the Convention does update, as

Mr. Witten noted, all of our older list treaties by providing that the

five mandatory offenses required by the Convention shall be

deemed to be extraditable offenses in any existing treaty. Thus, the

practical effect of this Convention is to expand the substantive

scope of our existing, older bilateral treaties to include money laundering, obstruction of justice, foreign and domestic bribery, and embezzlement.

The treaty also creates a framework for mutual legal assistance

in corruption-related cases where the States Parties do not otherwise have an existing bilateral mutual legal assistance relationship. Where there is no existing mutual legal assistance treaty, the

United States may now use the Convention as an independent

legal basis for requesting and providing assistance. Article 46 of

the treaty is thus a treaty within a treaty. Significantly, however,

the Convention also provides, as Mr. Witten noted, all of the safeguards that we would expect to see in such a convention, including

the possibility of denying a request for mutual legal assistance

20

whenever the United States essential interests would be jeopardized.

Turning to the asset recovery provisions of this Convention, here,

too, we find important developments for U.S. law enforcement.

These provisions make possible for law enforcement to provide assistance from the detection to the seizure to the disposition of illicitly obtained assets, assets that have been obtained through corruption. They will help foreign officials be assured that any corruption that they undertake will not result in their ultimate gain, and

it will help ensure that property is returned to the states from

which it may have been corruptly taken.

Article 52, for example, requires States Parties to have adequate

procedures in place to detect suspicious transactions. Article 53

provides that a State Party that has been harmed by corruption

may participate as a private litigant to recover the proceeds of embezzlement. And in article 54, the Convention requires State Parties to establish a legal framework for providing assistance and recovery of assets acquired through one of the core criminalized offenses. Under this provision, countries must enact legislation to enable them either to freeze or seize illicit property or to recognize

a foreign judgement against the property. And article 57 sets forth

a framework for the disposition of property confiscated by one State

Party at the request of another.

Finally, Mr. Chairman, I would like to say a brief word about the

technical assistance provisions of the Convention. The Convention

in chapter 6 calls for States Parties to provide each other with

technical assistance in implementing the various provisions of the

Convention.

As the committee knows, the Department of Justice, with funding from the Department of State, provides technical law enforcement assistance by posting experienced Federal prosecutors abroad

as resident legal advisors. We have found time and again that our

assistance is most effective when we can point out that the law enforcement standards that we are suggesting be implemented are

not simply those of the United States, but are universal standards.

By creating a universal law enforcement standard regarding the

fight against corruption, the Convention will directly advance the

interests of the United States in this regard as well.

In conclusion, Mr. Chairman, by combating global corruption, we

restore confidence in democracy and the rule of law, we bolster the

global economy by encouraging open trade and investment, and we

strengthen the stability and integrity of government and economic

systems worldwide.

The United Nations Convention Against Corruption helps us to

do all of these things, but perhaps most significantly, Mr. Chairman, as you noted at the outset, the Convention significantly and

directly advances the national security and law enforcement interests of the United States of America.

On behalf of the Department of Justice then, we respectfully

urge the U.S. Senate to provide its advice and consent to ratification of this important treaty. And I look forward to answering any

questions that the committee may have.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Swartz follows:]

21

PREPARED STATEMENT OF BRUCE C. SWARTZ, DEPUTY ASSISTANT ATTORNEY

GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC

I. INTRODUCTION

Mr. Chairman and members of the committee, I am pleased to appear before you

today on behalf of the U.S. Department of Justice to testify in favor of the United

Nations Convention Against Corruption. This new treaty will significantly and directly advance the national security and law enforcement interests of the United

States. As former Attorney General Ashcroft stated at the treaty signing in Merida,

Mexico: ‘‘The fight against corruption is critical to realizing our shared and essential

interests. Corruption undermines the goals of peace loving and democratic nations.

It jeopardizes free markets and sustainable development. It provides sanctuary to

the forces of global terror, and facilitates the illicit activities of international and

domestic criminals. It undermines the legitimacy of democratic governments and

can, in its extreme forms, even threaten democracy itself.’’

The U.N. Convention Against Corruption is the culmination of a worldwide movement against corruption that has resulted in smaller scale corruption conventions,

such as the Organization of American States Inter-American Convention Against

Corruption and the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business

Transactions. Although those other conventions have addressed corruption on a

more limited basis, none has attacked corruption with the same substantive or geographical breadth as the U.N. Convention.

Mr. Chairman, I understand that the President and the Secretary of State have

already submitted to this committee substantial information detailing the various

provisions of the Convention. You have also heard this morning from my State Department colleague, Mr. Witten. I do not intend to duplicate the information you

have received from those sources. I would, however, like to take this opportunity

to more fully explain exactly why this treaty is so important from a Federal criminal

law enforcement perspective. Specifically, I would like to discuss the Convention’s

core criminalization provisions under chapter III; the provisions related to international law enforcement cooperation under chapter IV; and the provisions related

to asset recovery under chapter V. I would also like to briefly discuss the technical

assistance and implementation provisions of chapters VI and VII.

The Attorney General has made fighting corruption one of his top priorities. And

as Deputy Assistant Attorney General of the Justice Department’s Criminal Division, I can tell you firsthand that the Department’s anticorruption efforts do not

stop at our borders. Under the Attorney General’s leadership, as well as the leadership of Assistant Attorney General Alice Fisher, the Criminal Division’s prosecutors

are working tirelessly every day to root out global corruption and to prosecute bribery of foreign officials.

For example, we are aggressively investigating violations of our Foreign Corrupt

Practices Act, which as you know makes it illegal for U.S. companies and individuals doing business overseas to bribe foreign officials. We are also working extremely hard to root out bribery in the Iraq reconstruction process. And in partnership with the Department of State, we are working with our international partners

to build and strengthen the ability of prosecutors around the world to fight corruption through our Overseas Prosecutorial Development and Training Assistance Program.

The U.N. Corruption Convention would create new opportunities for international

law enforcement cooperation to combat corruption around the world. It would give

the Department new tools to more effectively prosecute companies and individuals

who bribe foreign governments. And it would make it easier for the Department to

recover the ill-gotten assets of corrupt government officials.

II. CRIMINALIZATION

Let me begin by describing the Convention’s core criminalization provisions,

which can be found in chapter III of the Convention. Articles 15, 16, 17, 23, and

25 require all signatory nations to enact laws criminalizing bribery and associated

conduct. Article 15, for example, requires countries to criminalize bribery of domestic public officials. Article 16, in part, requires countries to criminalize bribery of

foreign public officials. Article 17 requires criminalization of embezzlement by public

officials. Article 23 requires criminalization of money laundering and requires countries to expand the reach of their money laundering laws to predicate offenses associated with corruption. Finally, article 25 requires criminalization of obstruction of

justice related to offenses set forth in the Convention.

22

As this committee may know, all of the foregoing offenses are already illegal

under U.S. law. For that reason, and because the other criminalization provisions

in chapter III are discretionary, the United States does not need to enact any new

legislation to implement chapter III (or any other components) of this Convention.

Rather than placing a burden on the United States to change its laws, this Convention puts the burden on countries around the world to enact antibribery laws that

the United States already has in place.

The effect on U.S. economic and security interests of criminalizing bribery and related offenses on a global scale cannot be overstated. Let me give you an example.

Under the U.S. Foreign Corrupt Practices Act, or FCPA, it is illegal for U.S. companies to bribe foreign government officials for the purpose of retaining or obtaining

business or securing any unfair advantage. Because corruption is rampant in certain

parts of the world in which our companies do business, U.S. companies seeking to

play by the rules often have been at a competitive disadvantage.

The core criminalization provisions of this Convention will level the playing field

by requiring everyone to play by the same set of rules. The Convention effectively

requires all States Parties to adopt a ‘‘Foreign Corrupt Practices Act’’ of their own.

Now all companies based in countries that are parties to the Convention will have

an obligation to comply with the same antibribery laws in competing for business

overseas. That is good for U.S. businesses. It is also good for Federal law enforcement, because the less financial incentive companies have to bribe foreign government officials, the less likely they will be to ignore or subvert the requirements of

the FCPA.

The Convention’s core criminalization provisions are also good for the U.S. economy. As this committee knows, public corruption weakens the integrity, stability,

and transparency of market systems. By criminalizing domestic and foreign public

corruption and related offenses, this Convention helps to promote the integrity, stability, and transparency of foreign markets, thereby creating opportunities for U.S.

investment in those markets.

Finally, the core criminalization provisions of the Convention are good for U.S. national security. For example, as President Bush stated in his transmittal message,

corruption facilitates transnational crime and terrorism by funding—directly or indirectly—criminal and terrorist organizations. By criminalizing domestic and foreign

bribery and related offenses, this Convention will reduce or cut off a critical funding

source for terrorists, drug traffickers, money launderers, and other criminals.

At this point, Mr. Chairman, I would like to briefly note that the Secretary of

State has recommended two reservations and one declaration relevant to the core

criminalization provisions. Principally, the Secretary of State has recommended that

the United States take a reservation to the Convention to accommodate federalism

concerns. As the committee may know, Federal criminal law does not apply where

the criminal conduct does not implicate interstate or foreign commerce or another

Federal interest. There are conceivable situations involving offenses of a purely local

character where U.S. Federal and State criminal law may not be entirely adequate

to satisfy an obligation under the Convention. Accordingly, the Secretary of State

has recommended that the U.S. reserve to the obligations set forth in the Convention ‘‘to the extent they address conduct that would fall within this narrow category

of highly localized activity.’’ In light of this reservation, as noted by the accompanying understanding, the Convention does not require any legislative or other

measures. The Justice Department supports this reservation.

Additionally, the Secretary of State has recommended that the Senate include a

declaration in its resolution of advice and consent that makes clear that the provisions of the Convention, with the exception of articles 44 and 46 regarding extradition and mutual legal assistance, are not self-executing. This is particularly relevant to article 35 of the criminalization chapter, which requires that ‘‘each State

Party shall take such measures as may be necessary . . . to ensure that entities

or persons who have suffered damage as a result of an act of corruption have the

right to initiate legal proceedings against those responsible for that damage . . .’’.

Under U.S. law, private parties damaged by corruption already have private

rights of action under various theories, e.g., fraud claims, tort claims, contract

claims, antitrust theories, shareholder class actions or derivative suits. The United

States is therefore already in compliance with article 35. The Secretary of State recommends this declaration, however, to clarify that none of the provisions, including

article 35, creates an independent private right of action that could open U.S. courts

to civil lawsuits that would not otherwise lie under U.S. law. The Justice Department fully supports such a declaration.

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III. INTERNATIONAL COOPERATION

I would now like to briefly describe chapter IV of the Convention, which governs

international law enforcement cooperation. Mr. Chairman, the provisions of this

chapter provide critical new tools to Federal law enforcement by creating new mechanisms for extradition and mutual legal assistance. At the same time, these provisions provide the U.S. Government with all of the safeguards found in modem bilateral mutual legal assistance treaties, including options for noncompliance where assistance would offend the ‘‘essential interests’’ of the United States.

These provisions are closely modeled after similar provisions in the United Nations Convention Against Transnational Organized Crime, to which, as you know,

the U.S. Senate gave its advice and consent. Article 44, for example, creates an extradition regime for offenses established pursuant to this Convention where dual

criminality exists (i.e., where the offense is criminalized under the laws of both the

requesting and the requested State). Article 44 provides that States Parties may

make extradition conditional upon the existence of a bilateral extradition treaty

(which is the practice in the United States). It also provides that ‘‘each of the offenses to which this article applies shall be deemed to be included as an extraditable

offenses’’ in any existing treaty. Thus, the practical effect of this article is to expand

the substantive scope of existing bilateral extradition treaties to new offenses such

as money laundering, obstruction of justice, foreign and domestic bribery, and embezzlement. This article does not create obligations with countries with which we

do not already have bilateral extradition treaties (nor does it alter the requirement

of dual criminality under those treaties).

Additionally, article 46 creates a framework for mutual legal assistance in corruption-related cases where the States Parties do not otherwise have mutual legal assistance obligations. Parties with bilateral mutual legal assistance treaties can continue to use those existing agreements. Parties that do not have existing bilateral

mutual legal assistance treaties can use article 46 as an independent legal basis for

requesting or providing assistance. Article 46 is effectively a ‘‘treaty within a treaty’’

governing in great detail cooperation between the States Parties for offenses covered

by the Convention.

Specifically, article 46 sets forth various types of assistance that States Parties

may request under the Convention (including taking evidence or statements from

persons, effecting service of judicial documents, executing searches and seizures,

and other activities). Paragraphs 9 and 21, however, list various grounds upon

which assistance may be refused, providing strong safeguards for the United States.

For example, a State Party can deny assistance when the request is not made in

conformity with the provisions of the article; if the requested State Party considers

that execution of the request is likely to prejudice the sovereignty, security, or other

essential interest; if the authorities of the requested party would be prohibited by

its domestic law from carrying out the action; and if it would be contrary to the

legal system of the requested party relating to mutual legal assistance. In addition,

a State may deny assistance based on lack of dual criminality where the assistance

would involve a coercive measure such as a search warrant or subpoena. Even

where noncoercive measures are at issue, a State may deny assistance on dual criminality grounds if granting the assistance is inconsistent with its basic legal principles or the request involves de minimus matters.

I would also briefly note that article 46 requires on a global scale measures that

have long been a standard aspect of U.S. mutual legal assistance practice but that

are not always applicable in other countries, such as the prohibition on invoking

bank secrecy to bar cooperation in paragraph 8.

Finally, chapter IV contains several other nonmandatory but helpful cooperation

provisions, including article 48 (encouraging States Parties to cooperate closely to

enhance the effectiveness of law enforcement action) and article 49 (whereby States

Parties shall consider concluding bilateral or multilateral joint investigation agreements).

We believe that all of these provisions provide important new tools to U.S. law

enforcement. Let me give you a practical example. As I stated earlier, enforcing the

Foreign Corrupt Practices Act is a major priority for the Justice Department’s

Criminal Division. The very nature of FCPA investigations, however, is that many

of the relevant witnesses and evidence often are located in foreign countries. The

Justice Department believes that the international cooperation provisions in this

Convention will increase our ability to obtain evidence from foreign countries, leading to more effective enforcement of the FCPA and other offenses. And by providing

us with the tools to more effectively investigate and prosecute the FCPA, the Convention helps us to preserve the integrity, stability, and transparency of our political

and economic systems.

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IV. ASSET RECOVERY

I would now like to discuss a few of the key asset recovery provisions of the Convention, which can be found at articles 51–59. The asset recovery provisions establish new mechanisms for the recovery of illicitly acquired assets and for international cooperation regarding asset forfeiture. These provisions are important from

a law enforcement perspective because they will help to deprive corrupt officials of

their ill-gotten gains and may, in some cases, require the property to be returned

to the nation from which it was taken.

Article 52, for example, requires States Parties to have adequate procedures in

place to detect suspicious transactions. Article 53 provides that a State Party that

has been harmed by corruption can participate as a private litigant to recover the

proceeds of embezzlement and other crimes in a forfeiture proceeding, or as a victim

for purposes of court ordered restitution. And in article 54, the Convention requires

States Parties to establish a legal framework for providing assistance in the recovery of assets acquired through one of the core criminalized offenses. Under this provision, countries must enact legislation to enable them either to freeze or seize the

illicit property or to recognize a foreign judgment against the property. The Department currently anticipates that in the event the United States requests assistance

from another party under article 54, the United States would seek to have both in

rem civil forfeiture and post-conviction criminal forfeiture judgments enforced.

Finally, article 57 sets forth a framework for the disposition of property confiscated by one State Party at the request of another. Although article 57 is a powerful new tool for returning ill-gotten gains to victim States, it is narrow in scope and

thus will not burden the U.S. judicial system. First, article 57 applies only in cases

in which one country has successfully recovered the proceeds of foreign corruption

through enforcement of a foreign forfeiture order (i.e., pursuant to article 55(1)(b)).

Second, article 57 reaffirms the principle that repatriation of forfeited assets is subject to the requirements and procedures of domestic law. Third, the obligation is

subject to the same safeguards as provided in article 46. The U.S. Government

could, therefore, refuse a request to repatriate funds under this article where assistance would offend the ‘‘essential interests’’ of the United States. The United States

has ample authority through its asset sharing and remission statutes to execute the

obligations under article 57.

V. TECHNICAL ASSISTANCE AND IMPLEMENTATION

Finally, Mr. Chairman, I would like to say a brief word about the technical assistance and implementation provisions of the Convention. The Convention, in chapter

VI, calls for States Parties to provide each other with technical assistance in implementing the various provisions of the Convention. In chapter VII, the Convention

creates a Conference of the States Parties to the Convention, the purpose of which

is to ‘‘improve the capacity of and cooperation between States Parties to achieve the

objectives set forth in this Convention and to promote and review its implementation.’’

The first meeting of the Conference of the States Parties, or COSP, is tentatively

scheduled to occur in December of this year. The COSP will determine the substance and scope of any technical assistance and implementation programs, including any mechanism for ‘‘peer review’’ or ‘‘monitoring.’’ In the months leading up to

the COSP, States will be working informally to develop an agenda for the COSP

and to begin to discuss the substantive issues that the COSP will address. For example, the Criminal Division and other U.S. Government components have already

been assisting the United Nations Office on Drugs and Crime with the drafting of

legislative and technical guides for the Convention.

