United States Department of State 10846

Bureau of Economic and Business Affairs

Released June 2001
iii

Contents

Executive Summary .......................................................................................................v

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

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

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

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

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

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

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

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

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

Bulgaria ................................................................................................................................... 23

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

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

Denmark .................................................................................................................................. 29

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

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

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

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

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

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

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

Japan ........................................................................................................................................ 46

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

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

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

The Netherlands ...................................................................................................................... 54

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

Poland ...................................................................................................................................... 58
iv

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

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

Sweden ................................................................................................................................... 65

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

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

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

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

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

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

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

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

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

Chapter 5: Future Negotiations to Strengthen the Convention ....................................... 87

Chapter 6: Expanding the Membership of the Convention ............................................ 92

Classified Annex (Transmitted Separately)

APPENDIXES

Appendix A: Senate Resolution of Advice and Consent of July 31, 1998...................... A-1

Appendix B: OECD Documents ................................................................................... B-1

OECD Convention on Combating Bribery of Foreign Public Officials

in International Business Transactions (Adopted November 21, 1997;

signed December 17, 1997)

OECD Commentaries on the Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions (Adopted by the Negotiating

Conference on November 21, 1997)

Revised Recommendation of the OECD Council on Combating Bribery in International

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

Recommendation of the OECD Council on the Tax Deductibility of Bribes to Foreign

Public Officials (Adopted by the OECD Council on April 11, 1996)

Appendix C: Websites Relevant to the Convention, Anticorruption, Ethics, Transparency, and

Corporate Compliance Programs ............................................................................... C-1
Executive Summary v

Executive Summary

The battle against international bribery and other

forms of public corruption remains a high priority for

the United States. As President George W. Bush stated

in his May 2001 message to the Second Global Forum

on Fighting Corruption, “The corruption of governmental institutions threatens our common interests in promoting political and economic stability, upholding core

democratic values, ending the reign of dictators, and creating a level playing field for lawful business activities.”

Bribery of foreign public officials by businesses is a

particularly damaging type of corruption. It penalizes

firms that play by the rules and compete on the merits of

their products and services. But the damage is not limited to billions of dollars of lost exports. Bribery of public

officials in commercial dealings undermines good governance, retards economic development and is especially

damaging to developing countries and those in transition to democratic market economies.

 The OECD Convention on Combating Bribery of

Foreign Public Officials in International Business Transactions represents a concerted effort by the world’s major trading nations to combat this pernicious practice.

Battling International Bribery 2001 is the Department

of State’s third of six annual reports on enforcement

and monitoring of the OECD Convention. The reports

are required by Paragraph (c)(1) of the July 31, 1998

Senate Resolution of Advice and Consent to ratification

of the Convention. The report is the result of close collaboration among a number of federal agencies, including the Departments of State, Commerce, Justice and

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

and Exchange Commission. The analysis reflects the

same key points and findings as those contained in the

Department of Commerce’s third annual report to the

Congress required under the International Anti-Bribery

and Fair Competition Act (IAFCA) of 1998.

The OECD Convention marks a major milestone in

U.S. efforts over more than two decades to have other

major trading nations join us in criminalizing the bribery of foreign public officials in international business

transactions. The Convention -- which has been signed

by all 30 OECD members1

 plus Argentina, Brazil, Bulgaria, and Chile -- entered into force for the United States

and 11 other signatories on February 15, 1999. As of

June 4, 2001, a total of 32 countries had deposited their

instruments of ratification with the OECD and 30 signatories had legislation which they represented as fully

implementing the Convention. We are hopeful that all

of the signatory countries will complete the process of

ratification and implementation of the Convention by the

end of 2001.

This third annual report continues to focus on the

progress that has been made by each signatory country

in ratifying and implementing the OECD Convention.

National legislation is critical for governments to fulfill

their commitments under the Convention to criminalize

the bribery of foreign public officials. The assessment

of national implementing legislation in Chapter 2 of this

report represents the views of the U.S. government agencies that prepared it. The assessment is based on information from a variety of sources, including the implementing legislation of the countries, publically available

evaluations of country legislation prepared by the OECD

Working Group on Bribery in International Business

Transactions, reporting of U.S. embassies, publications,

private sector comments, and other public sources. Our

views are not necessarily those of other governments.

In Chapters 3 through 6, the report addresses other related issues raised in the Senate Resolution. These include: the adequacy of enforcement; steps taken by signatories to implement the 1996 OECD Council recommendation to end the tax deductibility of bribes; an assessment of the need for strengthening the Convention;

and the desirability of expanding the membership of the

Convention to other countries.

1

 The member states of the OECD are: Australia, Austria,

Belgium, Canada, the Czech Republic, Denmark, Finland,

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

Japan, Korea, Luxembourg, Mexico, the Netherlands, New

Zealand, Norway, Poland, Portugal, the Slovak Republic,

Spain, Sweden, Switzerland, Turkey, the United Kingdom,

and the United States.
vi Battling International Bribery, 2001

Key Points

Meaningful progress has been made over the past

year in the implementation of the OECD Bribery Convention. Our first objective – ensuring that all signatories ratify the Bribery Convention and enact implementing legislation – has been mostly achieved. In less than

two and a half years, the Convention is nearing ratification by all signatories. As of June 4, 2001, thirty-two of

the thirty-four Convention signatories had deposited instruments of ratification with the OECD secretariat, and

thirty have laws on the books that make it a crime to

bribe foreign public officials in international business

transactions. These countries represent over three-quarters of global trade. Only Brazil, Chile, Ireland, and Turkey must still complete legislative action to bring the

Convention into force. The United States will continue

to press these countries to complete their legislative processes without delay.

The OECD process to monitor implementation

and enforcement of the Convention and the 1997 Revised Recommendation has proven to be rigorous. Thus

far, review of the implementing legislation of twentyeight countries, including the United States, has been

completed by the OECD Working Group on Bribery. The

effectiveness of this process has been demonstrated by

the willingness of several Parties to correct weaknesses

identified in their implementation and enforcement regimes after their legislation has undergone review. The

U.S. government assessments of the legislation of twentyseven foreign Parties, including the seven reviewed since

our last report (Argentina, France, Denmark, Italy, Luxembourg, the Netherlands, and Poland) are included in

Chapter 2 of this report.

We are concerned that some countries’ legislation may be inadequate to meet all their commitments

under the Convention, in particular that of France, Japan, and the United Kingdom. We will continue to note

our concerns in the Working Group meetings and also

when appropriate, in bilateral contacts with the other

governments.

Phase II of the monitoring process – which will

include on-site visits to study the enforcement structures

and practices of the Parties to the Convention – begins

this year with the review of Finland. This will be a critical phase in ensuring rigorous enforcement of the

Convention’s obligations. The U.S. government believes

that Phase II will be the true litmus test of a Party’s commitment to the Convention and its eventual effectiveness.

 We are not aware at this time of any prosecution by another Party to the Convention for bribery payments to foreign public officials. However, as with investigations in this country, the confidentiality of the procedures prior to prosecution could be one factor. Nonetheless, we are disturbed by continuing reports of alleged

bribery of foreign public officials by firms based in countries where the Convention is in force. In the coming

year we will redouble our efforts to encourage the relevant authorities in each Party to address all credible allegations of bribery and will seek to engage other signatory governments in coordinated action in situations

where bribes have been solicited by foreign public officials.

Another very important element in making the

Convention a success is raising public awareness of the

laws. This includes informing the relevant prosecutorial

authorities of the new tools they have to prosecute corruption, as well as counseling businesses and the general

public about the laws. While in important economies

such as Belgium, Italy, Japan, Spain, and the United Kingdom, there continues to be relatively little official activity to publicize the Convention, other Parties have undertaken useful initiatives including Australia, Canada,

the Czech Republic, Korea, and the Netherlands. The

United States will encourage other governments to increase public awareness.

The United States takes monitoring of the Convention very seriously and has committed significant resources to this endeavor, at times through supplemental

funding for the Working Group. A lack of adequate funding for the Bribery Working Group could jeopardize its

ability to carry out its mandate. The United States will

continue to press for adequate OECD funding for the

Working Group.

The Commerce, State, Justice, and Treasury departments continue to work together as a team to monitor implementation and enforcement of the Convention.

U.S. agencies have established a comprehensive monitoring process that includes active participation in the

OECD meetings on the Convention, bilateral discussions

with other governments on implementation and enforcement issues and careful tracking of bribery-related developments overseas.
Executive Summary vii

Further substantial progress has been achieved

in implementing the OECD Council recommendation

to eliminate any remaining tax deductibility for bribes to

foreign public officials, with only one country (New

Zealand) reporting that it has not yet completed action

necessary to disallow these deductions. The United

States, in cooperation with other OECD members, continues to provide technical assistance to the OECD’s Fiscal Affairs Committee. With significant assistance from

U.S. Treasury officials, within the past year the Committee on Fiscal Affairs has completed work on a Bribery Awareness Handbook designed to serve as a manual

for tax officials in signatory countries to assist them in

detecting bribes.

At the urging of the United States, OECD Ministers in their 2001 communique indicated that the OECD

will move ahead on two issues of particular importance:

bribery acts in relation to foreign political parties and

advantages promised or given to any person in anticipation of that person becoming a foreign public official.

These channels of bribery and corruption are covered in

the Foreign Corrupt Practices Act (FCPA), but not specifically covered in the Convention. After persistent encouragement by the U.S. government, and recognizing

that such a gap in Convention coverage would be potentially a serious problem, the Working Group agreed to

issue a questionnaire to signatories to explore this important issue.

The Working Group and the United States have

concluded that a targeted expansion of the Convention

membership to appropriate states could contribute to the

elimination of bribery of foreign public officials in international business transactions. Since our last report, one

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

Working Group observership or full accession to the

Convention in the coming years.

U.S. agencies will continue to take measures to

help U.S. business deal with the problem of international

bribery. U.S. officials will intensify their outreach to the

private sector to solicit its views on how best to implement the Convention and to share information on signatories’ laws and policies regarding bribery. The Department of State, in cooperation with the Commerce and

Justice Departments, published a new edition of its brochure, Fighting Global Corruption: Business Risk Management, and the Department of Commerce maintains

an Internet bribery hotline. The Department of Justice,

under its Foreign Corrupt Practices Act Opinion Procedure, will issue opinions regarding the antibribery provisions of the Foreign FCPA with respect to certain prospective business transactions.

Combating corruption is more than a responsibility of governments. Business associations and nongovernmental organizations, such as Transparency International, are playing an important role in helping the

U.S. government monitor implementation of the Convention and educating the public and the business community about the pernicious effects of corruption and how

to combat it.

A classified annex to this report (transmitted

separately) lists foreign firms on which credible information exists that they have been engaging in bribery of

foreign public officials since May 1994, when the OECD

approved a nonbinding recommendation to combat international bribery. From May 1, 2000 to April 30, 2001,

the period since our last report, we received allegations

that bribes had been offered to foreign government officials in some 61 international contracts worth about $37

billion. In these alleged incidents of bribery, U.S. firms

are believed to have lost at least nine of the contracts

worth approximately $4 billion. The annexes to future

reports will help to indicate the effectiveness of the Convention in leveling the playing field for American business.

The fight against corruption is a high priority for the

U.S. government. Secretary of State Colin L. Powell

has made this clear: “Since the enactment of the Foreign

Corrupt Practices Act of 1977, the United States has provided indispensable leadership so that business enterprise

can compete fairly in the global economy. Today, rule

of law and anticorruption initiatives are key foreign policy

elements that promote integrity and confidence in both

government institutions and in the global marketplace.”

In addition to the OECD Convention, the United

States has led or supported numerous other anticorruption initiatives. The United States hosted the first Global Forum on Fighting Corruption held in Washington,

D.C. in February 1999, and co-sponsored the Second

Global Forum held in the Netherlands in May 2001,

which was attended by more than 1600 senior-level government officials and private sector representatives from

143 countries. These meetings have emphasized the

importance of governments implementing principles and

practices to combat corruption in the public service.

During the past year, the United States has also ratified

the Inter-American Convention Against Corruption,
viii Battling International Bribery, 2001

signed the Criminal Law Convention on Corruption negotiated under the auspices of the Council of Europe,

and concurred in the December 2000 UN General Assembly resolution deciding to negotiate a global instrument against corruption.

Through the above and other global and regional initiatives and with the continued support of the private

sector and civil society, the United States seeks to capitalize on the growing international political will to combat corruption and to employ it to achieve concrete actions supporting our good governance goals.
Introduction 1

Introduction

Promoting Good Governance and

Fair Competition

International bribery in the twenty-first century is a

pernicious practice that affects us all. President Bush

clearly enunciated the problem in a message sent to the

May 2001 Second Global Forum on Fighting Corruption: “The corruption of governmental institutions threatens the common aspirations of all honest members of

the international community. It threatens our common

interests in promoting political and economic stability,

upholding core democratic values, ending the reign of

dictators, and creating a level playing field for lawful

business activities.” Bribery of foreign government officials by business people and companies unfairly distorts competition and penalizes companies that seek to

win contracts on the merits of their goods and services.

It also violates the accountability that companies have to

governments, their shareholders, and the general public.

Soliciting and/or accepting bribes undermines good

governance. “Good governance” is a concept that connotes the obligation of public officials to perform their

duties responsibly, efficiently, honestly, and transparently

for the public good. Bribery and other forms of corruption impair individual rights, especially among the poor

and disadvantaged, and corrode the effectiveness and legitimacy of political institutions.

The United States has been in the forefront of efforts

to combat bribery in international business transactions.

The American public became concerned in the 1970s

about reports that U.S. companies had spent millions of

dollars to bribe foreign officials in order to obtain contracts. Responding to this concern, the Congress passed

the Foreign Corrupt Practices Act (FCPA) of 1977. The

law established substantial penalties for persons and corporations making payments to foreign government officials, political parties, party officials, and candidates for

public office in order to obtain or retain business.

The FCPA has had a major impact on how U.S. companies conduct business overseas. However, in the absence of similar legal prohibitions by our key trading

partners, U.S. businesses were put at a significant disadvantage in international commerce. Their foreign competitors continued to pay bribes without fear of penalties

and, in many cases, even obtained tax deductions for the

bribes. We believe that this activity has resulted in billions of dollars in lost sales to U.S. exporters and harm
2 Battling International Bribery, 2001

to governments and societies, often in developing countries that are much in need of transparent and honest institutions and in receiving the true value of the goods

and services that they purchase.

 As a result, the United States has, consistent with

the provisions of the Omnibus Trade and Competitiveness Act of 1988, undertaken a long-term effort to convince the other leading industrial countries to join the

United States in criminalizing the bribery of foreign public officials in order to create a level playing field. Success was achieved in the Organization for Economic

Cooperation and Development (OECD) on November

21, 1997, when the United States and thirty-three other

nations adopted the text of the Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions. All signatories to the Convention also agreed to implement the 1996 OECD Council

recommendation on eliminating the tax deductibility of

bribes.

The Convention entered into force on February 15,

1999, following ratification by the United States and

eleven other countries. As of June 4, 2001, a total of 32

countries had deposited their instruments of ratification

with the OECD, and 30 signatories had legislation which

they represented as fully implementing the Convention.

The United States will continue to urge the remaining

signatory nations to complete the ratification and implementation processes as soon as possible. We are hopeful

that all of the signatory countries will complete the process of ratifying and implementing the Convention by

the end of 2001.

Major Provisions of the Convention

The Convention obligates the Parties to criminalize

bribery of foreign public officials, including officials of

public international organizations, in the conduct of international business. It is aimed at proscribing the activities of those who offer, promise, or pay a bribe. For this

reason the Convention is often characterized as a “supply side” agreement, as it seeks to affect the conduct of

companies in exporting nations. The Convention requires that the Parties, among other things:

• Apply “effective, proportionate, and dissuasive

criminal penalties” to those who bribe and provide

for the ability to seize or confiscate the bribe and

bribe proceeds (i.e., net profit) or property of similar

value, or to apply monetary sanctions of comparable

effect.

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

corporations) for bribery, where consistent with a

country’s legal system, or, alternatively, ensure that

legal persons are subject to effective, proportionate

and dissuasive noncriminal sanctions, including

monetary penalties.

• Make bribery of a foreign public official a predicate offense for purposes of money laundering legislation on the same terms as bribery of domestic

public officials.

• Take necessary measures regarding accounting

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

of bribing or hiding the bribery of foreign public officials.

• Provide mutual legal assistance to the fullest

extent possible under their respective laws for the

purpose of criminal investigations and proceedings

under the Convention and make bribery of foreign

public officials an extraditable offense.

The Convention tracks the FCPA closely in many

important respects. Unlike the FCPA, however, it does

not specifically cover bribes to political parties, party

officials, or candidates for public office. The United States

has urged signatories to strengthen the Convention by

including these individuals and organizations in its coverage.

Reporting and Monitoring Requirements

Monitoring the implementation and enforcement of

the Convention is the subject of this report. The U.S.

Senate gave its advice and consent to ratification of this

path-breaking international agreement in a Resolution

dated July 31, 1998 (copy at Appendix A). Among the

provisos of the Resolution is a requirement that the President submit a report on enforcement and monitoring of

the Convention to the Senate Foreign Relations Committee and the Speaker of the House on July 1, 1999, and

annually thereafter for five years. The President has delegated the responsibility for preparing this report to the

Secretary of State. The report is to address the following topics:

• The status of ratification by all signatory countries and U.S. efforts at encouraging ratification.

• A description of the domestic implementing legislation of each Party.

• An assessment of the measures taken by each

Party to enforce the Convention and on the effectiveness of the OECD monitoring process.

• An explanation of the laws enacted by each Party

to prohibit the tax deduction of bribes.

• A description of the future work of the Parties to

expand the definition of “foreign public official” and
Introduction 3

to assess other areas where the Convention could be

strengthened to decrease bribery and other corruption.

• A description of U.S. efforts to encourage other

non-OECD members to sign and ratify the Convention.

• A classified annex that lists foreign corporations

on which credible information exists indicating that

they are engaging in activities prohibited by the Convention.

The following chapters of this report deal in turn with

each of the above requirements. This year’s report analyzes the implementing legislation of seven additional

countries, which were not covered in the two previous

submissions: Argentina, Denmark, France, Italy, Luxembourg, the Netherlands, and Poland. The reviews of the

implementing legislation of the United States and 20 other

Parties to the Convention provided in the Department’s

previous reports are also included and updated as necessary.

In order to carry out U.S. obligations under the Convention, the Congress enacted the International Anti-Bribery and Fair Competition Act of 1998 (IAFCA). The

IAFCA contains a similar but not identical reporting requirement addressed to the Department of Commerce.

As a result, the Departments of State and Commerce have

worked together, in close coordination with the Justice

and Treasury Departments, the Office of the United States

Trade Representative, and the staff of the United States

Securities and Exchange Commission, to prepare the two

reports.

The U.S. Government and OECD Monitoring

Programs

The U.S. government has established a program to

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

trading partners around the world. This interagency effort includes regular contacts with the business community and nongovernmental organizations, dissemination

of information about the Convention and antibribery legislation over the Internet, and other initiatives to promote

international cooperation in combating these illicit and

harmful practices. Chapter Three provides more detailed

information on U.S. government monitoring.

U.S. officials also participate in the OECD process

for monitoring implementation of the Convention. The

OECD Working Group on Bribery in International Business Transactions is conducting a systematic review of

measures taken by signatory countries to carry out their

obligations under the Convention. Phase I of this review, examination of national implementing legislation

to assess whether it conforms to the requirements of the

Convention, is largely completed. In Phase II, scheduled to begin later in 2001, the Working Group will conduct on-site visits in the Parties to the Convention to assess steps that they are taking to enforce their antibribery

legislation and fulfill other obligations under the Convention.

The Phase I reviews of implementing legislation to

date indicate that many of the Parties have taken concrete steps to make bribery of foreign public officials

illegal under their domestic laws. We are concerned,

however, that some countries’ legislation may be inadequate to meet all of their obligations under the Convention. Chapter Two provides a detailed U.S. government

analysis of national implementing legislation of 27 foreign parties to the Convention and identifies specific areas of concern. We are also disturbed by continuing reports of alleged bribery of foreign public officials by firms

based in countries in which legislation implementing the

Convention is in force. The Phase II reviews of national

enforcement structures and practices will provide further opportunities for the United States to emphasize the

importance of making the Convention a truly effective

instrument in the battle against international bribery.

The OECD Bribery Working Group was given a

mandate, which has been renewed in successive ministerial communiques, to continue to examine five aspects

of international bribery that are not currently covered by

the Convention. These are:

• Bribery acts in relation to foreign political parties.

 • Advantages promised or given to any person in

anticipation of that person becoming a foreign public official.

 • Bribery of foreign public officials as a predicate

offense for money laundering legislation.

 • The role of foreign subsidiaries in bribery transactions.

 • The role of offshore centers in bribery transactions.

The first two of these aspects, namely coverage of

political parties and party officials and candidates for

public office, are areas that the United States would like

to see included in a possible future strengthening of the

Convention. In their May 2001 communique, OECD

ministers indicated that they expected progress toward

final action on all the above issues.
4 Battling International Bribery, 2001

The Battle Against Bribery - An Ongoing

Effort

The OECD Convention is an important element in

the U.S. government’s comprehensive strategy to combat international corruption. We have also sought in other

global and regional forums and in bilateral activities to

encourage and assist other countries to establish or improve their institutional capabilities to define and implement comprehensive national anticorruption regimes:

• The United States initiated and hosted the first

of a series of Global Forums on Fighting Corruption: Safeguarding Integrity of Justice and Security

Officials. The initial conference was held at Washington, D.C. in February 1999. The United States

also co-sponsored the Second Global Forum, held in

the Netherlands in May 2001, which was attended

by more than 1600 senior-level government officials

and private sector representatives from 143 countries.

A Third Global Forum is scheduled to be held in

Korea in 2003. These meetings have placed a strong

emphasis on defining and promoting implementation of comprehensive principles and practices to

combat corruption in public service, especially

among officials who uphold the rule of law. The

Second Global Forum’s Final Declaration stresses

the importance of monitoring mechanisms including efforts undertaken in the context of the OECD

Convention. The Final Declaration also encourages

the secretariats of the various regional monitoring

mechanisms “to seek more ways for effective cooperation.”

• The United States led a successful effort in 1999

to include a provision on official bribery in the Convention on Transnational Organized Crime. The provision obligates parties to that convention to establish as criminal offenses acts of corruption involving domestic public officials. The General Assembly in December 2000 approved a resolution that

decides to negotiate under UN auspices a global instrument against corruption. In his presentation at

the Second Global Forum, Attorney General John

Ashcroft welcomed this decision and indicated that

the United States looks forward to working within

the United Nations “to develop a meaningful global

instrument against corruption that efficiently adds

value to the current array of multilateral agreements

and mechanisms addressing corruption.”

• Last year the United States became a party to

the Inter-American Convention Against Corruption,

which was negotiated under the auspices of the Organization of American States (OAS) in 1996. With

the assistance of the United States, the States Parties

have recently agreed to establish a mechanism that

will promote implementation of the Inter-American

Convention.

• The United States has signed (but not yet ratified) the Criminal Law Convention on Corruption

negotiated under the auspices of the Council of Europe (COE) in 1999. We participate in the COE

mechanism created to monitor implementation of that

convention.

• The United States is supporting work in the

OECD Trade Committee that is seeking to address

the question of what practices or characteristics of a

trade regime may be susceptible to bribery and corruption.

• We are encouraging the application of the anticorruption principles adopted by the Global Coalition for Africa in 1999 and the work of the Asia Pacific Economic Cooperation (APEC) forum in promoting economic reforms that enhance good governance.

• Since 1998, the Heads of Government of the G8 have directed their Senior Experts on Transnational

Crime (the Lyon Group) to explore ways to combat

official corruption resulting from large cross-border

financial flows

• The U.S. Helsinki Commission has been instrumental in promoting a strong anticorruption initiative in the Organization for Security and Cooperation in Europe (OSCE). It has held hearings on U.S.

government policies and measures against corruption in the OSCE region and globally. At the request

of the Commission Chairman, the General Accounting Office will carry out this year a comprehensive

examination of the U.S. government response to international corruption problems.

• The Stability Pact, a compact for cooperation

among 40 countries (including the United States) and

major international organizations, which was created

to help foster stability in Southeast Europe, recently

established a program against corruption. The Stability Pact Anticorruption Initiative (SPAI) is currently being implemented by the participant countries in the region.

• The United States is encouraging anticorruption

and good governance initiatives in many different

public international organizations, including the

major international financial institutions such as the

World Bank, the International Monetary Fund and

the regional development banks in Asia, Africa and

the Americas. We encourage all international organizations to maintain high standards of ethics, trans-
Introduction 5

parency, and good business practices in both their

internal operations and the projects they administer.

• U.S. government agencies that implement assistance programs overseas are designing their programs

so that they target law enforcement, good governance,

public education, and other efforts to promote a corruption free society.

As the above summary makes clear, the United States

is actively engaged on many fronts in order to advance our anticorruption goals. President Bush

stressed U.S. dedication to this effort in his May 29,

2001 message sent to the Second Global Forum: “Increasing accountability and transparency in governance around the world is an important foreign policy

objective for my Administration. The United States

is committed to bringing renewed energy to the global anti-corruption agenda, and to increasing the effectiveness of the American policies and programs

that address this important issue.”

 By means of these annual reports and other contacts, the Bush Administration will keep the Senate

Foreign Relations Committee and the Speaker of the

House of Representatives informed of the progress

in the implementation of the OECD Convention and

of our broader anticorruption initiatives.
6 Battling International Bribery, 2001
Chapter 1: Ratification Status 7

Ratification Status

1

The OECD Convention on Combating Bribery of

Foreign Public Officials in International Business Transactions (“the Convention”) entered into force on February 15, 19991

 for twelve of the thirty-four signatories to

the Convention: Bulgaria, Canada, Finland, Germany,

Greece, Hungary, Iceland, Japan, Korea, Norway, the

United Kingdom, and the United States. In less than two

and a half years, the Convention has been ratified by

nearly all signatories—a remarkable achievement for a

multilateral instrument that requires Parties to criminalize

acts with trans-border consequences. As of June 4, 2001,

thirty-two countries had deposited an instrument of ratification with the Secretary General of the OECD. These

countries represent over three-quarters of global trade.

In addition to the twelve countries identified above,

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

implementing the Convention: Argentina, Australia, Austria, Belgium, the Czech Republic, Denmark, France,

Italy, Luxembourg, Mexico, the Netherlands, New

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

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

implemented the Convention under domestic law. Only

Ireland and New Zealand have not deposited their instruments of ratification with the OECD. (Table 1 provides summary information on all signatories regarding

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

into force of the Convention.)

Since our last report, nine additional countries have

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

OECD Working Group on Bribery and by the U.S. government: Argentina, France, Denmark, Italy, Luxembourg, the Netherlands, and Poland. The U.S. government assessments of these seven countries have been

included in Chapter 2 of this report. The OECD Working

Group on Bribery assessments can be viewed at http://

www.oecd.org/daf/nocorruption/report.htm and through

a web-link on the Commerce Department Trade Compliance Center web-site at http://www.mac.doc.gov/tcc.

New Zealand and Portugal adopted legislation after our

cut-off date of April 30, 2001, but before publication of

this report. It is anticipated that assessments of the implementing legislation of New Zealand, Portugal, and the

remaining signatories will be included in next year’s report.

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

has been notable progress in preparing implementing legislation and obtaining the necessary authorizations for

ratifying the Convention. Each of these countries is expected to complete this process by the end of 2001. The

following status report on their internal legislative pro-
8 Battling International Bribery, 2001

islation to make the bill’s provisions apply extraterritorially and to alter the elements of a defense. The bill was

approved by parliament and received royal assent on May

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

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

in late June 2001. It is expected that New Zealand’s implementing legislation will undergo review at the June 26-

28 Working Group plenary.

The Inland Revenue Department (IRD) is working

on separate legislation to end the tax deductibility of

bribes. That legislation will be introduced later in 2001.

Portugal

The National Assembly approved ratification by resolution number 32/2000 of December 2, 1999. Presidential decree number 19/2000 authorizing ratification was

issued on March 31, 2000. Ratification of the Convention became effective with its publication in the official

gazette on March 31, 2000, and the instrument of ratification was deposited with the OECD Secretariat on November 23, 2000.

On February 15, 2001, the Council of Ministers approved draft implementing legislation, and the National

Assembly passed the legislation unanimously on April

5, 2001. The legislation was finalized by the First Committee on April 26, 2001, enacted by the President and

entered into law upon publication in the official gazette

on June 4, 2001.

Turkey

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

on February 6, 2000. The instrument of ratification was

deposited with the OECD Secretariat on July 26, 2000.

An inter-ministerial committee has prepared draft implementing legislation, including amendments to the penal,

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

approved by the Ministry of Justice and the Prime Minister and was submitted to parliament on November 3,

2000, where it was forwarded to the Justice commission

for discussion.

cess is based on information obtained from U.S. embassies and reporting from the signatories themselves to the

OECD, which is publicly available at http://

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

Brazil

The bill to ratify the Convention was approved by

parliament on June 12, 2000 and was signed by the President on August 6, 2000. The instrument of ratification

was deposited with the OECD Secretariat on August 24,

2000.2 The Convention text was published in the Official Gazette of Brazil on November 30, 2000.

Draft implementing legislation was approved by the

President and submitted to Congress on February 20,

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

to the President for signature. The government expects

to complete this process by the end of 2001.

Chile

The Chamber of Deputies approved the draft bill to

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

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

approved in March 2001. The instrument of ratification

was deposited with the OECD Secretariat on April 18,

2001.

Chile currently has no legislative provisions

criminalizing bribery of foreign public officials. Studies

on the necessary amendments to national law are underway in the Presidential Secretariat General and other

government agencies.

Ireland

Legislation to ratify and implement the Convention,

entitled the Prevention of Corruption Bill 2000, was submitted to the Dail (the lower house of the Irish parliament) in January 2000. The “second stage reading” in

the Dail was completed on December 15, 2000. The bill

must now be reviewed and approved by the appropriate

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

vote in the Seanad (the upper house of the Irish parliament), and then be signed by the President. The government expects the process will be completed before

parliament’s summer 2001 recess. Legislation pending

in the Irish parliament can be viewed or tracked at:

www.irlgov.ie/oireachtas.

New Zealand

A bill to ratify and implement the Convention was

initially introduced to parliament in September 1999, but

consideration was delayed by changes in government.

On April 4, 2001, the government amended the draft leg-
Chapter 1: Ratification Status

9

Efforts to Encourage Implementation

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

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

ratify and implement the Convention in both public statements and direct contacts with foreign governments. The

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

as senior officials of these agencies, have used a variety

of opportunities to comment on the importance of the

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

have met with marked success. Since our last report,

eleven additional signatories have become Parties to the

Convention, among them important exporters such as

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

efforts to secure full implementation of the Convention

and will exercise equal vigor in encouraging Parties to

the Convention to faithfully and forcefully enforce the

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

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

of foreign public officials in international business. 1

Article 15 of the Convention states that the Convention shall enter into force on the sixtieth day following the date upon which five of the ten countries, which

have the ten largest shares of OECD exports and which

represent by themselves at least 60 percent of the combined total exports of those ten countries, have deposited their instruments of acceptance, approval, or ratification with the OECD Secretariat. For each signatory

depositing its instrument after such entry into force, the

Convention shall enter into force on the sixtieth day after deposit of its instrument. 2

Brazil, Chile, Portugal, Turkey, and Poland deposited instruments of ratification with the OECD Secretariat before domestic implementing legislation supporting the Convention was in place. Poland’s implementing

legislation entered into force before it became internationally bound under under the Convention, and

Portugal’s implementing legislation entered into force

on June 4, 2001. As of June 4, 2001, the other three remain without legislation specifically implementing the

Convention.
10 Battling International Bribery, 2001

Ratification Status of Signatory Countries to the OECD Anti-Bribery Convention

(As of June 4, 2001)

Instrument of Ratification Convention

Deposited With Enters

Signatory Country Ratified Legislation Approved OECD Secretariat1 Into Force

Totals:34 33 30 32 32

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ireland

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

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

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

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

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

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

New Zealand May 2, 2001 May 2, 2001

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

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

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

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

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

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

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

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

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

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

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

signatory deposits an instrument of ratification with the OECD.

2Date legislation came into effect.

3 Date partial implementing legislation came into effect.

4 The U.K. relied exclusively on existing legislation to implement the Convention and Argentina on legislation implementing the Inter-American Convention Against Corruption. (See Chapter 2 reviews).

5

 Deposited instrument of ratification with legislation still being drafted or before parliament.
Chapter 2: Review of National Implementing Legislation 11

Review of National

Implementing Legislation

2

The Departments of Commerce, State, and Justice

and the staff of the United States Securities and Exchange

Commission (SEC) have reviewed the implementing legislation of the following twenty-seven countries: Argentina, Australia, Austria, Belgium, Bulgaria, Canada, the

Czech Republic, Denmark, Finland, France, Germany,

Greece, Hungary, Japan, Korea, Mexico, Poland, Iceland,

Italy, Luxembourg, The Netherlands, Norway, the Slovak Republic, Spain, Sweden, Switzerland, and the

United Kingdom. Legislative reviews of twenty of these

countries appeared in last year’s report. These have been

revised and updated as necessary in this report. In addition to these reviews, the chapter also provides a summary of the 1998 amendments made to the Foreign Corrupt Practices Act (FCPA) to implement the OECD Convention.

The views contained in this chapter are those of the

U.S. government agencies and staff mentioned above and

not necessarily those of the Working Group on Bribery,

the body at the Organization for Economic Cooperation

and Development that is reviewing the implementing legislation of the signatories to the Convention in the OECD

monitoring process. Information for the reviews in this

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

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

publications, nongovernmental organizations, the OECD

Working Group Country Reports, and other public

sources. The Working Group Country Reports on the

implementing legislation reviewed to date are made public on the OECD website at http://www.oecd.org/daf/

nocorruption/index.htm, and are linked through the Department of Commerce’s website.

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

Convention. We looked first at whether the legislation

contains provisions implementing the basic statement of

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

obligates the country to criminalize the bribery of foreign public officials. We also looked closely at the definitions of the offeror and offeree of the bribe to ensure

that transactions within the scope of the Convention are

adequately covered, pursuant to Article 1 of the Convention. Article 1 requires each Party to criminalize the bribery of foreign public officials by “any person.” Article

1.4 defines “foreign public official” as: any person holding a legislative, administrative, or judicial office,

whether they are appointed or elected; any person exercising a public function; and any official or agent of a

public international organization. We then examined the

manner and extent to which the country will exercise its

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

We have paid special attention to the penalties im-
12 Battling International Bribery, 2001

posed for the offense of bribery of foreign public officials, which Article 3 of the Convention states must be

“effective, proportionate, and dissuasive.” Where possible, we have examined other issues, such as bribery as

a predicate offense to money laundering (Convention

Article 7), provisions on books and records (Convention

Article 8), mutual legal assistance and extradition (Convention Articles 9 and 10), and conspiracy, attempt, and

authorization (Convention Article 1.2).

Drawing from this methodology, each country review follows the same format:

• Basic statement of the offense.

• Jurisdictional principles.

• Coverage of payor/offeror.

• Coverage of payee/offeree.

• Penalties.

• Books and records provisions.

• Money laundering.

• Extradition/mutual legal assistance.

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

Analyzing a Party’s implementing legislation is a

complex undertaking that requires an understanding of

not only the Party’s new laws implementing the Convention but also of the existing body of legislation relevant to bribery and corruption. Convention implementation differs markedly among the Parties depending on

their individual legal systems. Some Parties enacted new

legislation, whereas others amended existing domestic

antibribery provisions of their laws. We have taken into

consideration throughout the review process that the

Convention seeks to ensure functional equivalence

among the measures taken to sanction bribery, without

requiring absolute uniformity or changes in fundamental principles of a Party’s legal system. (See paragraph 2

of the Commentaries on the Convention.) Nonetheless,

individual country implementation of some elements

(e.g., penalties, statute of limitations, etc.) diverges to

such a degree that the issue will be addressed by the

OECD Working Group on Bribery during its Phase II

review.

We are continuing to review information on relevant

legislation and to monitor the signatories’ implementation of the Convention, independently and within the

OECD Working Group on Bribery. Further analysis of

implementing legislation and related laws is required for

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

Convention’s standards for criminalizing the bribery of

foreign public officials. Equally important now that most

signatories are Parties to the Convention will be how

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

government agencies responsible for monitoring implementation of the Convention.

Concerns About Implementing Legislation

Based on information currently available, we remain

generally encouraged by the efforts of the twenty-seven

other Parties who have implemented the Convention.

However, for a number of countries, we have concerns

about how requirements have been addressed and, in

some cases, the absence of specific legislative provisions

to fulfill obligations under the Convention. Several countries, particularly France, Japan, and the United Kingdom have implementing or pre-existing legislation that

we believe falls short of the Convention’s requirements.

The concerns raised by the French legislation relate

mostly to enforcement issues and will merit close scrutiny during the Phase II monitoring process of the Convention. Japanese officials have informed the Working

Group on Bribery at the OECD that it has submitted legislation which they expect will be enacted shortly rectifying some of the deficiencies in its laws. The U.K., however, has not yet made public new draft implementing

legislation, nor has it indicated when such legislation

would be introduced to parliament. We have repeatedly

called upon Japan and the U.K. in particular, since they

are key exporters and influential OECD members, to act

quickly to bring their implementing legislation into conformity with the Convention.

The following concerns are especially noteworthy

and will require further examination during Phase II, the

enforcement stage of the monitoring process of the Convention:

• Deficiencies in France’s Implementation: The basic statement of the offense in the French implementing legislation does not explicitly criminalize the

“giving” of bribes as required by the wording of Article 1, paragraph 1 of the Convention, which reads

“to offer, promise or give any undue advantage”. The

absence of the word “giving” in the French legislation raises the potential that the French law applies

only to the offer itself and that payments extending

indefinitely into the future based upon an offer made

before the effective date of the French legislation

would not be criminalized. In addition, the French

legislation appears to require that prosecutions of

French nationals for extraterritorial bribery of a foreign public official must be preceded by a complaint

from a “State victim,” e.g., a representative of the
Chapter 2: Review of National Implementing Legislation 13

State whose official was bribed, which is in our view

extremely unlikely and has the potential of further

reducing the possibility of French prosecutions over

its own nationals. (We note that Luxembourg’s implementing legislation, which was based on the French

model, did not include such a condition for the prosecution of its nationals under its bribery law. In addition, Luxembourg’s basic statement of the offense,

which is otherwise very similar to the French version, includes the word “giving.”) Finally, France

implemented the Convention in conjunction with

various EU anticorruption instruments. We are concerned that, in several circumstances, France affords

more rigorous and comprehensive treatment of bribery of officials of EU states than it does of officials

of non-EU states. For example, France apparently

eliminated its requirement of dual criminality with

respect to violations of EU conventions by nonFrench nationals who seek refuge in France but did

not do so with respect to violations of laws implementing the OECD Convention. In addition, France

permits the victim of a bribery scheme, e.g., a competitor, to initiate a public prosecution for bribery of

French and EU officials, but not for bribery of nonEU officials. Third, France permits only the Paris

Public Prosecutor and examining magistrate to investigate and bring prosecutions under the law implementing the OECD Convention, whereas domestic

and EU corruption may be investigated and prosecuted by prosecutors and magistrates throughout the

country.

• Deficiencies in Japan’s Implementation: Japan’s

implementing legislation raises several issues. For

example, the Japanese legislation contains a “main

office” exception, which provides that the legislation will not apply where the person who pays a bribe

to a foreign public official is employed by a company whose “main office” is in the corrupt foreign

official’s country. Thus, a Japanese national employed by a foreign company may not be prosecuted

for the bribery of an official of that company’s home

country even if the bribe is offered or paid in Japan.

We believe that this exception is a loophole in the

Japanese implementing legislation. Also, we believe

that the maximum fine of $2.5 million for legal persons is not “effective, proportionate, and dissuasive,”

given the serious questions concerning its ability to

confiscate the proceeds of the bribery. While we are

encouraged that Japan has now taken steps to amend

its implementing legislation to eliminate the “main

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

to correct all defects in its legislation, now almost

two years since its legislation was found to be inadequate by the Bribery Working Group to fully implement the Convention.

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

United Kingdom, existing corruption law does not

explicitly address bribery of foreign public officials,

and its adequacy for implementing the requirements

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

legal commentators, certain. The U.K. Government

has recognized the need for new legislation but has

not taken steps to introduce and pass such legislation in parliament. It is now almost two years since

the U.K. legislation was reviewed by the Bribery

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

The inaction by the U.K. is disappointing.

• Nationality Jurisdiction: Canada, the U.K., and Japan have declined to extend nationality jurisdiction

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

provide for nationality jurisdiction over other offenses. Further, some countries, including, Austria,

Belgium, Finland, and France, while asserting nationality jurisdiction, make it contingent upon the

principles of dual criminality or reciprocity, thus requiring that the laws of the country whose official is

bribed or a third country where the bribe is paid also

prohibit bribery of foreign officials. These requirements could limit the ability of these Parties to prosecute bribery of foreign officials in countries where

such behavior is most likely to occur.

•Liability of Legal Persons: Many countries, including Argentina, Austria, Bulgaria, the Czech Republic, Hungary, Luxembourg, the Slovak Republic,

Spain, and Switzerland, have not provided for effective, proportionate and dissuasive criminal or noncriminal sanctions for legal persons. Argentina, Austria, Bulgaria, the Czech Republic, Hungary, Luxembourg, the Slovak Republic, and Switzerland have

indicated that they are in the process of amending

their legislation in this respect.

•Inadequate Penalties: Several countries, including

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

Slovak Republic, and Spain have penalties that may

fall short of the Convention requirement that they be

“effective, proportionate and dissuasive.”

•Differing Standards for Bribery of EU Officials: A

number of European Union member countries, including France, implemented the Convention in conjunction with various EU anticorruption instruments.
14 Battling International Bribery, 2001

The implementing legislation of some of these countries contains several definitions of the term “foreign public official”, or different jurisdictional requirements, depending on whether the foreign official is an EU official. We have concerns that this may

lead to different penalties or uneven application of a

country’s jurisdiction over bribes to EU officials visa-vis bribes to other foreign public officials.

•Limited Statutes of Limitations: Several countries,

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

Slovak Republic have statutes of limitations periods

that are three years or less. We are concerned that

such short statutes of limitations may not fulfill the

Convention requirement that statutes of limitations

be sufficiently long so as to provide an adequate period of time for investigation and prosecution. However, Hungary, Norway, and the Slovak Republic

have indicated that they are taking steps to address

this deficiency in their respective laws.

•Definition of Foreign Public Official: In some countries, such as Mexico, the implementing legislation

provides for a definition of foreign public official

based on “applicable law.” This is a concern as it

could mean that the definition would depend on the

law of the foreign country where the offense occurred, instead of the autonomous definition in the

Convention.

•Inappropriate Defenses: Several Eastern European

countries, such as the Czech Republic, the Slovak

Republic, and Bulgaria have included a defense in

their implementing legislation that exempts an individual from prosecution or the imposition of sanctions if the bribe is solicited, the individual pays or

agrees to pay the bribe and thereafter the individual

voluntarily and immediately reports the bribe or

promise to pay a bribe to the authorities. Similarly,

Italy has a possible defense under its law, called

“concussione” (coercion), which may also excuse a

briber where the official induced the bribe. Although

there may be a rationale for permitting such a defense for domestic acts of bribery, the United States

believes this defense is inappropriate for instances

of transnational bribery and may constitute a loophole.

Many of the countries reviewed are considering—or

are already in the process of amending—their implementing legislation to address concerns raised in the OECD

Working Group monitoring process, including Argentina,

Austria, Greece, the Czech Republic, Japan, Korea, Luxembourg, Norway, the Slovak Republic, Switzerland and

the U.K. Our analysis has focused primarily on existing

legislation at the time of this writing, but we will monitor the progress of proposed amendments and report on

any new legislation in subsequent reports. As we continue our analysis of implementing legislation and more

information becomes available in the enforcement stage,

we will be in a better position to assess the overall conformity of Parties’ laws with the Convention. The analysis will be useful for our participation in the Working

Group and our dialogue with signatories on promoting

effective implementation of the Convention.

Summary of Amendments to the FCPA

Through the FCPA, the United States declared its

policy that American companies and companies traded

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

for foreign contracts and should act in accordance with

the U.S. policy of encouraging the development of democratic institutions and honest, transparent business practices. Since 1977, the FCPA has required issuers and U.S.

nationals and companies to refrain from offering, promising, authorizing, or making an unlawful payment to

public officials, political parties, party officials, or candidates for public office, directly or through others, for

the purpose of causing that person to make a decision or

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

his influence, for the purpose of obtaining or retaining

business.

The International Anti-Bribery and Fair Competition

Act of 1998 (IAFCA) amended the FCPA to implement

the OECD Convention. First, the FCPA formally

criminalized payments made to influence any decision

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

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

IAFCA amended the FCPA to include payments made to

secure “any improper advantage,” the language used in

Article 1(1) of the OECD Convention.

Second, the OECD Convention calls on Parties to

cover “any person.” The FCPA prior to the passage of

the IAFCA covered only issuers with securities registered under the 1934 Securities Exchange Act and “domestic concerns.” The IAFCA expanded the FCPA’s coverage to include all foreign persons who commit an act

in furtherance of the offer, promise to pay, payment, or

authorization of the offer, promise, or payment of a foreign bribe while in the United States.

Third, the OECD Convention includes officials of

public international organizations within the definition

of “public official.” Accordingly, the IAFCA similarly

expanded the FCPA’s definition of public officials to include officials of such organizations. Public international
Chapter 2: Review of National Implementing Legislation 15

organizations are defined by reference to those organizations designated by Executive Order pursuant to the

International Organizations Immunities Act (22 U.S.C. ‘

288), or otherwise so designated by the President by

Executive Order for the purpose of the FCPA.

Fourth, the OECD Convention calls on Parties to

assert nationality jurisdiction when consistent with national legal and constitutional principles. Accordingly,

the IAFCA amended the FCPA to provide for jurisdiction over the acts of U.S. businesses and nationals in furtherance of unlawful payments that take place wholly

outside the United States.

Fifth and finally, the IAFCA amended the FCPA to

eliminate the disparity in penalties applicable to U.S.

nationals and foreign nationals employed by or acting as

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

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

companies were subject only to civil penalties. The

IAFCA eliminated this restriction and subjected all employees or agents of U.S. businesses to both civil and

criminal penalties.

One issue that has arisen with respect to the United

States’ implementation of the Convention is the existing

disparity between the maximum term of imprisonment

under the FCPA (five years) and that under the domestic

corruption statute (fifteen years). (See 18 U.S.C. ‘ 201.)

Article 3(1) of the Convention requires that each Party

provide for a range of penalties for foreign bribery comparable to those provided for bribery of its own officials.

The interested U.S. government agencies are considering whether to support an amendment to the FCPA to

conform the penalties for domestic and foreign bribery

offences.

The following summary of foreign legislation should

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

legislation by persons contemplating business activities

relevant to these provisions.

Argentina

Argentina signed the Convention on December 17,

1997 and deposited its instrument of ratification with the

OECD on February 8, 2001. The Argentine implementing legislation, entitled the Statute on Ethics in the Exercise of Public Office (Law No. 25.188), was enacted on

November 1, 1999 and entered into force on November

10, 1999. This legislation amended the Argentine Penal

Code to implement the standards of the Inter-American

Convention Against Corruption (OAS Convention). According to Argentine officials, draft legislation to conform Argentine law to the requirements of the OECD

Convention is being prepared for submission to Congress

by July 2001.

Our main concern with the existing Argentine law is

that it does not provide for liability of legal persons in

the case of bribery of foreign public officials. The proposed bill to implement the OECD Convention includes

provisions that may address deficiencies in the Argentine legislation, but it is not final and has not been submitted to the Argentine Congress. Therefore, this review

only addresses the enacted provisions amending the Penal Code to implement the OAS Convention. We will

continue to monitor the status of the draft legislation and

provide further analysis in next year’s report.

Basic Statement of the Offense

The basic statement of the offense of bribery under

the Convention is contained in Article 258 bis of the Argentine Penal Code:

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

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

object of pecuniary value, or other benefits as gifts,

favors, promises or advantages in order that the said

official acts or refrains from acting in the exercise of

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

According to Argentine authorities, intent is required

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

that a “gift” may not necessarily constitute a bribe; factors such as value and the effect on the public official

will be assessed to determine the status of the gift.

The basic statement of the offense does not cover

acts or omissions of the public official not within her

authorized competence, whereas the Convention requires

that bribery to a foreign public official for any official

act “in relation to the performance of public duties” be

covered, “whether or not within the official’s authorized

competence.” (See Convention Articles 1.1 and 1.4(c)

and Commentary 19.) Argentine officials have explained

that this deficiency would be addressed in the draft legislation.

Jurisdictional Principles

Argentina generally practices territorial jurisdiction.

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

partially in Argentina or areas subject to its jurisdiction,

or relating to offenses whose effects occur in Argentina

or areas subject to its jurisdiction. Any actions, e.g., a
16 Battling International Bribery, 2001

phone call or e-mail, may trigger Argentine territorial

jurisdiction. “Effects” on Argentine territory may include

undue benefits or contracts obtained in exchange for the

bribe.

The Argentine Penal Code contains no provisions on

nationality jurisdiction, although Argentina will assert

nationality jurisdiction pursuant to Article 1.2 over offenses committed abroad by “agents or employees of

Argentine authorities performing their duties,” including public agencies and enterprises. Argentina establishes

nationality jurisdiction through various treaties, but those

treaties do not apply to Argentine nationals who commit

bribery of a foreign public official abroad. Although the

Convention does not require nationality jurisdiction, it

does encourage consideration thereof where other offenses under a country’s laws can be reached through

such jurisdiction. (See Commentary note 26.)

Coverage of Payor/Offeror

Article 258 bis covers bribery by “whoever,” but this

includes only natural persons, not legal persons. Argentine officials have stated that proposed changes to the

Argentine Penal Code, to be presented to Congress by

July 2001, will introduce corporate criminal liability for

bribery offenses. As Argentine law does not at this time

cover legal persons, Argentina has not met its obligations under Convention Articles 2 and 3.2.

Coverage of Payee/Offeree

Article 258 bis covers bribes to a “public official from

another State.” There is a definition contained in the Argentine Penal Code for “public official,” but that definition only applies to domestic bribery offenses. Argentine authorities have stated its courts may refer to the

definition in the Convention as well as the Commentaries to ensure that “foreign public official” is properly

defined. However, there is some uncertainty as to the

legislation’s coverage in practice, especially in light of

other Conventions to which Argentina is a party that have

different definitions of the same term. Additionally, Article 258 bis does not cover officials from international

organizations as required by the OECD Convention.

Penalties

Article 258 of the Argentine Penal Code provides

that individuals who commit bribery of foreign public

officials are subject to being penalized by one to six years

of “reclusion” and can no longer enjoy the right to hold a

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

found in Penal Code Articles 258-259. One minor difference is that the aggravated bribery offenses for domestic officials, e.g., bribery of judges or where a public

official is the offender, are punishable by imprisonment,

or “prison” for a term of 3-10 years. Argentine officials

have explained that the penalty for bribery of foreign

public officials, “reclusion,” is stricter than the penalty

of national bribery offenses, “imprisonment,” in that a

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

fine of 90,000 Argentine pesos (approx. U.S.$90,000)

may also be imposed for both domestic and foreign bribery offenses with an “aim of monetary gain.”

The bribe may be forfeited upon conviction pursuant to Article 23 of the Argentine Penal Code. If forfeiture is not possible, then Article 22 states that a fine of

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

Seizure of both the bribe and bribe proceeds is possible

under Article 231 of the Argentine Code of Criminal Procedure.

The Argentine legislation contains no criminal or administrative penalties for legal persons for the offense of

bribing a foreign public official, contrary to the requirements of Convention Articles 2 and 3.2.

According to Articles 62 and 258 bis of the Argentine Penal Code, the statute of limitations period for bribery of foreign public officials is six years, and begins to

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

date when the offer, promise or giving of the bribe took

place). The statute of limitations can be suspended or

interrupted pursuant to Article 67.

Books and Records Provisions

According to the Argentine government, the Law of

Corporations No. 19.550, Statute of Financial Entities

Law No. 21.526, National Securities Commission Law

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

generally cover the types of accounting offenses required

under the Convention. Articles 43-55, 51, and 54 of the

Commerce Code provide that “traders” must report their

commercial transactions and keep a book of original entries, an inventory, and balance sheet that reflects the

accurate financial situation of the company. The Charter

of the General Inspectorate of Companies, Article 12,

gives that body the authority to impose penalties on individuals and entities, including for omissions and falsifications under the books and records provisions of the

Convention. Furthermore, Article 300, Section 3 of the

Argentine Penal Code penalizes with a prison term of

six months to two years certain individuals for publishing, certifying, or authorizing a false or incomplete in-
Chapter 2: Review of National Implementing Legislation 17

ventory, balance, or profit and loss account. According

to Argentine authorities, legal persons are generally subject to auditing requirements.

Money Laundering

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

amended by Law No. 25.246 on Money Laundering, include bribery of domestic and foreign public officials as

predicate offenses for the application of the money-laundering legislation, including the concealment of benefits

from the crimes, and irrespective of where the underlying offense occurred. The money-laundering legislation

does not apply to self-laundering.

Extradition/Mutual Legal Assistance

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

absent another relevant treaty. For extradition, dual criminality is required (imprisonment of at least one year under both the Argentine and requesting state’s laws). Argentina will extradite its nationals only with their consent; otherwise, the case may be tried in Argentina.

Extradition by the United States and Argentina is governed by a 1972 bilateral treaty (entered into force in

1972).

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

applicable treaty. Argentina does not require a minimum

prison sentence or fine in order to grant mutual legal assistance. Mutual legal assistance between the United

States and Argentina is governed by a 1990 bilateral treaty

(entered into force in 1993). Bank secrecy cannot be invoked as grounds to refuse mutual legal assistance.

Complicity, Attempt, Conspiracy

Argentine Penal Code Articles 45 and 46 cover the

offense of complicity. Article 45 provides that persons

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

could not be committed, and directly abet another to commit a criminal act, will all be punished by the same penalty as the perpetrator. Penal Code Article 46 covers incitement, aiding and abetting, direct or indirect co-operation, and authorization. It provides that someone who

cooperates in any form in the commission of a criminal

act and who gives assistance by carrying out a preceded

promise, whether or not essential, will be punished by

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

that accomplices may be punished whether or not the

perpetrator is convicted.

Attempt is defined in the Argentine Penal Code under Articles 42-44. If the commission of the offense is

not concluded because of circumstances beyond the

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

43, if an offender “voluntarily desists from performing a

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

from liability.

Conspiracy is apparently not punishable under Argentine law. Argentine Penal Code Article 210 provides

that whoever takes part in a group of three or more people

having the purpose of committing an offense will be liable for “belonging” to the group. A member of such an

association would be subject to a prison sentence of 3-

10 years, whereas the “head” would be subject to at least

5 years.

Australia

Australia signed the Convention on December 7,

1998, and deposited its instrument of ratification with

the OECD Secretariat on October 18, 1999. Australia has

implemented the Convention through the Criminal Code

Amendment (Bribery of Foreign Public Officials) of 1999

to the Criminal Code Act of 1995. The amendment was

enacted on June 17, 1999, and entered into force on December 18, 1999. The following analysis is based on the

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

embassy in Canberra.

Basic Statement of the Offense

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

Foreign Public Official,” provides that a person is guilty

of an offense if:

(a) the person: (i) provides a benefit to another person; or (ii) causes a benefit to be provided to another

person; or (iii) offers to provide, or promises to provide, a benefit to another person; or (iv) causes an

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

the provision of a benefit, to be made to another person; and

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

person; and

(c) the first-mentioned person does so with the intention of influencing a foreign public official (who

may be the other person) in the exercise of the

official’s duties as a foreign public official in order

to: (i) obtain or retain business; or (ii) obtain or retain a business advantage that is not legitimately due

to the recipient, or intended recipient, of the business advantage (who may be the first-mentioned per-
18 Battling International Bribery, 2001

son).

Under Section 70.2(2), in determining whether a benefit or a business advantage is “not legitimately due,”

the following are to be disregarded:

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

be customary, or perceived to be customary, in the

situation;

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

(c) any official tolerance of the benefit/business advantage.

The amendments contain exceptions for payments

that are lawful in the foreign public official’s country

(Section 70.3) and for facilitation payments made “for

the sole or dominant purpose of expediting or securing

the performance of a routine government action of a minor nature.” (Section 70.4).

Jurisdictional Principles

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

person who commits bribery of a foreign public official

wholly or partly in Australian territory, or wholly or partly

on board an Australian aircraft or ship. Nationality jurisdiction is established under Section 70.5(1)(b), which

covers acts of bribery of foreign public officials conducted wholly outside Australia by an Australian national,

an Australian resident (subject to the Attorney General’s

consent), or “body corporate” incorporated under Australian law.

We understand that there is no applicable statute of

limitations for prosecutions of bribery of a foreign public official.

Coverage of Payor/Offeror

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

person.” Under Australian law, “person” refers to natural persons as well as “bodies corporate.” We understand

that the latter refers to legal persons generally. Under

Section 12.3(2) of the Criminal Code, bodies corporate

may be held criminally liable where a board of directors

carries out or authorizes the conduct; where a “high managerial agent” does so; or where a “corporate culture”

exists that permitted or led to the conduct.

Coverage of Payee/Offeree

Under Section 70.1 of the Criminal Code, “foreign

public official” is broadly defined to include employees

or officials of, or persons who work under contract for

or are otherwise in the service of, a foreign government

body (or subdivision thereof), including members of legislatures; employees of, or persons who work under contract for or are otherwise in the service of, a public international organization; and authorized intermediaries of

such persons. For this purpose, “foreign government

body” includes a “foreign public enterprise,” which is

defined to include instances in which the government

exercises de jure or de facto control over the enterprise,

or in which the enterprise enjoys special legal rights,

benefits or privileges because of its relationship to the

government.

Penalties

The Criminal Code provides that natural persons who

are convicted of bribing a foreign public official are subject to a fine of A$66,000 (approx. U.S.$38,000), imprisonment for a maximum of ten years, or both. Bodies

corporate are subject to a fine of A$330,000 (approx.

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

in the Criminal Code for bribery of domestic public officials. However, the Criminal Code was amended to increase the penalties for domestic bribery to those imposed on bribery of foreign public officials.

Under Section 19 of the Proceeds of Crime Act 1987,

courts may order the forfeiture of “tainted property,”

defined as “property used in, or in connection with, the

commission of the offense,” or “proceeds of the offense.”

Books and Records Provisions

Companies are required, under Section 298 of the

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

correctly record and explain their transactions and financial position and performance; and (b) would enable true

and fair financial statements to be prepared and audited.”

Violations of Section 298 are punishable by a criminal

fine of up to A$12,500 (approx. U.S. $6,300). Under

Section 296 of the Corporations Law, annual financial

reports (required of most companies) must be consistent

with the Australian accounting standards. Failure to comply with those standards can result in civil penalties for

company directors. Section 310 of the Corporations Law

requires that companies furnish external audit reports to

the Australian Securities and Investment Commission.

Money Laundering

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

money-laundering provisions in the Proceeds of Crime

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

transactions involving the proceeds of crime, where the

person knows or reasonably should know that the money

or other property is derived from some form of unlawful

activity.
Chapter 2: Review of National Implementing Legislation 19

Extradition/Mutual Legal Assistance

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

amended in 1990, provides for extradition for offenses

that are punishable under the laws of both parties by deprivation of liberty for a maximum period of more than

one year. Under the authority of the Extradition Act of

1988, Australia may extradite persons on the basis of

bilateral extradition treaties, multilateral treaties with

extradition provisions, or bilateral arrangements or understandings based on reciprocity. Accordingly, we understand that Australia is currently able to extradite persons to all of the signatories of the Convention except

Bulgaria. Australia generally does not refuse extradition

on the grounds that an individual is an Australian national.

A bilateral mutual legal assistance treaty between the

United States and Australia entered into force in 1999.

Legal assistance can also be provided, in the absence of

a treaty, on the basis of reciprocity under the Mutual

Assistance in Criminal Matters Act 1987.

Complicity, Attempt, Conspiracy

Section 11.1(1) of the Criminal Code pertains to aiding, abetting, counseling, and procuring the commission

of a bribery of a foreign public official, as well as an

attempt to commit that offense. Conspiracy to bribe a

foreign public official is covered under Section 11.5(1)

of the Criminal Code.

Austria

Austria signed the Convention on December 17,

1997. The Austrian parliament passed legislation amending the Austrian Penal Code in order to implement and

ratify the Convention on July 17, 1998. The domestic

legislation implementing the Convention became effective on October 1, 1998. Austria deposited its instrument

of ratification with the OECD on May 20, 1999. The

Austrian legislation entered into force on July 23, 1999.

This analysis is based on those amendments as well as

information provided by the U.S. embassy in Vienna.

The Austrian legislation raises a number of concerns.

At present, it contains no criminal responsibility for legal persons, nor does it provide for sufficient comparable administrative or civil sanctions. The punishment

for natural persons is limited to imprisonment of only

two years, and there is no provision of fines for natural

persons. We also are concerned that Austria may assert

nationality jurisdiction only under the condition of dual

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

the country where it was committed, particularly in the

case where an Austrian national bribes a foreign public

official in a third country.

Basic Statement of the Offense

The basic statement of the offense is contained in

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

Whoever offers, promises, or grants a benefit for the

principal or a third person to a foreign official for

the commission or omission of an official act or a

legal transaction in violation of his duties in order to

gain or retain an order or other unfair advantage in

international trade, shall be punished by imprisonment of up to two years.

Jurisdictional Principles

Austria exercises both territorial and nationality jurisdiction. Under Sections 62, 63, and 67 of the Austrian

Penal Code, Austria may exercise jurisdiction over all

offenses committed in Austria or on an Austrian aircraft

or vessel, irrespective of location. The territoriality principle is broadly interpreted ( e.g., even a phone call from

Austria in furtherance of the bribe transaction would suffice). However, in order for nationality jurisdiction to

apply, Section 65 of the Austrian Penal Code provides

that the offense must also be punishable in the country

where it has been committed. Austria will exert jurisdiction over non-nationals where the offender was arrested

in Austria and cannot be extradited (again, the offense

must be punishable in the country where it has been committed).

Coverage of Payor/Offeror

Section 307 of the Austrian Penal Code, cited above,

covers bribes made by “whoever.” This encompasses only

natural persons. We understand that Austria plans on

implementing the Second Protocol to the EU Convention on the Protection of the Financial Interests of the

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

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

Coverage of Payee/Offeree

Foreign public officials are defined in Section 74 (4c)

of the Austrian Penal Code as: any person who holds an

office in the legislature, administration, or judiciary of

another state, who is fulfilling a public mission for another state or authority or a public entity of another state,

or who is an official or representative of an international

organization.
20 Battling International Bribery, 2001

Penalties

Section 307 of the Austrian Penal Code provides a

maximum term of imprisonment of two years for the

payor/offeror, the same penalty imposed for the bribery

of domestic officials. As stated above, legal persons are

not covered in the amendments to the Penal Code. However, Austrian Penal Code Section 20 does provide for

confiscation of illegal gains, and there are also some applicable administrative penalties applicable to legal persons.

Austria will confiscate criminal proceeds pursuant

to Penal Code Section 20, paragraph 4, although there

are several exceptions under Section 20a paragraphs 1

and 2, i.e., where the enriched person has satisfied or has

contractually bound itself to satisfy civil law claims in

connection with the offense, or has been sentenced, or if

the gains are removed by other legal measures. Also,

confiscation is apparently not permitted if the gains are

less than 300,000 Austrian shillings (approx. U.S.

$18,450), the gains are disproportionate to the cost of

the proceedings, or it would constitute “inappropriate

hardship.”

Austria provides for administrative liability for legal persons. Under Section 58, paragraph 1 of the Federal Law on Public Procurement, a legal person may be

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

conduct of business, even absent the initiation of criminal proceedings or a conviction. Section 123 of the Federal Law on Public Procurement apparently also allows

the contracts already awarded to be rescinded where it

was obtained through an illegal act of a representative of

a legal person. Under Section 13 of the Austrian Business Law of 1994, legal persons whose business conduct

was significantly influenced by the conduct of the convicted natural person may be excluded from the exercise

of business if the natural person has been sentenced for

the offense of bribery to a prison term of more than three

months or a fine.

Section 57 of the Austrian Penal Code provides that

bribery prosecutions cannot be brought if not initiated

within five years after the commission of the offense.

Books and Records Provisions

Section 189, paragraph 1 of the Austrian Code of

Commercial Law requires merchants to keep books and

records in accordance with correct accounting principles.

Section 190, paragraph 2 provides that all entries “must

be complete, accurate, up-to-date, and orderly.” Section

268 provides that annual financial statements and company reports must be examined by an auditor. The general accounting provisions apply to all persons engaged

in commercial activities, excluding small merchants.

Also, certain small corporations are exempt from the

obligatory annual audit. Under Section 122 of the Federal Law of Private Companies, the penalty for violation

of the accounting provisions is imprisonment for up to

two years or a fine. This applies to managing directors,

members of the supervisory board, and agents. The same

penalties apply under the Federal Law on Public Companies.

Money Laundering

Section 165 of the Austrian Penal Code establishes

all punishable offenses as predicate offenses for money

laundering. Persons may be prosecuted for having moneylaundered property deriving from the predicate crime of

bribery even if it was committed abroad. The penalty for

money laundering is imprisonment for up to two years

or a fine.

Extradition/Mutual Legal Assistance

Under Section 11, paragraph 1 of the Extradition and

Mutual Legal Assistance Act, extradition is permitted if

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

than one year. It is our understanding that the requirement of dual criminality will be met in cases arising between Convention Parties. Section 12, paragraph 1 of

the Extradition and Mutual Legal Assistance Act prohibits the extradition of Austrian nationals. However, it is

our understanding that where Austria will not extradite

its own nationals, it will exercise jurisdiction over them

in conformity with Convention Article 10.3.

Austria has entered into bilateral extradition agreements with three signatories to the Convention: Australia, Canada, and the United States. Austria has also signed

the European Extradition Agreement which governs extradition requests among Belgium, Bulgaria, the Czech

Republic, Denmark, Germany, Finland, France, Greece,

Hungary, Ireland, Iceland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Sweden, Switzerland,

the Slovak Republic, Spain, Turkey, and the United Kingdom. With regard to Belgium, Germany, France, Greece,

Italy, Luxembourg, the Netherlands, Portugal, and Spain,

the Schengen implementation agreement of 1997 also

applies.

Austria has mutual legal assistance treaties with Australia, Estonia, Latvia, Monaco, Slovenia, the former Yugoslavia, and the United States.

It is our understanding that requests originating from

countries not mentioned above will be handled in accor-
Chapter 2: Review of National Implementing Legislation 21

dance with Austrian Federal Law on Extradition and Judicial Assistance, and on the basis of reciprocity. Consultations are also covered by the same law. The bribery

of a foreign public official is an extraditable offense under the extradition treaties to which Austria is a party. It

is our understanding that the condition of reciprocity will

met with regard to the Convention, unless the requesting

state refuses reciprocity. Similarly, dual criminality is

required for the granting of mutual legal assistance, but

it is our understanding that between Austria and Parties

to the Convention, the condition will always be met under Article 1.

We understand that Austrian authorities will not decline to render mutual legal assistance for criminal matters within the scope of the Convention on bank secrecy

grounds.

Complicity, Attempt, Conspiracy

Austrian Penal Code Section 12 provides that anyone who is an accessory or who instigates a criminal act

is punished as a perpetrator. Section 15 covers attempt.

Conspiracy is not punishable under Austrian law.

Belgium

Belgium signed the Convention on December 17,

1997, and deposited its instrument of ratification on July

27, 1999. In order to implement the Convention, Belgium enacted two laws. One is the Bribery Prevention

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

April 3, 1999, and which amended provisions of the

Criminal Code relating to the bribery of public officials.

The other is the Act of May 4, 1999 (known as Act 99/

1890), which entered into force on August 3, 1999, and

which creates criminal liability for legal persons. The

following analysis is based on those acts, related Belgian laws, and reporting from the U.S. embassy in Brussels.