Critically, the United States will have more influence as a participant in the

COSP as a State Party than a mere signatory. Participating in the COSP as a State

Party will benefit the United States. Among other things, as a State Party we will

be in a better position to influence the scope of any peer review mechanism that

may emerge from the COSP to ensure that it is not unduly burdensome or otherwise

unreasonable.

Accordingly, I respectfully urge the committee to report the Convention favorably

and the Senate to provide its advice and consent to ratification as soon as practicable, but in any event prior to November 2006.

VI. CONCLUSION

Mr. Chairman, by combating global corruption, we restore confidence in democracy and the rule of law. We bolster the global economy by encouraging open trade

and investment. We strengthen the stability, integrity, and transparency of governVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00024 Fmt 6601 Sfmt 6621 109-18.TXT SFRELA2 PsN: SFRELA2
25

ment and economic systems worldwide. The United Nations Convention Against

Corruption helps us do all of those things.

But above all, Mr. Chairman, the Convention significantly and directly advances

the national security and law enforcement interests of the United States of America.

On behalf of the Department of Justice, I, therefore, urge the U.S. Senate to provide

its advice and consent to ratification to this important treaty. I would be pleased

to respond to any questions the committee may have.

The CHAIRMAN. Well, thank you very much, Mr. Swartz, for your

testimony. We appreciate both of you illuminating the treaty. You

have provided excellent summaries of your broader statements.

I have a series of questions that are not meant to challenge your

testimony, but may offer you additional opportunities to once again

cover the aspects, for the sake of a hearing record, that would be

important to our members on the committee, and likewise to all

Senators.

Let me ask you these questions, and either one of you may respond. One or the other may have a specialty in the areas we are

going to talk about here. First of all I would point out that the

United States is already a party to two treaties relating to corruption—the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and the InterAmerican Convention Against Corruption that I mentioned in my

opening statement.

What progress has been made against corruption as a result of

these two earlier treaties, and how does this Convention build on

these regional efforts? Why, therefore, is another convention needed, in your judgement?

Mr. SWARTZ. Mr. Chairman, these two Conventions have been, as

you note, extremely important to the international fight against

corruption. And this Convention builds upon those two prior Conventions in ways that we believe will be very useful for the law enforcement and for the national security interests of the United

States. The Inter-American Convention Against Corruption was the

first multilateral international agreement specifically relating to

corruption, and it established the principle that international cooperation and preventive measures were necessary to fight corruption.

Now that that Convention is in force throughout the hemisphere,

countries are more able and more willing to address problems relating to corruption, bilaterally and at the Organization of American States. And the Convention has been helpful in practical

cases.

One striking example, from the perspective of the U.S. Government, was when the United States invoked the Convention in 2001

to arrest and to extradite two fugitive associates of the former chief

of intelligence of Peru, Vladimir Montesinos. Montesinos had been

charged in Peru with an array of corruption and abuse of office offenses, and the fugitives were charged with aiding him in evading

arrest and destroying evidence.

Now, these offenses were not covered by the old 1899 treaty between the United States and Peru regarding extradition, but they

were covered by the accessory after the fact provisions of the Convention, and thus extradition from the United States was possible.

The OECD Convention has been equally important. It was the

first international agreement to solely target bribery of foreign offiVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00025 Fmt 6601 Sfmt 6602 109-18.TXT SFRELA2 PsN: SFRELA2
26

cials in international business transactions, and it was the first to

create an active peer-review monitoring mechanism to ensure effective implementation. Prior to that Convention, as the Chair is

aware, the United States was the only country to investigate and

prosecute bribery of foreign officials, and the Convention is slowly,

but surely, leading the way to action by other OECD governments

in this area. For example, France, Germany, and the United Kingdom all have a very active number of investigations into foreign

bribery by their companies. Work at the OECD also eliminated the

tax deductibility of bribes, and has strengthened significantly

antibribery disciplines on export credits.

But even with such progress, there is a long way to go and the

U.N. Convention will take the international fight against corruption to a new level. It is a far more comprehensive treaty than either the OECD or the Inter-American Conventions. The OECD

Convention, as I noted, focuses on bribery of foreign officials; and

the Inter-American Convention only requires action in the law enforcement area and is geographically based.

Neither of those Conventions provides as well the approach of

comprehensively addressing asset forfeiture that the U.N. Convention does. In short, the U.N. Convention addresses corruption on

multiple fronts, by taking preventive measures, as Mr. Witten

noted; criminalizing a wide range of corrupt conduct; and cooperating on asset recovery. It will apply to countries around the world,

and it will provide a comprehensive framework that we believe will

be essential to advancing our anticorruption goals.

The CHAIRMAN. Thank you. One of the facets that you mentioned, and only one in that comprehensive list, but one which

many Americans have found fascinating as well as repugnant, has

been the deduction of bribes as people file tax returns in other

countries; in other words, the perception that it’s just simply a cost

of doing business. And the internationalization of that principle in

itself is really an important indicator of the seriousness of this activity.

Let me ask now a second question of this panel. In a speech commemorating the entry into force of the Corruption Convention last

December, Ambassador John Bolton, U.S. Representative to the

United Nations stated, and I quote, ‘‘The United States is proud to

have actively participated in the negotiation of the Convention.’’

And he encouraged the U.S. Senate to provide its advice and consent to ratification of this important convention at an early date.

Ambassador Bolton is leading the U.S. efforts in the critical campaign to reform the United Nations in the wake of the oil-for-food

scandal. What would be the impact on those efforts if the United

States were to fail to ratify the Convention?

Mr. Witten.

Mr. WITTEN. Thank you, Mr. Chairman. The short answer, Mr.

Chairman, is that becoming a party would help in this and all

other efforts of the United States to address corruption as reflected

in Ambassador Bolton’s statements back in December which echoed

the President’s words when submitting the Convention to the Senate for its consideration. The administration strongly supports ratification of the Convention and requests rapid approval by the Senate.

27

The United States has been a world leader at addressing corruption wherever it occurs, whether at the national level or in international organizations such as the United Nations.

The United States is working on many fronts to further these

anticorruption goals, for example, by pushing for governmental

commitments to fight corruption through agreements such as the

Corruption Convention, the OECD Convention, and the InterAmerican Convention. Second, by pushing for government action

against corruption through other means, for example, U.S. international diplomacy and foreign assistance. Third, by engaging governmental organizations and working with them in a partnership

to address corruption issues throughout the world. And, finally, as

you mentioned, Mr. Chairman, pushing for action by, and within,

international organizations such as the United Nations.

Becoming a party to this Convention and participating in its implementation will certainly enhance our anticorruption efforts in all

of these fronts, of course including our posture advocating reform

at the United Nations and other public international organizations.

In addition, Mr. Chairman, I note that the Convention addresses

bribery for commercial advantage not only of officials of foreign

governments but also officials of public international organizations.

This is one of the key criminalization requirements of the Convention. Parties, therefore, are required to criminalize bribes paid to

officials of the United Nations and other public international organizations that are made for commercial advantage. Thank you.

The CHAIRMAN. Let me ask, as we further examine our foreign

policy goals, how does this Convention fit in with the broader U.S.

anticorruption agenda? We’ve discussed already the U.S. reforms

with regard to the United Nations, as you’ve just mentioned, Mr.

Witten. But what other ramifications would result from a U.S. failure to ratify the Convention? For example, would it impair U.S.

credibility in advancing other key anticorruption efforts, such as

our own committee’s efforts to combat corruption related to multilateral development bank financing?

Mr. Witten.

Mr. WITTEN. Thank you again, Mr. Chairman. Adherence to this

Convention is part of a broader picture, as you’ve indicated in your

opening statement, and as I’ve attempted to convey. The fight

against corruption is a priority for the United States because it accomplishes so much. As we’ve discussed, it has national security

implications; it affects U.S. businesses; it advances development;

and it brings the world up to a higher standard of law enforcement

cooperation and security cooperation.

In our view, the Convention will be a critical tool for enhancing

U.S. international anticorruption efforts, and this is because we

learned from the earlier treaties, which are regional or more limited in their scope. It takes those provisions, it builds on them, and

it effectively creates a framework that the entire world can use.

In our view, if the United States does not become a party, it will

make it much more difficult for us to continue what we have started by way of our international efforts to bring countries up to the

higher standards of anticorruption in their domestic systems. We’re

currently, as you know, Mr. Chairman, going around the world, for

example, at APEC, at the Group of 8, in OECD fora, working with

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the United Nations, we are making every effort we can to remain

a firm and resolute leader in the effort to combat international corruption. And, put simply, not becoming a party to this Convention

at this stage would make our efforts much more difficult.

In addition, as you mentioned, Mr. Chairman, with the 1-year

anniversary of the Convention entering into force almost upon us

in December 2006, there will be the first Conference of State Parties. Although the United States will attend that Conference

whether or not we’re a party, our position will be strengthened materially if we are a party and are participating in that capacity.

Thank you.

The CHAIRMAN. Thank you, Mr. Witten. As I’ve observed before,

after some of our hearings on the multilateral development bank

situations, often the press in our country has not really gotten into

this, but the press in other countries has, and I compliment, really,

the vigorous press in countries that have worked to frame this

issue in ways that citizens are able to understand.

Mr. WITTEN. Mr. Chairman, could I add something?

The CHAIRMAN. Yes.

Mr. WITTEN. And I didn’t——

The CHAIRMAN. Yes.

Mr. WITTEN. Your question particularly addressed the multilateral development bank issue, and I would note in the same way

that in my comments about the United Nations, the same legal

framework would apply. This Convention applies to bribery of officials of public international organizations. So I would just note for

the record that this is yet another advantage of the Convention,

and it’s entirely consistent with this committee’s excellent efforts in

recent years to address this issue.

The CHAIRMAN. Well, I thank you for that comment. We believe

that we’ve been able to assist the banks in not necessarily reforming the cultures that were a part of their administration, but in indicating that this has a higher priority around the world. And the

citizens suffer twice if a loan is made to a country and that money

is misused. The people then don’t have the road or the bridge or

whatever the money might have brought, and they do have a debt

and are double losers in the process. So the attempt here to bring

about some confidence in multilateral institutions is, we believe, an

important effect of what you’re proposing today.

Now, let me ask, although parties to the Convention are required

to criminalize certain corruption related offenses, many of the other

provisions contained in the Convention are not of a mandatory nature, or grant each party significant discretion in determining how

and when to apply the provisions ‘‘in accordance with fundamental

provisions of its legal system.’’ In light of these so-called soft obligations, how does the administration envision the Convention will

make significant headway against corruption, especially in countries where it is most endemic?

Mr. Swartz.

Mr. SWARTZ. Thank you, Mr. Chairman. This is an important

issue. I believe that, as, of course, the chairman has pointed out,

the five core criminalization provisions, the mandatory criminalization provisions, are important. But they are not the only mandatory provisions of the Convention. And it is important to recall in

29

this regard, first, that the Convention carries with it, both in the

prevention context and the international legal assistance context

and with regard to asset recovery, mandatory provisions that themselves will be very important in fighting corruption. For instance,

in the prevention context, the disallowance of the deductibility of

tax deductions, as the chairman has pointed out, is a critical and

mandatory feature of the Convention, as are the actions that are

mandated in other areas of the Convention, such as the books and

records requirements. The requirement that countries be able to

provide international cooperation is also mandatory and will be

very important in pushing forward the fight against corruption.

Similarly, the mandatory provisions set forth in the asset recovery

portion are also essential.

But, as you point out, Mr. Chairman, there are only five mandatory core criminalization provisions, and there are various discretionary provisions put forward, particularly in the criminalization

article of the Convention. But those discretionary provisions are

there for two reasons. First, they provide some needed flexibility in

how countries apply a certain principle for fighting corruption, as

in the prevention chapter as well. And, second, they represent

measures that were deemed important to various groups of countries during the negotiation of the Convention but did not enjoy

wide enough support, the consensus of support, to be mandatory.

During negotiations, certain delegations argued that it was important for their domestic anticorruption efforts to have certain

tools included in the Convention, even if discretionary. In that regard we believe that having those discretionary provisions available will not weaken enforcement of the Convention, but will provide additional tools for those countries that choose to use those

tools.

Perhaps most importantly, the United States was successful in

ensuring that all mandatory provisions in the U.N. Corruption

Convention involved anticorruption measures that are deemed acceptable and already used by the United States. It is these provisions, we believe, that are most likely to lead to headway against

corruption in many countries.

I’d also like to note that applying a provision in accordance with

the fundamental provisions of its legal systems, the term used in

the Convention, was not intended by the negotiators to make a provision discretionary in and of itself. It simply calls upon parties to

apply a provision in a way that best suits their domestic legal systems. For example, the United States, given its Federal legal structure, may want to apply a provision differently than a country that

has only one national legal system. But that said, we believe that

the Convention does have a combination of mandatory and discretionary provisions that will advance the fight against corruption.

The CHAIRMAN. Thank you. The Convention encourages parties

to adopt measures designed to prevent corruption, such as the application of codes of conduct for public officials and the transparent

use of objective criteria in public procurement systems. Do you expect that many developing countries will have the resources to be

able to implement such provisions? And is technical assistance envisioned to assist countries in their effort to implement these and

other provisions of the Convention?

30

Mr. Witten.

Mr. WITTEN. Thank you, Mr. Chairman. The U.N. Corruption

Convention not only encourages, but mandates, certain goals and

actions to prevent corruption. I would draw the committee’s attention to article IX. Designing transparent public procurement systems is one of the mandated preventive measures. And as your

question reflects, Mr. Chairman, countries will, of course, have different resources to apply to implementing the Corruption Convention. Developing countries may have fewer resources. The United

States will encourage countries to see that the return in investing

resources in some of these areas, such as the transparent public

procurement system, can outweigh the initial public cost. For example, taking the time and effort to design more transparent procurement systems may ultimately save the government millions of

dollars in lower procurement costs.

We also expect that technical assistance will be needed by some

countries to implement certain of the U.N. Corruption Convention

provisions. The Corruption Convention will provide a basis for a political commitment on the part of the parties to take action in those

areas, and also relevant to your question, will provide a basis for

the United States and other donor countries to work cooperatively

and closely with countries on fighting corruption. In fact, although

the entire agenda of the Conference of State Parties has not been

set, we expect that conference in December 2006 to focus heavily

on the issue of what technical assistance could be useful to more

effectively promote implementation of the provisions of this Convention.

The CHAIRMAN. I appreciate your mention of that agenda for the

December 2006 conference. And I think that’s important for public

understanding and for the record that this is an opportunity, really, to try to fill in such things as technical assistance, recognizing

that there are provisions here. But the practical effect will only be

realized if countries have the resources to do this sort of thing, and

that may require some international cooperation.

The Convention contains a framework for parties to provide legal

assistance to each other in corruption-related cases in the absence

of a bilateral mutual legal assistance treaty. What safeguards

would be available to the United States to refuse to provide assistance if it should receive a mutual legal assistance request that it

judges to be politically motivated or otherwise improper? How do

these safeguards compare with those applicable under United

States bilateral mutual legal assistance treaties?

Mr. Swartz.

Mr. SWARTZ. Mr. Chairman, thank you. The Convention provides

broad safeguards for the United States to refuse politically motivated or otherwise improper requests for evidence. The mutual

legal assistance article, article 46, unlike the extradition article, article 44, does not specifically reference improper political motivation as a basis for refusing the mutual legal assistance request.

However, such a request would implicate each of the four bases for

refusal set forth in article 46, paragraph 21.

As an initial matter, a request motivated by a desire to punish

a person for his political views would not be a request made ‘‘in

conformity with the mutual legal assistance provisions of article

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46,’’ because it would not be, in fact, for the article’s required purpose of advancing legitimate investigation or prosecution of an offense under the Convention.

Second, it would be contrary to our essential efforts to use our

courts to assist a foreign government in persecution, including the

repression of political speech or other activities we would view as

protected by the first amendment.

Finally, such action would constitute an abuse of process that

would be both contrary to our legal system, the third basis for refusing a request, and an action that would be prohibited under our

own laws if our agents and prosecutors sought to utilize their

criminal investigative powers and the powers of our courts for such

ends.

Overall then, the bases for refusal in the Convention are somewhat broader than under our bilateral treaties. Most significantly,

under the Convention a request for a coercive measure, for example, a search or seizure of property, may be declined on the basis

of lack of dual criminality.

While some bilateral mutual legal assistance treaties do have

some limitations based on dual criminality considerations, the majority do not. Moreover, even as to noncoercive measures, we can

decline under the Convention on the grounds that the request is de

minimus or if the request could be channeled through informal

channels such as police-to-police cooperation.

Also, while all of our bilateral treaties permit us to decline assistance if contrary to our essential interests, and we consider adherence to the Constitution and other fundamental provisions of

our law as being within those central interests, the Convention

goes further, permitting us to refuse a request where it is simply

contrary to our legal system. This should give us, we believe, greater latitude in declining and limiting assistance.

The CHAIRMAN. Well, that’s a very important response, because

clearly as a commonsense matter, even as we’re seeking to fight

corruption worldwide, it would be very unfortunate if a country attempting to settle political scores within its own realm tried to utilize us as a method of prosecution. And I appreciate your illuminating that area, both in terms of our normal bilateral treaties,

as well as its application in the one we’re discussing this morning.