One concern is that the definitions of “foreign public official” under Belgian law are not autonomous. In

addition, there are certain limitations on the exercise of

nationality jurisdiction.

Basic Statement of the Offense

Article 246, Section 2 of the Criminal Code provides

that “the act of proposing, whether directly or through

intermediaries, an offer, promise or advantage of any kind

to a person exercising a public function, either for himself or a third party, in order to induce him to act in one

of the ways specified in Article 247 shall constitute active bribery.” Article 247 specifies four different types

of acts: (1) an act within the scope of a person’s responsibilities that is proper but not subject to remuneration;

(2) performance of an improper act, or refraining from a

proper one, in the exercise of one’s function; (3) commission of an offense in the exercise of one’s function;

or (4) use of influence derived from one’s function to

obtain performance of an act, or failure to perform one,

by a public authority. Pursuant to Article 250, Articles

246 and 247 now apply to persons who exercise a public

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

251 extends the coverage of Articles 246 and 247 to persons who exercise a public function in an organization

governed by public international law. These provisions

are not limited to bribes made in order to obtain or retain

business or other improper advantage in international

business.

Jurisdictional Principles

Under Article 3 of the Criminal Code, jurisdiction is

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

Article 10 quater to the Code of Criminal Procedure. This

provides for jurisdiction in certain cases over persons

(foreign as well as Belgian nationals) who commit bribery offenses outside the territory of Belgium. Various

limitations apply, however. For example, if the bribe recipient exercises a public function in a European Union

member state, Belgian prosecution may not proceed without the formal consent of the other state. If the bribe recipient exercises a public function in a state outside the

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

order to prosecute. In addition, there is a requirement

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

and that the state would punish such bribery of a person

exercising a public function in Belgium. Bribery involving a person who exercises a public function within an

EU institution is subject to prosecution. For bribes involving persons exercising a public function within other

public international organizations, the formal consent of

the organization is required before prosecution can proceed.

Under Articles 21-18 of the Code of Criminal Investigation, the statute of limitations for criminal offenses

is ten years from the date the offense was committed.

This period may be extended because of the conduct of

investigations or prosecutions.

Coverage of Payor/Offeror

Under the Article 5 of the Criminal Code as amended

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

to prosecution for the bribery of a foreign public official.
22 Battling International Bribery, 2001

Coverage of Payee/Offeree

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

in accordance with the law of that state. When the foreign state is not a member of the European Union, it is

necessary also to determine whether the function is considered a public one under Belgian law. Under Article

251, Section 1, whether a person exercises a public function in a public international organization is evaluated

by reference to the by-laws of that organization. Thus,

these definitions are not autonomous.

Article 246, Section 3 provides that corruption offenses also apply in the case of a person who is a candidate for the exercise of a public function, who implies

that he will exercise such a function, or who misleads

another into believing that he currently exercises such a

function.

Penalties

We understand that the applicable penalties are derived not only from Articles 247-249, but also from other

provisions of the Criminal Code. Individuals who commit bribery of a foreign public official are subject to fines

ranging from BF20,000 to BF40 million (approx. U.S.

$420-$840,000), and/or imprisonment for a period of six

months to fifteen years. Legal persons face fines ranging

from BF600,000 to BF72 million (approx. U.S. $12,600-

$1.5 million). Penalties are more severe if the person to

whom the bribe is offered or paid exercises certain functions relating to the investigation, prosecution, or adjudication of offenses, e.g., police officers, prosecutors,

jurors, or judges. The existence of a bribery agreement

between the payor/offeror and the payee/offeree is also

an aggravating circumstance.

Belgian law also provides for certain civil and administrative penalties for the bribery of a foreign public

official:

Loss of rights such as holding public office (Articles

31-33 of the Criminal Code).

Disqualification from public procurement (Article

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

Prohibition from exercising certain professional functions (Section 1 of Royal Order No. 22 of October 24,

1934).

Articles 35-39 and 89 of the Code of Criminal Investigation permit seizure of bribes and the proceeds of

bribery. Articles 42-43 of the Criminal Code authorize

the confiscation of items that are the object of the offense or that were used or intended to be used to commit

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

any proceeds of the offense and patrimonial advantages

derived directly from the offense, as well as any goods

and assets acquired in exchange for these advantages and

any income derived from investing them.

Books and Records Provisions

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

1872 impose accounting requirements on all commercial concerns and prohibit the establishment of off-thebooks accounts, use of false documents, and other acts

covered under Article 8 of the Convention. Those who

violate these provisions are subject to criminal, civil, and

administrative penalties.

Money Laundering

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

involving bribery of public officials,” domestic or foreign.

Extradition/Mutual Legal Assistance

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

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

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

Bribery of a foreign public official is also an extraditable offense under the Extradition Act of March 15, 1874.

Belgium has bilateral extradition treaties with twenty

countries and is a party to the European Convention on

Extradition of December 13, 1957. Section 1 of the Extradition Act of March 15, 1874, prohibits the extradition of Belgian nationals.

The U.S.-Belgium mutual legal assistance treaty entered into force on January 1, 2000. Belgium may also

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

Convention applying the Schengen Agreement of June

19, 1990; the European Convention on Mutual Assistance

in Criminal Matters of April 20, 1959; or provisions of

the domestic Judicial Code.

Complicity, Attempt, Conspiracy

Complicity—including aiding and abetting, authorization, and incitement—is covered under Articles 66-

67 of the Criminal Code. Attempting to bribe a public

official, domestic or foreign, is generally not specifically

covered under Belgian law, although the mere offer of a

bribe is sanctionable.
Chapter 2: Review of National Implementing Legislation 23

Bulgaria

Bulgaria signed the Convention on December 17,

1997, and deposited its instrument of ratification with

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

Amendment to the Penal Code was passed by parliament

on January 15, 1999, and came into force on January 29,

1999.

Bulgaria’s implementing legislation amends Articles

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

public officials in the course of international business

activities. The following analysis is based upon the Penal Code and reporting from the U.S. embassy in Sofia

and nongovernmental organizations.

Bulgarian law currently does not provide for liability—criminal or otherwise—of legal persons, although

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

bribe foreign public officials. There are also concerns

over available defenses.

Basic Statement of the Offense

Article 304(1) of the Penal Code provides for criminal penalties for “[a] person who gives a gift or any other

material benefit to an official in order to perform or not

to perform an act within the framework of his service, or

because he has performed or has not performed such an

act.” Under Article 304(2), this applies to a person who

“gives a bribe to a foreign official in relation to the performance of international business activity.” Current

Bulgarian law does not cover the promising or offering

of a bribe, but this is included in legislation that is pending before parliament. The U.S. embassy in Sofia advises that Bulgarian law was recently amended to cover

the promising or offering of a bribe.

Under Articles 306 and 307, there are available defenses for (1) a person who has been blackmailed into

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

informed the authorities of the bribe. We understand that

recent legislation has eliminated provocation as a defense.

Although Article 304 does not address bribes made

through intermediaries, Article 305a imposes criminal

liability on persons who “mediate” in the giving or receiving of a bribe.

Jurisdictional Principles

Article 3 of the Penal Code states that the code applies to all crimes committed in the territory of Bulgaria.

It is not clear how this provision applies to crimes committed only in part in Bulgaria. Under Article 4(1) of the

Penal Code, the code applies to crimes committed by

Bulgarian citizens abroad.

Under Article 80 of the Penal Code, the statute of

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

three years the statute of limitations is generally five

years.

Coverage of Payor/Offeror

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

Coverage of Payee/Offeree

In amended Article 93 of the Penal Code, “foreign

official” is defined as any person:

•exercising duties in a foreign country’s public institutions (office or agency);

•exercising functions assigned by a foreign country,

including for a foreign public enterprise or organization; or

•exercising duties or tasks of an international organization.

Penalties

Under Article 304 of the Penal Code, the penalty for

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

has violated his official duties in connection with the

bribe, in which case the penalty is imprisonment for a

term of up to five years. “Mediation” of bribery under

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

the penalties for all types of corruption.

Legal persons are not subject to criminal liability

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

a foreign public official. The Council of Ministers is preparing amendments to the Administrative Offenses and

Sanctions Act to introduce noncriminal (monetary) liability of legal persons for such bribery.

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

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

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

value is adjudged.” Under Article 53, “objects” subject

to seizure include those used in the perpetration of the

crime as well as those acquired through the crime.
24 Battling International Bribery, 2001

Books and Records Provisions

Article 5 of the Accountancy Act sets forth certain

principles that must be observed in the preparation of

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

companies without legal personality performing any activity permitted by the law.” Under Article 308 of the

Penal Code, forgery of official documents is punishable

by imprisonment for up to three years.

Under Article 15 of the Law on Public Financial

Control, the audit of the books and records of certain

enterprises is required, and auditors must report infractions to prosecuting authorities. Obligations on accountants are found in Article 57a(1) of the Accountancy Act.

Money Laundering

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

concludes financial transactions or other transactions with

funds or property of which he knows or supposes that

they have been acquired by crime” is subject to punishment of imprisonment for one to five years and a fine of

3,000 to 5,000 Bulgarian levs (approx. U.S. $1,300

$2,200). In certain cases, these penalties are increased to

imprisonment for one to eight years and a fine of 5,000

to 200,000 levs (approx. U.S. $2,200-$8,700).

Extradition/Mutual Legal Assistance

Bribery is not listed as an extraditable offense under

the 1924 U.S.-Bulgaria extradition treaty. However, Article 10.1 of the Convention provides that bribery of a

foreign public official shall be deemed to be an extraditable offense under extradition treaties between the parties. Dual criminality is required under the treaty and

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

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

Procedure Code prohibit the extradition of Bulgarian

nationals.

The United States and Bulgaria do not have a mutual legal assistance treaty. Under Article 461 of the Penal Procedure Code, Bulgaria may provide legal assistance in criminal matters to a requesting state (1) pursuant to the provisions of an international treaty to which

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

Complicity, Attempt, Conspiracy

Complicity in criminal acts is covered under Articles

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

aids or abets an offense is subject to the same punishment as that which applies to the offense itself, subject

to due consideration for the nature and degree of the

person’s participation. Articles 17-19 of the Penal Code

apply to attempts to commit offenses. Article 18 provides

that an attempt is subject to the same punishment as that

pertaining to the underlying offense, with due consideration given to the degree of implementation and the reasons why the crime was not completed.

Canada

The Canadian Corruption of Foreign Public Officials

Act, 46-47 Elizabeth II ch. 34, was adopted on December 7, 1998, assented to on December 10, 1998, and entered into force on February 14, 1999.

Sources for this analysis include the text of the act,

diplomatic reporting, and information from nongovernmental organizations.

We are concerned that Canada, which has previously

asserted nationality jurisdiction over certain other crimes

and thus has constitutional authority to do so, has not

done so for offenses created to implement the Convention.

Basic Statement of the Offense

Section 3(1) of the Corruption of Foreign Public

Officials Act provides:

Every person commits an offense who, in order to

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

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

any kind to a foreign public official or to any person

for the benefit of a foreign public official;

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

official in connection with the performance of the

official’s duties or functions; or

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

influence any acts or decisions of the foreign state

or public international organization for which the

official performs duties or functions.

The act contains exceptions for facilitation payments,

payments that are lawful under the written law of the

receiving official’s country, and payments related to bona

fide business promotion and execution of a contract. (See

Sections 3(3) & (4).)

Jurisdictional Principles

The Corruption of Foreign Public Officials Act does

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

will assert territorial jurisdiction where a significant portion of the activities constituting the nature of the offense takes place in Canada. There must be a real and

substantial link between the offense and Canadian territory.
Chapter 2: Review of National Implementing Legislation 25

It is our understanding that the courts in Canada have

adopted a two-part test for determining whether a crime

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

relevant acts that took place in Canada that may have

legitimately given Canada an interest in prosecuting the

offense. Second, the court will consider whether it would

offend international comity to assert jurisdiction over

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

178 (1985).)

Canada has not asserted extraterritorial jurisdiction

for this offense. However, Canadian law provides that

any person who, while outside Canada, conspires to commit an indictable offense in Canada shall be deemed to

have committed the offense of conspiracy in Canada. (See

Criminal Code ‘465(4).) The penalties for conspiracy are

the same as those for the substantive offense. (See Criminal Code ‘465(1)(c).)

Coverage of Payor/Offeror

The Corruption of Foreign Public Officials Act applies to “every person,” without reference to nationality.

“Person” includes “Her Majesty and public bodies, bodies corporate, societies, companies, and inhabitants of

counties, parishes, municipalities or other districts in relation to the acts and things that they are capable of doing and owning respectively.” (See Criminal Code ‘2.)

Coverage of Payee/Offeree

Section 2 of the Corruption of Foreign Public Officials Act defines a “foreign public official” as:

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

or judicial position of a foreign state;

(b) a person who performs public duties or functions

for a foreign state, including a person employed by a

board, commission, corporation or other body or

authority that is established to perform a duty or function on behalf of the foreign state, or is performing

such a duty or function; and

(c) an official or agent of a public international organization that is formed by two or more states or

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

The act further defines a foreign state to include a

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

The definition of a public official includes persons

employed by “a board, commission, corporation or other

body of authority that is established to perform a duty or

function on behalf of the foreign state, or is performing

such a duty or function.” It is our understanding that the

legislature intended that judges interpret the terms of the

act by reference to the OECD Convention and Official

Commentaries, which provide that a “public enterprise”

is “any enterprise, regardless of its legal form, over which

a government, or governments, may, directly or indirectly,

exercise a dominant influence.” The Act does not address whether state-owned enterprises acting in a commercial context are covered. The Official Commentaries

affirmatively state that they are not so covered if the enterprise receives no subsidies or privileges. (See OECD

Commentary, footnote 14.).

Penalties

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

five years. We understand that corporations are subject

to fines at the discretion of the court with no maximum

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

as to the proper calculation of the fine.

The penalties under the act are roughly congruent to

the penalties for domestic bribery except that a person

convicted of bribery of a foreign public official is not

subject to debarment.

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

bribery (Section 4) and laundering of the proceeds of

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

provisions is up to ten years’ imprisonment, a penalty

that is higher than that for the bribery offense itself.

The act incorporates Section 2 of the Criminal Code

which defines “person” to include “bodies corporate.”

We understand that corporations may be prosecuted

criminally in Canada.

The Canadian principle of corporate criminal liability appears to be similar to, but potentially somewhat

narrower than, that of the United States. It focuses on an

identification of the corporation with the “directing

mind,” which is anyone who has been authorized to exercise “the governing executive authority of the corporation.” A corporation is liable if the criminal acts are

performed by the manager within the sector of operation

assigned to him or her by the corporation. The sector

may be functional or geographic or may embrace the entire undertaking of the corporation.

Sections 7 and 9 of the Corruption of Foreign Public

Officials Act adds the three offenses created under the

act (bribery, possession of proceeds, and money laundering of proceeds) to the statutory list of “enterprise

crimes” (See Criminal Code ‘462.3.), thus enabling the

government to obtain warrants to search, seize, and detain the proceeds of these offenses and to obtain an order

of forfeiture upon conviction. (See Criminal Code

‘’462.32-.5.)
26 Battling International Bribery, 2001

Books and Records Provisions

Canada has a number of statutes that govern books

and records. They prohibit falsification of books and

documents, false pretense, false statement, false prospectus, forgery, and fraud. (See Criminal Code ‘’361-62, 366,

380, 397, and 400.) However, Canadian business leaders have criticized the Canadian laws as insufficient because they do not prohibit off-the-books accounts, inadequately identified transactions, the recording of nonexistent expenses, and the use of false documents.

The generally accepted auditing standards in effect

in Canada require the auditor to obtain a written certification from management that it is not aware of any illegal or possibly illegal acts.

Money Laundering

Sections 5 and 7 of the Corruption of Foreign Public

Officials Act criminalize the laundering of the proceeds

of any payment in violation of the act and makes offenses

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

act further criminalizes the laundering of the proceeds

of any payment that “if it had occurred in Canada, would

have constituted an offense under Section 3.”

Extradition/Mutual Legal Assistance

Canada will provide mutual legal assistance and extradition with respect to the offenses covered by the

OECD Convention. Under Canadian law, there must be

an extradition agreement with the country requesting

extradition; that country must punish the offense by imprisonment for a maximum term of two or more years;

and the equivalent offense must also be punishable under Canadian law by a maximum term of imprisonment

of two or more years.

Complicity, Attempt, Conspiracy

Canadian law permits prosecution for attempt and

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

Corruption of Foreign Public Officials Act covers any

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

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

a conviction for conspiracy carries the same penalties as

a conviction for the substantive offense.

Czech Republic

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

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

Convention under national law on December 20, 1999,

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

The Czech Republic made only minor modifications

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

“bribe” and “public official.” Sources for this analysis

include the Czech implementing legislation, relevant

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

embassy in Prague.

Our main concern with the Czech legislation pertains to the defense of “effective repentance,” which provides that the criminal nature of bribery shall not apply

if the offender provided or promised a bribe solely because he had been requested to do so and reported the

fact voluntarily and without delay to the prosecutor or

police authority. We believe this defense is inappropriate for instances of transnational bribery and may constitute a loophole. Also, the Czech law currently does

not provide for criminal responsibility for legal persons,

or for effective, proportionate, and dissuasive noncriminal sanctions as required by the Convention.

Basic Statement of the Offense

The basic statement of the offense is contained in

Section 161, paragraph 2b of the Czech Criminal Code

which states that:

(1) Whoever in connection with procuring affairs in

the public interest provides, offers, or promises a

bribe shall be sentenced to imprisonment for up to

one year or to a monetary fine;

(2) A perpetrator shall be sentenced to imprisonment

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

he commits the act referred to in paragraph 1 with

the intent of procuring a substantial benefit for him/

herself or for another person or to cause substantial

harm or other particularly serious effect to another

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

Section 162a paragraph 1 defines a “bribe” as “an

unwarranted advantage consisting in direct material enrichment or other advantage that the person being bribed

or another person receives or is to receive with its consent, and for which there is no entitlement.”
Chapter 2: Review of National Implementing Legislation 27

The basic statement of the offense under Section 161,

paragraph 2b covers “any person,” defined as natural

persons. It also covers direct bribes and bribes through

intermediaries, and bribes to foreign officials as well as

third parties. (Although third parties are not specifically

mentioned in the basic statement of the offense (Section

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

mentions “another person” incorporates the concept of

bribes for third parties.) Section 161 also includes the

concept of intentionality. The basic statement of the offense also goes beyond the scope of the Convention in

that it does not require that the alleged offender acted in

the context of international business transactions.

The Czech legislation also contains a defense of “effective repentance” in Section 163, which provides that

the criminal nature of bribery and indirect bribery shall

not apply if the offender has provided or promised a bribe

solely because he has been requested to do so and reported the fact voluntarily and without delay to the prosecutor or police authority.

Jurisdictional Principles

The Czech Republic exercises jurisdiction over any

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

threatened an interest protected under the Code) in its

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

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

Czech vessel or aircraft. In addition, the Czech Republic

will also exert nationality jurisdiction over its nationals

and stateless persons who reside permanently in the

Czech Republic. (Section 18 of the Criminal Code.) Companies that bribe will be excluded from Czech procurement irrespective of the nationality of their agents, employees, or board members liable for bribery of foreign

public officials. Czech law will apply to foreigners and

stateless non-Czech residents if the act was committed

in a country that also criminalizes the offense, and if the

offender is caught in the Czech Republic and was not

extradited to a foreign state. (Section 20, Criminal Code.)

Coverage of Payor/Offeror

The basic statement of the offense only covers bribes

by natural persons, as Czech law does not provide for

penal responsibility for legal persons.

Coverage of Payee/Offeree

The Czech definition of foreign public official includes the definition of domestic public officials under

Section 89 of the Criminal Code in addition to a new

definition under Section 162a, paragraph 2, extending

the definition of public official (found in Section 161,

paragraph 2b) to foreign officials.

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

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

administration or local (municipal) authority, a court

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

or armed corps insofar as he takes part in the

fulfilment of the tasks set by society and the state,

for which he exercises authority entrusted to him as

a part of his responsibility for fulfilment of such tasks.

When exercising entitlements and competency according to special legal provisions a public official

shall also mean a natural person holding the position

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

guard or fishing guard. Criminal liability and protection of a public official under individual provisions of this Code shall require that a crime be committed in connection with the official’s authority

(competency) and responsibility.

Section 162a, paragraph 2 provides that in addition

to Section 89, “public official” also includes any person

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

or the public administration authority of a foreign country, or (b) an enterprise, in which a foreign country has

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

connected with authority in handling public affairs and

the criminal act was committed in conjunction with such

authority.

It is our understanding that this definition includes

all levels and subdivisions of the foreign government.

Penalties

Bribery of domestic and foreign public officials by

natural persons may be punished by imprisonment of one

to five years and/or a monetary fine ranging from 2,000

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

$124,000). (Section 161, paragraph 2b, Section 53, Criminal Code.) The guidelines for imposing penalties are contained in Sections 33 and 34 of the Criminal Code. They

contain examples for judges to take into account when

determining penalties, such as the state of mind of the

offender or the nature of the motive for the crime.

Civil sanctions applying to both natural and legal

persons apparently are possible under Section 451 of the

Civil Code, which provides that the court may render a

civil law judgement on the transfer of illegal gains.
28 Battling International Bribery, 2001

The statute of limitations for the offense of bribery

of foreign public officials is five years (offenses subject

to a maximum prison term of not less than three years).

(Section 67, Criminal Code.) The statute of limitations

period does not include the period in which the offender

could not be tried because of legal impediments, when

the offender was abroad, or if there is a conditional stay

of criminal prosecution. The period shall be interrupted

and a new statute of limitations shall commence where

the offender is informed of the alleged offense and a

criminal investigation has begun, or if the offender commits a new offense during the statute of limitations period.

Section 55 of the Czech Criminal Code allows for

forfeiture of an asset belonging to the offender if the bribe

is secured during a criminal proceeding

Books and Records Provisions

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

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

Coll., governs the maintenance of books and records

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

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

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

Money Laundering

It is our understanding that as with bribery of domestic officials, bribery of foreign officials is a predicate offense for the application of the Czech money-laundering legislation. (Section 1, paragraph 2, Act No. 61/

1996 Coll. Concerning Certain Measures Against Legalization of Proceeds of Criminal Activity and amendments.)

Extradition/Mutual Legal Assistance

Under Czech law, the Convention will be considered

as a basis for extradition and mutual legal assistance.

Bribery of foreign public officials is an extraditable offense under Czech law and the extradition treaties to

which the Czech Republic is a party. Where no treaty

applies, Section 379 of the Code on Criminal Procedure

permits extradition of a person in the Czech Republic to

a foreign country if the offense is punishable in both countries, extradition is found admissible by a competent

Czech court, the statute of limitations has not expired,

and the accused is not a Czech national. It is our understanding that the Czech condition for dual criminality

will be considered fulfilled between parties to the Convention. Section 382 provides that a permit is required

from the Czech Minister of Justice once a competent court

has decided upon the admissibility of the extradition.

Czech nationals cannot be extradited. (Section 21, Criminal Code.) Under Section 18 of the Criminal Code, Czech

law applies to Czech nationals and permanent residents

who commit offenses abroad, and such persons can be

prosecuted in the Czech Republic.

Mutual legal assistance may be governed by the 1959

European Convention on Mutual Legal Assistance in

Criminal Matters. Where no treaty applies, mutual legal

assistance is governed by Section 384 of the Code on

Criminal Procedure. Under Section 56 of the Act on International Private and Procedural Law, Czech judicial

authorities will grant legal assistance to foreign judicial

bodies if the requirement of reciprocity is met. Consultation procedures are determined on a case-by-case basis by the Supreme Prosecution Office at the request of

the competent foreign body for the transfer of criminal

proceedings. (Section 383, Code on Criminal Procedures.) Also applicable are the 1972 European Convention on Transfer of Criminal Proceedings and Article 21

of the 1959 European Convention on Mutual Assistance

in Criminal Matters. In noncriminal matters where no

treaty governs, the Act on International Private and Procedural Law will apply, along with the relevant provisions in the bilateral and multilateral mutual legal assistance treaties to which the Czech Republic is a party.

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

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

provisions also state that bank secrecy is not violated

where such information is provided relating to criminal

proceedings.

Complicity, Attempt, Conspiracy

Section 9, paragraph 2 of the Czech Criminal Code

provides that where the offense has been committed collectively by two or more persons, each one shall be held

individually liable. Section 10 of the Criminal Code defines “participants” in criminal offenses as persons who

intentionally organize, instigate, or assist in crime. Sections 7 and 8 of the Criminal Code govern conspiracy

and attempt, respectively. Section 7 concerns “especially

serious criminal offenses,” which are defined as offenses

punishable by imprisonment of at least eight years. However, bribery of foreign public officials is punishable by

imprisonment of five years or less, so apparently Section 7 would not apply.
Chapter 2: Review of National Implementing Legislation 29

Denmark

Denmark signed the Convention on December 17,

1997. The Danish parliament passed legislation amending the Danish Criminal Code and ratifying the Convention on April 4, 2000, and this legislation entered into

force on May 1, 2000. Denmark deposited its instrument

of ratification with the OECD on September 5, 2000.

Danish legislation seems to conform in the most part

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

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

Basic Statement of the Offense

Section 122 of the Criminal Code, as amended, provides:

Any person who unlawfully grants, promises or offers some other person exercising a Danish, foreign

or international public office or function a gift or other

advantage in order to induce him to do or fail to do

anything in relation to his official duties shall be liable to a fine, simple detention, or imprisonment for

any term not exceeding three years.

Although the law does not provide any specific defenses or definitions, the Danish authorities have represented that certain payments or gifts would not be deemed

“unlawful,” i.e., “usual gifts” in connection with special

events and “ordinary gifts” for acts already committed,

provided there was no explicit or implicit agreement in

advance of the official act. In addition, the legislative

history indicates that the Danish authorities intend to

permit a defense for facilitation payments in certain circumstances.

Intent is required to commit the basic offense. Danish authorities also state that third-party beneficiaries to

the bribes are also covered by Section 122.

Jurisdictional Principles

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

the consequences of the criminal act are manifest in Denmark. Liability of legal persons depends upon the location in which the requisite natural person committed the

crime.

Denmark also asserts nationality jurisdiction over

acts committed outside the territory of any state. With

respect to acts within another state’s territory, Denmark

asserts nationality jurisdiction provided the crime is also

punishable within that state.

Coverage of Payor/Offeror

The Danish law applies to any person, irrespectively

of nationality. Although the Danish law does not explicitly refer to payments through intermediaries, Danish law

encompasses such payments through its law on complicity.

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

public prosecutor. The law requires that at least one natural person employed by the legal person have committed

the crime with the requisite intent. That person, however, need not hold a managerial position and may be an

agent rather than a salaried employee. Prosecution and

conviction of the natural person is not a prerequisite for

criminal liability of the legal person.

Coverage of Payee/Offeree

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

a person holding a “foreign public office or function”

includes officials of foreign countries, public enterprises,

and international organizations, and explicitly references

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

and employees of all levels of the foreign government

are included, as well as officials of state-owned enterprises engaged in commerce and industry.

Penalties

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

of imprisonment between seven days and three years and

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

realized from the offense of foreign bribery may be confiscated.

Under Danish law, fines are calculated according to

a “day-fine” system in which the size of a single dayfine is dependent upon the defendant’s economic situation. The fine itself can range from a single day-fine of

not less than 2 DKK (approx. U.S.$0.22) to 60 day-fines

of an indeterminate amount. The actual amount of dayfines, and thus the total amount of the fine, is set by the

court according to the nature of the offense and the

defendant’s means. Further, should a fine of 60 day-fines

be deemed inadequate by the court due to the amount of

profits obtained or that might have been obtained by the

defendant from the violation, the court has the discretion

to impose a fine outside of the day-fine system.

According to section 93 of the Danish Criminal Code,

the statute of limitations for bribery of foreign public

officials is five years for an individual, whereas it is two
30 Battling International Bribery, 2001

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

triggered or suspended pursuant to section 94. The statute begins to run the day when the act has ceased.

Books and Records Provisions

Denmark’s Bookkeeping Law requires companies to

keep accounts in accordance with “good bookkeeping

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

the Bookkeeping Law may be punished by a fine and

imprisonment of up to one year.

Money Laundering

Denmark prohibits some forms of money-laundering through section 284 of the Criminal Code, which

prohibits receiving stolen goods. Section 284 prohibits

acquiring the profits or gains from listed offenses, including domestic and foreign bribery, hiding them, or

otherwise assisting in ensuring their availability for the

benefit of another person

.

Extradition/Mutual Legal Assistance

The United States has an extradition treaty with Denmark. Denmark does not, however, extradite its nationals except to other Nordic countries.

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

general mutual legal assistance law. Thus, requests for

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

when the request can be carried out in corresponding

Danish proceedings.

Complicity, Attempt, Conspiracy

Danish law provides for prosecution of every person who “contributed” to the commission of an offense

and for the same penalties, except in special circumstances, as those applicable to the substantive offense.

(See Criminal Code 23.) Danish law also provides for

prosecutions of attempts, with lower penalties than for

the completed offense. (See Criminal Code 21.) However, the offense of bribery is complete when a bribe is

promised or offered, regardless of whether the bribe is

accepted or received by the public official. Danish law

does not provide for prosecution of conspiracies.

Finland

Finland signed the Convention on December 17,

1997, and enacted implementing legislation on October

9, 1998. Finland deposited its instrument of ratification

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

Sources for this analysis include the new provisions

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

Against Public Authorities,” as well as information from

the U.S. embassy in Helsinki.

One concern with the Finnish legislation is that Finland requires dual criminality in order to exercise jurisdiction over Finnish citizens abroad.

Basic Statement of the Offense

The basic statement of the offense of bribing foreign

public officials is set forth in Chapter 16 of the Finnish

Penal Code, Section 13 on bribery:

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

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

the service of the European Communities, to an official of another Member State of the European Union,

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

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

or other benefit, intended to the said person or to

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

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

imprisonment for at most two years.

(2) A person who in exchange for the actions in service of a public official or another person mentioned

in paragraph (1) promises, offers, or gives a gift or

other benefit mentioned in the said paragraph to another person, shall also be sentenced for bribery.

Generally, Section 13 provides that persons who intentionally promise, offer, or give gifts or other benefits

either directly or indirectly to a foreign public official to

affect the behavior of such an official may be imprisoned for a maximum period of two years or fined. The

provision is not limited to bribes in the context of international business. Although intermediaries are not specifically mentioned, the provision says that bribes “intended” for public officials are covered. Payments involving third parties are covered under Section 13(2).

Jurisdictional Principles

Finland practices both territorial and nationality jurisdiction. Chapter 1, Section 1 of the Finnish Penal Code

provides that Finnish law shall apply to offenses committed in Finland. Pursuant to Section 10 of the same

chapter, acts are deemed to have been committed in Finland if the criminal act occurred in Finland or if the consequences of the offense as defined by statute were realized in Finland. Chapter 1, Section 6 of the Finnish Penal Code allows for the prosecution of a Finnish citizen
Chapter 2: Review of National Implementing Legislation 31

who commits an offense outside of Finland. Chapter 1,

Section 11 of the Finnish Penal Code requires dual criminality for offenses committed abroad by a Finn. The provisions on jurisdiction have been part of Finnish Penal

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

Coverage of Payor/Offeror

The Finnish legislation covers bribery by any person. It is our understanding that “any person” is to be

broadly construed, applying to both natural and legal

persons.

Coverage of Payee/Offeree

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

a “foreign public official” is defined as:

a person who in a foreign State has been appointed

or elected to a legislative, administrative or judicial

office or duty, or who otherwise performs a public

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

under public law.

Although the Finnish definition of foreign public

official contains no reference to employees of a “public

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

of the Convention, it is our understanding that Section

13 of the Finnish law, the provision containing the basic

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

Penalties

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

for persons who have committed bribery of domestic

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

addition, for “aggravated bribery,” Chapter 16, Section

14 provides that the offender shall be sentenced to a minimum of four months’ and a maximum of four years’ imprisonment. These provisions also apply to the bribery

of foreign public officials, so the penalties for domestic

and foreign bribery are the same. Statutes of limitations

for bribery by natural persons are covered under the Finnish Penal Code Chapter 8, Section 1, which provides that

charges must have been brought within five years after

the offense for the imposition of a sentence. For aggravated bribery, the statute of limitations is ten years.

Chapter 16, Section 28 of the Finnish Penal Code

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

Code Chapter 9, Section 5, corporations can be fined from

a minimum of 5,000 Finnish Markka (approx. U.S. $712)

to a maximum of FM5 million (approx. U.S. $711,650).

Chapter 9, Section 2 of the Penal Code provides that a

Finnish corporation may be fined for the actions of its

management representatives or employees, when acting

within the scope of their employment on behalf of the

corporation or for its benefit, if they act as accomplices

in committing an offense or allowed the offense to happen. Section 2(2) states that even if a specific person cannot be identified as the offender, the corporation itself

can still be fined.

Penal Code Chapter 9, Sections 4 and 6 set forth illustrative lists of factors that must be taken into account

when determining sentencing of a corporation to a corporate fine and calculating the fines for corporations,

including the lack of corporate oversight; the position of

the offender in the corporation; the seriousness of the

offense; the consequences to the corporation due to the

commission of the offense; measures, if any, taken by

the corporation to prevent the offense from occurring;

whether the offender sentenced is part of management;

the size of the corporation; the amount of shares held by

the offender; and the extent to which the offender can be

held personally liable for the commitments of the corporation. For fines, the list also takes into account not only

the size of the corporation, but also its solvency, earnings, and other indicators of its financial circumstances.

Chapter 9 provides that if the offender is not sentenced to a punishment due to the statute of limitations,

then the corporation on behalf of which he acted cannot

be sentenced either. The minimum statute of limitations

for corporate fines is five years. Chapter 9, Section 9

provides that the enforcement of any corporate fine will

lapse five years from the date the fine was imposed.

Chapter 40, Section 4 of the Finnish Penal Code covers forfeiture of bribes: the gift or benefit or the corresponding value will be forfeited to the State from the

bribe recipient or beneficiary. Section 4 applies to passive bribery. We understand that, although the Finnish

penal code does not specifically address forfeiture for

active corruption, Chapter 2, Section 16 of the Penal Code

provides for forfeiture generally and can be applied to

offenses of active corruption. We understand that there

are no additional civil or administrative sanctions for

bribery under Finnish law.

Under Chapter 12, Section 94, paragraph 2 of the

Act on Credit Institutions, financial institutions must provide prosecution and investigative authorities all information necessary for crime detection. It is our understanding therefore that bank secrecy should not inhibit

mutual legal assistance in criminal matters under the

Convention.
32 Battling International Bribery, 2001

Books and Records Provisions

The Finnish law on accounting provisions is covered by the Accounting Act, which applies to natural

persons and companies. Chapter 1, Article 1 states that

anyone carrying out business or practicing a profession

must keep accounting records of such activities.

The Finnish law on offenses for accounting provisions is covered under Chapter 30, Section 9 of the Finnish Penal Code:

If a person with a legal obligation to keep accounts,

his/her representative or the person entrusted with

the keeping of accounts intentionally (1) neglects in

full or in part the recording of business transactions

or the balancing of the accounts, (2) enters false or

misleading data into the accounts, or (3) destroys,

conceals or damages account documentation and in

this way essentially impedes the obtaining of a true

and sufficient picture of the financial result of the

business of the said person or of his/her financial

standing, he shall be sentenced for an accounting

offense to a fine or to imprisonment for at most three

years.

Money Laundering

Money laundering is a crime under Chapter 32, Section 1(2) of the Finnish Penal Code. It covers all assets

or property resulting from offenses of the Finnish Penal

Code, including bribery of foreign public officials.

Extradition/Mutual Legal Assistance

Section 4 of the Finnish Extradition Act provides that

extradition will not be granted unless the request is based

upon an act that is an extraditable offense, or the act, if it

had been committed in Finland, constitutes an offense

for which the penalty is greater than one year. Acts within

the scope of Article 1 of the Convention will fulfill the

dual criminality requirement, as the Finnish penalty for

bribery is a maximum of two years. The Finnish Extradition Act provides that Finnish nationals shall not be

extradited. However, under the Extradition Act between

Finland and other Nordic countries, Finnish nationals may

be extradited to other Nordic countries in some cases.

Finland is also a party to the European Convention on

Extradition of 1957 and is expected to ratify the 1996

Convention relating to extradition between member states

of the European Union soon. After ratification of that

convention, Finland will be able, under certain conditions, to extradite Finnish nationals to other European

Union states.

We understand that mutual legal assistance is provided for by the Finnish Act on International Legal Assistance in Criminal Matters. Under that act, Finland can

provide assistance without the condition of dual criminality, except where coercive measures are requested,

unless such measures would be available under Finnish

law had the offense upon which the request is based occurred in Finland. Finland has also ratified the 1959 European Convention on Mutual Legal Assistance in Criminal Matters and its 1978 Protocol.

Complicity, Attempt, Conspiracy

Chapter 5 of the Finnish Penal Code contains provisions on complicity, attempt, and authorization. Under

Chapter 5, Section 1, if two or more persons have committed a crime together, they will be punished as principals. If the offense is carried out or attempted, under

Chapter 5, Section 2 of the Penal Code, a person who

encouraged another in committing the offense will be

punished for incitement as a principal. Complicity is covered by Chapter 5, Section 3, which provides that a person who acts to further the crime, whether it is carried

out or attempted, will be sentenced under the same provisions as a principal. Finnish law does not specifically

criminalize an attempt to bribe a foreign public official,

as the basic prohibition already covers promising and

offering bribes to such officials. Conspiracy is not punishable under the Finnish Penal Code.

France

France signed the Convention on December 17, 1997.

The French government completed its internal processes

for ratification of the Convention with the adoption of

law no. 99-424 dated May 27, 1999, authorizing ratification of the Convention. The French implementing legislation, Act 2000-595, became final on June 30, 2000.

France deposited its instrument of ratification with the

OECD on July 31, 2000. The OECD Convention entered

into force for France on September 29, 2000.

The legislation amends the French Penal Code to

criminalize the bribery of foreign public officials by adding a new chapter containing three sections to the Penal

Code at the end of Title III of Book IV, entitled “Interference with the Public Administration of the European

Communities, the Member States of the European Union,

other Foreign States and Public International Organizations.” As indicated by the title, the legislation also incorporates France’s obligations under various European

Union conventions on corruption.

Our main concern with an earlier version of the

French implementing bill had been that it contained a

“grandfather clause” that would have exempted from
Chapter 2: Review of National Implementing Legislation 33

prosecution future bribery payments relating to contracts

entered into before the Convention’s entry into force for

France. Under pressure from the OECD and several

OECD members, including the United States, this provision was removed during parliamentary review of the

bill. However, we will continue to monitor this issue very

closely as it is our understanding that there is a possibility that French judges could read the so called “principle

of non-retroactivity” back into the law, particularly since

the new legislation still does not explicitly state that the

act of “giving” bribe payments is covered. The absence

of the word “giving” in the French legislation raises the

potential, denied by the French authorities, that the French

law applies only to the offer itself and that payments

extending indefinitely into the future based upon an offer made before the effective date of the French legislation would not be punishable. Also, there are questions

as to whether and to what extent a legal person can be

prosecuted for the acts of employees or subordinates, and

the French statute of limitations of only three years seems

low.

In addition, we have several concerns about the jurisdictional and prosecutorial provisions in the French

legislation. Although the French legislation provides for

extraterritorial nationality jurisdiction, it appears to require that a complaint be filed with the French public

prosecutor’s office by an official of the payee/offeree’s

government in order for French prosecutors to assert jurisdiction in such cases. Such a requirement could cause

a major loophole in the French authorities’ ability to enforce their Convention obligations effectively over

French nationals outside of French territory.

Further, France implemented both the OECD Convention and various EU anticorruption conventions at the

same time. We are concerned that, in several instances,

France afforded more rigorous and comprehensive treatment of bribery of officials of EU states than it did of

officials of non-EU states. For example, for offenses

under various EU conventions, France also allows for

“non-nationality” jurisdiction over persons temporarily

in France for committing certain offenses outside of

France irrespective of otherwise applicable dual criminality requirements, but does not apply this basis of jurisdiction to similarly situated persons under the OECD

Convention. Moreover, the new legislation provides that

investigations for bribery offenses falling under the Convention may only be initiated by French prosecutors, even

when the offense is committed on French soil; whereas

prosecutions for bribery of domestic and European Union

officials may be initiated by victims. This disparate treatment also could decrease the number of foreign bribery

cases brought under the Convention, as prosecutorial

discretion could never be overridden, unlike in the case

of domestic and European Union officials context. Finally, the new legislation also provides that only the Paris

Public Prosecutor, the examining magistrate, and the

Correctional Tribunal will have jurisdiction to prosecute,

investigate, and try offenses relating to the bribery of

foreign public officials. This provision apparently applies

only to cases brought under the OECD Convention and

not to cases involving corruption of EU officials. We are

uncertain why this special provision was included in the

law and what effect that may have on enforcement. We

will continue to monitor these issues very closely in the

implementation stage.

Basic Statement of the Offense

The basic statement of the offense of active bribery

under the Convention is contained in Articles 435-3 and

435-4 of the French Penal Code. These provisions apply

to active corruption of officials of foreign States other

than Member States of the European Union and of officials of public international organizations other than institutions of the European Communities. They provide

that:

• 435-3 With regard to the implementation of the

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

signed in Paris on December 17, 1997, the act of

unlawfully proposing, at any time, directly or indirectly, offers, promises, donations, gifts or any advantages whatsoever in order to cause a person of

public authority, or a person carrying out public service, or a person vested with an elective mandate in

a foreign country or in an international public organization, to act or refrain from performing an act

within his/her duties, mission or mandate, or facilitated by his/her duties, mission, or mandate in order

to obtain or retain business or another improper advantage in international business, is punishable by

10 years imprisonment and a 1 million franc (FF)

fine (approx. U.S.$129,000).

• It is also punishable by the same penalties to yield

to a person cited above who unlawfully solicits, at

any time, directly or indirectly, offers, promises, donations, gifts or any advantages whatsoever to act or

refrain from acting as described above.

The prosecution of the crimes listed in this article

may only be exercised at the request of the Public

Prosecutor.

• Art. 435-4 With regard to the implementation of

the Convention on Combating Bribery of Foreign
34 Battling International Bribery, 2001

Public Officials in International Business Transactions signed in Paris on December 17, 1997, the act

of unlawfully proposing, at any time, directly or indirectly, offers, promises, donations, gifts or any advantages whatsoever in order to cause a magistrate,

a jury member, or any other person who has a judicial function, an arbitrator or an expert appointed

either by a court or by the parties, or a person whom

a judicial authority has given the authority to conduct conciliation or mediation, in a foreign country

or in an international public organization, to act or

refrain from acting or refrain from performing an act

within his/her duties, mission or mandate, or facilitated by his/her duties, mission, or mandate in order

to obtain or retain business or another improper advantage in international business, is punishable by

10 years imprisonment and a 1 million FF fine

(approx. U.S.$129,000).

• It is also punishable by the same penalties to yield

to a person cited above who unlawfully solicits, at

any time, directly or indirectly, offers, promises, donations, gifts or any advantages whatsoever to act or

refrain from acting as described above.

The prosecution of the crimes listed in this article

may only be exercised at the request of the Public Prosecutor.

The basic statement of the offense contained in Articles 435-3 and 435-4 is based on the French Penal Code

Articles 433-1 and 434-9, which apply to bribery of domestic officials. Articles 435-3 and 435-4 contain a more

detailed definition of foreign public official and include

officials of public international organizations. Articles

435-3 and 435-4 are also limited to bribes made in order

to obtain or retain business or an other improper advantage. Also, although bribe payments for third parties are

not explicitly mentioned in the new Penal Code provisions, French officials explained that the provision would

apply regardless of the ultimate beneficiary.

Neither the new provisions nor the domestic bribery

provisions upon which they were based explicitly provide that “giving” bribe payments are covered, although

French representatives have stated that such acts are implicit in the language of the provisions. It is our understanding that prior French law required proof of a “corruption pact” between the briber and the official receiving the bribe. This requirement made bribery offenses

very difficult to prove, as bribery transactions are usually conducted in secret. With the addition of the language “at any time” to the basic statement of the offense,

the French explain that there is no longer the need to

prove when the “corruption pact” took place when the

only evidence one has is the bribe payment. French authorities explain that the new law eliminates this requirement by assuming that an offer was renewed at the time

of the payment. Although apparently there is case law to

support this interpretation, we will not be certain that

bribe payments stemming from pre-Convention contracts

will be covered by the French legislation until the issue

is decided by the French courts.

According to the French, Articles 435-3 and 435-4

do not apply to European Union officials, whereas the

more specific provisions under new Penal Code Articles

435-1 an 435-2 are applicable. The articles covering bribery of both foreign public officials and EU officials generally appear to use the same language and call for the

same penalties. However, the articles implementing the

EU conventions do not contain the provision limiting the

initiation of prosecutions to public prosecutors. In other

words, under French law, domestic bribery cases and

bribery cases involving European Union officials, but not

officials of other countries, may be initiated by victims,

overriding the prosecutor’s discretion; but this is not

possible under the legislation implementing the OECD

Convention, even if the offense is committed in France.

Jurisdictional Principles

Pursuant to Penal Code Article 113-2, France will

exercise territorial jurisdiction over offenses committed

at least in part in France or relating to offenses committed in France.

France will also assert nationality jurisdiction over

French nationals who commit offenses outside of French

territory only when the offense is punishable under the

laws of the state where it occurred. Article 113-6. However, it is our understanding that such prosecutions against

French nationals must also be preceded by a complaint

from the State victim. This provision, particularly when

coupled with the limitation that prosecutions can be initiated only by prosecutors, could seriously limit the effectiveness of French enforcement of Convention obligations, because officials of the payee/offeree government may be very reluctant to request French government action.

Furthermore, under certain circumstances, French

courts can assert “non-nationality jurisdiction,” provided

for in Penal Code Article 689-1. This exceptional basis

of jurisdiction only applies to enumerated offenses falling under various international conventions listed in Articles 869-2 to 689-7 of the Code of Criminal Procedure.

The French implementing legislation contains a new article, Article 689-8, which provides that this special basis of jurisdiction can be used for offenses falling under
Chapter 2: Review of National Implementing Legislation 35

various EU anticorruption instruments, but no such provision was added with respect to the OECD Convention.

Therefore, France has provided for a jurisdictional regime that waives nationality and dual criminality requirements for some of its prosecutions in EU corruption cases,

but not those falling under the OECD Convention, in

apparent disregard for Article 5.

Also, new Penal Code Article 706-1 of the French

implementing legislation provides that the Paris Public

Prosecutor, the examining magistrate, and the Correctional Tribunal will have jurisdiction to prosecute, investigate, and try offenses relating to the bribery of foreign public officials. This centralizing provision apparently applies only to cases brought under the OECD

Convention and not to domestic cases or those involving

corruption of EU officials. This raises concerns because

apparently, according to the OECD Working Group

Country Report on the French legislation:

the bribery of both European Union and French officials will fall within the responsibility of regional

jurisdictional economic and financial poles, which

were created to adapt the law to the complexity of

financial and economic crime, and to strengthen the

means of combating corruption. New working methods will be introduced: modern logistical means will

be available and multidisciplinary teams will be

placed at the disposal of specialized courts.

French officials explained that jurisdiction over offenses falling under the Convention will be prosecuted

out of Paris for harmonization purposes.

Coverage of Payor/Offeror

The provisions to the French Penal Code appear to

cover bribes made by “any person” including both natural and legal persons. Criminal responsibility for legal

persons is dependant upon the offense having been committed by a natural person on behalf of the company.

Penal Code Article 121-2.

Coverage of Payee/Offeree

Article 435-3 and Article 435-4 cover bribes made

to “a person of public authority, or a person carrying out

public service, or a person vested with an elective mandate in a foreign country or in an international public

organization” and “a magistrate, a jury member, or any

other person who has a judicial function, an arbitrator or

an expert appointed either by a court or by the parties, or

a person who a judicial authority has given the authority

to conduct conciliation or mediation, in a foreign country or in an international public organization.” It is also

our understanding that the legislation will be interpreted

in light of the Convention and its Commentaries.

Penalties

For natural persons, Articles 435-3 and 435-4 of the

French Penal Code provide a penalty of ten years imprisonment and a 1 million FF fine (approx.

$U.S.129,000). The same penalties apply to individuals

who “yield to solicitations” under the same Articles.

These are the same as the penalties for bribery of domestic officials.

Article 435-5 provides for additional penalties for

natural persons, including: the loss of benefits [civic benefits, civil benefits, and family benefits for five years or

more] pursuant to Penal Code Article 131-26; a ban on

holding public office for a period of five years, or on

holding a professional or commercial position in the same

field as the one held when the bribe occurred; publication and dissemination of the judgment pursuant to Article 131-35; and confiscation pursuant to Article 131-

21 of the bribe or bribe proceeds, with the exception of

objects subject to restitution. In addition, foreigners having violated the basic statement of the offense may be

subject to deportation pursuant to Article 131-30 either

permanently or for a period of ten years or more. Article

435-5 is based upon Article 433-22 of the Penal Code

which sets forth penalties for natural persons for the bribery of domestic officials.

Legal entities, except for State entities, can also be

found criminally liable under Penal Code Article 435-6

under the terms of Article 121-2 for violations of Articles 435-2, 435-3 and 435-4. The penalties include: a

fine of five times the fine provided for natural persons,

i.e., 5 million FF (approx. U.S.$645,000), pursuant to

Article 131-38 and, for a maximum of five years: banning the entity from participating in the professional or

commercial activity, directly or indirectly, in which the

offense was committed; placing the entity under judicial

supervision; closure of the division/establishment used

to commit the offense; exclusion of the entity from government procurement; banning the entity from raising

public funds; prohibiting the entity from writing checks

other than those that allow funds to be withdrawn or certified checks, and disallowing the use of credit cards;

confiscation according to Article 131-21 of the bribe or

bribe proceeds, except for objects subject to restitution;

and publication and dissemination of the judgement

against the entity as stipulated in Article 131-35. Article

435-6 is based upon Article 433-25 of the Penal Code

which sets forth penalties for legal persons for the bribery of domestic officials.
36 Battling International Bribery, 2001

The offense of bribery of foreign public officials will

fall within the general statute of limitations under Article 8 of the French Penal Procedure Code, which is three

years. Apparently the statute of limitations will start to

run from the date the “corruption pact”—as it is referred

to under French law, i.e., a meeting of minds between

the briber and the recipient of the bribe—was agreed to,

or from the occurrence of the last act relating to “the

corruption pact.” (Arret Carignon. C. cass., 27/10/1997.)

Pursuant to Articles 7 and 8 of the French Penal Procedure Code, the statute of limitations may be interrupted

during investigations or prosecutions. After interruption,

the limitation period begins anew. The statute of limitations is suspended if there is an obstacle of law or fact.

Suspension stops the limitation period only temporarily.

Books and Records Provisions

According to the French government, Articles 8-17

of the French Commercial Code and Articles 1 to 27 of

the related Decree of November 29, 1983, as amended,

and the amended Ministerial Decree of April 27, 1982,

generally cover the types of accounting offenses listed

under the Convention. Also relevant are the Law of July

24, 1966 and the Decree of March 23, 1967.

Money Laundering

France punishes money laundering resulting from all

offenses regardless of where the underlying offense occurred pursuant to Article 324-1 of the Penal Code.

Extradition/Mutual Legal Assistance

Dual criminality is necessary in order for France to

grant an extradition request. In the absence of a treaty,

the Law of March 10, 1927 requires that the requesting

country either imposes a fine for the offense under its

own law or provides for a minimum term of imprisonment of at least two years for the offense. If France does

have an extradition treaty with the requesting country,

the requesting country’s law must provide for the minimum prison term for the offense according to the terms

of the treaty. France will not extradite its nationals. The

European Convention on Extradition and the bilateral extradition treaties to which France is a party provide that

where a request has been refused on nationality grounds,

the State refusing the request must submit the matter to

its national authorities upon request from the State seeking extradition. In the absence of an extradition treaty,

where France has denied an extradition request upon

nationality grounds, Article 113-8 of the French Penal

Code provides that France will submit the issue to its

national authorities following an official condemnation

by the State where the offense occurred.

France has signed treaties with the United States and

the European Community regarding mutual legal assistance; it has also entered into many bilateral mutual legal assistance treaties. In the absence of a treaty, France

does not require a minimum prison sentence or fine in

order to grant mutual legal assistance, pursuant to the

Law of March 10, 1927.

Pursuant to Penal Code Article 132-22, bank secrecy

cannot be invoked to refuse mutual legal assistance.

Complicity, Attempt, Conspiracy

Penal Code Articles 121-6 and 121-7 cover the offense of complicity. Article 121-7 provides that accomplices are those who knowingly aid or assist in the facilitation or consummation of an offense, as well as persons

who by giving, promising threatening, ordering, or abusing authority or power cause an offense or give instructions so that it may be carried out. Penal Code Article

121-6 provides that accomplices will be treated the same

as the principal author of the offense. The offense of bribery of a foreign public official occurs whether or not the

offer to bribe the official is accepted. Therefore, attempt

is not specifically mentioned in the provisions on the

offense of bribery of foreign public officials, as it is not

contained in the French Penal Code provisions on bribery of domestic officials. Conspiracy, as defined in the

United States, is apparently not punishable under French

law.

Germany

Germany signed the Convention on December 17,

1997, and deposited its instrument of ratification with

the OECD on November 10, 1998. The German legislation entered into force on the same date as the Convention, February 15, 1999.

Sources for this analysis include Germany’s implementing legislation, “The Act on the Convention Dated

December 17, 1997, on Combating Bribery of Foreign

Public Officials in International Transactions,” dated

September 10, 1998 (ACIB), and reporting from the U.S.

embassy in Berlin.

Germany will impose sanctions upon legal persons

only where an identifiable natural person employed by

the legal person has committed an offense. Although an

actual prosecution does not seem to be a prerequisite,

this provision may create an impediment to effective

enforcement, depending on how Germany applies this

provision.
Chapter 2: Review of National Implementing Legislation 37

 Basic Statement of the Offense

Germany’s basic statement of the offense is in two

parts. With respect to officials, soldiers, and judges, the

ACIB prohibits:

bribery concerning a future judicial or official act

which is committed in order to obtain or retain for

the offender or a third party business or an unfair

advantage in international business transactions.

[ACIB ‘2(1).]

Germany implemented the Convention by making

judges, officials, and soldiers of foreign governments and

international organizations “equal” to domestic judges,

officials, and soldiers for purposes of Sections 334 (active bribery), 335 (severe cases of bribery), 336 (omission of public service), and 338 (fine and forfeiture). The

basic offense, therefore, is defined in Criminal Code Section 34 as follows:

Whoever offers, promises, or grants an advantage to

any official, any person specifically engaged for public service, or any soldier of the Federal Armed

Forces, on behalf of such person or for a third party,

in return for the performance of a past or future public service and the past or future breach of his official duties, shall be punished.

Unlike the domestic bribery provisions, the implementing legislation applies to “future judicial or official

acts.” As Section 334 applies to “offers,” the timing of

the payment itself, whether before or after the corrupt

act, is not determinative. In addition, the implementing

legislation refers to “official acts”; the domestic bribery

laws use the term “performance of past or future public

service and the past or future breach of his official duties.”

The second prong of the implementing legislation

applies to bribery of foreign parliamentarians. The implementing legislation provides in ACIB ‘2(2) that:

Anyone who offers, promises, or grants to a member of a legislative body of a foreign state or to a

member of a parliamentary assembly of an international organization an advantage for that member or

for a third party in order to obtain or retain for him/

herself or a third party business or an unfair advantage in international business transactions in return

for the member’s committing an act or omission in

future in connection with his/her mandate or functions, shall be punished.

Jurisdictional Principles

Germany applies the principles of both territorial and

nationality jurisdiction. Germany will assert jurisdiction

when an offender or participant has acted or ought to

have acted within its territory or when the “success of

the offense” occurs within its territory. (See Criminal

Code ‘’3, 9.) In addition, Germany will assert jurisdiction over the acts of its nationals abroad.

Coverage of Payor/Offeror

The implementing legislation covers payments offered or made to (1) judges of a foreign state or an international court; (2) public officials of a foreign state or

“persons entrusted to exercise a public function with or

for an authority of a foreign state, for a public enterprise

with headquarters abroad, or other public functions for a

public state; (3) a public official or other member of the

staff of an international organization or a person entrusted

with carrying out its functions; (4) a soldier of a foreign

state or one who is entrusted to exercise functions of an

international organization; and (5) a member of a legislative body or parliamentary assembly of a foreign state

or international organization. (See ACIB ‘2(1)(1).) In

addition, German law covers payments made to a third

party.

Coverage of Payee/Offeree

The implementing legislation covers payments offered or made to (1) judges of a foreign state or an international court; (2) public officials of a foreign state or

“persons entrusted to exercise a public function with or

for an authority of a foreign state, for a public enterprise

with headquarters abroad, or other public functions for a

public state; (3) a public official or other member of the

staff of an international organization or a person entrusted

with carrying out its functions; (4) a soldier of a foreign

state or one who is entrusted to exercise functions of an

international organization; and (5) a member of a legislative body or parliamentary assembly of a foreign state

or international organization. (See ACIB ‘2(1)(1).) In

addition, German law covers payments made to a third

party.

Penalties

As noted, Germany implemented the Convention by

adding bribery of foreign officials to its existing domestic bribery statutes. The penalties, therefore, are the same.

Under Sections 334 and 335, bribery of a public official is punishable under a three-tier system: “less severe offenses” earn a prison term of up to two years, or a

fine; “general” offenses earn a prison term of three

months to five years; “particularly severe cases” earn a

prison term of one to ten years.

There is no statutory definition of “less severe offenses.” A “particularly severe case” is one that” con-
38 Battling International Bribery, 2001

cerns an advantage of large proportions,” where the perpetrator “continuously accepts advantages which he requested in return for the future performance of a public

service,” and where the perpetrator “conducts the activity as a business or as a member of a gang, which he

joined in order to continuously commit such acts.”

As noted, corporations are not subject to criminal

liability. However, they may be prosecuted administratively and subjected to fines under the Administrative

Offenses Act. The statutory fines on corporations are up

to DM1 million (approx. U.S.$433,000) for intentional

acts by a leading person and up to DM500,000 (approx.

U.S. $216,000) for negligent acts. (See Administrative

Offenses Act, ’30.) However, it is our understanding that

corporations can be subject to fines up to the amount of

the commercial advantage. (See Administrative Offenses

Act,’17(4).) We have not received any information on

how often this provision has been invoked against German corporations.

It is our understanding that both the bribe and the

proceeds of bribery are forfeitable under the Criminal

Code, Section 73. However, in the case of corporations,

a corporation cannot both be fined and subjected to an

order of forfeiture.

Books and Records Provisions

We understand that Germany’s laws prohibit the establishment of off-the-books accounts, the making of offthe-books or inadequately identified transactions, the

recording of nonexistent expenditures, the entry of liabilities with incorrect identification of their object, and

the use of false documents to justify book entries. These

prohibitions are principles to which a corporation must

adhere to meet the legal requirement that it conform with

legal norms.

Money Laundering

Bribery is a predicate offense for Germany’s moneylaundering provision. (See Criminal Code ‘261.) As with

domestic bribery, however, bribery committed within

German territory is always a predicate offense, whereas

bribery committed abroad is only a predicate offense if

it is also punishable at the place of the offense.

Extradition/Mutual Legal Assistance

Pursuant to bilateral agreements and various European conventions, Germany will render mutual legal assistance in investigations of foreign bribery. Germany

also has a law permitting non-treaty-based mutual legal

assistance.

Pursuant to the Convention, bribery of a foreign public official is an extraditable offense. The United States

has an extradition treaty in force with Germany. However, the German Basic Law prohibits the extradition of

its nationals.

Complicity, Attempt, Conspiracy

Attempt and complicity are both covered by German law. (See Criminal Code ‘’25(2), 26, 27, and 334

and ACIB ‘1(2).)

Greece

Greece signed the Convention on December 17,

1997, and ratified it on November 5, 1998. It deposited

its instrument of ratification with the OECD on February 5, 1999. Greece’s implementing legislation was

adopted on November 5, 1998, and became effective on

December 1, 1998.

Sources for this analysis include Greek Law 2656/

1998 implementing the Convention, as well as other information obtained by the U.S. embassy in Athens.

Under Article 28 of the Greek Constitution, generally approved rules of international law and international

conventions that have been ratified under Greek law form

an integral part of domestic Greek law and supersede

any existing conflicting law, to the extent that they do

not conflict with the Constitution. Accordingly, the Convention became an integral part of Greek law when

Greece enacted Law 2656/1998 ratifying the Convention and including specific provisions to criminalize bribery of foreign public officials.

Basic Statement of the Offense

The basic statement of the offense is set forth in Article 2(1) of Law 2656/1998:

Any person who, in the conduct of international business and in order to obtain or retain business or other

improper advantage, promises or gives, whether directly or through intermediaries, any undue gift or

other advantage, to a foreign public official, for that

official or for a third party, in order that the official

act or refrain from acting in relation to the performance of official duties, is punished with imprisonment of at least one year.

Jurisdictional Principles

Although the statute itself does not contain any information about jurisdictional principles, Greek law provides for both territorial and nationality jurisdiction. Article 5 of the Greek Criminal Code provides that Greece
Chapter 2: Review of National Implementing Legislation 39

follow the principle of territoriality: Greek criminal laws

apply to all acts committed in Greek territory, either by

Greeks or other nationals. Article 16 generally defines

the place where acts are committed as the place where

the act or omission was carried out in whole or in part. It

is our understanding that if only part of the act in furtherance of the bribery took place in Greece, the crime

would still fall within Greek jurisdiction. Article 6 of the

Criminal Code provides that Greek criminal laws apply

to criminal acts committed abroad by a Greek national if

the act is punishable under the laws of the country in

which it occurs.

Coverage of Payor/Offeror

Article 2 covers bribery by “any person,” but does

not describe what persons or entities are covered by this

term. It is our understanding that “any person” means

any individual.

Under Article 71 of the Greek Civil Code, legal entities are generally responsible for the acts or omissions of

their representatives, meaning those in management positions, in carrying out the legal entities’ functions. Greek

law does not provide for criminal responsibility for legal

entities. Therefore, corporations are subject only to administrative penalties (See below). It is unclear to what

extent a corporation could be held responsible for bribes

involving lower-level employees. It appears that under

Criminal Code Article 922, the company may also be

held responsible in some circumstances for acts and

omissions of its employees and auxiliary personnel whose

positions have been prescribed by the company’s bylaws

and when acting in the scope of their positions.

Coverage of Payee/Offeree

The statute itself does not define “foreign public official.” However, it is our understanding that the statute

incorporates the definitions found in the Convention and

Official Commentaries, and specifically that Convention

Article 4(a) containing the definition of “foreign public

official” and Commentary footnotes 14-18 apply. It is

our understanding that the definition of a foreign public

official will be interpreted in light of the definitions of

domestic public officials under the Greek Criminal Code,

Articles 13 and 263(a), which is even broader than the

Convention definition.

Penalties

Although Law 2656 states that any person who bribes

a foreign public official “is punished with imprisonment

of at least one year,” it is our understanding that the law

is to be read in conjunction with Criminal Code Articles

235 and 236 on bribery of domestic officials, which provide that the penalty for bribery may range between one

and five years. There do not appear to be any fines for

individuals for the bribery of domestic or foreign public

officials.

As stated above, the Greek judicial system does not

recognize criminal responsibility for legal entities. Article 5 provides three kinds of administrative penalties

for a company whose managerial employees violate the

law: fines of up to three times the value of any benefit

that it has received, temporary or permanent prohibition

from doing business, or provisional or permanent exclusion from state grants or incentives. Article 2(2) provides

for the confiscation of the bribe or the value of the bribe.

Article 76 of the Greek Code of Criminal Procedure provides for confiscation of the proceeds of a crime. Also, if

an act violates the anticorruption laws as well as Article

2(1) of Law 2331/1995 concerning money laundering,

then paragraphs 6-10 of that article on the confiscation

of goods will also apply. Goods may also be seized during the criminal investigation/inquiry under the Code of

Criminal Procedure Articles 258, 259, 260, 261, 266, 288,

and 495.

Under Articles 111, paragraphs 3 and 112 of the

Criminal Code, the statute of limitations in general for

acts of bribery, as for all crimes, is five years after the

commission of the act.

Books and Records Provisions

Books and records are covered by Greece’s Accounting Code. Violations of the code are punished under Law

2523/1997, which provides for both criminal and civil

sanctions. If the violations in question are committed in

furtherance of a bribe to a foreign public official, Article

3 of Law 2656/1998 also applies. Article 3 specifically

prohibits off-the-books business accounts, false bookkeeping entries, or false documents and provides for a

three-year prison term for such offenses, unless a longer

term would apply pursuant to another provision of Greek

law. Article 4 of Law 2656/1998 gives the authority to

investigate violations of Article 3 to the Greek Financial

and Economic Crimes Office.

Money Laundering

Bribery of foreign public officials is a predicate offense for the application of the Greek money-laundering

Law 2331/1995, as is the case with domestic bribery,

without regard to where the bribe occurred.
40 Battling International Bribery, 2001

Extradition/Mutual Legal Assistance

Greece has an extradition treaty with the United

States that has been in effect since 1932. The treaty includes bribery as an extraditable offense. Generally, under Article 437 of the Code of Criminal Procedure, extradition is permitted if the maximum prison sentence

for the act upon which the extradition request is based

exceeds two years under both Greek law and the law of

the country requesting extradition. Bribery of foreign

public officials is an extraditable offense because, as

noted above, the maximum prison sentence is five years.

The Convention will serve as the legal basis for extradition for the offense of bribery of foreign public officials.

Under Article 428 of the Code of Criminal Procedure,

Greece cannot extradite its own citizens.

The Greek government will offer mutual legal assistance in accordance with the European Convention on

Mutual Legal Assistance concerning criminal acts, and

in accordance with its bilateral mutual assistance treaties. Article 7 of Law 2656/1998 gives the authority for

purposes of Convention Article 4 on jurisdiction to the

Greek Ministry of Justice.

Complicity, Attempt, Conspiracy

It is our understanding that the Greek Criminal Code

Articles 45-49 on complicity and aiding and abetting

apply to bribery of foreign public officials.

Hungary

Hungary signed the OECD Convention on December 17, 1997, and deposited its instrument of ratification

with the OECD on December 4, 1998. Hungary’s implementing legislation entered into force on March 1, 1999.

Our primary source for this analysis is the implementing legislation contained in Title VIII of the Hungarian Criminal Code (Crimes Against the Purity of International Public Life), dated December 22, 1998.

Two major concerns arise from Hungary’s implementation of the Convention. First, Hungary currently provides for neither criminal nor civil liability for legal persons. Second, Hungarian law includes a defense for bribes

that are solicited by the official and are paid only to avoid

an “unlawful disadvantage.” In our view, these matters

must be addressed for Hungary to fully implement the

Convention. In addition, we are concerned that Hungary’s

three-year statute of limitations is too short and may not

fulfill the Convention requirement of an adequate period

of time for investigation and prosecution.

Basic Statement of the Offense

The basic prohibition for bribery of public officials

is Section 258/B of the Hungarian Criminal Code (HCC):

(1) The person who gives or promises a favor to a

foreign official person or with regard to him to another person, which may influence the functioning

of the official person to the detriment of the public

interest, commits a misdemeanor and shall be punishable with imprisonment of up to two years.

(2) The briber shall be punishable for a felony with

imprisonment of up to three years, if he gives or

promises the favor so that the foreign official person

violates his official duty, exceeds his competence,

or otherwise abuses his official position.

(3) The perpetrator of the crime defined in subsection (1) shall not be punishable, if he gave or promised the favor upon the initiative of the official person because he could fear unlawful disadvantage in

case of his reluctance.

Jurisdictional Principles

Hungary applies the principles of territorial and nationality jurisdiction. (See HCC ‘3.) In addition, our translation of Hungary’s law states that Hungary will apply

its law to non-Hungarian citizens abroad, if the acts are

violative of Hungarian law and the law of the place of

perpetration. (See HCC ‘4.) The statute of limitations for

bribery of a foreign public official is three years.

Coverage of Payor/Offeror

The Hungarian statute applies to “person[s].” Hungarian law does not provide for criminal responsibility

of legal persons. We are not aware of any administrative

or civil sanctions that may be imposed on legal persons

for bribery.