While the Convention contains a chapter on asset recovery, an

area not addressed in significant detail in earlier anticorruption instruments, as a practical matter, how would these provisions facilitate the identification and recovery of assets illicitly acquired by a

corrupt official, and how would a government using this Convention seek the return of assets embezzled from its treasury?

Mr. Swartz.

Mr. SWARTZ. Thank you, Mr. Chairman. As you note, the asset

recovery provisions of the Convention are important ones. They receive an entire chapter, and they are some of the provisions that

make this such an important convention. The provisions regarding

asset recovery cover the entire range from detection through restraint to recovery and to final disposition of the assets. As a practical matter it provides important new tools for law enforcement

and will help ensure that we can deprive corrupt officials of their

ill-gotten gains and return funds to victim states.

32

Turning first to detection, article 52 requires States Parties to

have adequate procedures in place to detect suspicious transactions

and particularly to give heightened scrutiny to high-value accounts

owned by foreign public officials. And the United States meets this

obligation already under the Patriot Act as to foreign public officials.

The Convention also gives several routes for recovery of such illegally obtained assets. First, article 53 provides that a State Party

that has been harmed by corruption can participate as a private

litigant to recover the proceeds of embezzlement and other crimes

in the country in which those funds may have been deposited or

otherwise transferred.

In addition, article 54 provides that each State Party must provide a legal framework to provide assistance in the recovery of assets that were acquired under one of these mandated offenses

under the Convention. Under this provision, countries must enact

legislation to enable them to either freeze and seize the illicitly obtained property of foreign origin or to recognize a foreign judgement seizing or freezing the property, and to use that as a basis

for recovery.

Article 55 provides that requests by a foreign government in recovering assets shall be governed by the mutual legal assistance

provision, article 46, which, therefore, puts in place all of the safeguards that I discussed in my prior answer.

And then finally article 57 sets forth a framework for the disposition of property confiscated by a State Party at the request of another. These provisions are detailed. They are all in accordance

with U.S. law, and we believe that they provide a framework that

will be of tremendous value, not only for the United States, but for

other countries trying to seek return of looted assets.

The CHAIRMAN. The first Conference of States Parties to the Convention is scheduled to take place, as we have been mentioning, in

December of this year. What issues do you expect this conference

to address? You’ve already touched upon some, but be expansive,

if you will. Some private sector organizations have urged the U.S.

Government to provide leadership at the conference in the establishment of an effective monitoring mechanism for the Convention.

What is the U.S. position on that issue, and to what extent will the

United States be in a position to influence the outcome of the conference? Wouldn’t U.S. influence be enhanced if the United States

were to become a party prior to the conference?

Mr. Witten.

Mr. WITTEN. Thank you, Mr. Chairman. The issue of what will

take place at the conference is something that we are beginning to

look at and consult about extensively. I can give you the best picture that we have at this time of how we intend to approach this

conference. We view this as the beginning of an effort that will go

over a long stretch of time to consider how parties can best promote implementation of the Corruption Convention. The role of

technical assistance, as we’ve discussed, will of course be a major

focus of the Conference of State Parties. We note that this first

meeting has been tasked by the U.N. General Assembly to consider

also how the Corruption Convention may help further the

anticorruption efforts of public international organizations such as

33

the United Nations and other multilateral organizations. And I

note that I believe two of your questions, Mr. Chairman, have addressed this issue.

The CHAIRMAN. Yes.

Mr. WITTEN. We’re in the process of conducting internal discussions to determine what exactly we, the United States, would like

to see happen at the Conference of State Parties. I can tell you our

thinking as of this time. Initially, we will likely want to see a constructive process that will create a conduit for providing more effective technical assistance on issues of corruption. The Conference of

State Parties will likely need to gather information on Corruption

Convention implementation in order to inform donors and to help

them determine which countries are committed to implementing

the Corruption Convention and willing to take appropriate action

to implement its terms.

One challenge that’s clear—this will be the first conference, the

first of many—will be to develop an effective and efficient process

for an envisioned conference of 130-plus parties. This will be a complicated enterprise, just like the negotiation of the Convention.

The United States was active and very successful during those

negotiations, and we hope to have a similarly active and influential

role in the Conference of State Parties process. We’ve been able to

secure a seat at the Conference of State Parties table, even as a

signatory. However, as you’ve noted, Mr. Chairman, being a party

to the Convention at the time the conference meets will definitely

provide us more influence at the Conference of State Parties, and

according to the rules of the conference, will guarantee us input on

all substantive decisions. Thank you.

The CHAIRMAN. Well, that’s useful, but we will have a seat at the

conference in any event. But, of course, to the extent that we’re a

party, as you say, our influence will be substantially increased.

Just out of curiosity, where is it likely the conference will be held

and what dates in December, or has this been defined?

Mr. WITTEN. I’ll consult. I believe Vienna, but I’ll consult.

[Consults with staff.]

Mr. WITTEN. I’m sorry, Mr. Chairman. First, the dates are December 9–13, and I’ve just been reminded that Jordan has agreed

to host this initial Conference of State Parties. The negotiations

were in Vienna, hence my focus there.

The CHAIRMAN. So it will be in Amman, Jordan?

Mr. WITTEN. December 9 through 13.

The CHAIRMAN. And with as many as 130 parties around the

table.

Mr. WITTEN. Well, we don’t know at this time exactly how many

will attend.

The CHAIRMAN. I see.

Mr. WITTEN. We know that there are a large number of signatories, and with 55 nations already having become parties, it’s just

June, I imagine there will be more and more. We’ll see how many

actually attend.

The CHAIRMAN. Once again just out of curiosity, from your experience, when there are that many parties attending, do they all sit

around a large, round table, or how do you accommodate all these

people who have differing views?

34

Mr. WITTEN. Well, I’m afraid I don’t know the physical layout

that will happen.

The CHAIRMAN. I see. The Jordanians will have to work that out.

Mr. WITTEN. The Jordanians will——

Mr. SWARTZ. They’re building the table now.

The CHAIRMAN. I see.

Mr. WITTEN. You’re thinking back to the seventies, I know, trying to configure the table.

The CHAIRMAN. Well, there are now, just to get into the details

of this, over 55 parties to the Convention, including countries at all

levels of economic development. Eighty-eight other countries, including the United States, have signed but not yet ratified the Convention. Thus, if we’re doing the math, we’ve got up to the 130

range, actually, 143—55 plus 88, I guess. What is the U.S. Government doing to encourage wide ratification of the Convention among

both our trade competitors and developing countries, and does the

administration anticipate that this Convention will finally achieve

truly global acceptance?

Mr. WITTEN. Thank you, Mr. Chairman. The U.N. Corruption

Convention is being recognized internationally as the new and comprehensive global standard for fighting corruption, and we do expect it to become globally accepted over time.

With respect to your question, there is a lot of momentum already building. Just this week Spain added its name to the countries that are becoming parties. And with the 30-day notice requirement, Spain will become a party 30 days from this past Monday.

So the momentum is building. Countries around the world have already signed, and a growing number are actually becoming parties.

The United States is doing a number of things to encourage

countries to become a party. As I noted in my opening statement,

the United States has been actively promoting the Convention in

regional fora such as the G–8, the Asia-Pacific Economic Cooperation Forum, the Organization of American States, and the U.N. Development Programme–OECD’s Initiative on Good Governance in

the Middle East and North Africa. We’ve also provided some funding so far, and may be providing more in the future, to the U.N.

Office on Drugs and Crime, which is the forum within the United

Nations that is at the heart of these efforts. Our funding, which I

understand to be $1 million already, has included regional conferences to educate countries on the Convention and to promote acceptance and ratification, and the placement of mentors in several

regions to help provide advice on implementing the Convention.

And these efforts, together with our outreach at regional fora, will

only be helped once we become a party as opposed to a country that

played a big role in this negotiation.

The CHAIRMAN. Well, I thank both of you for your detailed responses to these questions. We appreciate your initial testimony

and look forward later to being in consultation with you as our

committee proceeds and hopefully, on the Senate floor thereafter.

Do either of you have any final comments that you would like to

make for the record?

Mr. WITTEN. Mr. Chairman, I would like to make one comment.

It’s a little unusual, but the head of our delegation is sitting behind

35

us, and I know I’ll get into trouble by recognizing just one

person——

The CHAIRMAN. Please go ahead.

Mr. WITTEN. I think it would be appropriate. Elizabeth Verville

has been with this Convention from day one, along with John

Brandolino and Molly Warlow, and a number of folks from State

and Justice. And obviously this is an enterprise that required many

round trips, many days and weeks away from home. And the effort

was worth it, as we know. But I just wanted to recognize the outstanding work of the team that negotiated this on behalf of the

United States.

The CHAIRMAN. Well, I thank you for recognizing these very, very

able associates. We thank both of you, as well as all of the dedicated associates who have accompanied you to the hearing, for your

testimony.

We will now proceed to our second panel, and that will include

the Honorable Alan P. Larson, chairman of Transparency International–USA in Washington, DC, and the Honorable William A.

Reinsch, president of the National Foreign Trade Council, Washington, DC.

Gentlemen, we welcome you both again to the committee witness

table. We have appreciated your testimony in the past, frequently,

Secretary Larson, in your other capacities at the State Department

in addition to the new responsibilities that you have assumed.

I would like for you to testify in the order that I have introduced

you, and your full statements will be made a part of the record.

You may summarize, if you wish. Please proceed, Secretary Larson.

STATEMENT OF HON. ALAN P. LARSON, CHAIRMAN,

TRANSPARENCY INTERNATIONAL–USA, WASHINGTON, DC

Mr. LARSON. Thank you very much, Mr. Chairman. On behalf of

the U.S. Chapter of Transparency International, I want to congratulate you for holding this hearing. We appreciate the strong interest of this committee and particularly your leadership, Mr.

Chairman, in making the issue of corruption in development assistance, at the World Bank and more broadly, a priority. It has stimulated significant progress, and we are honored by the interest you

and committee staff have shown in our views.

Corruption is not simply an unpleasant fact of life that we must

reluctantly accept. It, rather, is a cancer that threatens core American values and interests.

Corruption despoils democracy. It erodes development. It penalizes U.S. businesses. And, as you pointed out quite clearly in your

statement, Mr. Chairman, it damages the very security of our country.

The United States has a strong record of leadership in the global

fight against corruption. Congress enacted the Foreign Corrupt

Practices Act in the 1970s. In 1988 the Congress instructed the executive branch to try to extend those disciplines to other countries

through negotiations in the OECD. This committee led the ratification of that OECD Convention Against Bribery. The committee and

past administrations pushed forward the Inter-American Convention Against Corruption.

36

As you pointed out in your statement, in the first term of the

Bush administration there were many important initiatives against

corruption that were pursued in our own policies and through the

G–8.

And then, finally, the United States through the last two administrations has devoted considerable effort to the negotiation of the

United Nations Convention Against Corruption.

This Convention Against Corruption significantly strengthens the

international framework. It provides a global framework to combat

what is a global phenomenon. It extends discipline, for example, of

the bribery of foreign government officials to significant emerging

market exporters such as China, which are not covered by the Foreign Corrupt Practices Act, of course, and are not parties to the

OECD Convention either.

The Convention prohibits domestic bribery of public officials, and

it recommends measures to prevent bribery in the private sector

and to enhance auditing and accounting standards. It provides for

preventative measures to raise the levels of integrity in public service. Importantly, it requires specific steps to enhance procurement

transparency, something the United States has fought hard for intrade agreements, but we’ve achieved in substantial measure in

this U.N. Convention. It expands mutual legal assistance on a global scale, and it breaks new ground in providing for the recovery of

funds deposited in foreign banks by corrupt officials.

As important as the Convention is, it will not implement itself.

Monitoring is going to be very important to ensure effective implementation and enforcement. We’ve learned from past experience

that an effective monitoring regime is necessary to secure timely

and consistent implementation and enforcement. And we believe

that it is important that the Congress encourage this and subsequent administrations to report to the Congress on progress that’s

being made in implementing an effective monitoring mechanism.

Similarly, I underscore the comments, Mr. Chairman, that you

and the previous witnesses made about the importance of technical

assistance to the effective implementation of this Convention.

I do believe that prompt U.S. ratification is necessary for continued U.S. leadership in this effort. As has been pointed out by Mr.

Witten and others, ratification will strengthen the hand of the

United States at the Conference of the Parties at the end of this

year. And that meeting will be very important to set the framework

for monitoring and for the use of technical assistance to make sure

that this Convention is implemented in the way we all want and

expect it to be.

At a more political level, Mr. Chairman, I think it’s important for

the United States, which has been the global leader in this fight

against corruption, to be waging it on all fronts. And you, sir, mentioned the importance of the efforts that our government is making

to clean up the U.N. administration and specifically to address the

oil-for-food program. That is very important work, and it’s work

that’s been spearheaded by a well-respected American, Mr. Volker,

and someone on his team, Mark Pieth, who has been a leader in

the global anticorruption, antibribery fight. So this is one fight that

has to be waged on different fronts. And for us to be effective in

the work in cleaning up the oil-for-food program, we need to be

37

1 According to the World Bank, over $1 trillion is lost to bribes annually. Embezzlement,

fraud, and other corrupt acts raise these costs by diverting resources from poverty alleviation

programs and essential public services such as education, nutrition, and health care.

pursuing just as vigorously ratification of the U.N. Convention and

effective implementation of the U.N. Convention.

I do believe that this Convention is an indication of the rising

tide, globally, of attention to this issue. I believe it has strong support from business interests and from a wide array of nonprofit and

international public organizations who are working to promote rule

of law, good governance, and democracy. It, in particular, enjoys

strong support from reformers in other countries who are struggling, sometimes in fairly lonely battles, to promote democracy,

transparency, accountability, and economic development in their

own countries.

So, in conclusion, Mr. Chairman, as you indicated, I’ve had the

honor to testify before this committee on many occasions as a

spokesman for the administration. I’m very pleased today in my

first appearance as a private citizen to be here and testify in support of the Convention and in support of a cause that’s been championed by both parties. As you highlighted in your opening statement, it truly is a cause that’s vital to American values and to

American interests. Thank you.

[The prepared statement of Mr. Larson follows:]

PREPARED STATEMENT OF HON. ALAN LARSON, CHAIRMAN, TRANSPARENCY

INTERNATIONAL–USA, WASHINGTON, DC

Chairman Lugar, Ranking Member Biden, and distinguished Senators, I congratulate the committee for organizing this hearing on the United Nations Convention Against Corruption (Convention).

My name is Alan Larson and I am testifying in my capacity as chairman of the

board of directors of the U.S. chapter of Transparency International. We appreciate

the strong interest of this committee and particularly your leadership, Mr. Chairman, in making the issue of corruption in development assistance, at the World

Bank and more broadly, a priority. It has stimulated significant progress. We are

honored by the interest you and committee staff have shown in our views.

At present, I am also a senior advisor at the law firm of Covington & Burling and

I serve as a strategic advisor and director of the World Economic Forum. Formerly,

I was a career ambassador in the Foreign Service of the United States, ending my

government career in 2005, as Under Secretary of State for Economic, Business and

Agricultural Affairs.

I mention these past and present affiliations because each of them contributes to

my conviction that prompt Senate ratification of the Convention must be among the

highest priorities. Prompt ratification will advance America’s leadership in the

world, contribute to our efforts to promote democracy and development, and will

help level the playing field for American business. Delay, on the other hand, would

damage each of these objectives.

Corruption damages core America values and interests

Corruption is not simply an unpleasant fact of life that we must reluctantly accept. Corruption, rather, is a cancer that threatens core American values and interests.

Corruption despoils democracy. It is impossible to build and sustain representative institutions when corruption runs rampant. Promoting institutions with integrity and combating corruption is a central element of America’s policy of empowering people and promoting democracy.

Corruption erodes development. In country after country, corruption in the institutions of the marketplace has either prevented economic growth, perpetuated poverty, or has so distorted the distribution of the benefits of growth that public support for reform policies has been sapped.1

Corruption produces an unpredictable and unfair business playing field. It is a

barrier to the trade and investment of American companies.

38

For all these reasons and more, corruption must be tackled, not tolerated.

The United States has a strong record of leadership in the fight against corruption

The United States, the Congress, and this committee have reason to be proud of

the leadership of the United States in the fight against corruption. That leadership

has been bipartisan and sustained across changes in the leadership of the Congress

and across changes of administration.

The Congress enacted the Foreign Corrupt Practices Act (FCPA) in 1977, to address the issue of overseas bribery of public officials to gain or retain business. In

this way, the United States sought to ensure that American companies would be

part of the solution, not part of the problem.

In 1988, Congress encouraged the executive branch to negotiate, within the Organization for Economic Cooperation and Development (OECD), an arrangement that

would commit other nations to disciplines similar to those in the FCPA.

The task required persistent efforts over a decade by administrations of both political parties, and by 1997, the OECD Convention on Combating Bribery of Foreign

Public Officials in International Business Transactions (OECD Convention) had

been negotiated. This committee played a leading role in securing Senate ratification of the treaty and enactment of the necessary implementing legislation in 1998,

and TI–USA was privileged to testify before this committee when Senator Helms

was chairman. Widespread enforcement of the OECD Convention is still essential

not only to level the playing field for U.S. business, but for the developed world so

it has credibility when it urges governance reforms, such as those in the Convention, in the developing nations.

The United States has played a leadership role in the negotiation of other

anticorruption agreements, including the Inter-American Convention Against Corruption, which this committee reviewed and the full Senate ratified in 2000. Since

then, it has encouraged other initiatives to address corruption in development, in

the World Bank, in our own Millennium Challenge Corporation, and in initiatives

of the Group of 8.

In addition, the Bush administration rightly has stressed anticorruption initiatives as central planks of efforts to promote democracy and to strengthen free societies.

Finally, the United States, throughout both the Clinton and Bush administrations, has devoted considerable effort to the negotiation of an effective universal arrangement, the United Nations Convention against Corruption, which entered into

force on December 14, 2005.

Prompt ratification of this Convention will sustain this record of leadership.

Delays will damage the image of the United States. More specifically, delays in ratification will limit the leadership of the United States in the implementation of the

Convention.

The United Nations Convention Against Corruption significantly strengthens the

international framework against corruption

The basic provisions of the Convention have been fully summarized by the administration and committee staff, and the administration’s October 27, 2005, transmittal package notes that no change in U.S. law is required to implement the Convention.

I would simply highlight a few provisions that, in my opinion, represent significant advances over the status quo. First and foremost, the Convention provides a

global framework to combat a global phenomenon. Corruption has global dimensions, and the Convention’s universal reach, comprising developed and developing

nations, makes it possible to tackle problems that cannot be addressed through existing regional regimes.

For example, foreign bribery by significant emerging exporters, such as China, is

not covered by the OECD Convention, but is covered under this Convention. This

will help reduce the competitive disadvantage faced by U.S. companies, which have

long operated under more stringent rules than their foreign competitors.

In addition to prohibiting foreign bribery, the Convention prohibits domestic bribery of public officials and recommends measures to prevent bribery in the private

sector and to enhance auditing and accounting standards. It requires parties to

criminalize bribe solicitation, which is an important concern for businesses dealing

with extortion.

It provides for preventive measures to raise levels of integrity in public service,

including laws that prevent conflicts of interest and promote asset disclosure, and

it requires specific steps to enhance procurement transparency—an area rife with

corruption.

39

2TI’s report on convention monitoring is entitled ‘‘Report of TI Study on Follow-up Process

for UN Convention Against Corruption.’’

It expands mutual legal assistance on a global scale, requiring the widest possible

cooperation in investigations, gathering and transferring evidence, and extradition.

As a leading prosecutor of transnational crime, the United States stands to benefit

greatly from this enhanced international cooperation.

Finally, the Convention breaks new ground by providing for the recovery of funds

deposited in foreign banks by corrupt officials. The asset recovery provisions are of

prime importance to many developing nations whose wealth has been plundered and

they are intended to create a disincentive for future illicit acts.

Monitoring is essential to effective implementation and enforcement

The potential of this Convention is substantial, but we have learned from experience with other anticorruption conventions that an effective monitoring system is

essential to secure timely, effective, and consistent implementation and enforcement.

This is particularly true for this Convention, which involves numerous and diverse parties with different legal systems and levels of capacity. It requires governments to pass numerous laws, create agencies and take other actions. Monitoring

will help identify problems, facilitate guidance and assistance, and promote reform.

It will also provide important external impetus for action, particularly in countries

lacking in political will.

For companies doing business in multiple jurisdictions, monitoring will promote

consistent implementation. It will also provide a forum where governments, the private sector, and others can raise concerns or bring complaints about actions inconsistent with the spirit and letter of the Convention.

Given the importance of monitoring, TI convened experts with extensive experience to develop recommendations for an effective process. Last week, it presented

its report to the U.N. Office of Drugs and Crime, which is expected to manage the

process.2 We respectfully request that the committee enter this report into the

record.

[EDITOR’S NOTE.—This report was too large to print in this hearing. It will be

maintained in the committee’s permanent record.]

To ensure sustained attention to the important issue of monitoring, the committee

may want to request that the administration report back annually on progress in

creating the monitoring mechanism. The Senate provided for such a report in its

ratification of the Inter-American Convention.

Prompt U.S. ratification is necessary to continued U.S. leadership

The Convention provides for a Conference of States Parties to promote and review

Convention implementation, including by establishing an appropriate monitoring

mechanism.

The Conference of States Parties will discuss this issue when it meets this December in Amman, Jordan. United States leadership at this event will be vital to ensure

that an effective and transparent monitoring mechanism is put in place. Our ability

to influence the process will be significantly diminished if the United States has not

ratified the Convention beforehand.

The Convention enjoys broad support and is part of a rising tide of attention to the

issue of corruption

The Convention enjoys strong support from business interests in the United

States and abroad, as well as from a wide array of nonprofit and international public organizations working to promote rule of law, good governance, and democracy.

The committee will hear from representatives of some of these groups today and in

written testimony.

The Convention enjoys broad support from reformers in other countries who are

struggling to promote democracy, transparency, accountability, and economic development. TI chapters in over 90 countries firmly believe this agreement has great

potential and, therefore, played a key role throughout the negotiations. Many TI national chapters are actively engaged in efforts to promote ratification and implementation by their governments.

TI–USA enjoys the support of numerous leading U.S. multinationals who share

the view that this Convention has great potential. We worked closely with the administration to craft Convention provisions and, more recently, a transmittal package that would maximize these benefits and address concerns.

40

Through my work with TI and the World Economic Forum, I am aware of a growing number of international companies throughout the world who are seeking to

form partnerships against corruption.

Through my work at Covington & Burling, I am aware that corporations are very

interested in strengthening their compliance programs. The Convention will help

create an environment in which they can operate according to these programs.

Through my work with other countries, I am aware that many governments consider corruption to be a central issue. Clearly, the fact that 140 countries signed and

53 ratified the Convention reflects a global consensus that corruption must be addressed.

Even in the United States, the public has become increasingly concerned about

failures of corporate governance and instances of public corruption.

For all these reasons, prompt Senate ratification of the Convention will position

the United States where our citizens and companies expect it to be and where the

citizens and companies of other countries count on us to be.

Concluding Remarks

Mr. Chairman, I have had the honor to testify before this committee on many occasions as the representative of administrations of both parties. I am pleased that

today, in my first appearance as a private citizen, I am able to testify in support

of a cause that has been championed by both parties. It is a cause on which I labored while in government and on which the organization I now represent has an

unparalleled record of leadership.

The CHAIRMAN. Thank you very much, Secretary Larson. We’re

grateful your public service continues.

Mr. Reinsch, will you please give us your testimony.

STATEMENT OF HON. WILLIAM A. REINSCH, PRESIDENT,

NATIONAL FOREIGN TRADE COUNCIL, WASHINGTON, DC

Mr. REINSCH. Thank you, Mr. Chairman. I’m here in my capacity

as president of the National Foreign Trade Council and the cochair

of USA*Engage to make clear the American business community’s

support for a swift ratification of the Convention in accordance

with the statements received from the administration in its transmittal package to this committee.

American business understands that corruption is highly detrimental to the global trading system. It impedes economic growth

and development and siphons money from productive uses. In addition, it disadvantages U.S. firms internationally, as domestic laws

like the Foreign Corrupt Practices Act have held American firms

to higher standards than many of their foreign competitors. The

business community supports efforts to create a more stringent

anticorruption regime and thereby raise the bar for the behavior of

foreign businesses and governments and in the process promote expanded investment and growth.

Ten organizations, including the NFTC, American Petroleum Institute, the Business Roundtable, the National Association of Manufacturers, the U.S. Chamber of Commerce, and the U.S. Council

for International Business, have written you, Mr. Chairman, indicating that ‘‘the Convention can be a critical tool in the global fight

against corruption,’’ and that it is ‘‘noncontroversial and has broad

support.’’ I would like to ask that this letter be included in the

record following my testimony.

The CHAIRMAN. The letter will be included.

Mr. REINSCH. Thank you. The business community has come to

its support for the Convention after a long and fruitful dialog with

representatives of the administration, including those who negotiated the document, who were sitting behind me. I don’t know if

41

they’re still there. And I’d like to thank them for their hard work,

particularly former Assistant Secretary Anthony Wayne and his

staff, and, of course, former Undersecretary Al Larson, who is sitting next to me.

The interaction we had with these people is a fine example of

how good government is supposed to work. During the negotiation

of the Convention, some of my members raised concerns as to how

this new instrument might affect U.S. laws and questioned its potential domestic impact on American companies. The administration officials carefully listened to our concerns, participated in an

extensive, open, and frank dialog, and provided detailed language

in the transmittal package that enabled us to come to four very

positive conclusions about the Convention. They also permitted us

to review that language prior to submitting it and received a number of comments that we had on it.

First, the Convention, we believe, will level the playing field for

American business by holding foreign companies around the world

in places including Brazil, China, France, Russia, and the United

Kingdom accountable for acts of corruption. It is the first truly

global anticorruption effort, and it improves substantially upon

other existing regional conventions that have attempted to address

the issue of corruption. Those others, I gather, were discussed in

some detail in previous testimony, so I won’t elaborate on them

now. I would point out, though, that some of the major exporters,

as I believe Mr. Larson just mentioned, including China and India

and all of Africa, are not parties to the existing conventions but

hopefully will be to this one.

By harmonizing anticorruption obligations at a higher standard

than any before and globalizing the standard for the first time, the

United Nations Convention raises the bar overall and has the potential to level the playing field to a greater degree than any treaty

or convention currently in existence.

The convention includes mandatory preventive measures, including calls to establish anticorruption policies and bodies, mechanisms to prevent public sector corruption and transparency in public procurement, and measures related to the judiciary, the private

sector, and to civil society. The convention also criminalizes corrupt

practices, including bribery and embezzlement of public funds, and

includes provisions to recover illegally obtained assets and improve

mutual legal assistance.

The United States already abides by the requirements spelled

out in the Convention. For example, the transnational bribery provisions are incorporated in the United States within the FCPA.

Campaign finance laws, obstruction statutes, and various State and

Federal laws incorporate the remainder of the mandatory provisions contained in the Convention. As a result, no changes to U.S.

law are required, which is a key point for the American business

community.

Second, the reservations, declarations, and understandings contained in the transmittal package which accompanies the Convention ensure that the Convention does not impose any new costs or

obligations under U.S. law. Secretary of State Rice indicated in her

letter of submittal to the Senate that, ‘‘if the United States makes

the proposed reservations, the existing body of Federal and State

42

law regulations will be adequate to satisfy the Convention’s requirements for the legislation, and thus further legislation will not

be required for the United States to implement the Convention.’’

The administration has concluded that this Convention does not

require any changes to U.S. law and is generally not self-executing,

with the exception of the articles that have already been discussed,

subject to the declarations, understandings, and reservations they

have already proposed. In addition, nothing in the treaty creates a

private right of action to permit foreigners to litigate corruption

complaints in U.S. courts. These statements confirm that the

United States is already in compliance with its obligations under

the Convention, and has no further steps to take beyond ratification to implement this treaty into U.S. law.

From our perspective, it’s important that the Senate include the

reservations, declarations, and understandings as part of its advice

and consent, as the administration recommends in its transmittal

package. We particularly support the following declaration in its

resolution, which is contained on page 21 in the administration’s

transmittal package: ‘‘The United States declares that the provisions of the Convention, with the exception of articles 44 and 46,

are non-self-executing. None of the provisions of the Convention

creates a private right of action.’’

With the necessary declarations, reservations, and understandings in place, this Convention is costless from a domestic

legal perspective, and squarely in the interest of the American

business community.

Third, since this treaty raises the bar for other countries without

imposing new obligations on us, the United States must focus its

attention on implementation and monitoring, which was the subject of several of your questions for the preceding panel. The administration must make certain that implementation of the Convention is transparent and honest, and that implementation actually focuses on rooting out corruption and is not used as a pretext

to bar or harass American businesses.

We should also urge other countries to implement the Convention consistent with due process protections and fundamental

rights. In order to speak with the strongest and most credible voice

to shape implementation of the Convention with these objectives in

mind, prompt ratification by the Senate is imperative before December of this year, when the first Conference of State Parties

meets in Amman.

That meeting will be the first time the parties to the Convention

will have an opportunity to discuss implementation, monitoring,

and technical and capacity-building assistance. As countries incorporate the requirements of the Convention into domestic law, U.S.

negotiators will be in position, starting in December, to help ensure

that implementation focuses on developing legal mechanisms to

root out corruption as opposed establishing new levers to make life

more difficult for American and other foreign competitors. If we do

not have a vote and a voice at that meeting, our ability to achieve

those objectives will be jeopardized.

Finally, the Convention will benefit political systems and investment regimes worldwide by empowering reform elements with tools

they need to root out corruption and encourage transparent, stable

43

investment climates. Consultations and technical assistance from

developed countries and institutions will benefit elements in developing countries interested in improving transparency and reducing

corruption, thereby improving the climate for American and local

businesses and aiding overall development.

For all these reasons, the National Foreign Trade Council supports swift ratification by the Senate of this Convention subject to

the declarations and understandings contained in the transmittal

package as received from the administration.

And we thank you in particular, Mr. Chairman, as I have many

times before, for holding a hearing so promptly on the subject.

Thank you.

[The prepared statement of Mr. Reinsch and the letter he requested to be put into the record follows:]

PREPARED STATEMENT OF HON. WILLIAM A. REINSCH, PRESIDENT, NATIONAL

FOREIGN TRADE COUNCIL AND COCHAIRMAN OF USA*ENGAGE, WASHINGTON, DC

Mr. Chairman and members of the committee, thank you for the opportunity to

testify in support of Senate ratification of the U.N. Convention against Corruption.

I am the President of the National Foreign Trade Council (NFTC), a trade association of more than 300 companies committed to an open, rules-based trading system.

Along with our USA*Engage coalition, we support multilateral cooperation and economic, humanitarian, and diplomatic engagement as the most effective means of advancing U.S. foreign policy interests and American values.

My testimony details the American business community’s support for swift ratification of the Convention in accordance with the statements received from the administration in its transmittal package.

American business understands that corruption is highly detrimental to the global

trading system. It impedes economic growth and development and siphons money

from productive uses. In addition, it disadvantages U.S. firms internationally, as domestic laws like the Foreign Corrupt Practices Act have held American firms to

higher standards than many of their foreign competitors. The business community

supports efforts to create a more stringent anticorruption regime and thereby raise

the bar for the behavior of foreign businesses and governments and in the process

promote expanded investment and growth.

Ten organizations, including the NFTC, American Petroleum Institute, Business

Roundtable, National Association of Manufacturers, U.S. Chamber of Commerce,

and U.S. Council for International Business, have written you, Mr. Chairman, indicating that ‘‘the Convention can be a critical tool in the global fight against corruption,’’ and that it ‘‘is noncontroversial and has broad support.’’ The letter states that

‘‘timely Senate ratification is necessary for the United States to play a leadership

role in moving implementation forward.’’ Mr. Chairman, I would like to ask that

this letter be included in the record following my testimony.

The business community has come to its support for the Convention after a long

and fruitful dialog with representatives of the administration, including those who

negotiated the document. I would like to thank these individuals for their hard work

on this Convention and for their outreach to the business community. In particular,

former Assistant Secretary of State for Economic and Business Affairs Tony Wayne

and his staff should be commended for their efforts.

Our interaction with Ambassador Wayne and his staff is a fine example of how

good government is supposed to work. During the negotiation of the Convention,

some of my members raised concerns as to how this new instrument might affect

U.S. law and questioned its potential domestic impact on American companies. Administration officials carefully listened to our concerns, participated in an extensive,

open and frank dialog, and provided detailed language in the transmittal package

that enables us to come to four very positive conclusions about the potential of the

Convention to benefit American business:

(1) The Convention will level the playing field for U.S. businesses.

(2) There are no domestic costs or obligations imposed on the United States.

(3) Effective and transparent implementation by foreign governments is imperative.

(4) The Convention will benefit trade and improve investment climates worldwide.

44

I would like to discuss each of these in turn, as together they make clear why

prompt ratification of this Convention by the United States is important to the

American business community:

Leveling the playing field for U.S. businesses

This Convention will level the playing field for American business by holding foreign companies around the world—in places including Brazil, China, France, Russia,

and the United Kingdom—accountable for acts of corruption.

It is the first truly global anticorruption effort. This Convention improves substantially upon other existing regional conventions that have attempted to address the

issue of corruption. The broadest of the four, the Inter-American Convention Against

Corruption, includes all 35 nations of the Western Hemisphere. The strongest of the

four, the Organization for Economic Cooperation and Development’s Convention on

Combating Bribery of Foreign Public Officials in International Business Transactions, has 30 parties from Europe, Asia, and the Western Hemisphere. However,

it only covers bribery and not other forms of corruption such as interference in a

judicial process, which also threaten the interests of U.S. business. The Council of

Europe Criminal Convention on Corruption has 45 States Parties, nearly all in Europe. Africa attempted its own convention, but that convention has not yet entered

into force. Thus some of the major exporters—including China and India, and all

of Africa—have been omitted from the international anticorruption legal regime

until now.

Thus, by harmonizing anticorruption obligations at a higher standard than any

before, and globalizing that standard for the first time, the United Nations Convention raises the bar overall and has the potential to level the playing field to a greater degree than any treaty or convention currently in existence.