Coverage of Payee/Offeree

A foreign official person is defined in the statute to

include the following (see HCC ‘258/F(1)):

• A person holding a legislative, administrative or

judicial office in a foreign state.

• A person at an organ or body entrusted with public power or public administration duties or who fulfills tasks of public power or state administration.

• A person serving at an international organization constituted by international treaty, whose activity forms part of the proper functioning of the organ.

• A person elected to the assembly or other elected

body of an international organization that is constituted by international treaty.
Chapter 2: Review of National Implementing Legislation 41

• A member of an international court with jurisdiction over the Republic of Hungary or a person

serving the international court, whose activity forms

part of the proper functioning of the court.

Penalties

The penalties for bribery of a foreign public official

are up to two years for purchasing influence and up to

three years where the bribe was intended to induce the

official to violate his official duty, exceed his competence, or otherwise abuse his official position. These penalties are identical to those for domestic bribery. (Compare HCC ‘’253, 258/B.) In addition, Hungary authorizes the confiscation of property “which was obtained

by the perpetrator during or in connection with the commission of the crime.” (HCC ’62, 63.) In addition, the

law provides for the confiscation of instrumentalities of

crime. (See HCC ‘’77, 77/A.)

Although Hungary does not provide for criminal responsibility of a legal person, it does provide that an officer of a business association may be barred from being

an “executive officer of a business association until relieved of the detrimental legal consequences related to

his criminal record.” (Act CXLIV of 1997 on Business

Associations, ’23.) In addition, such a person may be

barred from being an executive officer in a particular

profession for up to three years. (See id.)

Books and Records Provisions

Act XVIII of 1991 on Accounting defines the reporting and bookkeeping obligation of economic organizations. In addition, tax provisions include detailed regulations concerning the verification, accounting, and registration of incomes and costs arising in connection with

the activity of the enterprise.

Money Laundering

Foreign and domestic bribery are predicate offenses

for Hungary’s money-laundering offense. (See HCC

‘303.)

Extradition/Mutual Legal Assistance

Hungary will extradite non-nationals provided there

is dual criminality. (See HCC ’11.) Hungary will extradite Hungarian nationals only if the person holds dual

nationality and is a resident of a foreign state. (See HCC

’13.)

Hungary has both an extradition treaty and a mutual

legal assistance treaty with the United States, both of

which entered into force in 1997. Hungary will provide

mutual legal assistance provided that doing so will not

“prejudice the sovereignty, security, or public order of

the Republic of Hungary” (Act XXXVIII of 1996 on International Legal Assistance in Criminal Matters, ‘2).

Complicity, Attempt, Conspiracy

Hungarian law covers attempt and abetting. (See

HCC ‘’16-21.)

Iceland

Iceland has implemented the Convention by enacting Act No. 147/1998, amending its General Penal Code,

and Act No. 144/1998, on the Criminal Liability of Legal Persons on Account of Bribery of Public Officials.

Both laws were passed on December 22, 1998, and went

into effect on December 30, 1998. Act No. 147/1998

amended Section 109 of the General Penal Code to fully

equate bribery of a foreign public official or an official

of a public international organization with bribery of a

domestic public official.

Basic Statement of the Offense

Section 109 of the General Penal Code provides:

(1) Whoever gives, promises or offers a public official a gift or other advantage in order to induce him

to take an action or to refrain from an action related

to his official duty, shall be imprisoned for up to three

years, or, in case of mitigating circumstances, fined.

(2) The same penalty shall be ordered if such a measure is resorted to with respect to a foreign public

official or an official of a public international organization in order to obtain or retain business or other

improper advantage in the conduct of international

business.

Section 18 of the General Penal Code requires intent

for all criminal actions; therefore bribery of a foreign

public official must be intentionally committed.

Jurisdictional Principles

Iceland’s law provides for both territorial and nationality jurisdiction. Chapter 2 of the General Penal Code

allows for prosecution of any offense committed, in part

or in whole, in Iceland. The General Penal Code requires

only that a significant number of the elements be traced

to Iceland. Under Section 7 of the General Penal Code,

an offense is deemed to have been committed where its

consequences are actual or deliberate.

Section 5 of the General Penal Code allows Iceland

to prosecute its nationals for crimes committed abroad if

the acts were also punishable under the law of the nation

where committed. However, under Section 8 of the Gen-
42 Battling International Bribery, 2001

eral Penal Code, the penalties for such offenses are limited to those of the country where the crime is committed. We understand that the statute of limitations for bribery of foreign public officials is five years with respect

to both natural persons and legal persons.

Coverage of Payor/Offeror

Iceland’s General Penal Code applies to whoever

offers or pays a bribe, without reference to nationality.

Legal entities are also covered under Act No. 144/1998

on the Criminal Liability of Legal Persons on Account

of Bribery of Public Officials.

Coverage of Payee/Offeree

“Foreign public official” is not specifically defined

in the General Penal Code. However, the explanatory

notes to the act amending Section 109 of the General

Penal Code expressly state that the term “foreign public

official” is meant to have as broad a scope as in the Convention. Furthermore, the explanatory notes state that the

law will be interpreted in conformity with the Convention.

Penalties

Under Section 109 of the General Penal Code, the

maximum prison sentence for bribery of a domestic or

foreign public official is three years. Fines may be assessed in certain circumstances.

Act No. 144/1998, on Criminal Responsibility of

Legal Persons on Account of Bribery of Public Officials,

provides that a legal person may be fined if its employee

gives, promises, or offers a domestic or foreign public

official a gift or advantage to induce acts or omissions as

part of the recipient’s official duties. Icelandic law provides for criminal responsibility of legal persons. In May

2000 the maximum limit on fines for legal persons was

removed.

The Code of Criminal Procedure allows for the seizure of “objects” if obtained by criminal means under

Section 78. “Objects” include documents, money, and

proceeds. Iceland’s implementing legislation does not

provide for civil or administrative penalties for bribery

of a foreign public official.

Books and Records Provisions

Section 1 of the Business Records Act requires all

businesses, regardless of form, to maintain clear records.

Section 6 of the Business Records Act requires businesses

to maintain records in such a manner as to make all transactions traceable. Section 36 of the Business Records Act

makes a violation of any part of the act a criminal offense. Violators may be fined and, in serious cases, imprisoned for a period not to exceed six years.

Money Laundering

Bribery of a foreign public official or a domestic official is a predicate offense for the application of Iceland’s

money-laundering law found in Section 264 of the General Penal Code. Where the bribe occurred is not a relevant consideration.

Extradition/Mutual Legal Assistance

Act 13/1984 on Extradition of Criminal Offenders

and Other Assistance in Criminal Matters (Extradition

Act) allows the extradition of any suspect so long as the

alleged act is punishable under Icelandic law by a prison

term of at least one year. However, the extradition of

nationals of Iceland is forbidden under Section 2 of the

Extradition Act.

The Extradition Act also governs mutual legal assistance. Under the Extradition Act, Iceland will render legal assistance regardless of the applicable penalty. The

Code of Criminal Procedure sets forth the procedures

for rendering legal assistance to foreign states.

Complicity, Attempt, Conspiracy

Section 20 of the General Penal Code provides that

any attempt to commit a crime is punishable. Under Section 22 of the General Penal Code, all accomplices to an

offense under the General Penal Code are criminally liable. Section 70 of the General Penal Code provides that

when two people commit a crime, both may be prosecuted for the commission of the crime. In addition, under Section 70, acting together to commit a crime is regarded as an aggravating factor. We understand that conspiracy per se could constitute a criminal offense only

under certain circumstances.

Italy

Italy signed the Convention on December 17, 1997.

It adopted implementing legislation (Act No. 300) on

September 29, 2000, which entered into force on October 26, 2000. Italy deposited its instrument of ratification of the Convention with the OECD on December 15,

2000, and the Convention entered into force for Italy on

February 13, 2001. Although Italian law does not provide for criminal responsibility for legal persons, on May

2, 2001, the Council of Ministers approved the text of an

implementing decree which will introduce administrative sanctions against legal persons for bribery pursuant

to guidelines and principles set forth in Article 11 of the
Chapter 2: Review of National Implementing Legislation 43

Italian implementing legislation and consistent with

Italy’s obligations under Articles 2 and 3 of the Convention. The decree will enter into force upon signature by

the President and publication in the official gazette.

Generally, the Italian implementing legislation appears to fulfill the requirements of the Convention. One

minor concern is that, in certain circumstances, Italian

law provides for a defense for “concussione” (coercion),

whereby the briber may not be penalized for being obliged

or induced to make an illegal payment. We also note that

Italian law does not provide financial penalties for natural persons convicted of bribery offenses. The added

possibility of imposing financial penalties, although not

required by the Convention, would make Italy’s sanctions more “effective, proportionate and dissuasive” than

would imprisonment alone. We will monitor both the use

of the defense of concussione as well as the effectiveness of the penalties provided for in the Italian legislation during Phase II of the monitoring process.

Basic Statement of the Offense

In order to implement the Convention, Italy added a

new Article 322 bis to its Criminal Code to establish the

offenses of passive bribery of officials of the European

Communities and, in Paragraph 2, subsection 2, the active bribery of foreign public officials. Article 322 bis

Paragraph 2, subsection 2, provides that the provisions

of Articles 321 and322 on domestic bribery will apply

where money or other advantages are given, offered, or

promised to foreign public officials. The term “foreign

officials” is defined as:

persons carrying out functions or activities equivalent to those performed by public officials and persons in charge of a public service within other foreign States or public international organizations,

when the offense was committed in order to procure

an undue benefit for himself or others in international

business transactions.

The Italian implementing legislation refers to Articles

321 and 322 on the bribery of domestic officials, which

in turn reference the Italian provisions on passive bribery, including Articles 318, 319, 319 bis, 319 ter, and

Article 320, by domestic officials in order to determine

applicable penalties. Generally, the relevant articles concern two aspects of bribery: bribery acts where a bribe

payment was made in order for a foreign public official

to perform acts relating to one’s office, and, secondly,

bribery for the public official to omit or delay such acts

relating to one’s duties, or for breaching one’s duties.

Intent is required for both categories of offenses. According to Italian officials, bribery through intermediaries is

covered, as are bribes made for third parties.

Italian law contains a possible defense to the basic

statement of the offense. Article 317 of the Criminal Code

covers the offense of concussione by a public official. In

such cases, only the public official would be liable for

punishment and not the person who was “obliged” or

“induced” to pay a bribe. This provision might weaken

the effective application of the Convention. Italy has indicated, however, that defendants in bribery cases have

only rarely invoked this provision, and even more rarely

has it been successful.

Jurisdictional Principles

Italy practices both territorial and nationality jurisdiction. Under Article 6 of the Criminal Code, “[w]hoever

commits an offense in the territory of the State shall be

punished according to Italian law. An offense shall be

deemed committed in the territory of the State when the

act or omission, which constitutes it, occurred therein in

whole or in part, or when an event which is a consequence of the act or omission took place therein.” The

Italian courts have generally held that territorial jurisdiction applies where the offense originates abroad and

is completed in Italian territory and where the offense is

committed wholly abroad with the participation of another person in Italian territory. Italian territory is held

to include Italian aircraft and ships.

With respect to nationality jurisdiction, Articles 6

through 10 of the Criminal Code establish jurisdiction

over offenses committed abroad in certain limited cases:

• jurisdiction over an Italian national or an alien

for an offense committed by a public officer in service of the State by abusing the powers or violating

the duties of one’s office, regardless of whether the

citizen or alien is found within Italy, and

• jurisdiction in certain other limited cases over

Italian nationals (or aliens) within Italian territory

for offenses committed abroad.

We understand that Italian law does not require dual

criminality for establishing jurisdiction over an offense

which occurs entirely abroad.

Coverage of Payor/Offeror

Article 322 bis, establishing bribery of a foreign public official as an offense, does not specify to whom it

applies. However, Article 322 bis is linked in the statutory scheme to Article 321, the corresponding article regarding domestic active bribery, which applies to “any

person.” Under Italian law only natural persons can be

held criminally liable.

As noted above, the newly adopted legislative de-
44 Battling International Bribery, 2001

cree will provide for administrative sanctions for a legal

person found guilty of a bribery offense. Article 11 of

the implementing legislation enabled the government to

issue a decree providing for the administrative responsibility of legal persons and companies, associations, and

bodies without legal personality that do not carry out

statutory functions (partnerships). We understand that the

definition of “legal persons” under Article 11 would include state-owned and state-controlled corporations when

they are acting in their commercial capacity, but exclude

them when they are exercising “public powers.” The Italian authorities explained that this provision would be

interpreted narrowly to ensure that State and other public enterprises, including those that cover regions and

municipalities, would not escape administrative liability.

Coverage of Payee/Offeree

As noted above, paragraph 2, subsection 2 of Article

322 bis of the Criminal Code applies to the bribery of

“persons carrying out functions or activities equivalent

to those performed by public officials and persons in

charge of a public service within other foreign States or

public international organizations.” We understand that

the intent of Italian legislators is to criminalize the bribery of foreign public officials executing functions corresponding to those of a public official under Italian law.

Article 357 (defining “public officer”) and Article 358

(defining “person in charge of a public service”) of the

Criminal Code do not correspond exactly to the definition of “foreign public official” in Article 1 of the Convention. The Italian authorities, however, represented that

Italian case law illustrates that all the categories of public officials referred to in Article 1 of the Convention are

indeed covered by Italian law.

Penalties

Penalties for a natural person convicted of giving,

promising, or offering a bribe to a foreign public official

for the performance of an act related to the office of the

official or for an omission or delay of an act relating to

the office of the official or for performance of an act in

breach of official duties are covered in Articles 321 and

322 of the Criminal Code read in conjunction with Criminal Code Articles 318-320. Ranges of imprisonment depend on the severity of the offense and can vary from a

term of imprisonment between 6 months and 3 years at

the lower end to a term between 6 and 20 years for crimes

in which another person has been wrongly sentenced to

a term of imprisonment of more than 5 years. In certain

circumstances, e.g., where the foreign public official does

not accept the offer or promise of a bribe, the penalty

can be reduced up to a maximum of one-third. Although

the Convention does not require monetary penalties for

natural persons, we believe that adding such sanctions

could prove more dissuasive than imprisonment alone.

A natural person is also subject to a number of civil

sanctions including permanent or temporary disqualification from holding public office, loss of capacity to enter

into contracts with the public administration, and an obligation to make restitution and pay damages.

As stated above, the Italian legal system does not

provide for criminal responsibility of legal persons. However, pursuant to Article 11 of its implementing legislation, the Italian government has issued a legislative decree to regulate administrative liability for legal persons.

The following principles and guidelines in Article 11 are

to have been followed in the legislative decree. Paragraph

(1)(f) of Article 11 repeats the basic principle of the Convention that noncriminal penalties of legal persons should

be “effective, proportionate and dissuasive.” Monetary

sanctions under paragraph (l) (g) of Article 11 range from

Italian Lire 50 million (approx. U.S.$22,000) to Italian

Lire 3 billion (approx. U.S.$1.3 million) depending on

the gravity (i.e., the amount of bribe proceeds) of the

offense and the financial condition of the firm. Where

these two factors are “especially slight,” the range of fines

is between Italian Lire 20 million (approx. U.S.$9,000)

and Italian Lire 200 million (approx. U.S.$90,000). In

addition, according to paragraph (1)(h) of Article 11, the

fines shall not exceed the social capital or total assets of

an enterprise. Paragraph (1)(n) of Article 11 states that

the fines shall be reduced by one-third to one-half where

the enterprise has adopted “conduct ensuring an effective compensation or restoration with regard to the offense committed.”

In addition, Article 11 provides for one or more of

the following sanctions, in addition to fines, in “particularly serious cases”:

1. The closing (temporary or permanent) of the

place of business.

2. Suspension or revocation of authorizations, licenses, or permits instrumental to the commission

of the offense.

3. Disqualification (temporary or permanent) from

carrying out the activity of the body and possible

appointment of another body to carry out the activity where necessary to prevent damage to third parties.

4. Prohibition (temporary or permanent) from dealing with the public administration.

5. Temporary exclusion from obtaining any allow-
Chapter 2: Review of National Implementing Legislation 45

ances, funding, contributions or aid, and possible

revocation of those already granted.

6. Prohibition (temporary or permanent) from advertising goods and services.

7. Publication of the sentence.

Italian law provides for both preventive (e.g., to avoid

aggravation or prolongation of an offense) and probatory

(when evidence is to be acquired) seizure. Article 240 of

the Criminal Code covers confiscation generally, and the

Italian implementing legislation added a new Article 322-

ter which covers confiscation in cases where the offense

involved a gift or a promise. For legal persons, Article

11(1)(i) of the implementing legislation provides for confiscation of the bribe or the bribe proceeds, or their

equivalent value.

The general statute of limitations is five years for

the criminal offense of bribing a foreign public official

and with respect to the application of administrative sanctions on a legal person or other covered body for the commission of an offense. In certain instances of aggravated

bribery, the statute of limitations is 10 years. However,

the deadline for commencing preliminary investigations

is also relevant to the discussion of statutes of limitations. Where an investigation concerns an unknown person, the deadline is six months unless the public prosecutor requests an extension. In the case of an investigation of a known person, the deadline is also six months

unless the public prosecutor requests an indictment for

trial or an extension. In the latter case, extensions are

usually limited to 1 year, although in the case of complex investigations of “serious offenses” (including bribery of a foreign public official), investigations may be

extended for two years.

Books and Records Provisions

Accounting and auditing requirements for Italian

firms are specified in Article 13 of Presidential Decree

600/73 and Articles 2364 and 2400 of the Civil Code.

Requirements for limited liability companies with a capital of at least Italian Lire 200 million (approx.

U.S.$90,000) are contained in Article 2488. Company

executives who provide false financial information, or

who unlawfully distribute profits, can be punished with

imprisonment of one to five years and a fine of Italian

Lire 2 million to 20 million (approx. U.S.$900 to $9,000).

Auditors who commit this offense are subject to punishment of imprisonment of six months to three years and a

fine of Italian Lire 200,000 to 2 million (approx. U.S.$90

to $900). Under Article 2409 of the Civil Code directors

and auditors may be dismissed for accounting and auditing irregularities. Criminal and administrative penalties

may also result under Legislative Decree No. 74 of March

10, 2000 for the issuance of false invoices and other false

documents in order to evade taxes.

Money Laundering

Article 648 bis of the Criminal Code calls for the

punishment of anyone who substitutes, transfers, or conceals money, goods, or assets obtained by means of an

intentional criminal offense for the purpose of concealing the link between such assets and a predicate offense.

This provision would only apply to a person who has

laundered the money, who may not always be the person

who committed the predicate offense. Italian law provides for punishment of a person who invests the proceeds from these crimes in financial assets and for the

possibility of punishing a person for money laundering,

even if the predicate offense has been committed abroad.

Extradition/Mutual Legal Assistance

Pursuant to Article 696 of the Code of Criminal Procedure, Italy will respond to requests for extradition under international conventions in force in Italy or under

bilateral treaties, including the bilateral extradition treaty

between the United States and Italy. Under Title II of the

Code of Criminal Procedure, Italy may, in some cases,

grant extradition to a country with which it does not have

a treaty. The Court of Appeal cannot consent to extradition in certain limited cases. For example, if the offense

for which extradition is sought is punishable by death

under the law of the requesting country, sufficient assurance must be provided that the accused will not be sentenced to death or, if already sentenced, will not be executed. Italian citizens can be extradited only pursuant

to a treaty obligation. The extradition treaty between the

United States and Italy does not permit refusal of extradition based on the nationality of the individual sought.

Italy is a party to the European Convention on Legal

Assistance in Criminal Matters and to a number of bilateral legal assistance treaties, including a mutual legal

assistance treaty with the United States. Article 696 of

the Code of Criminal Procedure provides that letters requesting mutual legal assistance can be executed pursuant to such agreements. Where no treaty exists, mutual

legal assistance can be granted pursuant to provisions in

Title III of the Code of Criminal Procedure. The Court

of Appeal and the Minister of Justice must refuse to grant

assistance in certain limited instances, such as where the

requested acts are expressly prohibited by Italian law or

are in conflict with fundamental principles of the Italian

legal system. Italian authorities have confirmed that

mutual legal assistance will be granted for an offense
46 Battling International Bribery, 2001

coming within the scope of the OECD Convention. Italy

will not deny mutual legal assistance in criminal investigations on the grounds of bank secrecy.

Complicity, Attempt, Conspiracy

Article 110 of the Criminal Code states that participants in the same offense shall each be subject to the

prescribed punishment. In case of aggravating circumstances, such as the participation of five or more persons

in the offense, the punishment shall be increased pursuant to Article 112. As the Criminal Code does not define

participation, it is not evident whether aiding and abetting and authorization are covered. The Italian authorities have indicated that under Articles 322 and 322 bis,

incitement to bribery is considered a completed crime

and that these provisions would also apply to an attempt.

Conspiracy does not exist in Italian law.

Japan

Japan signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD on October 13, 1998. Implementing legislation

was adopted on September 18, 1998, and entered into

force on February 15, 1999, when the Convention itself

entered into force for Japan.

Japan’s legislation to implement the Convention is

found in amendments to the Unfair Competition Prevention Law (Law No. 47 of May 19, 1993) (UCPL), rather

than the Penal Code, where domestic bribery laws are

found. The penalties are criminal, however. Provisions

of the Penal Code apply generally to all crimes unless

specified otherwise.

Sources for this analysis include the UCPL, provisions of the Penal Code and other Japanese laws, information obtained from the government of Japan through

diplomatic exchanges, and reporting from the U.S. embassy in Tokyo.

There are concerns as to whether the maximum fines

for natural and legal persons are “effective, proportionate and dissuasive,” as Article 3(1) of the Convention

requires. There is also a concern that Japan will not subject the proceeds of bribery to confiscation, nor will it

impose monetary sanctions of comparable effect (other

than the criminal fines that otherwise apply to bribery)

in lieu of such confiscation, as required under Convention Article 3(3). The “main office” exception to territorial jurisdiction is problematic, as is the fact that bribery

is not included among the crimes subject to the application of nationality jurisdiction. Other concerns relate to

the definition of “foreign public official,” coverage of

payments made to a third party at the direction of a foreign public official, and the length of the statute of limitations.

Basic Statement of the Offense

Article 10 bis (1) of the UCPL provides:

No person shall give, offer or promise any pecuniary or other advantage to a foreign public official, in

order that the official act or refrain from acting in

relation to the performance of official duties, or in

order that the official, using his position, exert upon

another foreign public official so as to cause him to

act or refrain from acting in relation to the performance of official duties, in order to obtain or retain

improper business advantage.

Article 10 bis (1) does not include the element of

intent. Intent is generally an element in all criminal offenses pursuant to Article 38 of the Penal Code. Article 8

provides that general provisions such as Article 38 apply

to crimes under statutes other than the Penal Code. Article 10 bis (1) does not address bribes offered, promised, or given through intermediaries, nor bribes paid,

on behalf of a public official, to a third party.

Jurisdictional Principles

Article 10 bis of the UCPL does not address basic

jurisdictional principles. However, Article 1 of the Penal

Code sets forth the principle of territoriality. We understand that in order to establish jurisdiction, at least one

element of the offense must be committed in Japan. Pursuant to Article 8 of the Penal Code, the provisions of

Article 1 apply to the UCPL.

Under Article 10 bis (3) of the UCPL, Article 10 bis

(1) does not apply if the country of the foreign official

who is the bribe recipient is the same country in which

the “main office” of the briber is located. Under this exception, therefore, a bribe transaction that occurred in

whole or in part in Japan would not be covered under the

UCPL if the briber’s “main office” were located in a certain country and the bribe recipient were an official of

the government of that same country.

Under Article 3 of the Penal Code, nationality jurisdiction is applied only for specified crimes: arson, forgery, rape, murder, bodily injury, kidnapping, larceny, robbery, fraud, extortion, or embezzlement. Bribery, either

domestic or foreign, is not included.

The statute of limitations for active bribery of foreign officials, like bribery of domestic officials, is three

years. Article 250 of the Code of Criminal Procedure

prescribes a three-year statute of limitations for offenses

with a potential sentence of less than five years. Article
Chapter 2: Review of National Implementing Legislation 47

255 bis (1) provides that the statute of limitations does

not run during the period in which the offender is outside Japan.

Coverage of Payor/Offeror

Article 10 bis (1) prohibits conduct by any “person,”

without reference to nationality.

Coverage of Payee/Offeree

In Article 10 bis (2), “foreign public official” is defined to include:

• Persons engaged in public service for a national

or local government in a foreign country.

• Persons engaged in service for an entity constituted under foreign special laws to carry out specific

tasks in the public interest.

• Persons engaged in business operations in which

more than half of the stock or capital is held directly

by a foreign government, or in which the majority of

the executives are appointed by a foreign government, and that have been granted special privileges

by a foreign government.

• Persons engaged in public service for an international organization.

• Persons exercising a public function that falls

under the competence of and is delegated by a foreign government or international organization.

This definition of “foreign public official” does not

address indirect government control of an enterprise, nor

cases of de facto control where the government holds

less than 50 percent of the shares of an enterprise.

Under Articles 197 and 198 of the Penal Code, laws

against active and passive domestic bribery apply in cases

in which a person is bribed in anticipation of becoming a

public official, if that person actually becomes a public

official. It is not clear whether this applies equally to

bribery of a foreign public official.

Penalties

Under Article 14 of the UCPL, legal persons can be

held criminally liable. Article 14 provides that the maximum fine for legal persons is 300 million yen (approx.

$2.5 million). There is no comparable penalty for domestic bribery because the Penal Code, which covers

domestic bribery, does not provide for criminal liability

of legal persons.

Under Article 13, the penalties for natural persons

are imprisonment for up to three years or a maximum

fine of ¥3 million (approx. U.S. $25,000). The corresponding penalties in Article 198 of the Penal Code for

domestic bribery are imprisonment for up to three years

or a maximum fine of ¥2.5 million (approx. U.S.

$21,000). According to the Japanese legislation, a fine

or imprisonment can be applied in the alternative, but

not together.

Article 19 of the Penal Code provides for confiscation of the bribe or its monetary equivalent. Under the

recently enacted Anti-Organized Crime Law, if there has

been a conviction under Article 10 bis (1) UCPL, the

judge has discretion to confiscate “any property given

through a criminal act.” Japanese law does not provide

for confiscation of the proceeds of bribery, or monetary

sanctions of comparable effect. Nor does Japanese law

contain other civil or administrative sanctions for bribery of a foreign public official.

Books and Records Provisions

Companies and partnerships with capital equal to or

exceeding ¥500,000 (approx. U.S. $4,200) must, under

Article 32 bis (1) of the Commercial Code, keep accounts

and balance sheets that reflect the condition of the business and profits/losses. Such accounts must be kept in

accordance with the requirements of the Financial Accounting Standards for Business Enterprises. Under Article 498 bis (1) of the Commercial Code, directors and

others administering the affairs of a company are subject

to non-criminal fines of up to ¥1 million (approx. U.S.

$8,400) for falsification of records.

Articles 281 and 282 of the Commercial Code contain certain requirements for the maintenance of financial records by companies that issue shares of stock.

Under Article 266 bis (3), directors are liable for falsifying audit reports, prospectuses, etc. Share-issuing companies with capital of ¥500 million (approx. $4.2 million) or more, or total liabilities of ¥20 billion (approx.

U.S. $168 million) or more, must be audited by external

auditors pursuant to Article 2 of the Law for Special

Exceptions to the Commercial Code.

Companies that issue securities listed on a stock exchange are covered by the Securities and Exchange Law

(SEL). Article 207 of the SEL provides that balance

sheets, profit and loss statements, and other documents

relating to financial accounting are to be prepared in accordance with the requirements prescribed by the Ministry of Finance. Under Article 207 (2), such records must

be audited by independent auditors. Under Article 30 of

the Certified Public Accountants Law, accountants who

falsely certify the correctness of financial documents are

subject to administrative sanctions.

Article 197 (1) of the SEL provides for criminal penalties (imprisonment for up to five years and/or fines of

up to ¥5 million (approx. U.S. $42,000) for persons who
48 Battling International Bribery, 2001

submit false registration statements. The corporation may

also be penalized under Article 207. Individuals submitting false registration statements may also, under Article

18 of the SEL, be held civilly liable to injured investors.

Money Laundering

Under the Anti-Organized Crime Law, the acceptance

of a bribe by (but not the act of bribing) a domestic or

foreign official is a predicate offense for the purpose of

Japan’s money-laundering laws. Penalties include imprisonment for maximum terms of three to five years, or fines

ranging from a maximum of ¥1 million to ¥10 million

(approx. U.S. $8,400-$84,000).

Extradition/Mutual Legal Assistance

Under the U.S.-Japan extradition treaty, bribery is

an extraditable offense so long as it is punishable in both

countries by imprisonment for a period of more than one

year. The treaty provides that extradition of a party’s

nationals is discretionary. The United States and Japan

do not have a mutual legal assistance treaty. (One is currently under negotiation.) Japan can provide legal assistance to other countries under the Law for International

Assistance in Investigation (dual criminality is required)

and the Law for Judicial Assistance to Foreign Courts.

Complicity, Attempt, Conspiracy

Complicity is governed by Articles 61-65 of the Penal Code. Article 61 pertains to instigation of criminal

acts. Aiding and abetting the commission of an offense

is covered under Article 62. Neither the Penal Code nor

the UCPL criminalizes attempted bribery. Under Article

60, conspiracy is punishable if a coconspirator carries

out the criminal act. These provisions apply equally to

offenses under the UCPL.

Korea

Korea signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD on January 4, 1999. The implementing legislation entered into force on February 15, 1999. Sources

for this analysis include the Foreign Bribery Prevention

Act in International Business Transactions of 1998

(FBPA) and diplomatic reporting from the U.S. embassy

in Seoul.

One concern with the Korean legislation is that currently neither domestic or foreign bribery is a predicate

offense to Korean money laundering legislation. However, we understand that Korea will enact new legislation so that bribery will be a predicate offense.

Basic Statement of the Offense

Article 1 sets forth the purpose of the FBPA, which

is to contribute to the establishment of sound practice in

international business transactions by criminalizing bribery of foreign public officials and providing the details

necessary for implementing the OECD Convention. The

basic statement of the offense of bribery is contained in

the FBPA’s penalty provisions for natural (Article 3) and

legal (Article 4) persons. Article 3, “Criminal Responsibility of Bribery,” provides that:

Any person, promising, giving or offering [a] bribe

to a foreign public official in relation to his/her official business in order to obtain [an] improper advantage in the conduct of international business transactions, shall be subject to [penalties].

We understand that under Korean law generally a

bribe is “any undue advantage in relation to a public

official’s duty or business.” Furthermore, it is our understanding that although its implementing law does not

explicitly include liability for payments for the benefit

of third parties, the Korean law does cover situations in

which payments are made to a third party for the benefit

of a public official and in which payments are made to a

public official for the benefit of a third party.

Article 4 covers such bribes on behalf of a legal person by a “representative, agent, employee or other individual working for [a] legal person...in relation to its

business.” There are two exceptions to the basic statement of the offense. Article 3(2) provides an exception

for (1) bribes where they are “permitted or required by

the law” in the country of the foreign public official and

(2) facilitating payments.

Jurisdictional Principles

Article 2 of the Korean Criminal Code provides for

territorial jurisdiction. Jurisdiction will be established

over any offense that has been committed in the territory

of the Republic of Korea. Article 3 of the Korean Criminal Code allows Korea to prosecute its nationals for offenses committed abroad (nationality jurisdiction). Article 6 of the Korean Criminal Code confers Korean jurisdiction over any offenses in which the Republic of

Korea or a Korean national is a victim.

Coverage of Offeror/Payor

Article 3 covers bribes made by “any person,” without reference to nationality. Article 4 of the FBPA provides for criminal responsibility of legal persons.

Coverage of Payee/Offeree

Foreign public officials” are defined in Article 2 of
Chapter 2: Review of National Implementing Legislation 49

the FBPA. Article 2 covers officials, whether appointed

or elected, in all branches of government, at either the

national or local level. The FBPA covers all foreign public officials who perform public functions, such as those

in “business, in the public interest, delegated by the foreign government,” people “working for a public organization established by law to carry out specific business

in the public interest,” officials of public international

organizations, and persons working for companies “over

which a foreign government holds over 50 percent of its

subscribed capital” or over which the government exercises “substantial control.” Article 2(2)(c) of the FBPA

provides an exception for employees of businesses that

operate on a “competitive basis equivalent to entities of

[an] ordinary private economy [sic]” and that do not receive “preferential subsidies or other privileges.”

Penalties

For individuals, Article 3(1) of the FBPA provides

for a maximum prison sentence of five years or a maximum fine which is the greater of 20 million won (approx.

U.S. $15,600) or twice the profit obtained as a result of

the bribe. Article 3(3) provides that where imprisonment

is imposed, “the prescribed amount of fine shall be concurrently imposed.” The stated intent of Article 3(3) of

the FBPA is to effectively deprive the offeror/payor of

the profits obtained from the bribery. Under Article 132

of the Korean Criminal Code, the criminal penalty for

bribery of domestic public officials is imprisonment for

a maximum of five years or a maximum fine of 20 million won (approx. U.S. $15,600).

In addition to the fines imposed on representatives,

agents, employees, or other individuals working for legal persons under Article 3, the entity itself may be fined

under Article 4 where a representative, agent, or other

employee of the legal entity, in the ordinary conduct of

the business of the legal entity, commits the offense of

bribery of a foreign public official. Article 4 of the FBPA

provides for a maximum fine which is the greater of 1

billion won (approx. U.S. $781,300) or twice the profit

obtained as a result of the bribe. The same provision provides that fines will not be imposed if the legal person

has paid “due attention” or has made “proper supervisory efforts” toward preventing the violation.

Article 5 of the FBPA provides for confiscation of

bribes in the possession of the briber or another person

who has knowledge of the offense. (It is our understanding the Korea has indicated that the language “after the

offense has been committed” which appeared in the original Article 5 had been inserted mistakenly and is to be

deleted). However, the bribe proceeds are not subject to

confiscation. Instead, the FBPA in Articles 3 and 4 provides for a fine up to twice the profits obtained through

bribery of a foreign public official (See above). Under

Article 249 of the Criminal Procedures Act, the statute

of limitations for the bribery of foreign public officials

under the act is five years. Article 253 of the Criminal

Procedures Act provides that when a prosecution is initiated against one of the offender’s accomplices, or the

offender remains overseas to circumvent punishment, the

statute of limitations is suspended.