The Convention includes mandatory preventive measures including calls to establish anticorruption policies and bodies, mechanisms to prevent public sector corruption and transparency in public procurement, and measures relating to the judiciary, the private sector, and to civil society. The Convention also criminalizes corrupt

practices including bribery and embezzlement of public funds and includes provisions to recover illegally obtained assets and improve mutual legal assistance.

The United States already abides by the requirements spelled out in the Convention. For example, the transnational bribery provisions are incorporated in the

United States within the Foreign Corrupt Practices Act. Campaign finance laws, obstruction statutes, and various State and Federal laws incorporate the remainder

of the mandatory provisions contained in the Convention. As a result, no changes

to U.S. law are required, which is a key point for the American business community.

No domestic costs or obligations imposed on the United States

The reservations, declarations, and understandings contained in the administration’s transmittal package, which accompanies the Convention, ensure that this

Convention does not impose any new costs or obligations under U.S. law.

Secretary of State Condoleezza Rice indicated in her September 23, 2005, letter

of submittal to the Senate that, ‘‘if the United States makes the proposed reservations, the existing body of Federal and State law and regulations will be adequate

to satisfy the Convention’s requirements for legislation, and, thus, further legislation will not be required for the United States to implement the Convention.’’

The administration has concluded that this Convention does not require any

changes to U.S. law and is generally not self-executing, subject to the declarations,

understandings, and reservations that they have proposed. In addition, nothing in

the treaty creates a private right of action to permit foreigners to litigate corruption

complaints in U.S. courts. These statements confirm that the United States is already in compliance with its obligations under the Convention and has no further

steps to take beyond ratification to implement this treaty in U.S. law.

From our perspective, it is important that the Senate include the reservations,

declarations and understandings as part of its advice and consent, as the administration recommends in its transmittal package. We particularly support the following declaration in its resolution, which is contained on page 21 of the administration’s transmittal package:

The United States declares that the provisions of the Convention (with

the exception of Articles 44 and 46) are non-self-executing. None of the provisions of the Convention creates a private right of action.

With the necessary declarations, reservations, and understandings in place, this

Convention is costless from a domestic legal perspective, and squarely in the interests of the American business community.

45

Effective and transparent implementation is imperative

Since this treaty raises the bar for other countries without imposing new obligations on us, the United States must focus its attention on implementation and monitoring. The administration must make certain that implementation of the Convention is transparent and honest, and that implementation actually focuses on rooting

out corruption and is not used as a pretext to bar or harass American businesses.

We should also urge other countries to implement the Convention consistent with

due process protections and fundamental rights.

In order to speak with the strongest and most credible voice to shape implementation of the Convention with these objectives in mind, prompt ratification by the Senate of this Convention is imperative. The business community urges the Senate to

ratify the Convention before December of this year, when the first Conference of

State Parties meets in Amman, Jordan.

That meeting will be the first time the parties to the Convention will have an opportunity to discuss implementation, monitoring, and technical and capacity-building assistance.

As countries incorporate the requirements of the Convention into domestic law,

U.S. negotiators will be in a position—starting in December—to help ensure that

implementation focuses on developing legal mechanisms to root out corruption as

opposed to establishing new levers to harass American or other foreign competitors.

If we do not have a vote and voice at that meeting, our ability to achieve those objectives will be jeopardized.

This Convention will only be truly effective if it is implemented properly and subject to adequate monitoring. By ratifying this Convention promptly and before the

December conference, the United States will be in the strongest position to guide

implementation and monitoring efforts, which will be essential to its ultimate success. Timing is important, and swift ratification is absolutely in the interests of the

American business community.

Providing tools for reform-minded leaders

Finally, this Convention will benefit political systems and investment regimes

worldwide by empowering reform elements with the tools they need to root out corruption and encourage transparent, stable investment climates.

Consultations and technical assistance from developed countries and institutions

will benefit elements in developing countries interested in improving transparency

and reducing corruption, thereby improving the climate for American and local businesses and aiding overall development.

For all of these reasons, the National Foreign Trade Council supports swift ratification by the Senate of this Convention subject to the declarations and understandings contained in the transmittal package as received from the administration.

JUNE 19, 2006.

Re ratification of the United Nations Convention Against Corruption.

Senator RICHARD G. LUGAR,

Chairman, Senate Foreign Relations Committee,

Hart Senate Office Building, Washington, DC.

DEAR SENATOR LUGAR: We are writing on behalf of the undersigned organizations

to urge the Senate to ratify the United Nations Convention Against Corruption before December 2006. The Convention, which entered into force on December 14,

2005, reflects a global consensus on the international legal system necessary to fight

corruption. To date, more than 140 countries have signed the Convention, and over

50 countries, including France, Russia, Brazil, Mexico, and the United Kingdom,

have ratified it. Timely Senate ratification is necessary for the United States to play

a leadership role in moving implementation forward.

The Convention can be a critical tool in the global fight against corruption. It includes provisions to prevent and criminalize corruption, and procedures for governments to recover assets that have been acquired illicitly by corrupt officials. It also

includes a broad range of measures that enhance international cooperation among

governments, including extradition and mutual legal assistance. As a leading prosecutor of transnational crime, the United States stands to benefit greatly from this

enhanced cooperation.

United States ratification of the Convention in accordance with the Administration’s October 27, 2005, transmittal package is non-controversial and has broad support. The transmittal package notes that no change in U.S. law is required. The

Convention’s universal prohibition on foreign bribery—the first effort of its kind

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with truly global reach—has unique potential to reduce the competitive disadvantage faced by U.S. companies, which have long operated under more stringent rules

than their foreign competitors. It is also a crucial tool to improve rule of law, thus

promoting more effective economic development and a more stable environment in

countries around the world.

An effective monitoring process is critical to successful implementation of the Convention. Although the Convention provides for such a process, its specific contours

will be decided in December 2006, at the first Conference of States Parties. United

States leadership at that Conference is vital to ensure that an effective and transparent monitoring mechanism is put in place. As a global defender of due process

rights, it is also important that the United States participate actively in interpretation and application of the Convention around the world to ensure that those countries with less robust protections use it as a tool to prosecute corrupt actors, not

harass political or economic competition. The ability of the U.S. to influence these

discussions will be significantly diminished if it has not ratified the Convention before the Conference takes place.

Accordingly, we would appreciate your leadership in moving the Convention

through the ratification process in a timely manner.

Respectfully,

American Petroleum Institute; Business Roundtable; Coalition for Employment Through Exports; Coalition of Service Industries; Emergency Committee for American Trade; National Association of Manufacturers; National Foreign Trade Council; United States Council for

International Business; U.S. Chamber of Commerce; USA*Engage.

The CHAIRMAN. Well, thank you, sir, for the very strong endorsement of American business in the letter that you asked to be inserted in the record. It has a very important group of business organizations.

Let me start the questions with you, Secretary Larson. I want

you to discuss, essentially, the role the Convention will play in

global transparency efforts. Based on Transparency International’s

experience and anticorruption efforts around the world, do you expect that this Convention is likely to become truly global in scope?

And what are you hearing from your counterparts with other

Transparency International chapters around the world? Are they

engaging their host governments in an effort to expand the reach

of the Convention, as you are?

Mr. LARSON. Thank you very much, Mr. Chairman. I believe that

this Convention will create, over time, the global framework that

you were alluding to. And I can tell you that the TI chapters

around the world are actively involved in this effort. TI chapters

have been very engaged in the ratification efforts with their governments and in offering strong support, and in some cases strong

pressure, for ratification.

I think the work of Transparency International abroad will also

be enhanced by the ratification of the treaty. In other words, this

creates a global set of expectations, norms, and obligations. Many

of these norms and obligations had not been part of the legal fabric

in many of these countries. And now it is much easier for local TI

chapters to go to the government and say, well, you know you are

not quite living up to this obligation. We need to strengthen our

track record in another area. And it was that which I had in mind

when I alluded to the fact that in many countries this treaty provides support and cover for individuals and groups that are fighting for greater transparency, but don’t necessarily have—did not

have, before the Convention, a legal framework in place in the

countries in which they are operating.

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The CHAIRMAN. How many chapters are there of Transparency

International?

Mr. LARSON. We have chapters throughout the world, and we’re

finding that there’s interest in countries that don’t have chapters

in getting involved. One thing that truly is the case in my experience is that this issue has become a salient central issue for people

around the world.

When we first came to the OECD, at the encouragement of the

Congress, to try to get the first antibribery convention negotiated,

frankly, people thought we were a little foolish. You know, how

could we be trying to negotiate something that was just a fact of

life? Now we are seeing, some 16–18 years later, that countries

around the world recognize that this is a serious problem. They

may not welcome the fact that they are under pressure in some

cases, but they recognize that it is so important to their people that

they have to be involved in tackling it.

And so I think there’s been tremendous progress. I think this

Convention gives a base for further progress.

The CHAIRMAN. Fine. Well, if you could satisfy the record with

a number, that would be helpful.

Mr. LARSON. I will.

[The requested information follows:]

Transparency International currently has 96 national chapters and chapters-information around the world. In their view, the Convention is a critically important

instrument by which to hold their leaders accountable. Many are promoting ratification in their countries and believe that U.S. ratification would assist their efforts.

The CHAIRMAN. I take your points very seriously. In fact, in our

own legislation, our Millennium Challenge Account situation really

highlights corruption as a major factor. It is an item that is discussed with each applicant country. Each of these applicants are

taken very seriously as a part of our own major foreign aid assistance area. You’ve had experience throughout the formation of that

legislation, as well as in your current capacity.

Mr. LARSON. If I could just add one or two sentences on that

point, Mr. Chairman. When I was, briefly, the temporary, interim

CEO of the Millennium Challenge Corporation, it was striking to

me that Ministers from foreign governments would come to me and

grab me and want to sit me down so they could say, we know that

having a strong record against corruption is essential for us to be

eligible for MCC support, we know that we fall short today, but let

me take the next 20 minutes to explain to you all the measures

that we are introducing to correct our record, because we’re serious

about tackling this issue.

And I think it has been demonstrated that those responses have

not just been rhetorical, they have spurred change in many developing countries, and so that is another indication of just how much

an effect a strong stance on the part of the United States and a

commitment to that stance can—how important that can be in

changing behavior around the world.

The CHAIRMAN. Well, it certainly has. I would just say,

anecdotally, from my own experience, that having gone to Albania,

to take a look for weapons of mass destruction and nerve gas in

the mountains above Tirana, I found in the host government a very

considerable concern about the corruption provision. But likewise,

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interestingly enough, among some of the Ministers, I noted some

relief that because the United States had taken such a strong

stand on this, they could do so within their own internal affairs.

This had become, really, a world standard in a different way from,

as you suggested, the early part of your experience. People might

have sat you down and said, now, I want to tell you how the world

works. So the fact that the world is working differently comes, in

part, from our own leadership in the Unites States, but also now

in this more broadly based international compact that we’re discussing this morning.

Let me ask you, Mr. Reinsch, if you would illuminate, if you can,

some more of the economic benefits to U.S. companies that U.S.

ratification of the Corruption Convention might bring. Can you

give, perhaps, an example of how a company might benefit directly

from the implementation process? What would be the financial

costs to American businesses if for some reason the United States

failed to ratify this Convention?

Mr. REINSCH. Well, on the benefit side, Mr. Chairman, I think

the general answer is contained in what you said. It levels the

playing field, which means there will be more situations in which

we do not lose deals because of corrupt activities on the part of our

companies’ competitors.

I can site a couple of anecdotes in that regard that might be

helpful. I don’t want to name corrupt countries—I’m not sure that

would be fruitful at this point—but, I can suggest, first of all, that

the Commerce Department, about 10 years ago, in the mid-1990s,

actually did that, and conducted a study in which they detailed a

fairly lengthy list of transactions in which the American company

had lost out or was at risk because of corruption from another

party. That report was classified, but it might be something the

committee would want to look at. The information, of course, is old,

but I don’t think a lot has changed in the intervening period.

Maybe the quantity, but not the kinds of cases that occur.

When I was in the government, I was personally aware of a situation, where, without mentioning the country involved, there was

an American company bidding on a very large project valued at

more than a billion dollars in exports of both goods and technology

and with a lot of ongoing benefits down the line in follow-on costs,

so it was a major opportunity. Information came to the attention

of the U.S. Government that the main foreign competitor on this

particular project, which was a bid to the government—it was

going to be a decision by the procuring government—was essentially using a corrupt action to attempt to obtain the contract.

The fact that the United States found out about it allowed us to

take some remedial measures, and in the end the Americans prevailed. Were this kind of agreement to be in effect, there would be,

I think, two benefits for the Americans. One, because in that particular case both the procuring country and the country that was

engaged in the corrupt activities would be parties, it would be less

likely that would happen, and the playing field would actually be

level. In addition, though, there would be recourse for the American company were it to lose in the circumstances I described.

Those things happen a lot. Companies don’t like to talk about

them because they don’t like to talk about any deal that they don’t

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get. So it would be very hard to get people to come up and go on

the record. That’s why I referenced the Commerce Department

study.

The other comment I’d make that would be a little bit more specific on that is—I don’t know if you had the same opportunity,

about a month, 6 weeks ago, to meet with the Nigerian Finance

Minister when she was here. I had an opportunity to attend a

luncheon with her, and she gave a really stirring speech about the

importance of transparency and opposing corruption and described,

in some detail, things that she had done in her country in her

scope of responsibility to try to deter corruption. And it occurs to

me, in light of your question, that I have a number of members

who do business in Nigeria, particularly those in extractive industries, because that’s where the resources are. I have probably a

larger number that don’t do business in Nigeria, and the reason

they don’t is because they find it impossible to do business there

successfully because of the level of corruption.

Anything that we can do to help the Finance Minister or anybody

else in Nigeria who wants to create a climate of intolerance of corruption and create a general view that this is a pariah activity that

legitimate countries don’t engage in, is going to be a good thing. It’s

going to provide opportunities for American business to go back in

there because they’re deterred now. And it will give them an opportunity to succeed on the basis of a better climate for both investment and trade. I singled that one out only because the Minister

herself has been so prominent in making the same statements

about the cultural problem that she’s trying to deal with.

Now, on the down side, or the second half of your question about

financial costs, we’ve been thinking about that, and those, of

course, are harder to quantify because it would depend upon how

the implementation plays out. The downside risk is simply that in

the absence of the United States being there pursuing and pushing

for implementation in the way that I described in my testimony,

States Parties might instead choose to implement the Convention

in ways that do not provide protection or due process or permit, effectively, discrimination against foreigners, foreign competitors,

which might not only be the United States but would be others, in

the domestic laws that they establish to implement the Convention.

There are some other circumstances that I can think of, and I

can site one circumstance, in particular, that is not involved in corruption, as an example. It involves a case of environmental protection where another country has created a law that for all intents

and purposes is designed to discriminate against, essentially,

American polluters as opposed to indigenous polluters, and to try

to create, in a sense, a funnel for a large amount of claims to be

made against the American company, but not necessarily anybody

else.

That’s not, as I said, a case of corruption, but it does demonstrate that some countries find it difficult to resist the temptation to structure their laws in a way that disadvantages, in particular, large multinational companies, the assumption being that

they have large wallets and can afford to pay large costs, whether

they’re legal costs or other kinds of fees.

50

I don’t know that a convention would deliberately set out to permit those activities. That would be, I think, unlikely. On the other

hand, there is always that potential. And the absence of the United

States as a vigorous force in the implementation of the monitoring

process, I think, would make it more likely that that would happen.

If it did happen, of course, then American companies, have several

downside risks. One, the risk of lost business, because they

wouldn’t enter into transactions in those situations, but also they

would run the risk of significant legal costs and reputational costs

when they would have to defend themselves in adverse situations

that would end up being very expensive for them.

They have a lot of experience with that right now in other contexts, and they discover that the problem with these cases is they

go on and on and on. Even when you win, somebody appeals, and

they go on and on and on. It costs companies enormous amounts

of money in legal costs and enormous reputational damage, particularly if they have a brand name. So that’s the kind of thing

that we would like to avoid, and I think effective and balanced implementation of the Convention would enable us to avoid those

risks.

The CHAIRMAN. Well, I thank you very much for that response.

Mr. REINSCH. Sorry for the long answer.

The CHAIRMAN. It is an important one. And I join you in commending, not only the Finance Minister of Nigeria in her testimony, but our Government in inviting important leaders from

countries to come and offer that kind of testimony, in either governmental forums or forums provided by American business. I

think this has been a very important advance in this general area

we’re discussing this morning.

Secretary Larson, I’d like for you, likewise, to pick up in a twopart way, the adverse impacts on international transparency efforts

if we were not to ratify. But then on a more positive theme, in your

statement you’ve emphasized the importance of monitoring the implementation of the Convention. Could you briefly summarize the

key findings of this study that you have completed on this issue?

Mr. LARSON. Certainly, Mr. Chairman. I think that my answer

to your first question really picks up where Mr. Reinsch was, that

we have an opportunity, through prompt ratification of this treaty,

to play a leadership role in the implementation process, including

at the meeting to be held in Jordan in December. We will have a

louder and more effective voice, and we’ll be able to lead effectively

in a more substantial way, if we have ratified. And we’ll be able

to shape this treaty and its implementation so that it achieves the

results that we all have in mind.