Books and Records Provisions

It is our understanding that under Korean law, firms

must prepare financial statements in accordance with

Korean accounting standards, which prohibit off-thebooks transactions and accounts. The accounting standards require all financial transactions to be recorded on

the basis of objective documents and evidence. We understand in addition that Korea’s External Audit Law

obligates auditors to report fraud on the part of managers to shareholders and a statutory auditor. Korea’s regulatory authorities can bring administrative measures

against firms and auditors for material omissions, falsifications, and fraud.

Administrative penalties may include the suspension

of licenses and the issuance of securities. Firms and auditors may, in some circumstances, be subject to criminal sanctions pursuant to the External Audit Law.

Money Laundering

Convention Article 7 requires that each party that

has made bribery of domestic public official a predicate

offense for the purpose of the application of its moneylaundering legislation shall do so on the same terms for

the bribery of a foreign public official. Currently, bribery of neither domestic nor foreign officials is a predicate offense for the application of Korean money laundering legislation.

Extradition/Mutual Legal Assistance

It is our understanding that Korea’s Extradition Act

provides for granting extradition requests on a reciprocal basis even in the absence of a treaty, but reserves

discretionary authority to the government to deny extradition in cases involving a Korean national. We understand that dual criminality is a mandatory condition for

extradition under the Korean Extradition Act, but that

Korea may deem the requirement of dual criminality fulfilled if the offense falls within the scope of Article 1 of

the Convention.

Under its International Mutual Legal Assistance in
50 Battling International Bribery, 2001

Criminal Matters Act, Korea requires reciprocity before

it will provide mutual legal assistance to countries with

which it does not have mutual legal assistance treaties.

In the absence of contrary treaty provisions, Korea further requires dual criminality. It is our understanding that

the requirement of dual criminality will be met for requests made within the scope of the Convention. Banking records may be obtained by court warrant under the

International Mutual Legal Assistance in Criminal Matters Act and the Act on Real Name Financial Transaction

and Protection of Confidentiality.

Complicity, Attempt, Conspiracy

Complicity is covered under the Korean Criminal

Code, which categorizes the offense as coauthoring, abetting, and aiding. Article 30 of the Korean Criminal Code

provides that when two or more persons jointly commit

an offense, each person shall be punished as an author.

Article 31(1) of the Korean Criminal Code provides that

any person who abets another person in committing an

offense shall be subject to the same criminal liability as

that of the actual offender. Article 32 of the Korean Criminal Code provides that any person who aids another

person’s commission of an offense shall be punished by

a penalty, which shall be less than that of the author. Article 8 of the Korean Criminal Code links the above provisions to the FBPA by making them applicable to offenses enumerated in other criminal statutes.

Luxembourg

Luxembourg signed the Convention on December

17, 1997. The law implementing the Convention of January 15, 2001 (entitled the “Law of January 15, 2001 approving the Convention of the Organization for Economic

Cooperation and Development on Combating Bribery of

Foreign Public Officials in International Business Transactions and relating to misappropriation, destruction of

documents and securities, dishonest receipt of money by

a public officer, unlawful taking of interests and bribery

and amending other legal provisions”), entered into force

on February 10, 2001. Luxembourg deposited its instrument of ratification on March 21, 2001.

Our main concern with Luxembourg’s legislation is

that it provides for neither corporate criminal liability

nor for effective, proportionate, and dissuasive noncriminal sanctions for corporations, as required by Articles 2

and 3.2 of the Convention. However, the Luxembourg

authorities stated that a Justice Ministry working group

has been set up to prepare a reform which would introduce the principal of criminal liability of legal persons at

the end of 2001.

Basic Statement of the Offense

The basic statement of the offense is contained primarily in Criminal Code Articles 247, 249 para. 2, and

Article 250 para. 2, concerning bribery of public officials, which by application of Article 252 now also apply to foreign public officials. Article 247 generally provides that the act of unlawfully proposing or giving, directly or indirectly, or offering, promising, giving, presenting, or providing any advantages whatsoever, to a

person entrusted with, or agent of, public authority, a law

enforcement officer, or a person charged with performing a public function or holding an elected office for herself or a third person in order that: (1) she acts or refrains

from performing her duties, or (2) she uses her influence

to obtain from an official or public administration advantages, employment, government procurement, or any

other favorable decision, will be punished by imprisonment from five to ten years and a fine ranging from 20,000

Luxembourg francs (approx. U.S.$420) to 7,500,000

francs (approx. U.S.$157,350).

Articles 249 para. 2 generally provides that anyone

solicited by a public official as defined above and accepts, or who proposes offers, promises, gifts, presents,

or any advantages whatsoever so that the official will act

or refrain from acting according to her duties will be

punished by imprisonment of five to ten years and fines

of 20,000 francs (approx. U.S.$420) to 7,500,000 francs

(approx. U.S.$157,350).

Article 250 para. 2 generally provides that anyone

solicited by a member of the judiciary or any other person holding judicial office, arbitrator, or expert appointed

by the court or by the parties, who accepts or who proposes offers, promises, gifts, presents, or any advantages

whatsoever so that the official will act or refrain from

acting according to her duties will be punished by imprisonment from ten to fifteen years and fines ranging

from 100,000 francs (approx. U.S.$2,098) to 10,000,000

francs (approx. U.S.$209,800).

Article 252 generally provides that the provisions

above apply to offenses involving elected or appointed

public officials or those charged with such duties of another State, European Communities officials, officials or

agents of public international organizations.

According to the Luxembourg officials, bribe payments to foreign public officials made through intermediaries or to third parties are covered by the provisions

above. Intent is an essential condition of the offense. The

basic offense of bribery of foreign officials goes beyond

the Convention in that it is not restricted to bribery acts

in order to obtain or retain advantages in international

business transactions.
Chapter 2: Review of National Implementing Legislation 51

Jurisdictional Principles

Luxembourg practices both territorial and nationality jurisdiction. (See Articles 7 ter and 5 of the Code of

Criminal Procedure, respectively.) According to Article

7 ter, territorial jurisdiction applies where an act constituting an essential element of the offense occurs within

the territory of Luxembourg. Therefore, under Luxembourg law a court may assert jurisdiction if the offense

was committed abroad but its effects are realized in Luxembourg.

According to Luxembourg officials, the condition of

dual criminality is not required in order for Luxembourg

courts to assert jurisdiction over its nationals for the criminal offense of bribery of foreign public officials committed outside of its territory.

In addition, unlike France’s implementing legislation, no complaint is required to be filed by a “State victim,” e.g., a representative of the State whose official

was bribed, in order for there to be prosecution of the

offense. If a State victim does make such a complaint,

prosecution is still discretionary.

Coverage of Payor/Offeror

Luxembourg’s Criminal Code provisions on bribery

concern only natural persons. Luxembourg has indicated

that a working group within the Ministry of Justice has

been charged with developing amendments so that corporations will be penalized under its laws (See also discussion on penalties, infra.) Luxembourg officials predict that the bill will be introduced in Parliament at the

end of 2001.

Coverage of Payee/Offeree

Criminal Code Article 252 applies the offenses of

bribery of national public officials found in Articles 247,

249, and 250 to foreign public officials, European Communities officials, and officials of other public international organizations. Articles 247 and 249 define a public official as a person entrusted with or agent of public

authority, a law enforcement officer, or a person charged

with performing a public function or holding an elected

office for oneself or a third person, and Article 250 covers members of the judiciary or any other person holding

judicial office, arbitrators or experts appointed by the

court or by the parties.

Penalties

Currently, Luxembourg’s laws prohibiting bribery of

foreign public officials provide for criminal penalties only

for natural persons. Through the application of Criminal

Code Article 252, the amounts of the fines and terms of

imprisonment for bribery of foreign public officials under Luxembourg law are identical to those for domestic

officials listed in Articles 247, 249, and 250 above.

There are no penalties for legal persons specifically

for the bribery of foreign public officials under Luxembourg law at this time. Although dissolution of legal persons is possible under the law of Luxembourg as a criminal measure, Luxembourg’s own Conseil d’Etat has indicated that it is doubtful that this penalty would apply

to bribery of foreign public officials by legal persons,

and it would be “inappropriate and disproportionate” if

it were. (See Article 203 of the Act of August 15, 1915

on Commercial Companies as amended, and Article 18

of the Act of April 21, 1928, on non-profit associations

and foundations as amended.)

A natural person sentenced to prison for more than

five years is also subject to the following: deprivation of

certain rights for life or for ten to twenty years such as

the ability to serve in public office, vote or be elected,

receive medals for public service, be an expert, witness,

or someone who can certify official documents, provide

evidence, act as a member of a family council or serve to

legally protect the incompetent, bear arms, hold a teacher

or other public education position, or hold other licenses.

(See Criminal Code Articles 10-12.)

Luxembourg officials have stated that both the bribe

and the bribe proceeds may be seized (Code of Criminal

Procedure Articles 66 et seq.) and confiscated (Criminal

Code Article 31 et seq.), although it is unclear whether

the bribe proceeds can be confiscated from a legal person. Luxembourg also has stated that confiscation of

goods is possible from both natural and legal persons

and third parties. Because confiscation of the bribery instrument (e.g., the bribe itself or the object of value) is

dependent upon the conviction of the natural person who

owns the assets, it is unclear whether such confiscation

is possible from legal persons or third parties who own

the assets but who have not been convicted. Where confiscation is no longer possible, a fine in the same amount

may be imposed.

Under the law of January 15, 2001, the statute of

limitations for bribery of foreign public officials is ten

years, and may apparently be triggered the day the “corruption pact” between the public official and the briber

was agreed upon, the date of the last bribery payment, or

the date when the public official acts or refrains from

acting (pursuant to the corruption pact). The Law of January 15, 2001, obviated an earlier defect in the law,

whereby the statute of limitations was decreased to only

three years when the judge found that due to attenuating

circumstances the offense should have been classified as
52 Battling International Bribery, 2001

a misdemeanor instead of a crime. Under Article 637 of

the Code of Criminal Procedure, the statute of limitations may be interrupted by the prosecutor’s investigation or judicial proceedings.

Books and Records Provisions

Articles 8 and 9 of the Commercial Code contain

general provisions on bookkeeping that apply to merchants, including both natural and legal persons. Article

477 of the Commercial Code contains provisions on false

documents. Penalties for falsifying business, banking, or

private documents range from imprisonment from five

to ten years. Under Luxembourg law, companies are required to undergo auditing of their accounts and, depending on their size, may be required to use an independent

auditor. Since 1998, certain sectors, e.g., professions,

within the financial sector, are required by statute to exercise internal controls.

Money Laundering

The Act of August 11, 1998, added money-laundering offenses to the Luxembourg Criminal Code and expanded the list of predicate offenses for money laundering to include both bribery of domestic and foreign public officials. (See Article 506-1 of the Criminal Code.)

The money-laundering legislation covers both the bribe

and the bribe proceeds. The legislation applies even when

the bribery offense occurs in another country, as long as

bribery is also a criminal offense under that country’s

laws. (See Article 506-3 of the Criminal Code.) In addition to present disclosure requirements on financial institutions, the new money laundering legislation also requires auditors, notaries, casinos, and other similarly situated establishments to report suspicious facts that may

evidence money-laundering activity to the State Prosecutor.

Extradition/Mutual Legal Assistance

Extradition may be granted for persons committing

bribery of foreign public officials, pursuant to Article 2

of the European Convention on Extradition of December 13, 1957, which requires that a person must be

charged with an offense carrying a penalty of imprisonment of at least one year. Luxembourg officials stated

that the Convention will serve as a legal basis for extradition. The extradition treaty between the United States

and Luxembourg has been in force since August 13, 1884,

and was supplemented by a subsequent extradition convention which entered into force on March 3, 1936.

Luxembourg will not extradite its nationals. Pursuant to bilateral or multilateral conventions, a country requesting extradition of a Luxembourg national which has

been refused can lodge a complaint with the Luxembourg

authorities to initiate an investigation of the offense in

Luxembourg or, if no treaty exists, the alleged offender

may be prosecuted on the condition of reciprocity.

Luxembourg laws relating to mutual legal assistance

include the Act of August 8, 2000, on international mutual legal assistance in criminal matters and various bilateral and multilateral treaties. A treaty with the United

States was signed on March 13, 1997, and entered into

force on February 1, 2001.

According to Luxembourg officials, the terms of imprisonment for bribery of foreign public officials under

its laws are adequate for purposes of mutual legal assistance pursuant to Article 5 of the Act of August 8, 2000

on international mutual legal assistance in criminal matters. Dual criminality will be deemed to exist if mutual

legal assistance is sought concerning an offense falling

under the Convention.

Also, according to Luxembourg officials, bank secrecy is not a ground for refusing mutual legal assistance

in criminal matters. (See Law of April 5, 1993, Article

40.) Full cooperation with legal requests is also required

of auditors, notaries, casinos, and other similar establishments under the Act of August 11, 1998, supra, concerning organized crime and money laundering.

Complicity, Attempt, Conspiracy

Criminal Code Articles 66, 67, and 69 address the

offenses of complicity under Luxembourg law. Attempt

is covered under Criminal Code Article 51. There are no

conspiracy provisions in Luxembourg’s law similar to

the concept of conspiracy in U.S. law.

Mexico

Mexico signed the Convention on December 17,

1997, and deposited its instrument of ratification on May

27, 1999. Mexico’s implementing amendments to the

Federal Penal Code came into force on May 18, 1999.

Mexico’s implementation of the Convention raises

three concerns. First, Mexico has made prosecution of

corporations contingent upon prosecution of a natural

person, thus creating a potential bar to prosecution if such

a person evades Mexican jurisdiction or is otherwise not

subject to prosecution. Second, Mexico has not adopted

an autonomous definition of “public official,” thus making its prosecutions dependent upon a foreign state’s law.

Finally, Mexico’s penalties for natural persons are based
Chapter 2: Review of National Implementing Legislation 53

upon multiples of the daily minimum wage and are

grossly inadequate when applied to executives of companies engaged in international business.

Basic Statement of the Offense

The basic statement of the offense is contained in

Article 222 bis of the Federal Penal Code:

The same penalties provided in the previous article

shall be imposed on [a person] who, with the purpose of retaining for himself/herself or for another

party, undue advantages in the development or conducting of international business transactions, offers,

promises, or gives, whether by himself/herself or

through a third party, money or any other advantage,

whether in assets or services:

1. To a foreign public official in order that he/she

negotiates or refrains from negotiating the carrying

out or the resolution of issues related to the functions inherent to his/her job, post, or commission;

2. To a foreign public official in order to perform the

carrying out or the resolution of any issue that is beyond the scope of the inherent functions to his/her

job, post, or commission.

Jurisdictional Principles

Mexico asserts both territorial and nationality jurisdiction. (See Penal Code ‘’1, 2(1), 4.) Mexican law applies when the promise, offer, or giving of the bribe occurs within Mexico or when extraterritorial conduct is

intended to have an effect in Mexico. Mexico also asserts jurisdiction over crimes committed in a foreign territory by a Mexican or by a foreign national against a

Mexican provided there is dual criminality. Mexico would

not have jurisdiction over the extraterritorial acts of a

Mexican corporation unless the natural person who commits the offense on behalf of the corporation otherwise

comes within its jurisdiction.

Coverage of Payor/Offeror

Article 222 bis applies to any individual responsible

for the offense. Mexican law imposes only derivative liability on corporations. Thus, a court may impose sanctions on a corporation only after a member or representative of the corporation has been convicted of committing the bribery offense using means provided by the

corporation and in the name of or on behalf of the corporation. (See Penal Code ’11.)

Coverage of Payee/Offeree

Mexican law defines a foreign official as “any person displaying or holding a public post considered as

such by the applicable law, whether in legislative, executive, or judicial branches of a foreign State, including within autonomous, independent regions, or with

major state participation agencies or enterprises, in any

governmental order or level, as well as in any international public organization or entity.” (See Penal Code ‘222

bis.) This definition, by its reference to “applicable law,”

raises a question as to whether Mexico has adopted the

autonomous definition required by the Convention.

Penalties

For natural persons, Mexican law imposes the same

penalties for foreign bribery as it does for domestic bribery. These penalties depend on the size of the advantage

obtained or promise made and range from imprisonment

of between three months and twelve years, a fine of

U.S.$108-$1,800 (500 times the daily minimum wage),

and dismissal and debarment from holding a public job

from three months to twelve years. (See Penal Code ‘222.)

In addition, upon conviction, the instruments and the

proceeds of the crime are subject to mandatory forfeiture. When, however, those instruments and proceeds are

in the hands of a third party, forfeiture is only available

if the third party is in possession for the purpose of concealing or attempting to conceal or disguise their origin,

ownership, destination, or location.

For legal persons, the sanction is up to “500 days of

fine” and the possibility of suspension or dissolution. (See

Penal Code ‘222 bis.) “Days of fine” is defined as the

daily net income of the legal person. In addition, the court

considers the degree of knowledge of management, the

damage caused by the transaction, and the benefit obtained by the legal entity in fixing the appropriate sanction.

Books and Records Provisions

Mexican law requires natural and legal persons to

keep proper accounts, to accurately record transactions

and inventory, and to maintain an adequate accounting

system that best suits the conditions of business and enables the identification and tracking of each financial

transaction. The penalties range from approximately

U.S.$150 to $3,600 for most accounting offenses. (See

Federal Fiscal Code ‘’28, 30; Fiscal Regulations ‘’26,

29, 30, 32, 32A.) Further, if the accounts are deliberately

falsified, e.g., by keeping two sets of books, the penalty

for natural persons includes three months to three years

of imprisonment. For companies with listed securities

the maximum fine is approximately U.S. $450,000. (See

Securities Market Law ’26 bis.)

In addition, Mexico imposes auditing requirements
54 Battling International Bribery, 2001

on large or profitable companies. Under these audit rules,

the auditors themselves are required to ensure that a

company’s books are accurate and are subject to a range

of sanctions for noncompliance. (See Fiscal Code ‘’52,

91B, 96.) is imprisonment for a maximum term of two

years and/or an unlimited fine. For violation of Section

722, the penalty is an unlimited fine, and if the violation

persists, a daily fine. Section 17 of the Theft Act of 1968

also contains an offense for false or fraudulent accounting, the penalty for which is imprisonment for a maximum of two years. The Companies Act of 1985 also provides that certain companies must have an external audit.

Money Laundering

Mexico’s money-laundering law applies to transactions involving the product of any illicit activity, and thus

applies to the proceeds of bribery of a foreign official.

(See Penal Code ‘400 bis.) However, under Mexican law,

a money-laundering prosecution may only be brought

after there has been a conviction for the underlying offense.

Extradition/Mutual Legal Assistance

Mexico can provide mutual legal assistance in both

criminal and civil matters. In addition, Mexico will honor

extradition requests. Although Mexico does not, except

in exceptional circumstances, extradite its own nationals, it will commence its own prosecution in lieu of extradition.

Complicity, Attempt, Conspiracy

Mexican law holds that accomplices are punishable

as principals. (See Penal Code ’13.) Accomplices include

individuals who agree to or prepare the offense, who carry

out the offense, individually, in a joint manner, or through

a third party, who cause another to commit an offense or

assist another in committing an offense, or who otherwise participate in the commission of an offense. In addition, Mexican law punishes attempt and conspiracy,

which it defines as “part of a criminal organization or

gang of three or more individuals [who] gather together

with the purpose of committing a crime.” (See Penal Code

‘’12(1), 64.)

The Netherlands

The Netherlands signed the Convention on December 17, 1997 and deposited its instrument of ratification

with the OECD Secretariat on January 12, 2001. The

Dutch enacted bills ratifying and implementing the Convention on December 13, 2000, which came into force

on February 1, 2001. Aruba and the Netherlands Antilles

must still pass implementing legislation before the Convention will become effective for those parts of the Kingdom of the Netherlands.

Basic Statement of the Offense

The basic statement of the offense is found in several amended provisions of the Dutch Penal Code Articles 177, 177a, 178, and 178a. Article 177 of the Penal

Code criminalizes bribery of a public servant where there

is a breach of that public official’s duty. Article 177a establishes the offense of bribing public officials in order

to obtain an act or omission not in breach of her official

duties. Article 178 criminalizes bribery of judges. Article 178a provides that Articles 177, 177a, and 178 apply to foreign as well as domestic officials. The

abovementioned provisions criminalize the rendering or

offering of gifts, promises, or services to public officials.

According to Dutch officials, “promises” includes offering. Intent is implicitly required in the offenses, and the

perpetrator may be pursued for the offense whether or

not the official acts, as long as the offer was made. The

bribery offenses described exceed the obligation of Article 1 of the Convention in that they cover bribes in exchange for past acts or omissions. Also, the offenses go

beyond Article 1 of the Convention in that they are not

restricted only to bribes made in the conduct of international business.

Although not specifically stated in the statute, legislative history and case law relating to domestic bribery

indicates that the offense covers bribes made through

intermediaries. The bribery provisions do not explicitly

refer to third parties, although the Dutch government has

stated that they would apply to bribes made to third parties with the knowledge of the public servant, as the foreign public official will have received something of value

to influence her actions.

Jurisdictional Principles

The Netherlands practices both territorial and nationality jurisdiction. Article 2 of the Dutch Penal Code provides that the criminal law of the Netherlands is applicable to any person who commits a criminal offense

within the Netherlands. Article 3 provides that offenses

committed on Dutch vessels and aircraft are covered

under Dutch law. Territorial jurisdiction is interpreted

broadly and includes telephone calls, faxes, and e-mail.

Dutch citizens are also subject to nationality jurisdiction

by Dutch courts under Penal Code Article 5.1. In the case

of bribery of foreign public officials, it would appear that
Chapter 2: Review of National Implementing Legislation 55

such nationality jurisdiction will only apply subject to

dual criminality, i.e., the offense must be considered a

serious offense under both Dutch law and the laws of the

country where the offense was committed. Also, there is

no precedent in Dutch case law for applying nationality

jurisdiction to legal persons, although the Dutch government has stated that in its view legal persons can have

nationality and there is academic literature contending

that nationality jurisdiction could apply to legal persons

under Article 5 of the Penal Code.

Coverage of Payor/Offeror

Articles 177, 177a, and 178 apply to any person.

Article 51.1 provides that criminal offenses can be committed by both natural and legal persons. According to

the Dutch authorities, the concept of legal person is

broadly interpreted under Dutch jurisprudence. Legal

persons include ship owning firms, unincorporated associations, partnerships, and special funds. (See Article

51.3 Dutch Penal Code.) Under Dutch law, the concept

of legal persons is found primarily under civil law and

includes the State, municipalities, water control corporations, all regulatory bodies, associations—including

religious associations—cooperatives, mutual insurance

societies, companies limited by shares, private companies with limited liability, and foundations.

Article 51.2 provides that where a criminal offense

has been committed by a legal person, the institution of

criminal proceedings may be instituted and penalties may

be imposed against (1) legal persons, (2) those who have

ordered the commission of the criminal offense and those

in control of the unlawful behavior, or (3) against both

the legal person and those who ordered or have control

over the behavior at issue.

For the legal person to be liable under Article 51.2(1),

the offense must be imputed to a natural person, although

the natural person does not have to hold a managerial

position, and the legal person must have accepted either

the acts, the possibility of the acts, or the same types of

acts in the past. If it is clear that the legal person in some

way condoned the acts, then it is not necessary to identify a particular natural person.

The Dutch government explained that in order to hold

natural persons of the company liable under Article

51.2(2), it is not required that they hold positions on the

board or be directors or owners of the legal person. Such

natural persons can instead have de facto control, e.g.,

they have illustrated their intent that the offense be carried out, are aware of the possibility that the offense may

take place, or they fail to prevent the acts. There is also

case law indicating that a person can be considered as

holding a managerial position if she has authority or influence over the organization or parts of the organization. Natural persons who explicitly order the prohibited

act and, in some cases, those who suggest such acts will

be held liable. For the offense under Article 51.2(2), the

legal person must have committed a criminal offense.

Coverage of Payee/Offeree

Article 178a provides that the offenses covered in

Articles 177, 177a, and 178 also apply to foreign public

officials. The definition of foreign public official as set

forth in Penal Code Article 178a is “persons in the public service of a foreign state or an international legal organization” and judges “of a foreign state or an international law organization.”

“Public servant” is defined under Penal Code Article

84 as “all persons elected to public office in elections

duly called under law” as well as arbitrators and personnel of the armed forces. According to the bill’s legislative history, “official” has been interpreted broadly by

the Dutch courts to include appointed public officials who

perform State duties and also includes members of Parliament and municipal councils. “Public servant” has been

defined by the Dutch Supreme Court as “one who under

the supervision and responsibility of the authorities has

been appointed to a function of which the public character cannot be denied with a view to implementing tasks

of the state and its organs.”

 According to the Dutch government, the language

in Article 178a that provides there should be “equal treatment” of foreign public officials in comparison with domestic officials should ensure that the definition of foreign public official should be read as broadly as that of

“public servant.” Moreover, the Dutch explained that

Dutch courts will also use the Convention to interpret

the implementing legislation and that the Convention

definition of “foreign public official” will therefore govern.

Penalties

Under Article 177 of the Dutch Penal Code, the imprisonment and the fine for bribery of foreign public officials acting in breach of official duties for natural persons have been increased from the penalty for bribery of

domestic officials from two years and a category 4 fine

(i.e. 25,000 guilders, approx. U.S.$9,600) to four years

and a category 5 fine (100,000 guilders, approx.

U.S.$38,400), and for legal persons, a fine that may be

increased to the amount of the next highest level than

that for natural persons, which would be 1 million guilders (approx. U.S.$384,000). However, for the penalties
56 Battling International Bribery, 2001

of bribery of foreign public officials where the official is

not acting in breach of duties under Article 177a.1(1),

the prison sentence for natural persons is not more than

two years or a category 4 fine (25,000 guilders, approx.

$9,600), and for legal persons, a fine of not more than

the amount of the next category, which would be category 5, or 100,000 guilders (approx. U.S.$38,400.) For

breaches of Articles 178.1 (where the purpose of the bribe

is to influence a judge’s decision) and 178.2 (where the

bribe is intended to obtain a conviction in a criminal case),

the prison terms for natural persons are six and nine years

respectively, and 25,000 and 100,000 guilders respectively. For legal persons under the same provisions, the

penalties are not more than 100,000 guilders and 1 million guilders, respectively.

The fines are comparable to those of other offenses,

such as those for theft, embezzlement, etc. However,

except for the penalties for bribery of a foreign public

official where the official is acting in breach of official

duties, the penalties are less than those for passive bribery under domestic law. According to the Dutch government, fines and imprisonment can be applied simultaneously.

In addition to prison terms and fines for natural persons, Article 28 of the Dutch Penal Code provides that

certain rights can be withdrawn, e.g., the right to hold

public office, serve in the armed forces, or serve as an

advisor before the courts. Also, legal persons may be dissolved on application by the Public Prosecutor’s office,

and injured parties may bring civil cases for damages

against legal persons for unlawful acts, such as bribery

of foreign public officials.

Moreover, pre-trial seizure of the bribe and proceeds

is permissible under Articles 94 and 94a of the Code of

Criminal Procedure, and is discretionary in nature. Article 33 of the Penal Code provides for forfeiture of the

bribe, but not the proceeds. Again, the forfeiture is discretionary. Where the bribe is in the possession of a bona

fide third party who has no knowledge of the bribe, it is

not subject to forfeiture. However, under Penal Code

Article 36e1 concerning unlawfully obtained gains, courts

can order payment by the briber so that she is returned to

the financial state present before the bribe took place.

The statute of limitations for bribery offenses is set

forth in Article 70 of the Penal Code. For bribery acts to

public officials breaching their official duties (Article

177) and for bribery of judges (Article 178), the statute

of limitations is 12 years; for bribery acts of officials

acting outside the scope of their duties (Article 177a),

the statute of limitations is 6 years. The statute of limitations period commences on the date after the offense was

committed, and is terminated if the offense is prosecuted.

Books and Records Provisions

Accounting requirements under Dutch law are contained in Articles 361,362 et. seq. of Book 2 of the Civil

Code. Article 225 of the Penal Code addresses fraudulent accounting practices.

Money Laundering

There are currently no specific provisions establishing a money-laundering offense under Dutch law, although the Dutch authorities have stated that efforts are

underway to establish such an offense. There are, however, Dutch provisions on stolen property in Articles 416

and 417 bis of the Penal Code. According to the Dutch

government, Articles 416 and 417 bis cover both the bribe

and the bribe proceeds for the act of bribing a foreign

public official, and therefore fulfill the requirement under Article 7 of the Convention.

Extradition/Mutual Legal Assistance

Section 51a of the Extradition Act as amended provides that the new offenses of bribery of foreign public

officials are extraditable offenses. However, the offenses

of bribing judges under Article 178 are not covered, so

extradition requests based on Article 178 must be made

pursuant to a treaty. Under Section 5(1)(a) of the Extradition Act, extradition is allowed only where the penalty

of imprisonment is one year or more in both the Netherlands and the requesting State.

Section 4(1) of the Extradition Act forbids the extradition of Dutch nationals, except in cases where the Minister of Justice is given a guarantee that the Dutch national can serve any eventual term of imprisonment in

the Netherlands. Also, when such an extradition request

is refused, the Dutch prosecutors will address the case as

required by the Convention.

The Dutch government has said that where a treaty

is a condition for providing mutual legal assistance Article 9 of the Convention satisfies that condition. Mutual

legal assistance must be treaty based where the information requested is from the tax department, or where it

covers a political question. Moreover, where the request

concerns financial information, a treaty may be required.

The Netherlands is a party to the European Treaty Regarding Mutual Legal Aid in Criminal Cases of 1959 and

bilateral mutual legal assistance treaties. Articles 552h

and 552s of the Code of Criminal Procedure apply to

substantive issues of mutual legal assistance. In the absence of a treaty, “reasonable” requests for mutual legal
Chapter 2: Review of National Implementing Legislation 57

assistance will be honored pursuant to Penal Code Article 552K.2. Article 551K of the Penal Code provides

that every effort will be made to comply with mutual

legal requests based upon treaties. Requests for mutual

legal assistance will not be honored where the object of

the request is based upon punishing the defendant due to

nationality, race, or religion, pursuant to Article 552L.1

or where honoring the request would cause double jeopardy. Also, the request may not be honored if the alleged

offender is undergoing trial in the Netherlands.

The only mutual legal assistance situation where

prison terms are relevant is in the case of a request for

document seizure. Document seizure can only be provided where extradition would be available for the underlying offense.

The Dutch government has stated that mutual legal

assistance should not be denied under Dutch law on bank

secrecy grounds.

Complicity, Attempt, Conspiracy

The Dutch Penal Code Articles 47.1(2), 48, and 49.1

address complicity, incitement, aiding and abetting and

authorization required under Convention Article 1.2.

Article 47.1(2) provides that a person who by gifts, promises, abuse of authority, or violence provides the means

to commit an offense is liable as a principal. Article 48

provides that those who intentionally assist in the commission of an offense and those who provide the means

necessary for the commission of the offense are liable as

accessories. Article 49.1 provides for the penalties for

accessories to the offense.

Dutch law on attempt is found in Penal Code Articles 45.1, 45.2, and 46b. There are no conspiracy provisions under Dutch law, although Article 140.1 of the

Penal Code provides that participation in an organization whose objective is to commit serious offenses is

punishable by a maximum term of imprisonment of five

years or a category 4 fine.

Norway

Norway signed the Convention on December 17,

1997, and deposited its instrument of ratification with

the OECD on December 18, 1998. The amendments to

the Penal Code were passed on October 27, 1998, and

entered into force on January 1, 1999.

Norway has implemented the Convention by amending Section 128 of the Norwegian Penal Code to extend

existing provisions of law regarding the bribery of domestic public officials to cover the bribery of foreign

public officials and officials of public international organizations.

Sources for this analysis include the Penal Code,

other Norwegian laws, and information provided by the

U.S. embassy in Oslo.

There are concerns that under Norwegian law, the

maximum penalty for bribery of a foreign public official

is imprisonment for only one year, and that the relevant

statute of limitations is only two years.

Basic Statement of the Offense

Section 128 of the Penal Code provides:

Any person who by threats or by granting or promising a favor seeks to induce a public servant illegally

to perform or omit to perform an official act, or who

is accessory thereto, shall be liable to fines or imprisonment for a term not exceeding one year. The

term public servant in the first paragraph also includes foreign public servants and servants of public international organizations.

Section 128 does not refer to intent. However, Section 40 of the Penal Code states that the provisions of the

Penal Code apply only if a person acts intentionally. Section 128 also does not mention bribes paid through intermediaries, nor does it expressly address payments that

are made to third parties for the benefit of a public official.

Jurisdictional Principles

Norway exercises territorial jurisdiction over acts of

bribery of foreign officials by any person so long as any

part of the crime is committed in Norway. In addition to

territorial jurisdiction, under Section 12.3(a) of the Penal Code, Norway applies nationality jurisdiction over

crimes, including acts of bribery of foreign public officials, committed abroad by Norwegian nationals or persons domiciled in Norway.

Under Section 67 of the Penal Code, the statute of

limitations for bribery of foreign officials is only two

years. This is linked to the length of the maximum penalty. If Norway increases the maximum term of imprisonment, then the statute of limitations will automatically

increase.

Coverage of Payor/Offeror

Section 128 specifically covers acts by “any person.”

Coverage of Payee/Offeree

Although Norway’s law does not define “foreign

public servant,” we understand that Norway will interpret this term in accordance with the requirements of the

Convention.
58 Battling International Bribery, 2001

Penalties

Under Section 128, the penalty for natural persons

for bribery of domestic or foreign public officials is a

fine or imprisonment for a term not exceeding one year.

It is not clear from the statute whether both a fine and

imprisonment could be imposed. There is no stated limit

on the amount of the fine.

Under Section 48(a) of the Penal Code, enterprises

may be held criminally liable when “a penal provision is

contravened by a person who has acted on behalf” of the

enterprise. “Enterprise” is defined as “a company, society or other association, one-man enterprise, foundation,

estate or public activity.” There is no stated limit to such

fines; Section 48(b) lists factors that are to be considered

in determining the size of the fine. Under Section 48(a),

an enterprise may also “be deprived of the right to carry

on business or may be prohibited from carrying it on in

certain forms.”

Confiscation of both the bribe itself and the proceeds

of bribery is authorized under Sections 34-37(d) of the

Penal Code.

Books and Records Provisions

Section 2.1 of the Norwegian Accounting Act requires that records be kept of all information that is “of

importance for the size and composition of property,

debts, income and expenditure.” Section 8.5 provides that

violations of the Accounting Act are punishable by fines

or imprisonment ranging from three months to six years.

Under Section 5.1 of the Auditing Act, auditors are

required to ensure that accounts are correct, that the company manages its capital in a prudent fashion, and that

there are satisfactory internal controls. Pursuant to Section 9.3, violators of the Auditing Act are subject to fines

or imprisonment for up to one year.

Money Laundering

Section 317 of the Penal Code makes it a crime to

receive or obtain the proceeds of any criminal act under

Norwegian law, as well as to aid and abet the securing of

such proceeds for another person. As a result, bribery of

domestic or foreign officials is a predicate offense for

the purpose of application of money-laundering legislation. Violations of Section 317 are punishable by fines

or imprisonment for a term not exceeding three years.

For “aggravated offenses,” the penalty is imprisonment

for a term not to exceed six years.

Extradition/Mutual Legal Assistance

Under the extradition treaty between the United

States and Norway, bribery is an extraditable offense so

long as it is punishable in both states by a penalty of

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

This dual criminality requirement is also found in Section 3.1 of the Extradition Act. As previously noted, currently Section 128 of the Penal Code provides that imprisonment shall not exceed one year. However, Section

3.2 of the Extradition Act provides that the “King-inCouncil” may enter into extradition agreements covering criminal acts with penalties under Norwegian law of

one year’s imprisonment or less. Section 2 of the Extradition Act prohibits the extradition of Norwegian nationals.

The United States and Norway do not have a mutual

legal assistance treaty. Norway is a party to various European conventions relating to mutual legal assistance.

It is our understanding that irrespective of other agreements, the OECD Convention provides a sufficient basis for Norway to provide mutual legal assistance to other

Parties to that Convention.

Complicity, Attempt, Conspiracy

Section 128 of the Penal Code expressly applies to

those who are accessories. Section 128 does not directly

address attempt; rather the statute includes the phrase

“seeks to induce.” The Penal Code contains no specific

provisions on conspiracy.

Poland

Poland signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD Secretariat on September 8, 2000. Poland implemented the OECD Convention by amendments to its

Penal Code, Code of Criminal Procedure, Act on Combating Unfair Competition, Act on Public Orders, and

Banking Law. These amendments came into force on

February 4, 2001.

Our chief concern with Poland’s implementing legislation is its failure to create criminal liability for legal

persons. Instead, Poland has adopted an administrative

law that is unduly restrictive and cumbersome and will

likely prove difficult to apply.

Basic Statement of the Offense

Article 229.5 of the Penal Code provides that a person “who provides or promises to provide a material or

personal benefit to a person performing a public function in a foreign state or in an international organization,

in relation to the performance of that function” shall be

subject to the same penalties as a person who violates

Poland’s domestic bribery law. Apart from generally ap-
Chapter 2: Review of National Implementing Legislation 59

plicable defenses of mistake of law or fact, there are no

specific defenses provided for this offense. However, a

“facilitation payment” would likely be deemed to be a

payment to obtain an “act of less significance,” and would

be punished less severely than a bribe to influence the

award of business.

According to Polish authorities, intent is required to

commit the basic offense. Bribery payments through intermediaries are not expressly covered by the Penal Code,

although Polish authorities state that the general provisions would cover the offense. (See Penal Code 29, 18.)

Also, the authorities state that “promises to provide” includes both the act of promising as well as offering, although legal authorities and judicial decisions state the

contrary.

Jurisdictional Principles

Polish law provides for jurisdiction over a crime committed within Polish territory or where the consequence

is intended to take place within Polish territory. (See Penal Code 5.) Further, although generally applicable, Polish law provides for nationality jurisdiction that is conditioned upon dual criminality. (See Penal Code 109,

111.1.) Polish law provides for unconditional extraterritorial nationality jurisdiction whenever required by an

international agreement. (See Penal Code 113.) Poland

interprets the Convention as requiring it to assert nationality jurisdiction over foreign bribery offenses without

the requirement of dual criminality.

Coverage of Payor/Offeror

The Polish law applies to any “person,” regardless

of nationality. Polish law does not provide for criminal

liability over legal persons. However, as part of its implementing legislation, Poland amended its unfair practices

law to provide for administrative liability for legal persons that violate Article 229.5. (See Act on Combating

Unfair Competition 15a.) The responsibility for prosecuting legal persons is entrusted to the Office of Protection

of Competition and Consumers, which may only act after receiving a referral from the public prosecutor’s office. Pursuant to this law, liability requires proof that a

natural person violated the foreign bribery law while

acting on behalf of the company and within his authority

to represent the company, take decisions on its behalf, or

exercise control over it, or that a lower level employee

or agent did so with the consent of such a person. Prosecution and conviction of the culpable natural person is

a prerequisite to corporate liability unless such a prosecution is not possible due to lack of jurisdiction or other

legal impediments.

Coverage of Payee/Offeree

Poland’s bribery law does not define who is a “person performing a public function.” Other provisions of

Polish law, however, encompass a broad range of “public officials,” including elected officials, judges, state

prosecutors, employees of state and local governments

and other “state institutions,” and members of the military. (See Penal Code 115.13.) Further, Polish case law

indicates that the term “person performing a public function” encompasses individuals who do not have the status of a public official but nonetheless perform a public

function, e.g., one whose activities in the public sphere

are regulated by law, as well as employees and officials

of public enterprises and agencies. Polish law also covers payments to a public official through an intermediary. However, with respect to payments to third parties,

Polish law prohibits only the payment of a pecuniary

benefit but not the provision of a non-pecuniary benefit.

(See Penal Law 115.4.)

Penalties

Polish law provides for a complex structure of sanctions, in which the penalty is dependent upon the nature

of the public official’s act and the amount of the bribe.

Penalties range from 6 months to 12 years for aggravated

offenses and a fine or imprisonment of up to two years

where “the act is of less significance.” (See Penal Law

229(1)-(4).) The courts may impose a fine ranging from

100 to 720,000 Zloty (PLN)(approx. U.S.$25 to

$181,000) where the crime was committed, as in most

bribery cases, to obtain a material benefit and may also

order debarment from public contracting. Legal persons

are subject to a fine of up to 10 percent of their pre-tax

revenue for the year preceding the final action of the

Office for Protection of Competition and Consumers. (See

Unfair Competition Law 22d.)

Polish law also provides for the forfeiture of the proceeds of bribery, including any “financial benefit” from

the offense. (See Penal Code 44-46.) In some circumstances forfeiture is only possible upon conviction. (See

Penal Code 44, 45.) When the specific proceeds have

been concealed or dissipated, then the court may order

the forfeiture of substitute assets. Further, where a natural person committed the offense on behalf of a legal

person, the criminal court may “obligate” the legal person—separately and apart from administrative proceedings under the Unfair Competition Law—to return the

financial benefit, in whole or in part, to the State Treasury.

According to Poland’s penal code, aggravated bribery has a statute of limitation of ten years, while miti-
60 Battling International Bribery, 2001

gated bribery has a five year limitation. (See Penal Code

101.2.) The period is initiated the day that the crime is

committed. Additionally, there is a ten-year time period

with respect to the statute of limitations for imposing a

fine on entrepreneurs for unfair competition. (See Combating Unfair Competition article 22d.2.)

Books and Records Provisions

Poland’s Act on Accountancy requires companies to

maintain accurate books and records that reflect each

economic operation engaged in by the company. Further,

all companies are required to prepare annual financial

statements and economic activity reports that reflect honestly the financial status and profitability of the entity.

The failure to maintain such accurate financial statements

is punishable by a fine ranging from 230 to 2,208,000

PLN (approx. U.S.$58 to $555,000) and up to two years

imprisonment. (See Accountancy Act 77.2.) In addition,

individuals who fail to keep books or records or “dishonestly” do so may be punished under the Fiscal Penal

Law by fine or by a period of up to two years of imprisonment. (See Fiscal Penal Law 60-61.)

Money Laundering

Bribery of foreign officials is a predicate offense for

the application of the Poland’s money-laundering offense,

Penal Law 299.

Extradition/Mutual Legal Assistance

The 1996 U.S.-Poland Extradition Treaty provides

for extradition for offenses that are punishable under the

laws of both parties by deprivation of liberty for a maximum period of more than one year. Poland does not,

however, extradite its nationals.

Poland entered into a mutual legal assistance treaty

with the United States in 1996. In addition, Poland will

provide assistance to other countries based on bilateral

treaties, multilateral treaties such as the European Convention on Mutual Legal Assistance in Criminal Matters

of 1959, or its Code of Criminal Procedure. Similarly,

Poland will provide assistance in civil enforcement actions against legal persons pursuant to its unfair competition law.

Complicity, Attempt, Conspiracy

Article 18.1 of Poland’s Penal Law provides that a

person who directs or orders another person to commit a

crime is responsible for the crime as a principal. Articles

18.2 and 18.3 establish liability for inducing or aiding

and abetting another to commit an offense. Article 19

states that these latter acts carry the same penalties as

those for committing the actual bribery, but the court may

apply an “extraordinary mitigation of punishment.” Attempts are punishable by the same penalty as the substantive offense unless the person voluntarily abandons

the prohibited act or prevents the consequences from taking place. ( See Penal Law 13.1, 15.1.) However, a person who extends a bribe offer that is not accepted would

be deemed to have committed the substantive offense

rather than an attempt. Poland does not have a separate

offense of conspiracy.

Slovak Republic

The Slovak Republic signed the Convention on December 17, 1997, and deposited its instrument of ratification on September 24, 1999. The Slovak Republic partially implemented the Convention by amendments to

its Criminal Code that entered into force on September

1, 1999. However, as noted below, there are significant

gaps in the Slovak Republic’s legislation, which are expected to be filled by a complete revision of the Criminal Code that is currently underway.

The Slovak Republic’s current legislation raises several concerns. First and foremost, the Slovak Republic

has not established any criminal or civil liability for corporations. Second, the Slovak Republic has retained the

defense of “effective regret,” which, in the context of

foreign corruption, creates a significant loophole.

Basic Statement of the Offense

The basic statement of the offense of bribing foreign

public officials is set forth in Section 161b(1) of the Slovak Criminal Code:

Whoever offers, promises or gives a bribe or other

undue advantage, whether directly or through an intermediary, to a foreign public official in order that

the official act or refrain from acting in relation to

the performance of official duties with the intention

to obtain or retain business or other improper advantage in the conduct of international business, shall

be punished..

Section 161c provides similar coverage for bribery

of members of foreign public assemblies, judges and officials of international courts, and representatives and

employees of intergovernmental organizations of which

the Slovak Republic is a member or whose jurisdiction it

accepts.

Slovak law recognizes a defense of “effective regret,”

which applies when the offender is solicited for a bribe

by an official and immediately reports the crime to authorities. (See Cr. Code ‘163.) Although the purpose of
Chapter 2: Review of National Implementing Legislation 61

this defense is to assist law enforcement in detecting and

investigating domestic corruption by ensuring that corrupt officials are reported before they take any action in

response to the bribe, this defense creates a potential loophole in cases of bribery of a foreign official where the

Slovak Republic is not able to intervene immediately and

prosecute the official before any benefit is conferred.

Jurisdictional Principles

The Slovak Republic asserts both territorial and nationality jurisdiction over criminal offenses. Pursuant to

Section 17 of the Criminal Code, Slovak law applies to

offenses committed in whole or in part on Slovak territory as well as offenses committed abroad that were intended to have an effect within Slovak territory. Pursuant to Section 18 of the Criminal Code, Slovak law also

applies to extraterritorial acts by Slovak nationals, as well

as stateless persons and foreign nationals with permanent residency in the Slovak Republic. This nationality

jurisdiction is qualified, however, by a requirement that

the offense be punishable in the country in which the

crime takes place. Finally, pursuant to Section 20 of the

Criminal Code, the Slovak Republic will apply its law to

the extraterritorial crimes of a non-national who is apprehended in the Slovak Republic but not extradited to

the foreign state in which the crime took place, again

subject to the condition of dual criminality.

Coverage of Payor/Offeror

Slovak law imposes criminal liability only upon natural persons. Although there are some limited civil and

administrative sanctions available, Slovak law does not

provide for effective and dissuasive sanctions against

legal persons for the offense of bribery of foreign public

officials. We understand that the Slovak Republic intends

to address this issue in its recodification of the Criminal

Code.

Coverage of Payee/Offeree

Section 89, paragraph 10 of the Criminal Code defines “foreign public official” as:

any person holding a function in the legislative or

judicial body or in the public administration of a foreign country [or] in an enterprise in which a foreign

country exercises a decisive influence, or in an international organization established by states or other

subjects of public international law.

In addition, Section 161c applies specifically to bribery of a:

member of a foreign public assembly, foreign parliamentary assembly, or a judge or official of an international court whose jurisdiction is accepted by

the Slovak Republic or to a representative or employee of an intergovernmental organization or body

of which the Slovak Republic is a member or has a

relationship following from a treaty, or to a person

in a similar function.

Penalties

The penalty for violation of the base offense under

Sections 161b and 161c is punishment of up to two years

and a monetary sanction. However, when the offender

acts as part of an organized group or derives an “advantage of a large extent,” defined as 22 million Slovakia

koruna (approx. U.S. $433,840), the range of imprisonment is increased from one to five years. In addition, an

offender may be fined up to SKK 5 million (approx. U.S.

$98,600) and, pursuant to Sections 55 and 73 of the

Criminal Code, any asset that was used to commit the

crime or was obtained as a result of the crime may be

forfeited from the offender or confiscated from third parties.

Books and Records Provisions

Slovak law requires all companies, including stateowned enterprises, to maintain “accounts in a complete,

open, and correct manner so that they fairly report all

events that are subject to accounting.” (See Law on Accounting No. 563/1991 Coll, ‘7(1).) Companies that meet

certain income requirements are required to have audited

financial statements and to publish certain information

concerning their financial statements (id. at ’20.) Auditors are required to report evidence of money laundering

but not other crimes. (See Law No. 249/1994 Coll. to

Prevent Laundering Proceeds of Most Serious Crimes.)

Violations of the Accounting Law are punishable by fines

of up to SKK 1 million (approx. U.S. $19,720). (See Law

on Accounting, ’37.) In addition, the use of false or distorted data in connection with the keeping of commercial records may also be punished under Section 125 of

the Criminal Code, which carries with it sanctions that

include bans on future business activities, forfeiture of

property, and monetary sanctions and, if the offender violated a specific duty resulting from the law or his employment, imprisonment from one to five years. Additionally, on October 5, 2000, the parliament approved a

bill making additional persons within a corporation accountable for reporting suspicious transactions, as well

as progressively eliminating anonymous bank accounts.
62 Battling International Bribery, 2001

Money Laundering

Bribery of a foreign official is a predicate offense

for the Slovak Republic’s money-laundering law, provided that the amount laundered exceeds SKK 4 million

(approx. U.S. $79,000). (See Cr. Code ‘252.)

Extradition/Mutual Legal Assistance

The Slovak Republic recognizes the offense of bribery of foreign officials as a basis for extradition, subject

to the requirements of dual criminality and reciprocity.

Although the Slovak Republic will not extradite its nationals, the Slovak Prosecutor General’s Office will proceed against such nationals at the request of a foreign

country’s authorities. (See Cr. Code ’21.)

The Slovak Republic can render mutual legal assistance under both treaty and nontreaty mechanisms, subject to a requirement of reciprocity. Dual criminality is

not required, and bank secrecy is not a bar in either criminal or civil matters. (See Law on Banks No. 21/1992,

’38.)

Complicity, Attempt, Conspiracy

Slovak law treats accomplices as principals. (See Cr.

Code ‘’9, 10.) A person is liable for the offense if he is

involved in preparing, attempting, or committing the offense. A person may be deemed to have participated in

the offense by inciting, aiding, abetting, or authorizing

the commission of the offense. Slovak law also

criminalizes attempt. (See Cr. Code ‘8(1).)

Slovak law provides for the separate prosecution of

conspiracy only for offenses that fall within the statutory definition of a “very serious criminal offense,” a

definition that limits such offenses to offenses with a

maximum penalty of eight years’ imprisonment or more.

(See Cr. Code ‘’7, 41(2), 62(1).) Accordingly, conspiracy

to bribe foreign political officials is not covered by the

Slovak conspiracy law.

Spain

Spain signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the

OECD on January 14, 2000. The Spanish implementing

legislation, found in the Organic Act 3/2000 of January

11, entered into force on February 2, 2000. In order to

implement the Convention, Spain added Article 445 bis

(the basic statement of the offense of bribery of foreign

public officials) to its Penal Code. Sources for this analysis include provisions from the Spanish Penal Code and

information from the U.S. embassy in Madrid.

The Spanish legislation divides the offense of bribery of foreign public officials into several categories,

making it difficult to determine the respective penalties,

statute of limitations, etc., for each type of offense. We

are concerned that the amended Spanish Penal Code does

not provide criminal responsibility for legal persons, and

the administrative and civil sanctions that it does provide may not be effective, proportionate, and dissuasive

as required by the Convention. Finally, Spain did not add

a separate definition of “foreign public official” to its

Penal Code to implement the Convention. Therefore, it

is our understanding that Spanish judges will have to read

the existing definition for domestic officials in conjunction with the definition found in the Convention itself.

Basic Statement of the Offense

Article 445 bis of the Spanish Penal Code provides:

Whoever, through presents, gifts, offers or promises,

bribes or attempts to bribe, directly or through intermediaries, authorities or public officials, whether

foreign or from international organizations, in the

exercise of their position for themselves or for a third

party, or complies with their demands, so that they

act or refrain from acting in relation to the performance of official duties, to obtain or retain a business or other improper advantage in the conduct of

international business, will be punished pursuant to

the penalties set forth in Article 423.

Article 445 bis covers the active bribery of foreign

public officials or officials of international organizations, and criminalizes donations, presents, offers,

or promises. It is our understanding that “to offer or

promise” covers offering, promising, or giving.

Jurisdictional Principles

Spain exercises both territorial and nationality jurisdiction. Under Article 23 of the Judiciary Organic Act,

Spanish courts may assert jurisdiction over any acts committed wholly or partly in Spanish territory, and on board

Spanish ships or airplanes. Article 23.2 provides that

Spain will also have jurisdiction over acts committed

abroad by Spanish nationals or foreigners possessing

Spanish nationality after committing the act, but only if:

• The act (bribery) is punishable under the law of

the place where it was committed.

• Either the aggrieved party or Attorney General’s

office has made a claim before the Spanish courts.

• The accused has not been absolved, pardoned,

or punished abroad for the same act. (If he or she

already has served part of the sentence, then the Spanish authorities will take this into consideration in

deciding what the Spanish sentence should be.)
Chapter 2: Review of National Implementing Legislation 63

Coverage of Payor/Offeror

As stated above, Article 445 bis applies to “whoever.”

The Spanish code covers actions by individuals, even

though actions may be carried out by a body corporate.

The Spanish legal system does not establish criminal liability for legal persons, although it does provide for some

administrative and civil penalties.

Coverage of Payee/Offeree

Article 445 bis covers bribes to authorities or public

officials, whether foreign or from international organizations. There is no separate definition for foreign public officials under the Spanish Penal Code. Instead, Spanish courts will have to read Article 24 of the Spanish

Penal Code, which defines public authorities and officers, in conjunction with the Convention’s definition of

foreign public official in Article 1.4a for a full understanding of the definition.

Penalties

Article 445 bis provides that the penalties for bribery of a foreign public official will be those found under

Spanish Penal Code Article 423. Article 423 refers to

penalties for passive domestic bribery, found in Articles

419, 420, and 421 of the Spanish Penal Code. Article

419 provides for punishment by imprisonment from two

to six years and a fine for as much as three times the

amount of the bribe. Article 420 provides that for completed unjust acts that are not crimes, the penalty is imprisonment from one to four years; for attempt for such

acts, the penalty is imprisonment from one to two years;

and for both, a fine for as much as three times the value

of the bribe. Article 421 provides that if a bribe is made

so that an official would refrain from acting within the

scope of his or her duties, the penalty is a fine for as

much as three times the value of the bribe.

The Spanish Code does not provide for criminal liability for legal persons. However, the manager of the

legal person may be held liable for the acts of his or her

employees pursuant to Article 31 of the Spanish Penal

Code. Article 31 provides that:

Whoever acts as a “de facto” or “de jure” manager

of a legal person, or who acts on behalf of or as a

legal or voluntary representative of another, will have

to answer personally, even though he may not have

the conditions, qualities or relations that the corresponding crime or misdemeanor requires to be the

active subject of the same, if these circumstances

exist in the entity or person on whose behalf or under whose representation he acts.

Article 20.a of the 13/1995 Act Concerning Contracts

with the Public Administration, as amended by the 53/

1999 act, provides that a legal person may be prohibited

from Spanish government procurements for up to eight

years where the legal person’s representatives have been

convicted of criminal offenses on its behalf.

Pursuant to certain articles under the Spanish Criminal Procedural Act, including Articles 13, 299, 334-338

and 589, Spanish judges may order the seizure of donations, presents or gifts, assets, instruments, and proceeds

related to the offense of bribery of foreign public officials. Confiscation is available under Article 127 of the

Spanish Penal Code, which provides:

Penalties imposed for a culpable crime or misdemeanor will bring with them the loss of the effects

coming from it and the instruments used to commit

it, as well as the profits coming from the crime whatever the transformations they may have suffered.

These effects, instruments and profits will be seized,

except when they belong to a bona fide third party,

who is not responsible for the crime, and who has

legally acquired them. Effects and instruments seized

will be sold if their trade is legal, and their product

will be used to cover the civil responsibilities of the

sentenced person. If their trade is illegal, they will

be dealt with according to the regulations and if no

regulations apply, they will be destroyed.

Article 127 provides that confiscation may only be

effected up to the amount needed to cover the

offender’s “civil responsibilities” such as damages

and compensation, the cost of the legal proceedings,

and the fine, as set forth in Article 125 and 126.

Pursuant to Spanish Penal Code Articles 131 and 33,

the length of the statute of limitations depends on

the severity of crime allegedly committed. Accordingly, the statute of limitations for bribery of foreign

public officials subject to punishment under Article

419 is ten years, and the statute of limitations for

bribery punishable under Article 420 is five years.

Article 132 provides that the statute of limitations

period begins on the date the offense was committed, or when the last act of a continuous series of

offenses took place, or when the illegal activity

ceased.

Books and Records Provisions

Bookkeeping is regulated under the Spanish Commercial Code and several other related laws. Article 25.1

of the Spanish Commercial Code provides that “all entrepreneurs must keep orderly accounts suitable to the

business conducted to provide for chronological monitoring of all the respective operations, and draw up bal-
64 Battling International Bribery, 2001

ance sheets and inventories on a regular basis.” Article 1

defines an entrepreneur as an individual who owns a company or a corporate body. Article 25.2 provides that the

entrepreneur or duly authorized person must maintain

accounting books. Article 29.1 states that all accounting

book entries must be in chronological order and clearly

comprehensible. Article 30.1 requires that books and

records be kept for six years. Financial statements, including balance and income sheets, must be submitted at

year-end closing pursuant to Article 34.1. Article 34.2

provides that annual accounts must clearly and accurately

disclose the company’s financial situation, assets, and

liabilities. Accounting principles are also covered under

the Royal Decree 1643/90, of December 20, which enacted the General Plan of Accounting. Auditing requirements are set forth inter alia in the Law on Accounts

Auditing of June 13, 1988, and the Companies Act,

adopted under Royal Legislative Decree 1564/1989, of

December 22.

Money Laundering

Article 301 of the Spanish Penal Code provides that

whoever acquires, converts, or transmits goods, or carries out any other act to help someone else do so, including hiding the illicit origin of the goods, knowing that

they originated from a serious crime, will be punished

by imprisonment from six months to six years and a fine

up to three times the value of the goods. A conviction for

the underlying offense is not required. It is our understanding that bribery of foreign public officials will be

considered a “serious crime” and therefore a predicate

offense for money-laundering legislation when punishable under Article 419 and 420 of the Spanish Penal Code.

Article 301.4 provides that predicate offenses for Spanish money-laundering legislation may occur in whole or

in part abroad.

Extradition/Mutual Legal Assistance

Spain generally does not require dual criminality and

will provide mutual legal assistance in penal matters.

Spain has entered into multilateral agreements on mutual legal assistance, such as the European Agreement

on Legal Assistance of April 20, 1959. Spain is a party to

multilateral treaties for mutual legal assistance in criminal matters with Germany, Belgium, Austria, Bulgaria,

Denmark, France, Hungary, Iceland, Luxembourg, the

Netherlands, Portugal, the Czech Republic, Sweden,

Turkey, Finland, Greece, Ireland, Italy, Norway, Poland,

the Slovak Republic, the United Kingdom, and Switzerland. Spain has entered into bilateral treaties for mutual

legal assistance in criminal matters with Argentina,

Canada, the United States, Australia, Mexico, and Chile.

Where dual criminality is required under one of the

treaties, it will be deemed to exist if the offense upon

which mutual legal assistance is based falls under the

scope of the Convention. If no treaty applies, Spain will

apply the principle of reciprocity. It already does this with

Brazil, Japan, New Zealand, and Korea. Where no multilateral or bilateral treaty or the principle of reciprocity

applies, we understand that Spain will consider the Convention a sufficient legal basis for mutual legal assistance. According to Article 8.1 of the Constitutional Act,

when it is considered to be in the public interest to do so,

Spain may not allow a request for legal assistance to be

rejected by invoking bank secrecy.

Spain will also extradite persons for crimes committed under the Convention under its existing bilateral and

multilateral extradition treaties. Spain has multilateral

extradition treaties with Austria, Belgium, Bulgaria, the

Czech Republic, Denmark, Finland, France, Germany,

Greece, Hungary, Iceland, Ireland, Italy, Luxembourg,

the Netherlands, Norway, Poland, Portugal, the Slovak

Republic, Sweden, Switzerland, Turkey, and the United

Kingdom. Spain has bilateral extradition treaties with

Argentina, Australia, Brazil, Canada, Chile, Korea,

Mexico, and the United States. It is our understanding

that Spain will consider the Convention (in the absence

of a bilateral or multilateral treaty) a legal basis for extradition. However, it appears that Spain will not extradite persons who bribed a foreign public official to refrain from doing an act which should have been done

within his or her official capacity (as the penalty for such

an offense is a fine only). Spain will extradite its own

nationals for crimes pursuant to its multilateral and bilateral treaties, or in the absence thereof, using the Convention as a basis. Article 3.3 of the Passive Extradition

Act provides that where extradition is refused due to nationality, the charge will be reported to the Attorney General for appropriate legal action.

Complicity, Attempt, Conspiracy

Article 27 of the Spanish Penal Code provides that

principal offenders and accomplices are responsible for

crimes and misdemeanors. Article 28 provides that principal offenders are those who carry out the offense, jointly

or by using another as an instrument, including those who

assist either directly or indirectly and those who cooperate by performing an act necessary for the perpetration

of the crime. Article 29 defines accomplices as those not

covered by Article 28 who cooperate in the execution of

a crime through previous or simultaneous actions. Pur-
Chapter 2: Review of National Implementing Legislation 65

suant to Article 63 of the Spanish Penal Code, accomplices receive a lower penalty than the main perpetrator

of the offense.

Sweden

Sweden signed the Convention on December 17,

1997, and deposited its instrument of ratification with

the OECD on June 8, 1999. Implementing legislation

amending the Penal Code was enacted on March 25,

1999, and entered into force on July 1, 1999. The following analysis is based on those amendments, related

Swedish laws, and reporting from the U.S. embassy in

Stockholm.

The maximum sentence for bribery of a foreign public official is imprisonment for only two years, raising

questions about whether the penalties are sufficiently

“effective, proportionate and dissuasive.”

Basic Statement of the Offense

Under Chapter 17, Section 7 of the Penal Code, it is

unlawful to give, promise, or offer a bribe or other improper reward, whether for one’s self or any other person, to, inter alia, a minister of a foreign state, a member

of a foreign legislative assembly, a person exercising

public authority in a foreign state, or a member of the

European Commission, the European Parliament, or the

European Court of Auditors, or judges of the European

Court of Justice for the exercise of official duties. This

provision does not expressly address bribes offered or

made through intermediaries. The law is not limited to

bribes given in order to obtain or retain business or other

improper advantage in the conduct of international business.

Jurisdictional Principles

Chapter 2, Section 1 of the Penal Code establishes

jurisdiction over crimes committed in Swedish territory.

Chapter 2, Section 2 provides that “a crime is deemed to

have been committed where the criminal act was perpetrated and also where the crime was completed or, in the

case of an attempt, where the intended crime would have

been completed.” Where a crime is committed in Sweden by an alien on a foreign vessel or aircraft against

“another alien or foreign interest,” under Chapter 2, Section 5 authorization from the Swedish Government is

required to initiate a prosecution. Under Chapter 2, Section 2, jurisdiction may be established over Swedish nationals and foreign nationals domiciled in Sweden for

crimes committed outside Sweden (1) if the act is criminal under the law of the place where it was committed,

or (2) if the act was committed outside the territory of

any state, the punishment involves deprivation of liberty. Prosecution of offenses committed outside Sweden

generally requires authorization from the Swedish Government.

Under Chapter 35, Section 1 of the Penal Code, the

statute of limitations is five years for crimes punishable

by a maximum term of imprisonment of two years.

Coverage of Offeror/Payor

Chapter 17, Section 7 of the Penal Code refers to

acts by “a person.” Under Swedish law, legal persons

are not subject to criminal liability per se. However, under Chapter 36, Section 7 of the Penal Code, entrepreneurs are subject under certain circumstances to “quasicriminal” corporate fines for crimes committed in the

exercise of business activities. (“Entrepreneur” is defined

in the Part III of the Commentary to the Penal Code as

“any natural or legal person that professionally runs a

business of an economic nature.”)

Coverage of Payee/Offeree

Chapter 17, Section 7 covers bribes offered or paid

to a minister of a foreign state, a foreign legislator, or a

member of a foreign directorate, administration, board,

committee or other such agency belonging to the state or

to a municipality, county council, association of local

authorities, parish, religious society, or social insurance

office. Also covered are members of the European Union

Commission, the European Parliament, and the European

Court of Auditors, as well as judges of the European Court

of Justice. The statute applies in addition to those who

otherwise exercise public authority in a foreign state.

Under Chapter 17, Section 17, cases of bribery involving certain payees/offerees can be prosecuted only

if the offense is reported for prosecution by the employer

or principal of the payee/offeree or if prosecution is called

for in the public interest. This category apparently includes bribes of foreign public officials other than ministers of foreign states, members of foreign legislatures,

and officials of certain EU institutions.

Penalties

Chapter 17, Section 7 provides that bribery of foreign (or domestic) public officials is punishable by a fine

or imprisonment for a maximum of two years. (The maximum sentence in Sweden for the most severe crimes is

imprisonment for ten years.) Guidelines for determining

the appropriate penalty, including aggravating and mitigating circumstances, are listed in Chapter 29 of the Penal Code. Fines, which are assessed in accordance with
66 Battling International Bribery, 2001

Chapter 25 of the Penal Code, generally range from 900

to 150,000 Swedish crowns (approx. U.S. $84 -$14,000).

Under Chapter 36, Section 8, corporate fines for

“entrepeneurs” may range from 10,000 to 3 million Swedish crowns (approx. U.S. $930 -$278,000). Chapter 36,

Section 9 provides that in determining the amount of the

fine, “special consideration shall be given to the nature

and extent of the crime and to its relation to the business

activity.” Chapter 36, Section 10 sets forth certain circumstances requiring the mitigation or nonimposition of

corporate fines.

Chapter 36, Section 1 of the Penal Code authorizes

the forfeiture of the “proceeds of crime” unless forfeiture would be “manifestly unreasonable.” Under Chapter 36, Section 4, the value of “financial advantages”

derived “as a result of a crime committed in the course

of business” may be forfeited, unless such forfeiture

would be “unreasonable.”

Books and Records Provisions

Accounting obligations are set forth in the Bookkeeper Act, which applies generally to persons carrying

out business activities. The Companies Act requires that

companies have audits performed by independent auditors, and contains rules on reporting irregularities that

are discovered during audits. For private partnerships and

individuals, audits are required under the Accounting Act.

Chapter 11, Section 5 of the Penal Code provides that

bookkeeping offenses carry penalties of up to two years

imprisonment, with a possible increase up to four years

in “gross” cases.

Money Laundering

Money laundering is a crime under Chapter 9, Section 6a of the Penal Code. All crimes by which an individual has enriched himself, or involving a criminal acquisition, are predicate offenses for purposes of this statute.

Extradition/Mutual Legal Assistance

Extradition between the United States and Sweden

is governed by a 1961 bilateral treaty (entered into force

in 1963), supplemented by a convention that entered into

force in 1984. Under the treaty as amended, offenses are

extraditable if they are punishable by deprivation of liberty for a period of at least two years under the laws of

both parties. Sweden is a party to the European Convention on Extradition and has bilateral extradition treaties

with a number of countries. Pursuant to the Act on Extradition of Offenders, Sweden may extradite in the absence of an extradition agreement. Section 4 of that Act

authorizes extradition for offenses punishable in Sweden by imprisonment for more than one year. Under Section 2, extradition of Swedish nationals is prohibited except with respect to requests from other Nordic countries.

Legal assistance to foreign states may be provided

under the Act with Certain Provisions Concerning International Mutual Assistance in the Field of Criminal Cases,

the Act on the Use of Coercive Measures at the Request

of a Foreign State, and the Act on Taking Evidence for a

Foreign Court. Dual criminality is generally required. A

mutual legal assistance agreement with the foreign state

is not necessary. The United States and Sweden do not

have a mutual legal assistance treaty.

Complicity, Attempt, Conspiracy

Chapter 23, Section 4 of the Penal Code establishes

liability for those who further a criminal act by “advice

or deed” or who induce another to commit the act. Under Swedish law, attempt per se is not a punishable offense with respect to bribery, although the offense of bribery includes the act of offering a bribe. Likewise, conspiracy is not a punishable offense with respect to bribery

.