Second, I would repeat what I was saying earlier about the importance politically of strong U.S. leadership in the Convention in

our efforts elsewhere in pursuing anticorruption and transparency

objectives. I think our efforts to ensure greater transparency and

effectiveness in the United Nations and to repair some of the mistakes like the oil-for-food program will proceed better if we’re seen

as leading in this area as well. Similarly, I think it will strengthen

the efforts that the administration is making more generally to promote a transparent approach toward economic development

through reform of the practices of the multilateral development

51

banks. I think it will support the role the United States is taking

to promote democracy around the world.

This administration, correctly, has made anticorruption a significant part of the governance and prodemocracy initiatives that

we’ve stressed throughout the world, because we know that nothing

works more quickly to undermine support for free institutions than

the sense on part of the public that they’re being corruptly managed. So I think in all these ways movement on this Convention

supports important administration policy objectives.

If I could, I’d just add one other example. Mr. Reinsch was talking about particular problems acknowledged by the Government of

Nigeria. Your colleague, Senator Hagel, chaired or cochaired a series of hearings about energy security over the last several years,

and I testified once at one of those hearings that work to promote

a more transparent approach toward the use of oil resources in

countries like this, so their people know how the money is being

spent by their own government, not only is a good government initiative, not only is a prodevelopment initiative, but for us it’s an

energy security initiative, because it helps ensure that production

will be forthcoming and will be reliable.

Now, on the question that you asked about monitoring, per se,

and our analysis of the importance of monitoring, I think I can

limit it to three basic points. One is that many of these obligations,

standards, and norms that countries accept in this Convention are

new to them, and it requires a change in behavior, not only on the

part of private individuals, but on the part of the government. You

mentioned, Mr. Chairman, that in the early days of work on the

OECD Anti-Bribery Convention, many of our trading partners in

Europe not only tolerated bribery of foreign public officials, but

they subsidized it through a tax deduction. And it has been important to have a monitoring process in place and efforts to work with

prosecutors in place, so that the people who are in charge of enforcing the laws recognize the ways in which the laws are enforced and

understand how to proceed, where appropriate, with prosecutions.

Second, I think that it is important for a convention that’s as

wide-ranging as this one—you heard this morning about a number

of the important provisions that this treaty has, the new obligations that countries are accepting—for it to be monitored. There’s

a lot of things that need to be done in a lot of countries that

haven’t had these obligations before, and it’s only, in my estimation, through a monitoring process that we will have the visibility into whether those things that should be done are being

done. And I think, for the sake of the countries involved, you have

a little bit of constructive pressure. They know that someone is

looking over their shoulder, and that is an incentive in many instances to getting governments to do what needs to be done.

The third and last point I’d stress is that this can be a collaborative approach that identifies problem areas and helps countries

address them. This gets back, Mr. Chairman, to the point about

technical assistance. I think we’ve seen in other cases where we

have been trying to change behavior in large developing countries

that you need to be able to identify problems, and where appropriate, provide technical assistance at an early stage so that they

can deal with these implementation problems effectively. And

52

that’s why monitoring is important. Monitoring, in other words,

isn’t simply a way of saying to a country you’re not completely living up to what your obligation is in this area, but it’s to sit down

with a country and say, you clearly have a problem in this area,

let’s figure out how, through stronger enforcement on your part,

but also through targeted technical assistance, you’ll have the tools

to enforce this in the way that it’s intended to be enforced.

The CHAIRMAN. Well, thank you very much for that response. I

would supplement the work of my colleague, Senator Hagel, by

mentioning that during a visit I had in Azerbaijan in September

with President Aliyev at the beginning of the long awaited BakuJehan pipeline, it was apparent that the wealth of his country may

even double in terms of their gross national product in 2 years

time. With the addition of a natural gas pipeline 2 years later, it

could quadruple. So the issue of transparency to Azeris, quite apart

from the rest of the world, becomes of critical importance when you

have these dynamic changes occurring. His assurance was that

they would adopt the so-called Norwegian model, which is a good

suggestion. We’re hopeful that will be the case for the sake of

transparency as well as for the success of that modern state.

Let me ask one final question of you, Mr. Reinsch. Article 35 of

the Convention requires parties to ensure that persons suffering

damage as a result of an act of corruption can initiate legal proceedings to obtain compensation. I understand this article initially

raised some concern within the United States business community.

Those concerns were the focus of discussion with the administration. Please, if you will, explain the concerns, the discussion, and

how they have been resolved.

Mr. REINSCH. Well, let me say first, Mr. Chairman, it was an

iterative process. Over more than a year, we presented a number

of thoughts to the administration. In some cases they persuaded us

that they were not important problems, and we agreed with the administration. In other cases, I think we were able to persuade the

administration, not that they were so much problems, but persuade

them to be a little bit more detailed in their letter of transmittal

in addressing the problems. I don’t think there were many situations where they and we disagreed over fundamental interpretation

of the Convention or its significance. It was more a question of how

many words one wanted to put into the various documents.

I think the three most important issues were the following. Initially, we took the view that a reservation would be necessary with

respect to article 35, and the administration ultimately persuaded

us that that was the wrong course, and we no longer believe that

and are satisfied with the way they’ve chosen to deal with it.

The other two issues that we discussed with them in some detail

were, one, the statutory basis for their belief and our belief that existing law covers the obligation adequately already, and, second,

the degree of liability that would be attached via article 35. Our

concern, which is now addressed in the transmittal statement, was

that it be clear that the right of action that would be provided here

under our implementation process would relate to direct liability of

those directly engaged in acts of corruption as opposed to those

who are simply associated with others who are engaged in acts of

corruption.

53

One of the problems for the business community in other contexts has been the extension of the liability chain to the point

where it becomes very tenuous, and people are being sued because

they were in the room. Or, in the case of some alien tort law cases,

that I’m sure you’re familiar with, many of these companies that

have been sued in what are known as the South African cases. The

essence of the allegation in most of them is, you were in South Africa, you did business between 1948 and 1994, and, therefore,

you’re guilty and owe a large amount of damages. I think the companies believe that if they actually engage in a corrupt activity or

they actually engage in some illegal activity that’s one thing, but

their mere presence or their association with somebody else who’s

engaged in the activity shouldn’t be construed as liability.

Those points were all addressed satisfactorily in the submission

document, and so we had a happy ending to our dialog. And I must

say that I was a little surprised, frankly, that it was a happy ending because I’ve been in so many of these that weren’t. It was led

by the State Department, but it was a joint effort that included the

Justice Department as well as other relevant agencies. They consistently listened and consistently attempted to deal with the concerns that I’ve just described. We passed a lot of papers back and

forth in which we suggested some wording, and they’d come back

and say, well, how about this? We don’t want to, you know, be as

specific as that. A lot of their concerns were not in substantive opposition, but addressed more the question of what was appropriate

to put into a declaration, understanding, or letter of transmission

as opposed to what was not appropriate. And they, of course, are

better judges of that than we are, having done this many times. So

it was a genuinely joint exercise in which they ended up persuading us that they were right in a number of areas, and we

ended up persuading them that there were some things they needed to address in more detail.

The CHAIRMAN. Well, I thank you for complimenting the Department of State and the Department of Justice. These have been a

remarkably harmonious two panels of discussion of people who

have been visiting with each other constructively. Let me just

spread the compliments to our bipartisan staff, who are deeply interested in these issues, and their excellent preparation for this

hearing and the timely way in which they have moved so that we

could all meet together today.

I’ll ask that the record be kept open until the end of business tomorrow, which would be June 22, for any further questions of

members of this committee who were not able to attend the hearing today, and who may, for the sake of completing the record,

want to raise questions. And I would ask you and the members of

our first panel to respond as promptly as you could to help us complete that record.

Let me finally ask if you have any further statements that you

would like to make before we adjourn our hearing.

Mr. REINSCH. Only, Mr. Chairman, that we would also like to

thank the members of the bipartisan staff, who were very kind to

meet with us at some length on this and have had a lot of interaction with us by e-mail or on the phone since. We particularly appreciate their work in creating and facilitating the hearing, and

54

your work in being willing to schedule it and sit through all this

testimony.

I know that the management of treaties is complicated in the

Senate. We’ve worked on some where the ending was not quite so

happy, Law of the Sea, and we’ve worked together on some where

the endings were very happy. I have enormous respect for the

amount of time and attention it takes you and the staff to put

these things together. We are very grateful that you have been

willing to move this one forward so quickly. We’re delighted, and

we hope it will move on to ratification.

The CHAIRMAN. Thank you.

Secretary Larson.

Mr. LARSON. Thank you. I’d simply like to thank you for the

hearing; thank the staff for an excellent job, and to make certain

you all understand that Transparency International–USA is ready

to assist in any way we can on the road to ratification, but also on

the other important initiatives on transparency that you and other

senators are leading. Thank you.

The CHAIRMAN. Well, thank you. We’ll continue to work on this

treaty. And let me just say, given the spur of your comment, we

are still trying to continue to work on the Law of the Sea. Sufficient endurance may finally prevail. This is one aspect, as you

know, of public life.

Mr. REINSCH. I think it’s approaching the Genocide Convention

in longevity at this point.

The CHAIRMAN. Longevity, persistence, patience are all required.

Well, thank you very much, and the hearing is adjourned.

[Whereupon, at 11:26 a.m., the hearing was adjourned.]

ADDITIONAL QUESTIONS AND ANSWERS AND LETTERS SUBMITTED

FOR THE RECORD

RESPONSES OF STATE DEPARTMENT DEPUTY LEGAL ADVISER, SAMUEL M. WITTEN,

AND JUSTICE DEPARTMENT DEPUTY ASSISTANT ATTORNEY GENERAL, BRUCE

SWARTZ, TO QUESTIONS SUBMITTED BY SENATOR LUGAR

Question 1(a). Several provisions in chapter III (Criminalization and Law Enforcement) of the Convention against Corruption require the parties to consider criminalizing certain conduct under their domestic laws. These provisions are articles 16(2),

18, 19, 20, 21, 22, and 24.

What, if any, of the conduct described in these articles is criminalized under current U.S. law?

Answer.

• Article 16(2): Solicitation by Foreign Public Official.

The conduct described in article 16(2) could be punishable under various Federal criminal theories, including but not limited to the honest services, wire,

and mail fraud statutes (18 U.S.C. 1341, 1343, and 1346), depending upon the

facts of a given case. State laws may also criminalize solicitation by foreign public officials under various theories.

• Article 18: Trading in Influence.

Although lawful lobbying activity is constitutionally protected in the United

States, U.S. law criminalizes unlawful trading in influence in various ways. For

example, the Federal bribery and gratuity statute (18 U.S.C. 201) criminalizes

trading in influence for Federal officials. Additionally, the honest services, wire,

and mail fraud statutes (18 U.S.C. 1341, 1343, and 1346) could be used to prosecute trading in influence for Federal, State and local officials. The Hobbs Act

prohibits extortion under color of official right by Federal, State and local officials (18 U.S.C. 1951). The Federal Program Bribery statute (18 U.S.C. 666)

55

covers bribery in programs that receive Federal funds. Finally, State law bribery statutes also prohibit trading in influence in various ways.

• Article 19: Abuse of Functions.

U.S. law criminalizes ‘‘abuse of functions’’ in various ways. First, abuse of

functions is criminalized by the Federal bribery and gratuity statute (18 U.S.C.

201) and the conflict of interest statute (18 U.S.C. 208) for Federal officials. Second, the honest services, wire, and mail fraud statutes (18 U.S.C. 1341, 1343,

and 1346) could be used to prosecute trading in influence for Federal, State, and

local officials. Third, the Hobbs Act prohibits extortion under color of official

right by Federal, State and local officials (18 U.S.C. 1951). Fourth, the Federal

Program Bribery statute (18 U.S.C. 666) covers bribery in programs that receive

Federal funds. Finally, State law bribery statutes also criminalize abuse of functions in various ways.

• Article 20: Illicit Enrichment.

U.S. law does not criminalize illicit enrichment as described in article 20. See

response to question 1(c) for additional explanation of this provision.

• Article 21: Bribery in Private Sector.

The conduct described in article 21 could be punishable under various Federal

criminal theories, including but not limited to mail and wire fraud, antitrust

violations, conspiracy, and securities fraud, depending upon the facts of a given

case. Additionally, commercial bribery can be charged federally under 18 U.S.C.

1952(b)(2) (interstate and foreign travel or transportation in aid of racketeering

enterprises), which criminalizes bribery in violation of the laws of the State in

which committed, based on State commercial bribery violations. Commercial

bribery has been criminalized in most, but not all, of the 50 States. Even in the

States where commercial bribery is not a crime, the conduct is often punishable

under unfair trade practices laws, which define bribery as an improper means

of gaining a competitive advantage.

• Article 22: Embezzlement in the Private Sector.

The conduct described in article 22 could be punishable under various Federal

criminal theories, including but not limited to mail and wire fraud, securities

fraud, conspiracy, or interstate transportation of stolen property, depending

upon the facts of a given case. Additionally, State law typically criminalizes private theft and embezzlement.

• Article 24: Concealment of Ill-Gotten Property.

Federal law prohibits the type of conduct described in article 24 under various theories, principally the receipt of stolen money statute, 18 U.S.C. 2315

(which states that ‘‘whoever . . . conceals . . . money of the value of $5,000 or

more . . . which has crossed a State or United States boundary after being stolen, unlawfully converted, or taken, knowing the same to have been stolen, unlawfully converted or taken’’ is subject to punishment). Additionally, concealment of ill-gotten property could be punishable under, among other provision,

the Federal aiding and abetting statute (18 U.S.C. 2), the Federal accessory

after the fact statute (18 U.S.C. 3), or the Federal misprision of felony statute

(18 U.S.C. 4).

Question 1(b). Does the executive branch plan to seek the criminalization of any

of the conduct described in these articles that is not now criminalized under U.S.

law?

Answer. The executive branch does not currently intend to seek the criminalization of any of the conduct described in articles 16(2), 18, 19, 20, 21, 22, and 24 that

is not now criminalized under U.S. law.

Question 1(c). Article 20 requires each party, ‘‘subject to its constitution and the

fundamental principles of its legal system’’ to ‘‘consider’’ establishing the crime of

illicit enrichment which is defined as ‘‘a significant increase in the assets of a public

official that he or she cannot reasonably explain in relation to his or her lawful income.’’ The conduct described in this article appears to place the burden on the defendant to prove the absence of wrongdoing. Does U.S. law currently criminalize

this conduct? What is the executive branch’s interpretation of the obligation imposed

on each party under this article? What action, if any, does the executive branch intend to take with regard to this article?

Answer. U.S. law does not criminalize illicit enrichment as described in article 20.

As the Department of State’s Letter of Transmittal, dated September 23, 2005, stated: ‘‘Article 20 was included at the insistence of a number of the developing nations.

The article requires States Parties to consider establishing the offense known as illicit enrichment, which is defined as a significant increase in the assets of a public

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official that such official cannot reasonably explain in relation to his or her lawful

income. Such an offense could require a defendant to bear the burden of establishing

the legitimate source of the income in question. This article is nonobligatory.’’

Question 2. Article 27(3) states that parties may criminalize the ‘‘preparation for

an offense established in accordance with the Convention.’’ Does U.S. law currently

prohibit preparation for an offense?

Answer. U.S. law would criminalize ‘‘preparation’’ for an offense to the extent that

such conduct constitutes an inchoate offense recognized under U.S. law. U.S. Federal law, for example, criminalizes inchoate offenses principally under the conspiracy statute (18 U.S.C. 371) and also punishes attempts to commit certain offenses covered under the Convention (see, e.g., 18 U.S.C. 1512 (tampering with witness, victim, or an informant)). In addition, ‘‘preparatory’’ activities may also be

punishable under the aiding and abetting statute (18 U.S.C. 2(a)). State law also

typically criminalizes ‘‘attempted’’ crimes as well as conspiracy and aiding and abetting, all of which could be considered ‘‘preparation’’ for an offense.

Question 3. Article 31(8) provides that parties ‘‘may consider the possibility of requiring that an offender demonstrate the lawful origin of [the] alleged proceeds of

crime or other property liable to confiscation, to the extent that such a requirement

is consistent with the fundamental principles of their domestic law and with the nature of judicial and other proceedings.’’ The requirement described in this provision

appears to shift the burden of proof from the government to the defendant. Does

U.S. law currently require such a demonstration by the offender? Does the executive

branch plan to take any action with respect to this provision?

Answer. Under U.S. asset forfeiture law, a defendant may be required to prove

that his assets are not subject to forfeiture in some limited instances. Although the

general rule is that the Government must prove the forfeitability of assets to be recovered, U.S. law provides for certain exceptions where burden shifting occurs, such

as forfeitures in traditional customs cases, see 19 U.S.C. 1615, 18 U.S.C. 983(i), and

forfeitures of terrorists’ assets under the USA PATRIOT Act, see 18 U.S.C.

981(a)(1)(G), USA PATRIOT Act sections 316(a)(1) and 316(b), 115 Stat. at 309.

Even in those cases, however, the Government must make an initial showing of forfeitability, but the burden then shifts to the defendant to establish that the property

is not subject to forfeiture. Regardless, article 31(8) is nonobligatory and only applies to the extent consistent with domestic law, which article 31(8) generally is not.

Accordingly, the executive branch does not interpret this article as imposing any obligation on the U.S. Government, and the executive branch does not intend to take

any action with regard to this article.

Question 4. Article 34 requires each party to take measures ‘‘in accordance with

the fundamental principles of its domestic law’’ to address the consequences of corruption. What new measures, if any, does the executive branch plan to take to implement this article?

Answer. No new measures are needed to implement article 34. As a world leader

in anticorruption efforts, the United States has in place a broad spectrum of measures that establish standards for government conduct, provide oversight of public activities, and establish remedies for redress. These measures include laws that address specific conduct, such as 18 U.S.C. 218, which allows the Federal Government

to rescind a contract or other benefit gained through bribery or graft, and which is

consistent with article 34; an extensive network of laws and regulations related to

government contracting, government procurement, and ethics in government; integrity policy institutions, such as the Office of Government Ethics; institutional monitors, such as inspectors general; and remedies such as suspension and debarment

of contractors pursuant to the authority of the General Services Administration,

which maintains a web-based list (the Excluded Parties List System) that identifies

parties excluded from receiving Federal contracts. From time to time, the administration may suggest additional provisions to improve its domestic laws and regulations, but no changes are needed to discharge the obligations of this Convention.

Question 5. Article 49 requires parties to consider entering into bilateral or multilateral agreements or arrangements regarding the establishment of joint investigative bodies. Does the executive branch plan to enter into such agreements or arrangements?

Answer. In a number of contexts, U.S. law enforcement agencies currently pursue

joint investigative efforts with foreign counterparts. For example, our DEA frequently works closely with certain drug enforcement agencies overseas to investigate drug trafficking activity that affects both countries. In an appropriate case,

we would consider undertaking a joint investigative effort with another country

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where acts of corruption had a nexus with both the United States and that country.

In an appropriate case, we would consider undertaking a joint investigative effort

with another country where the criminal acts had a nexus with both the United

States and that country.

Our ability to engage in such joint efforts does not depend on this or any other

treaty. In large measure, joint investigative efforts take place on a case-by-case

basis, at the level of informal police cooperation, and entail sharing information and

cooperating on developing effective investigative strategies. A more formal arrangement may be appropriate if requested by the foreign government, or where it otherwise appears appropriate in light of: The potential subject matter for investigation;

our experience with the foreign country and law enforcement agency involved; the

types of investigative activity contemplated; and the respective laws and other authorities that may govern the activities of law enforcement agents working in such

a setting.

As reflected in the text of article 49, such joint investigative efforts do not contemplate visiting law enforcement personnel acting in any manner in violation of

the sovereignty of the host nation. Generally, U.S. law enforcement personnel involved in any joint investigative activity overseas are either prohibited from exercising law enforcement powers in the host government or are permitted to do so only

as explicitly authorized by the law enforcement or judicial authorities of the host

government.

With respect to the activities of foreign law enforcement officers in the United

States, as we recently explained in response to a question for the record from Senator Biden about a similar provision regarding joint investigative teams in the pending MLAT with Germany, foreign law enforcement agents are subject to the provisions of the Foreign Agents Registration Act (18 U.S.C. 951), which are implemented in part through regulations at 28 CFR 73.3. Subsections (b) and (c) of those

regulations provide that foreign law enforcement agents must notify U.S. law enforcement authorities, or the Justice Department’s Office of International Affairs,

with respect to their pursuing investigative or other official actions in the United

States. As a practical matter, U.S. law enforcement authorities would object to foreign law enforcement authorities conducting investigative activities within the

United States unless such activities were approved by, and coordinated with, U.S.

law enforcement authorities. To the extent foreign law enforcement authorities act

within the United States they are subject to U.S. laws.

RESPONSES FROM SAMUEL WITTEN AND BRUCE SWARTZ TO QUESTIONS SUBMITTED BY

SENATOR BIDEN

Question. Were there any statements made by the U.S. delegation in connection

with signature of the Convention or at the session of the U.N. General Assembly

when the Convention was adopted? If so, please provide them.

Answer. The U.S. delegation made statements in connection with the signing of

the Convention and in connection with the adoption of the Convention at the United

Nations General Assembly, as follows:

STATEMENT OF JOHN D. NEGROPONTE, U.S. PERMANENT REPRESENTATIVE TO THE

UNITED NATIONS AT THE U.N. GENERAL ASSEMBLY, NEW YORK, NY, OCTOBER 31,

2003

Mr. President, bribes were still tax deductible in some countries 10 years ago and

no international anticorruption treaties existed. Today’s resolution is therefore a

milestone achievement in the global effort to ensure transparency, fairness, and justice in public affairs.

This is vital not only to the rule of law, but to the fundamental confidence citizens

must have for representative government and private enterprise to succeed.

Corruption and democracy are incompatible; corruption and economic prosperity

are incompatible; and corruption and equal opportunity are incompatible.

As a consequence, I am pleased to say that the draft convention (A/58/422 and

Add.l) we consider for adoption represents the first globally negotiated

anticorruption treaty and will likely be the first anticorruption treaty applied on a

truly global level. It is more comprehensive than any existing anticorruption treaty,

and, for the first time in any multilateral agreement, provides a useful framework

for governments to cooperate in recovery of illicitly obtained assets. An important

chapter of the text creates a Conference of States Parties that will be responsible

for followup. We expect that this body will play a prominent role in promoting imVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00057 Fmt 6601 Sfmt 6621 109-18.TXT SFRELA2 PsN: SFRELA2
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plementation, and we believe it is not too soon for us to share our visions informally

of how that body can be most effective.

Like other anticrime treaties before it, the new convention establishes commitments to criminalize certain undesirable and harmful conduct—in this case, corrupt

actions such as bribery, embezzlement, and money laundering. But the convention

does not stop there. It also requires that governments take action in a number of

areas—for example, in public procurement, public financial management, and in

regulating their public officials—that will help prevent corruption from happening

in the first place.

The international fight against corruption has long been a priority for my country,

beginning with our efforts in the 1980s to rally international attention to bribery

in international business transactions. In fact, President Bush considers anticorruption efforts to be so central to development that he has made progress on fighting

corruption an essential element for participation in the Millennium Challenge Account (MCA), which we expect will add $5 billion and thereby increase our core development assistance 50 percent by fiscal year 2006.

Mr. President, experts from approximately 130 countries spent countless hours

over the past 2 years developing this convention. The United States was pleased to

participate actively in these long and highly technical negotiations. Our experience

convinces us that the United Nations Convention Against Corruption is the product

of a true partnership among most of the countries represented in this room.

We think this is crucial. A successful fight against corruption requires action on

many fronts; clearly our efforts will only be effective to the extent that we maintain

the partnership we have forged over the last 2 years.

So now, as with all treaties, the end of negotiations marks the real beginning of

engagement. The words of this convention must be translated into action, or else

the hard work of the ad hoc committee will be for naught. Numerous compromises

had to be made in the negotiations; no country obtained everything it sought, but

with an agreed text before us, the time has come for all countries to move as quickly

as possible in their national processes to consider signature and ratification, to engage civil society and the private sector and to work to promote the implementation

of the innovative and helpful approaches that we have developed together.

In closing, we thank the members of the bureau of the ad hoc committee and its

Secretariat from the United Nations Office on Drugs and Crime in Vienna, Eduardo

Vetere and his staff, particularly Dimitri Vlassis, for their tireless dedication during

the 2 years of negotiations.

Our acting chair, Ambassador Muhyieddeen Touk from Jordan, deserves special

credit for his wise leadership following the sad and untimely death of Ambassador

Chary Samper of Colombia. We also want to recognize the contributions of the late

Ambassador Samper, who believed wholeheartedly in our efforts and, we believe,

would be pleased with the finishing touches to his work.

Thank you, Mr. President, for allowing me the floor and congratulations to our

colleagues who participated in the important work of the ad hoc committee.

PREPARED REMARKS OF JOHN ASHCROFT, U.S. ATTORNEY GENERAL, AT TREATY

SIGNING, MERIDA, MEXICO, DECEMBER 9, 2003

Thank you for the opportunity to address this conference. By making the fight

against corruption a priority for his administration, President Fox has become a

hemispheric and world leader for integrity in government. The United States applauds his efforts and expresses gratitude for the excellent work of the Government

of Mexico to bring the world community together in Merida for the signing of the

United Nations Convention Against Corruption.

Just 10 short years ago, corruption was a topic that governments avoided in international discourse. Bribery was generally considered to be a domestic issue. It was

simply a part of human nature, a trivial issue, or even promoted as a normal business expense to be deducted from taxes at home. In some nations, corruption threatened to, in the words of philosopher and poet Alexander Pope, ‘‘deluge all; and

spread like a low-born mist, and blot the sun.’’

The fight against corruption is critical to realizing our shared interests. Corruption undermines the goals of peace loving and democratic nations. It jeopardizes free

markets and sustainable development. It provides sanctuary to the forces of global

tenor. It facilitates the illicit activities of international and domestic criminals. It

saps the legitimacy of democratic governments and can, in its extreme forms,

threaten democracy itself. Worst of all, it is a tax on the poor—it provides benefits

to the crooked by channeling money from projects to pockets. From projects like betVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00058 Fmt 6601 Sfmt 6621 109-18.TXT SFRELA2 PsN: SFRELA2
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ter roads and water supplies to the bank accounts of cronies. It steals from the

needy to enrich the wealthy. Corruption must end.

By combating corruption, we restore confidence in democracy and the rule of law.

We strengthen the open trade and investment that drive the world economy. We ensure that donor and government resources benefit a wide range of citizens, not only

a select few. When these conditions are secured, they combine to create faith in the

institutions of a civil society.

Beginning with a series of regional anticorruption conventions and related initiatives, among the first of which was this hemisphere’s 1996 Inter-American Convention against Corruption, the international community has made concerted efforts to

address this serious problem. The United States is thankful to have worked alongside other nations in this international movement. In the past 6 years, working together, we have achieved:

• A major campaign to end bribery in international business transactions;

• The creation of a high-level Global Forum process to generate governmental political will against corruption;

• The development of several regional anticorruption treaties; and

• The creation of several regional multilateral mechanisms to monitor implementation of anticorruption commitments.

The United Nations Convention Against Corruption we are signing today is a permanent enshrinement of the new global attitude towards corruption. Corruption is

now unacceptable in any form, and international cooperation is considered a key element of our respective efforts to combat this scourge.

The product of our negotiations over the past 2 years will sustain our fight

against corruption. It will ensure that corruption is more than merely a passing

common interest among nations.

But this document is not enough. It must not become an empty symbolic gesture,

Our governments must translate the words of this convention into effective actions.

These deeds will reinforce intergovernmental cooperation and, through domestic efforts to stem corruption, reaffirm our collective goals.

Question. What is the authoritative nature of the travaux pre ́paratoires that was

submitted to the Senate for its information in connection with submission of the

Convention?

Answer. The Interpretive Notes for the official records (travaux pre ́paratoires)

preserve certain points relating to articles of the instruments that are subsidiary

to the text, but nonetheless of potential interpretive importance. In accordance with

article 32 of the Vienna Convention on the Law of Treaties, to which the United

States is not a party but which reflects several commonly accepted principles of

treaty interpretation, preparatory work such as that memorialized in the Interpretive Notes may serve as a supplementary means of interpretation, if an interpretation of the treaty done in good faith and in accordance with the ordinary meaning

given to the terms of the treaty results in ambiguity or is manifestly absurd. Thus,

the Interpretive Notes, while not binding as a matter of treaty law, could be important as a guide to the meaning of terms in the Convention and Protocols.

Question. In the course of the negotiations, and in preparing to submit the Convention to the Senate, did the executive branch review the OECD Anti-Bribery Convention and the Inter-American Convention Against Corruption to ensure that the

obligations of those conventions did not conflict with the obligations of the U.N.

Convention?

Answer. The interagency team tasked with negotiating the U.N. Convention carefully reviewed provisions of the OECD and Inter-American Conventions when developing and negotiating U.N. Convention provisions. The team sought to ensure that

U.S. compliance with the U.N. Convention provisions would not adversely affect or

conflict with our implementation of OECD and Inter-American Convention provisions. At the same time, the negotiating team searched for areas where we could,

consistent with current U.S. law and practice, strengthen standards found in the

OECD and Inter-American Conventions.

As a result, the U.N. Convention contains certain provisions that are almost identical to those found in the OECD and Inter-American Conventions (e.g.—articles on

criminalizing bribery of domestic and foreign public officials), but also contains provisions that go further than the OECD and Inter-American Conventions (e.g.—articles that mandate the disallowance of tax deductibility for bribes and promote transparency in government procurement) and provisions that are not found in either

convention (e.g.—articles relating to asset recovery and the disposition of illicitly obtained assets).

60

Question. In the United States, what body or bodies will fulfill the obligation of

articles 6(1) and 36?

Answer. Article 6(1) requires States Parties to ‘‘ensure the existence of a body or

bodies’’ to prevent corruption. As the analysis accompanying the Secretary’s transmittal message stated, in the United States those bodies include the Department

of Justice (including the Office of Justice Programs and the National Institute of

Justice) and the Department of State, Bureau of International Narcotics and Law

Enforcement Affairs, Anticorruption Unit. Additional bodies that fulfill this role include, but are not limited to, the U.S. Office of Government Ethics, departmental

inspectors general, and the Government Accountability Office.

Article 36 complements article 6 in requiring a State Party to ensure the existence of at least one body that is specialized in combating corruption through law

enforcement. In the United States, the Criminal Division of the Department of Justice and the 93 United States Attorneys’ Offices combat corruption through enforcement of Federal antibribery laws. The United States is, therefore, in compliance

with article 36.

Question. Article 7(2) calls on State Parties to consider adopting measures to ‘‘prescribe criteria concerning candidature for and election to public office.’’ What types

of criteria are envisaged by this provision? What current U.S. law, if any, would be

relevant to this provision?

Answer. Article 7(2) is nonmandatory. Accordingly, the executive branch does not

intend to take or propose any action to implement this article. Various provisions

of U.S. law prescribe criteria concerning candidature for and election to public office.

For example, the United States Constitution prescribes age and citizenship requirements for election to office as President, Vice President, and Member of Congress,

Federal and State laws also prescribe various candidature requirements, including

residence requirements, candidate registration requirements, and the like.

Question. In the United States, what laws or programs fulfill the obligation of article 13?

Answer. The United States has a variety of laws and practices in place that promote the active participation of individuals and groups outside the public sector in

the domestic fight against corruption. For example, our inspectors general and various law enforcement agencies provide hotlines that allow the public to report potential mismanagement or corrupt government activities. Our Freedom of Information

Act allows public access to government information. Our Administrative Procedures

Act provides for open and transparent government decisionmaking and the input of

the public into government rulemaking. Agencies may also seek outside policy advice and recommendations by establishing an advisory committee following the requirements of the Federal Advisory Committee Act (FACA) including publishing advance public announcements of committee meetings and holding open meetings. The

Government in the Sunshine Act requires Federal agencies that are headed by a collegial body to publish public notices of meetings and to hold, with some exceptions,

those meetings in public. Various organizations, including the Offices of Inspectors

General and the General Accountability Office, produce publicly available reports on

government activities and efforts to stem mismanagement and corruption within

government. The public availability of government budgets and related financial information allow the public to monitor and help shape government fiscal priorities

and spending. Furthermore, various government agencies and offices involved in the

prevention of corruption and promotion of integrity within government, such as the

U.S. Office of Government Ethics, maintain outreach to nongovernmental and private sector individuals and organizations via Internet Web sites and formal advisory

groups.

Question. In a briefing with committee staff, administration representatives described articles 15, 16(1), 17, 23, and 25 as the ‘‘core criminalization’’ provisions of

the Convention. What U.S. laws fulfill the obligations of these articles?

• Article 15: Bribery of national public officials

Bribery of national public officials is criminalized under U.S. law in various ways.

First, Title 18 U.S.C. Section 201 makes it illegal for a Federal official to solicit or

take things of value in exchange for a promise to do an official act. It also punishes

the individual who offers or agrees to give the thing of value to the public official.

Second, the honest services, wire, and mail fraud statutes (18 U.S.C. 1341, 1343,

and 1346) could be used to prosecute bribery of Federal, State and local officials.

Third, the Hobbs Act prohibits extortion under color of official right by Federal,

State and local officials (18 U.S.C. 1951). Fourth, the Federal Program Bribery statVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00060 Fmt 6601 Sfmt 6621 109-18.TXT SFRELA2 PsN: SFRELA2
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ute (18 U.S.C. 666) covers bribery in programs that receive Federal funds. Finally,

State law bribery statutes also criminalize abuse of functions in various ways.

• Article 16(1): Bribery of foreign public officials and officials of public international organizations

U.S. Federal law criminalizes bribery of foreign public officials and officials of

public international organizations principally through the Foreign Corrupt Practices

Act as amended).

• Article 17: Embezzlement, misappropriation or other diversion of property by a

public official

U.S. Federal law criminalizes embezzlement, misappropriation or other diversion

of Federal property by a public official in 18 U.S.C. 641. The honest services, mail

fraud and wire fraud statutes (18 U.S.C. 1341, 1343, and 1346) also could be used

to prosecute such conduct. The Federal Program Bribery statute (18 U.S.C. 666)

criminalizes the bribery, conversion, or embezzlement of money or property valued

at $5,000 or more from a program that receives Federal funds. State embezzlement

statutes also criminalize this conduct on the State and local level.

• Article 23: Laundering proceeds of crime

U.S. Federal law criminalizes the laundering of proceeds of crime in 18 U.S.C.

1956.

• Article 25: Obstruction of justice

U.S. Federal law criminalizes obstruction of justice in various ways, including but

not limited to the following:

Title 18, U.S.C., Section 1505 criminalizes actions to avoid, conceal, or impede the

due administration of a proceeding before any department or agency. Title 18,

U.S.C., Section 1510 criminalizes bribery to obstruct, delay, or prevent communications related to the violation of a criminal law. Title 18, U.S.C., Section 1510 criminalizes witness tampering. Title 18, U.S.C., Section 1519 criminalizes conduct

meant to impede, obstruct, or influence an investigation by altering, destroying concealing any record or tangible object. State laws also criminalize obstruction of justice in various ways.

Question. The analysis accompanying the Secretary’s letter of submittal to the

President states ‘‘current laws and practices of the United States are in compliance

with article 35,’’ and further states that ‘‘U.S. jurisprudence permits persons who

have suffered from criminal acts such as bribery to seek damages from the offenders

under various theories.’’ Please elaborate on (a) the laws and practices of the United

States that comply with article 35; and (b) the theories under U.S. law and jurisprudence that permit victims of bribery to seek damages.

Answer. Article 35 does not create new causes of action against U.S. companies

or citizens. The combination of a declaration—that none of the provisions of the

Convention creates a private right of action and that the provisions of the Convention (except for articles 44 and 46) are non-self-executing—and the discussion of article 35 in the Secretary’s transmittal package provide ample protection against the

possibility that article 35 could be misconstrued in a manner that would increase

the litigation exposure of U.S. companies in the United States.

Furthermore, the executive branch does not intend to take any action to implement article 35, because U.S. law already permits persons who have suffered damage from criminal acts such as bribery to seek damages from offenders under various theories. For example, shareholders whose stock value declines as a result of

a company’s indictment for violations of the Foreign Corrupt Practices Act potentially have a private cause of action for securities fraud against the company individually or as a class. Likewise, a company that is harmed by the corrupt actions

of one of its officers and a resulting government investigation potentially has a

cause of action against that officer for, depending upon the facts of a given case,

breach of contract or breach of fiduciary duty.

Other private causes of action may apply in particular circumstances as well, including tort offenses (such as conversion or intentional interference with contractual

relations); civil RICO remedies under 18 U.S.C. 1964 (based upon fraud, bribery, or

money laundering offenses), private causes of action under antitrust and unfair competition theories, or qui tam actions.

Question. Article 50 of the Convention provides that each party ‘‘shall, to the extent permitted by the basic principles of its domestic legal system and in accordance

with the conditions prescribed by its domestic law, take such measures as may be

necessary, within its means, to allow for the appropriate use by its competent authorities of controlled delivery and, where it deems it appropriate, other special inVerDate 11-MAY-2000 11:49 Aug 30, 2006 Jkt 025358 PO 00000 Frm 00061 Fmt 6601 Sfmt 6621 109-18.TXT SFRELA2 PsN: SFRELA2
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vestigative techniques, such as electronic and other forms of surveillance and under

cover operations, within its territory.’’

Does this provision authorize warrantless surveillance in the United States, including any surveillance authorized by the President and about which the Attorney

General testified before the Senate Committee on the Judiciary on February 6, 2006

(the so-called ‘‘Terrorist Surveillance Program’’)?

Answer. Article 50 complements articles 48 and 49, which govern police-to-police

law enforcement cooperation between States Parties regarding the offenses established under the treaty, i.e., bribery and money laundering in various forms. Article

48, for example, states that ‘‘States Parties shall cooperate closely with one another

. . . to enhance the effectiveness of law enforcement cooperation to combat the offenses covered by this Convention.’’ Article 49 requires States Parties to consider

forming joint investigative bodies. Article 50(1), as indicated in the analysis accompanying the President’s letter transmitting the Convention to the Senate, ‘‘contemplates that, if permitted by the basic principles of its domestic legal system, law

enforcement authorities be given the ability to use controlled delivery, electronic

surveillance, and undercover operations.’’ Article 50(2)–(4) provides for cooperative

use of these ‘‘special investigative techniques’’ between nations, which ‘‘would be

regulated by the States Parties involved through general or case-specific agreements

or arrangements.’’

As indicated in the analysis accompanying the President’s letter of transmittal,

article 50, like virtually all of the articles in this treaty, is non-self-executing. Accordingly, article 50 does not confer any new authority on U.S. law enforcement

agencies to conduct electronic surveillance or any other investigative techniques referred to in the article. However, there is no need for any new legislation to implement article 50(1), since current U.S. law provides appropriate authority for the conduct of controlled deliveries, undercover operations, and electronic surveillance.

Thus, this provision of the Convention neither enlarges existing surveillance authorities nor requires any expansion of such authorities for its implementation.

The administration has stated previously that the Terrorist Surveillance Program

is a narrowly focused early warning system, targeting for interception only those

international communications for which there is probable cause to believe that at

least one of the parties to the communication is a member or agent of al-Qaeda or

an affiliated terrorist organization. It is a critical intelligence tool for protecting the

United States from another catastrophic al-Qaeda attack in the midst of an armed

conflict. It is not a means of collecting information for ordinary criminal investigations of public corruption and other related offenses covered by this Convention.

Question. In the United States, what laws fulfill the obligations of articles 53, 54

and 55?

Answer. The provisions of the Asset Recovery Chapter are consistent with, and

often inspired by, U.S. law. Accordingly, the United States is in compliance with articles 53, 54 and 55, and the executive branch does not intend to take any action

with regard to these articles.

In article 53, States Parties recognize that victim states can take action and responsibility for recovering the proceeds of corruption, independent of mutual legal

assistance procedures, by participating as a litigant in the courts of another State

Party. United States law does not preclude foreign governments from litigating in

our courts to establish ownership, superior title, or as a victim for purposes of restitution, and accordingly is in compliance with article 53.

Article 54 requires countries to adopt legislation to enable them to either open

their own case in response to a foreign request for assistance or to recognize a foreign forfeiture judgment for enforcement. It also includes parallel provisions for instituting a restraint of assets through domestic action or by enforcing a foreign restraint order. The United States complies with the obligation to be able to open its

own proceedings and institute domestic restraints through such provisions as 18

U.S.C. 981 and 982, which authorize the United States to initiate in rem civil forfeiture and post-conviction criminal forfeiture proceedings based upon a broad range

of foreign offenses, including foreign corruption as enumerated in 18 U.S.C.

1956(c)(7)(b)(iv), as well as other violations of U.S. law. It complies with the requirement of being able to enforce foreign restraint and forfeiture orders through 28

U.S.C. 2467. Article 54 suggests that countries should consider enacting nonconviction-based forfeiture in certain circumstances, and further follows U.S. legislation in

suggesting countries be able to base a preliminary restraint on a foreign arrest or

charge, as provided for in 18 U.S.C. 981(b)(4).

In contrast to article 54, which establishes the legislative framework for countries

to be able to provide assistance, article 55 sets forth the procedures for requesting

and providing assistance in a particular case. The procedures in article 55 largely

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track the traditional forfeiture cooperation provisions embodied in the U.N. Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the

U.N. Convention against Transnational Organized Crime, such as in paragraphs 7,

which informs countries that they must provide supporting evidence in a timely

fashion or risk release of restrained assets and that requests for forfeiture assistance must be reserved for cases of a serious nature. Application of this article is

subject to the requirements of mutual legal assistance under article 46, and does

not impose new obligations on the United States. The United States will comply

with article 55 to the extent it receives or submits requests for assistance pursuant

to article 54.

Question. What is likely to be on the agenda for the first Conference of States Parties? How is that agenda being formulated? What role is the United States playing

in shaping the agenda?

Answer. The agenda for the first Conference of States Parties will likely include

several topics for plenary debate that will help parties establish a future process for

promoting and reviewing implementation of the Convention and facilitating related

donor technical assistance. We expect that the Conference will seek to determine

how best to gather information on how countries are implementing the Convention

and how to best facilitate and integrate donor technical assistance. The Conference

is also mandated by U.N. General Assembly Resolution 58/4 of October 31, 2003 (the

resolution that formally adopted the Convention) to consider how the Convention

standards might be utilized to fight corruption within international organizations.

The Conference agenda may also include events that showcase international and regional anticorruption efforts and allow dialog with nongovernmental observers.

A draft agenda for the first Conference of States Parties is currently being developed by the U.N. Office on Drugs and Crime (UNODC) in Vienna, with the input

of various Convention parties and signatories. Any such draft agenda must be approved by the Conference at its opening session in December.

The United States is active in trying to shape the agenda and ensure that the

work of the Conference ultimately leads to wide implementation of the Convention

provisions and more effective international efforts to fight corruption. U.S. Government representatives have attended multiple informal meetings in the past 2

years—in Vienna and elsewhere—with various interested governments to help

shape an agenda that will further our goals mentioned above. We will continue to

work closely with UNODC and relevant governments on this issue.

LETTERS RECEIVED FOR THE RECORD

MAY 11, 2006.

Senator RICHARD G. LUGAR,

Hart Senate Office Building, Washington, DC.

Senator JOSEPH R. BIDEN, Jr.,

Russell Senate Office Building, Washington, DC.

DEAR SENATORS LUGAR AND BIDEN: We are writing on behalf of the undersigned

organizations to urge the Senate to ratify the United Nations Convention Against

Corruption before December 2006. The Convention, which entered into force on December 14, 2005, reflects a global consensus on the international legal system necessary to fight corruption. To date, more than 140 countries have signed the Convention, and more than 50 countries, including China, France, and the United Kingdom, have ratified it. Timely Senate ratification is necessary for the United States

to play a leadership role in moving implementation forward.

The Convention can be a critical tool in the global fight against corruption. It includes provisions to prevent and criminalize corruption and procedures for governments to recover assets that have been acquired illicitly by corrupt officials. It also

includes a broad range of measures that enhance international cooperation among

governments, including extradition and mutual legal assistance. As a leading prosecutor of transnational crime, the United States stands to benefit greatly from this

enhanced cooperation.

United States ratification of the Convention in accordance with the Administration’s October 27, 2005, transmittal package is non-controversial and has broad support. The transmittal package notes that no change in U.S. law is required. The

Convention’s universal prohibition on foreign bribery—the first effort of its kind

with truly global reach—has unique potential to reduce the competitive disadvantage faced by U.S. companies, which have long operated under more stringent rules

than their foreign competitors. It is also a crucial tool to improve rule of law, thus

64

promoting more effective economic development and a more stable environment in

countries around the world.

An effective monitoring process is critical to successful implementation of the Convention. Although the Convention provides for such a process, its specific contours

will be decided in December 2006, at the first Conference of States Parties. United

States leadership at that Conference is vital to ensure that an effective and transparent monitoring mechanism is put in place. As a global defender of due process

rights, it is also important that the United States participate actively in interpretation and application of the Convention around the world to ensure that those countries with less robust protections use it as a tool to prosecute corrupt actors, not

harass political or economic competition. The ability of the U.S. to influence these

discussions will be significantly diminished if it has not ratified the Convention before the Conference takes place.

Accordingly, we would appreciate your leadership in convening a hearing on the

Convention in the very near future. We are hopeful that ratification by the full Senate will quickly follow, and we will work with you to secure this objective. We look

forward to meeting with the Senate Foreign Relations Committee staff on May 15,

2006, to discuss this issue.

Respectfully,

NANCY BOSWELL,

President, Transparency International–USA.

WILLIAM A. REINSCH,

President, National Foreign Trade

Council.

JAKE COLVIN,

Director, USA*Engage.

DENNIS R. MARTENSON,

President, American Society of Civil

Engineers.

PETER M. ROBINSON,

President, U.S. Council for International Business.

ALEXANDRA WRAGE,

President The TRACE Institute.

AMERICAN BAR ASSOCIATION,

OFFICE OF THE SECRETARY,

Chicago, IL, September 1, 2005.

Re UN Convention Against Corruption.

Hon. RICHARD G. LUGAR,

Chairman, Committee on Foreign Relations,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: At the meeting of the House of Delegates of the American

Bar Association held August 8–9, 2005, the enclosed resolution was adopted upon

recommendation of the Section of International Law. Thus, this resolution now

states the official policy of the Association.

We are transmitting it for your information and whatever action you think appropriate. Please advise if you need any further information, have any questions or if

we can be of any assistance. Such inquiries should be directed to my Chicago office.

Sincerely yours,

ELLEN F. ROSENBLUM,

Secretary.

Enclosure.

ADOPTED BY THE HOUSE OF DELEGATES, AUGUST 8–9, 2005

RECOMMENDATION

Resolved, That the American Bar Association supports the prompt ratification by

the United States, and by other members of the United Nations of the United Nations Convention Against Corruption (UN Convention).

Further Resolved, That the American Bar Association urges that:

(1) such ratification be subject to minimal reservations, understandings and

declarations by the United States, but should include in the Senate’s resolution

65

of advice and consent a declaration that (i) the Convention, except for Articles

44 (Extradition) and 46 (Mutual Legal Assistance) is non-self-executing, (ii) that

no new legislation is necessary to implement the Convention, including Article

35 (Private Rights of Action), given that U.S. courts currently recognize private

remedies in certain circumstances for corruption-related actions, and that (iii)

in ratifying the Convention, the United States does not intend to broaden or enhance current U.S. law; and

(2) to the extent implementation is required in other countries, the United

States should urge other countries to implement the UN Convention in ways

consistent with recognized concepts of due process and fundamental rights, including the presumption of innocence.

Further Resolved, The American Bar Association supports the development of a

mechanism to monitor the implementation and enforcement of the UN Convention,

taking into account the monitoring efforts of other organizations such as the Organization for Economic Cooperation and Development, and taking such steps as may

be necessary or appropriate to promote efficiency in monitoring and avoid duplication of effort, while promoting the participation of civil society in the monitoring

process.

NATIONAL FOREIGN TRADE COUNCIL, INC.

Washington, DC, June 22, 2006.

Re June 21 hearing on the United Nations Convention Against Corruption.

Senator RICHARD G. LUGAR,

Chairman, Senate Foreign Relations Committee,

Hart Senate Office Building, Washington, DC.

DEAR SENATOR LUGAR: As a followup to the June 21 hearing of the Senate Foreign Relations Committee regarding the U.N. Convention Against Corruption, I

wanted to submit the following for the record regarding corruption in the global construction industry:

The American Society of Civil Engineers (ASCE) estimates that corrup- tion siphons off approximately 10 percent—or roughly $400 billion—of the

annual $4 trillion spent globally on the construction industry. Capturing

even 25 percent of that loss through the mechanisms provided under the

U.N. Convention Against Corruption would save money and redirect scarce

national resources to productive development around the world. This type

of cost savings from corruption is likely to benefit the least developed countries the most.

Thank you for holding this important hearing and for your continued attention

to the Convention.

Sincerely,

JAKE COLVIN,

Director, USA*Engage.

AMERICAN BAR ASSOCIATION,

Chicago, IL, May 11, 2006.

Hon. Richard G. Lugar,

Chairman, Committee on Foreign Relations,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: On behalf of the American Bar Association, I write to urge

the Senate to ratify the United Nations Convention Against Corruption. The Convention, which entered into force on December 14, 2005, reflects a global consensus

on the international legal system necessary to fight corruption. To date, over 50

countries, including China and the United Kingdom, have ratified the Convention.

The Convention can be a critically important tool in the global fight against corruption. It includes provisions to prevent and criminalize corruption and procedures

for governments to recover assets that have been acquired illicitly by corrupt officials. It also includes a broad range of measures that enhance international cooperation among governments, including extradition and mutual legal assistance. As a

leading prosecutor of transnational crime, the United States stands to benefit greatly from this enhanced cooperation.

U.S. ratification of the Convention is non-controversial and has broad support.

The Administration’s transmittal of October 27, 2005, notes that no change in U.S.

law is required. The Convention’s universal prohibition on foreign bribery can help

66

level the playing field for U.S. companies which have long operated under more

stringent rules than their foreign competitors. It is also a crucial tool for improving

the rule of law, thus promoting more effective economic development and a more

stable environment in countries around the world.

Prompt Senate ratification is also necessary for the United States to take a leadership role in moving forward with implementation. This is particularly true with

respect to creation of an effective monitoring process. Although the Convention provides for such a process, the specific contours of that process will be discussed in

November 2006 at the first Conference of States Parties. U.S. leadership at the Conference of States Parties is vital to ensuring that an effective and transparent monitoring mechanism is put in place. As a global defender of due process rights, it is

also important that the United States participate actively in interpretation and application of the Convention around the world to ensure that those countries with

less robust protections use it as a tool to prosecute the guilty, not harass political

or economic competition. The ability of the U.S. to influence these discussions will

be significantly diminished if it has not ratified the Convention before the Conference takes place.

For these reasons, we would appreciate your leadership in convening a hearing

on the Convention in the very near future. The ABA is hopeful that ratification by

the full Senate will quickly follow, and will be pleased to work with you to secure

this objective.

Sincerely,

MICHAEL S. GRECO,

President.

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