Switzerland

Switzerland signed the Convention on December 17,

1997. The Swiss parliament adopted a law ratifying and

implementing the Convention on December 22, 1999.

Because of a mandatory three-month period (allowing

for a possible referendum) which began on January 11,

2000 (the date that the legislation was published in the

Official Gazette), the law did not enter into force until

May 1, 2000. Switzerland deposited its instrument of

ratification with the OECD on May 31, 2000. This analysis is based on the relevant Swiss Penal Code provisions

and information from the U.S. Embassy in Bern.

Concerns with the Swiss implementing legislation

include a lack of legal responsibility for legal persons

and no monetary fines for natural persons. However, it is

our understanding that a new provision on the responsibility of legal persons has been introduced within the

framework of ongoing revisions of the general provisions

of the Penal Code.

Basic Statement of the Offense

The basic statement of the offense of bribery of a

foreign public official is contained in Title 19, Article

322 septies of the Swiss Penal Code (PC), which provides that:
Chapter 2: Review of National Implementing Legislation 67

Anyone who offers, promises, or grants an undue

advantage to a person acting for a foreign state or an

international organization, as a member of a judicial

or other authority, a civil servant, expert, translator,

or interpreter employed by an authority, or an arbitrator or military person, for that person or for another, for him to act or not to act in his official capacity, contrary to his duties, or using his discretionary powers, will be punished by five years of imprisonment.

Jurisdictional Principles

Article 3, line 1 of the PC provides that it is applicable to anyone who commits a crime or offense in Switzerland. It is our understanding that bribery of a foreign

public official which occurs in whole or in part in Switzerland will fall within Swiss jurisdiction. Switzerland

exercises jurisdiction over extraterritorial offenses committed by Swiss nationals in limited circumstances. Under Article 6 of the PC:

Swiss criminal law may apply to a Swiss person who

commits a crime or offense overseas that would be

extraditable under Swiss law, if the act is also a crime

in the foreign state where committed, and if the actor resides in Switzerland or is extradited to the Confederation because of his infraction. The foreign law

will be applicable if it is more favorable to the guilty

party.

Although non-Swiss persons within Swiss territory

currently cannot be prosecuted, it is our understanding

that within the framework of ongoing revisions to the

general parts of the PC, the application of Swiss law will

be enlarged to cover acts by such persons.

Coverage of Payor/Offeror

The Swiss law currently covers natural persons. A

new provision on the responsibility of legal persons has

been introduced within the framework of ongoing revisions of the general provisions of the Penal Code.

Coverage of Payee/Offeree

It is our understanding that Article 322 septies covers all foreign public officials as defined under the Convention, as it includes “persons acting for a foreign state

or an international organization or as a member of a judicial or other authority.” We understand that all levels

of government, including those at the local and state levels, are also covered. Members of the judiciary are specifically mentioned, as are civil servants, arbitrators,

translators, and interpreters. It is also our understanding

that by its terms article 322 septies includes any person

exercising a public function.

Penalties

The new Swiss legislation provides for a maximum

prison term of five years for natural persons, which is

the same penalty for bribery of domestic officials. There

is no minimum sentence. Article 63 of the PC provides

that “the court shall determine the sentence based upon

the behavior of the offender in committing the offense,

taking into account his motives, prior history and personal situation.” There are no fines under Swiss law for

bribery offenses committed by natural persons. In addition to imprisonment, Swiss law also provides for other

sanctions such as: disqualification from holding a public

office under Article 51 PC; disqualification from employment under Article 54 PC; deportation of foreigners under Article 55 PC; and publication of the judgment under Article 61 PC.

Although currently legal entities cannot be punished

under Swiss jurisprudence, an agent of the legal person

can apparently be held criminally liable. Swiss law also

provides for civil and administrative sanctions which may

be indirectly imposed on Swiss companies as third parties to an offense.

Article 59 of the Penal Code provides that a judge

may confiscate assets or their monetary equivalent resulting from an offense or which would have served as

payment to an individual for committing a crime. Confiscation from legal entities is currently only possible

when they are considered as third parties to, and not the

authors of, the offense. However, it is our understanding

that once the new law concerning legal responsibility for

legal persons is enacted, companies will also be subject

to direct confiscation under Article 59. Seizure is also

provided for in the civil codes and in the laws of the

cantons.

Article 70 of the Penal Code provides that the statute of limitations for a criminal act is ten years for violations punishable by imprisonment of more than three

years, which is the case for bribery of a foreign public

official. According to Article 71, the statute of limitations will run from the day when the accused committed

the act; or, if the actions were done in several stages,

then from the day of the last of the acts; or, if the actions

lasted over a longer period, then from the last day of

their completion. Article 72 provides that the statute of

limitations will not run during an ongoing investigation

or following a judicial decision concerning the accused.

In the case of bribery of a foreign public official, the

clock may be stopped for a maximum of fifteen years.
68 Battling International Bribery, 2001

Books and Records Provisions

The Swiss Debtors Code (“Obligations”) contains

the Swiss provisions on books and records. Any company that must register its trade name with the commercial register is required to maintain its books and records

in accordance with Swiss accounting rules. It is our understanding that Article 957 of the Swiss Debtors Code

generally covers the acts prohibited by Article 8 of the

Convention.

Money Laundering

Article 305 bis of the Penal Code on money laundering provides that anyone who commits acts that may prevent the identification of the origin, discovery, or confiscation of sums which the person knows or should have

known resulted from a crime, will be punished by imprisonment or a fine. Just as with bribery of domestic

officials, bribery of foreign public officials will be a predicate offense for the application of Swiss money-laundering legislation. Under line three of article 305 bis of

the PC, the money launderer is punishable when the predicate offense was committed outside of Switzerland and

is also punishable in the state where it was committed.

Extradition/Mutual Legal Assistance

Article 35 of the Federal Law on International Mutual Legal Assistance in Criminal Matters (EIMP) provides that extradition may be granted if: (1) the act is

punishable under both Swiss law and the requesting country by imprisonment of a maximum of at least a year or a

more severe penalty, and (2) Switzerland does not have

jurisdiction.

Swiss law on mutual legal assistance is provided for

in the EIMP. Mutual legal assistance in foreign criminal

proceedings is provided for in Part III of the EIMP. More

specifically, discovery of procedural or official Swiss

documents is governed by Article 63 of the EIMP. In

order to obtain mutual legal assistance which entails coercion under Article 63, Article 64 provides that the requesting country must show that the elements of the crime

are also punishable under Swiss law. Articles 85-93 of

the EIMP contain provisions on the delegation of criminal prosecutions, and Articles 94-108 of the EIMP contain provisions on the delegation of enforcement of criminal judgments. Dual criminality must exist for there to

be mutual legal assistance. This requirement will be satisfied with the entry into force of Article 322 septies for

bribery of foreign public officials. Switzerland ratified

the European Convention on Mutual Legal Assistance

on April 20, 1959.

It is our understanding that although Article 47 of

the Federal law on banking and accounts protects bank

secrecy, such protection is not absolute. Under Federal

and cantonal law, banks and their agents and employees

must testify and supply certain information to the authorities where the law provides that they have a duty to

do so, particularly in criminal proceedings.

Complicity, Attempt, Conspiracy

Complicity is covered in Articles 24 and 25 of the

Penal Code. Article 24 defines an “instigator” as a person who intentionally persuades another to commit a

crime. That person is punished as the “main author” of

the crime if it is carried out. An “accomplice” is defined

as someone who intentionally lends his assistance in furtherance of a crime. Article 25 provides that courts may

penalize the accomplice to a lesser extent than the “main

author,” depending on the facts of the case. Although

authorization is not specifically covered under Swiss law,

it may fall within the articles on complicity. Attempt for

bribery of a foreign public official is covered under Swiss

Penal Code Articles 21 and 23. Conspiracy does not exist under Swiss law, although Swiss Penal Code article

260 ter criminalizes participation in or support of a criminal organization.

United Kingdom

The United Kingdom signed the Convention on December 17, 1997. Parliament approved ratification on

November 25, 1998, and the U.K. deposited its instrument of ratification with the OECD on December 14,

1998. The U.K. Government has recognized the need for

new legislation but has not taken steps to introduce and

pass such legislation in parliament. It is now almost two

years since the U.K. legislation was reviewed by the Bribery Working Group, and we have yet to see final action.

We based our analysis on the texts of relevant U.K.

laws, a March 1998 report of the U.K. Law Commission

that considered how the U.K. would meet the requirements of the Convention, information obtained from

nongovernmental organizations, and reporting from the

U.S. embassy in London.

Our main concern with the existing legislation on

which the U.K. is basing implementation of the Convention is that it is unclear whether it applies to the bribery

of foreign public officials. Under U.K. law, bribery of

public officials is primarily covered under the common

law and under three statutes: the Public Bodies Corrupt

Practices Act 1889, the Prevention of Corruption Act

1906, and the Prevention of Corruption Act 1916, referred to collectively as the Prevention of Corruption
Chapter 2: Review of National Implementing Legislation 69

Acts. Although these statutes address the bribery of domestic public officials, they do not specifically address

the bribery of foreign public officials, and we are unaware of any specific cases that interpret the law as applying to foreign public officials. Another concern we

have is that although the U.K. has the constitutional authority to assert nationality jurisdiction, it has thus far

declined to consider doing so with respect to offenses

covered by the Convention.

Basic Statement of the Offense

The U.K. is basing its implementation of the Convention upon the Prevention of Corruption Acts and the

common law. Specifically, the U.K. considers that its laws

comply with Article 1 of the Convention under the 1906

act, as amended by the 1916 act. Section 1(1) of the 1906

act states that:

If any person corruptly gives or agrees to give or

offers any gift or consideration to any agent as an

inducement or reward for doing or forbearing to do,

or for having after the passing of this Act done or

forborne to do, any act in relation to his principal’s

affairs or business, or for showing or forbearing to

show favour or disfavour to any person in relation to

his principal’s affairs or business he shall be guilty

of a misdemeanor.

Generally, the 1906 act criminalizes bribes corruptly

offered or given by any person to an agent to induce him

or her to act or not to act in relation to his or her principal’s

affairs or business. “Agent” is defined under the Prevention of Corruption Acts as any person employed by or

acting for another, a person serving under the Crown, or

any local or public authority. It is our understanding that

this definition covers domestic public officials, but it is

unclear whether foreign public officials are covered.

Jurisdictional Principles

With very few exceptions, the U.K. exercises only

territorial jurisdiction. It is our understanding that if any

part of the offense, either the offer or acceptance or agreement to accept, takes place within the territory of the

U.K. jurisdiction, it can be prosecuted in the U.K. The

Criminal Justice Act of 1998 on Terrorism and Conspiracy provides that any conspiracy in the U.K. to commit crimes abroad is a criminal offense. The U.S. embassy reports that the antiterrorism legislation would

apply to a conspiracy in the U.K. to bribe a foreign public official. The U.K. does not exercise nationality jurisdiction over bribery offenses, although it does exercise

nationality jurisdiction over other offenses such as murder, high treason against the crown, and piracy.

Coverage of Payor/Offeror

The Prevention of Corruption Acts and the common

law concern bribery by “any person” without distinction

as to nationality. The 1906 act, which covers bribes by

“any person,” does not define “person.” Schedule 1 of

the Interpretation Act of 1978 states that “person” includes a body or person corporate or unincorporate. The

U.K. legal system provides criminal liability for legal

persons. Companies can be held criminally responsible,

and fined, for the acts of those who control the company,

including representatives of the company.

Coverage of Payee/Offeree

It is our understanding that under the U.K.’s Prevention of Corruption Acts, a public official is identified

based upon his or her position as an officer, member, or

servant of a “public body.” The 1916 act extended the

definition of “public body” to include “local and public

authorities of all descriptions.” As stated above, the 1906

act uses agency law to criminalize bribes that would encourage an agent in the public or private sector to contravene the principal/agent relationship. Section 1(2) of

the 1906 act defines “agent” as “any person employed

by or acting for another” and Section 1(3) further provides that “a person serving under the Crown or under

any corporation or any borough, county or district council, or any board of guardians, is an agent.” The 1916 act

provides that a person serving under a “public body” (i.e.,

under any local or public authority) is an agent within

the meaning of the 1906 act. Nothing in either the Prevention of Corruption Acts or the common law indicates

with certainty whether the U.K. law applies to foreign

public officials. Furthermore, it is our understanding that

the 1906 act does not cover members of parliament or

the judiciary when they are acting in their official capacity.

Penalties

The penalty for corruption in a magistrate’s court is

a maximum of six months imprisonment and/or a fine of

£5,000 (approx. U.S. $7,090). For convictions in crown

courts, the penalty is a maximum of seven years imprisonment and/or an unlimited fine. There are no express

provisions on corporate criminal liability, but we understand that companies can be fined for breaches of the

criminal law. There is no statute of limitations under U.K.

laws for prosecution of bribery cases. U.K. courts may

order confiscation of the bribe and the bribe proceeds

under the Criminal Justice Act of 1988, as amended by

the Proceeds of Crime Act of 1995. Following a conviction, Section 43 of the Powers of Criminal Courts Act of
70 Battling International Bribery, 2001

1973 allows a court to order forfeiture from the offender

of lawfully seized property used to commit or facilitate

the offense. It is our understanding that under Section 4

of the Criminal Justice (International Cooperation) Act

of 1990, the U.K. Secretary of State may decide whether

to grant a request for receiving assistance in obtaining

evidence, such as bank records, inside the U.K.

Books and Records Provisions

The Companies Act of 1985, Sections 221, 222, and

722 prohibit generally the establishment of off-the-books

accounts, the making of off-the-books or inadequately

identified transactions, the recording of nonexistent expenditures, the entry of liabilities with incorrect identification of their object, and the use of false documents.

These provisions govern private and public limited companies, companies limited by guarantee, and unlimited

companies. Section 223 provides that failure to comply

with Sections 221 and 222 is an offense unless the company officer can show that he acted honestly and the default was excusable under the circumstances. On summary conviction, the penalty for an offense under Section 223 is a maximum term of six months and/or a fine

of £5,000 (approx. U.S. $7,090), on conviction by indictment, the penalty is imprisonment for a maximum

term of two years and/or an unlimited fine. For violation

of Section 722, the penalty is an unlimited fine, and if

the violation persists, a daily fine. Section 17 of the Theft

Act of 1968 also contains an offense for false or fraudulent accounting, the penalty for which is imprisonment

for a maximum of two years. The Companies Act of 1985

also provides that certain companies must have an external audit.

Money Laundering

It is our understanding that since offering and accepting bribes are indictable offenses, they automatically

fall within the purview of the Criminal Justice Act of

1988, as amended by the Criminal Justice Act of 1993,

which sets forth the U.K. money-laundering legislation,

both as to the bribe and the bribe proceeds.

Extradition/Mutual Legal Assistance

The U.K. has extradition agreements with all of the

OECD member countries except Japan and Korea. The

U.K. is also a party to the Council of Europe Convention

on Extradition of 1957. In the absence of an extradition

agreement, the U.K. considers extradition requests on

an ad hoc basis under Section 15 of the Extradition Act

of 1989. If, under the law of the country requesting extradition, the offense is punishable with a prison term of

twelve months or more, extradition may be available.

U.K. nationals may be extradited.

Under Part I of the Criminal Justice Act of 1990 (International Cooperation), the U.K. can provide mutual

legal assistance in criminal matters to other countries

without treaties or agreements. It is our understanding

that the U.K. will provide assistance to foreign authorities to facilitate any criminal investigation or proceeding in the requesting country, and that there is no threshold penalty level for the provision of mutual legal assistance. We further understand that dual criminality is not

required for mutual legal assistance other than in general cases of search and seizure.

Complicity, Attempt, Conspiracy

Complicity, aiding and abetting, incitement, and authorization are addressed in an 1861 act entitled “Aiders

and Abettors,” which provides that:

Whosoever shall aid, abet, counsel, or procure the

commission of [any indictable offense], whether the same

be [an offense] at common law or by virtue of any Act

passed or to be passed, shall be liable to be tried, indicted, and punished as a principal offender.

The Criminal Attempts Act of 1981, Section 1, provides that a person is guilty of an attempt when he or she

“does an act which is more than merely preparatory to

the commission of the offense.” Under U.K. law, conspiracy to commit a crime is also a crime, and subject to

the same penalties as the primary offense. The Criminal

Law Act of 1977, as amended by the Criminal Justice

(Terrorism and Conspiracy) Act of 1988, defines conspiracy as “an agreement that a course of conduct shall

be pursued which will necessarily amount to or involve

the commission of any offense or offenses by one or more

of the parties to the agreement if the agreement is carried out in accordance with their intentions.”
Chapter 3: Review of Enforcement Measures 71

Review of Enforcement

Measures

3

Enforcement of National Implementing Legislation

As of July 2001, the Convention has been in force

for almost two and a half years for twelve signatories,

including five G-7 countries, and for over a year for almost two-thirds of the signatories. The U.S. government

recognizes that achieving Convention goals will take

time. The Parties need to establish mechanisms for identifying potential violations of their implementing legislation, and for identifying and correcting weaknesses in

their implementation programs. Moreover, prosecutors

need to gain experience in prosecuting these new laws.

Nevertheless, each signatory is entitled to expect full

compliance with commitments made by all signatories

to identify and eliminate bribery of foreign public officials in international business transactions.

We are not aware of any prosecution by another Party

to the Convention for bribery payments to foreign public officials at this time. However, as with investigations

in this country, the confidentiality of the procedures prior

to prosecution could be one factor. Nonetheless, we are

disturbed by continuing reports of alleged bribery of foreign public officials by firms based in countries where

the Convention is in force. While reports in the general

media are not always sufficiently credible to lead to an

official response, the recurring reporting of some allegations should have initiated inquiries by some of the Parties to the Convention. While not all inquiries will or

should lead to prosecutions, we expect that during Phase

II reviews governments will be prepared to explain sufficiently the procedures and methods they have developed for identifying and pursuing cases of transnational

bribery.

In the United States, Foreign Corrupt Practices Act

(FCPA) investigations of the bribery of foreign public

officials and prosecutions are subject to the same rules

and principles that govern any other federal criminal or

civil investigation. To ensure that uniform and consistent prosecutorial decisions are made in this particular

area, all criminal investigations under the FCPA are supervised by the Criminal Division of the Department of

Justice.

In the twenty-four years since the passage of the

FCPA, the Department of Justice has brought over thirty

criminal prosecutions and six civil injunctive actions.1

In addition, the United States Securities and Exchange

Commission (SEC) has brought several civil enforcement

actions against issuers for violations of the antibribery

provisions and numerous actions for violations of the

books and records provisions of the FCPA. In the period

January 2000 to May 2001, the SEC settled two cases

involving allegations of violations of the books and

records provisions of the FCPA involving illicit payments

to foreign officials. The defendants in each case agreed

to pay substantial civil penalties in excess of $250,000.

The Department of Justice also has provided assistance to American businesses engaged in international

business transactions. Since 1980, the Department has

issued thirty-five opinions in response to requests from

American businesses stating whether it would take enforcement action if the requestors proceeded with actual

proposed transactions.
72 Battling International Bribery, 2001

U.S. Efforts to Promote Public Awareness

For many years prior to the adoption of the Convention, the U.S. government sought to educate the business

community and the general public about international

bribery and the FCPA. As a result, U.S. companies engaged in international trade are generally aware of the

requirements of U.S. law. Since U.S. ratification of the

Convention and the passage of the IAFCA, the U.S. government has increased efforts to raise public awareness

of U.S. policy on bribery and initiatives to eliminate bribery in the international marketplace.

President George W. Bush has made it clear that increasing accountability and transparency in governance

around the world is an important foreign policy objective for his Administration. In his May 28, 2001, statement on corruption submitted to the Second Global Forum on Fighting Corruption and Safeguarding Integrity

(Second Global Forum) at The Hague, the President also

advised participants that the United States is committed

to bringing renewed energy to the global anticorruption

agenda, and to increasing the effectiveness of the American policies and programs that address this important

issue.

Over the past year, Secretaries Norman Y. Mineta

and Donald L. Evans, and other senior Commerce officials, including Under Secretary Grant D. Aldonas, have

spoken out against international bribery and urged support for the Convention. At the May 2001, OECD Ministerial, Secretary Evans made it clear that the Bush Administration is determined to fight bribery and corruption in international business transactions. Recognizing

that the OECD Antibribery Convention was a significant step to eliminate these activities, the Secretary in

meetings with business and labor representatives committed the Commerce Department to continue to promote

efforts to have the Convention implemented and enforced

by every signatory.

The Secretaries of State and the Treasury, the U.S.

Attorney General and senior officials in their Departments

have been supportive as well. In May 2001, at the Council of the Americas 31st Washington Conference, Secretary of State Colin L. Powell urged participants to fight

corruption, noting that corruption can destroy the strongest democracy, if it is not dealt with effectively.

In a May 31, 2001, speech during the Second Global

Forum, U.S. Attorney General John Ashcroft urged countries not to wait for further anticorruption studies or additional international agreements before implementing

their existing treaty obligations.

Officials of the Commerce, State, and Justice Departments are also in regular contact with business representatives to brief them on new developments on

antibribery issues and discuss problems they encounter

in their operations. As part of a vigorous outreach program, the three departments provide on their Internet

websites detailed information on the Convention, relevant

U.S. laws, and the wide range of U.S. international activities to combat bribery. In May 2001, the State Department, in cooperation with the Commerce and Justice

departments, also re-published a brochure titled Fighting Global Corruption: Business Risk Management that

contains information about the benefits of good governance and strong corporate antibribery policies, the requirements of U.S. law and the Convention, and various

international initiatives underway to combat business

bribery and official public corruption. The brochure is

being made available to U.S. and foreign companies and

business associations. The brochure can be found at

www.state.gov.

Efforts of Other Signatories

Rigorous enforcement of these new laws against bribery of foreign public officials is one part of the process

in making the Convention a success. Another very important element is raising public awareness of the laws.

This includes informing the relevant prosecutorial authorities of the new tools they have to prosecute corruption, as well as counseling businesses and the general

public about the laws.

For years, businesses from many of the signatory

countries were able to bribe foreign officials without fear

of penalty; they even benefitted from being able to deduct such bribes from their taxes. This is no longer the

case for most of the signatories to the Convention. It is

the responsibility of each Party to the Convention to publicize that bribes are no longer an acceptable way to obtain an international contract, and that serious criminal

penalties can be imposed upon those who bribe or attempt to bribe foreign public officials.

However, efforts to raise public awareness about

business corruption and the importance of the Convention vary widely among other signatory countries. The

United States has the most extensive public outreach program of any signatory to the Convention. Several other

countries are also taking useful initiatives to raise public

awareness on the need to fight corruption, both at home

and abroad, and they have expanded their activities over

the past year. Yet in many signatory countries, including

important economies such as Belgium, Italy, Japan, Spain,

and the U.K., there continues to be relatively little offi-
Chapter 3: Review of Enforcement Measures 73

cial activity to publicize the Convention or encourage a

public dialogue on unethical business practices in international trade.

Governments have sought to draw attention to the

Convention and the problems of business corruption in a

variety of ways, for example, through speeches by highlevel officials, publications, and well-publicized anticorruption programs. Nongovernmental organizations are

also playing an important role in raising public awareness of corruption and the need for effective remedies.

Transparency International, a nongovernmental organization committed to promoting good governance and

fighting bribery and corruption, has been particularly

active. Working with a network of representatives and

supporters in seventy-seven countries around the world,

Transparency International has sought to educate governments and societies on the importance of fighting

corruption and enacting effective legislation. Other private national organizations, some founded since the Convention came into effect, also have emerged to help promote public awareness of corruption and encourage public discussion of possible solutions.

According to reports from U.S. embassies and public sources of information, the following countries have

undertaken notable activities to raise public awareness

on corruption.

The government of Australia developed an extensive campaign to raise public awareness of its anticorruption policies. The Australian government has issued

press releases and placed advertisements in trade publications to explain the Convention and government efforts to fight corruption. It has also organized seminars

in Australia and overseas to brief Australian companies.

In addition, the Australian federal police maintain a

hotline and e-mail site for reporting all crimes, including

bribery, known as “crimestoppers.” It can be reached in

Australia at 1-800-333-000, or over the internet at the email address www.crimestoppers@afp.gov.au.

In Bulgaria, fifteen nongovernmental organizations

have joined together to form Coalition 2000, an advocacy group devoted to fighting corruption. Coalition 2000

is developing an anticorruption action plan and publicizing the Convention. It has its own Internet website with

links to the OECD website and the text of the Convention. The Bulgarian government has endorsed and supported activities of Coalition 2000. Among Southeast

European countries participating in the Stability Pact,

Bulgaria has taken the lead in promoting a new regional

anticorruption initiative aimed at promoting trade and

investment and improving the overall business climate.

The government has posted the Stability Pact initiative

on its Internet website and also publicized it at government press conferences.

Canada’s Justice Department has published a booklet on the Convention and Canada’s antibribery laws titled

The Corruption of Foreign Officials Act that is available

to its business community. The Justice, Foreign Affairs,

and International Trade Ministries also prepare an annual report to parliament on the implementation of the

Convention. Under the auspices of the federal

Transnational Crime Working Group, a study was conducted, titled Impact on Canada of Corrupt Foreign Officials in Other Countries, which was completed in September 2000 and recently made public. The study recommends that the government create a new body to coordinate federal anticorruption activities, in part because

“[t]here is a general feeling in parts of the business community that Canadian commerce suffers abroad because

individual businesses do not pay bribes on a routine basis as a means of securing contracts.” The study further

recommends that “research into the scope and impact of

corruption on Canadian commercial interests and on the

issue of trade distortions caused by corruption is required.” The government has also established a training

program for its foreign service officers on its legislation

implementing the Convention and has held a number of

regional seminars this past year. In addition to these government initiatives, several nongovernmental organizations, including Transparency International, the Canadian Bar Association, and the Canadian Association of

Manufacturers and Exporters, are helping to raise public

awareness by holding seminars on the Convention and

related issues.

The government of the Czech Republic has initiated a highly publicized war on corruption as part of its

anti-crime efforts. As part of this campaign, the Ministry

of Interior publishes an annual report on progress in the

fight against corruption. The report is available on the

Ministry’s website (www.mvcr.cz/korupce). The government also has organized a number of seminars over the

past several years to brief national and municipal officials on its anticorruption legislation. Czech officials also

have given numerous broadcast and print media interviews on corruption and bribery issues. In addition to

these government initiatives, the Transparency International branch in the Czech Republic has conducted its

own public information campaign, distributing posters

and pamphlets that incorporate information on the Convention. The government and Transparency International

Czech Republic will host the 10th International AntiCorruption Conference, October 7-11, 2001 in Prague.

This joint meeting of politicians, government officials,
74 Battling International Bribery, 2001

and representatives of the private sector, nongovernmental organizations and international development agencies

is the first of its kind in Central and Eastern Europe.

In France, magistrates and the media are continuing

to foster public awareness with their investigations into

domestic and international corruption cases, including

alleged bribes by a major French oil company and more

recently a probe into the sale of arms to an African country through a French company. The French chapter of

Transparency International has also been particularly

active. Despite the wide coverage of corruption cases,

the OECD Convention has not been publicized by the

government or the media. However, a special government-related internet site on corruption, which includes

articles on the latest scandals and links to special anticorruption sites, can be found at www.adminet.com/obs/

corruption.html.

In Germany, public outrage over alleged improper

donations to the Christian Democratic Union political

party has raised the profile of anticorruption issues. The

German government and business associations have been

working together to publicize antibribery laws in seminars and newsletters. For example, the U.S. Consul General of Dusseldorf and the North Rhine-Westphalia State

Minister of Justice held a conference on enforcement of

the OECD Convention for prosecutors and judges in June

2000, which was followed in March 2001 by a roundtable

hosted by the Consul General at which U.S. and German

business representatives discussed possible ways to reduce corrupt practices abroad. Increasingly, German companies are starting to develop internal procedures to promote compliance with the law. To encourage companies

in that direction, the German government now requires

all applicants for Hermes export credit guarantees to declare that financed transactions have been and will remain free of corruption.

In Greece, the Ministry of Justice circulated a questionnaire to all prosecutors’ offices during the summer

2000 to report all potential cases concerning the application of the Convention.

Korea has seen a dramatic increase in national anticorruption activities over the past two years. President

Kim Dae Jung established a presidential anticorruption

commission to investigate corruption and make policy

recommendations. In February 2000, President Kim personally inaugurated a new anticorruption website on

which Korean citizens may report complaints about unfair treatment and public corruption. Under the leadership of Mayor Goh Kun, the city of Seoul has undertaken a high-profile anticorruption campaign featuring a

new online procurement information system that allows

citizens to monitor the entire administrative process of

government procurement and civil applications. On December 10-13, 2000, the Korean government sponsored

and organized jointly with the Asian Development Bank

the “Seoul Conference on Combating Corruption in the

Asia-Pacific Region.” The Seoul metropolitan government and the United Nations will co-host an international

symposium on anti-corruption on August 30-31, 2001 in

Seoul. The event will bring together world experts and

high-ranking officials from Asia and Africa and is aimed

at expanding Seoul’s two-year-old On-line Procedures

Enhancement system (OPEN) that enables citizens to

monitor online civil applications for permits or approval

in areas vulnerable to corruption. In addition, the GOK

will host the Third Global Forum and the Eleventh International Anti-Corruption Conference in 2003.

In Mexico, the Vicente Fox administration is sponsoring the establishment of a semi-autonomous National

Council on Corruption, which will be composed of individuals chosen for their credibility on corruption issues.

The Council will evaluate government anticorruption

efforts and will be the primary vehicle through which

civil society expresses its views on corruption. Eightyone organizations, including prominent business organizations and NGOs, will support the public-private partnership.

The Netherlands hosted the Second Global Forum

on Fighting Corruption on May 28-31, 2001, in The

Hague. This important conference was attended by some

1,600 participants, including ministerial and senior-level

representation from 143 countries and 30 nongovernmental organizations (NGOs). The conference’s Final Declaration emphasized the “Guiding Principles” for effective national anticorruption efforts that were developed

by the United States at the First Global Forum. The Final Declaration also stressed the importance of monitoring mechanisms for the implementation of instruments

such as the OECD, Council of Europe, and Inter-American anticorruption conventions.

The Slovak Republic, under the leadership of Prime

Minister Mikulas Dzurinda, has called for a national program to fight corruption. Many high-level officials, including the Prime Minister and Interior Minister, have

publicly condemned official bribery and pledged to take

action against it. The government has organized several

inter-ministerial conferences to discuss the problem.

Sweden has been an active supporter of the Convention. Senior officials have spoken out against international corruption and publicly emphasized Sweden’s

willingness to expand the scope of its international cooperation to combat the problem.
Chapter 3: Review of Enforcement Measures 75

In addition to the United States, a number of the signatories to the Convention have posted their national

implementing legislation or draft legislation on their government websites or the OECD Anticorruption Division

website: Australia, Austria, Belgium, Canada, Denmark,

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

Ireland, Japan, Korea, Luxembourg, the Netherlands,

New Zealand, Norway, Poland, Spain, Sweden, and Switzerland. (See Appendix C for a list of websites.)

Monitoring Process for the Convention

Monitoring is crucial for promoting effective implementation and enforcement of the Convention by signatory countries. The OECD has developed a comprehensive monitoring process that provides for input from the

private sector and nongovernmental organizations. In

addition to the OECD process, the U.S. government has

its own intensive monitoring process, of which these

annual reports to the Congress are an integral part. The

United States has encouraged all signatories to participate fully in the OECD monitoring process and establish

their own internal mechanisms for ensuring followthrough on the Convention by governments and the private sector. We have also stressed the importance of signatories devoting sufficient resources to ensure that the

monitoring process is effective.

OECD Monitoring

The OECD has established a rigorous process to

monitor implementation and enforcement of the Convention and of the 1997 Revised Recommendation of the

Council On Combating Bribery In International Business Transactions (Revised Recommendation). Our experience with Phase I of the process confirms that it is a

serious undertaking that encourages Parties to fulfill their

obligations under the Convention. Evaluating implementation of the Convention is a challenging project given

the diverse legal systems of signatory countries. The

OECD review process seeks to accommodate these differences by focusing on the functional equivalence of

measures and the identification of the strengths and weaknesses of the various approaches to implementation.

Over the past two years, the effectiveness of this process has been demonstrated by the willingness of several Parties to correct weaknesses identified in their

implementation and enforcement regimes after their legislation has undergone the review process.

Framework for Monitoring

Article 12 of the Convention instructs the signatories to

carry out a program of systematic followup to monitor and

promote the full implementation of the Convention through

the Working Group on Bribery. Guidance for the Working

Group on monitoring and followup is provided in the

Revised Recommendation.

The key elements of the monitoring program are as

follows:

• A self-evaluation provided in response to the

Working Group questionnaire, assessing implementation of the Convention and Revised Recommendation, including whether the country disallows tax

deductibility of bribes to foreign public officials.

• A peer group evaluation wherein Working Group

members have an opportunity to review the questionnaire and seek clarifications from representatives

of the signatory government.

• A Working Group report providing an objective

assessment of the progress of the participating country in implementing the Convention and Revised

Recommendation.

• Regular provision of information to the public

on the Working Group’s programs and activities and

on implementation of the Convention and Revised

Recommendation.

Operation of the Working Group

To carry out its mandate, the Working Group agreed

at its July 1998 meeting to certain modalities concerning

the system of self-evaluation and peer group evaluation

provided for in the Convention and Revised Recommendation. The Working Group recognized that a rigorous

process of multilateral surveillance of implementation

was necessary to ensure the effectiveness of these instruments.

The monitoring process has been divided into two

stages, an implementation phase (Phase I) and an enforcement phase (Phase II). The objective of Phase I is to evaluate whether a Party’s implementing legislation meets the

standards set by the Convention and the Revised Recommendation. The objective of Phase II is to study and

assess the structures and methods of enforcement put in

place by countries to enforce the application of those laws.

The modalities are summarized below and are also available on the OECD’s public website at http://

www.oecd.org//daf/nocorruption/selfe.htm for Phase I

and http://www.oecd.org//daf/nocorruption/selfe2.htm for

Phase II.

Phase I began in the latter part of 1998 with the distribution of a questionnaire to signatories soliciting in-
76 Battling International Bribery, 2001

formation on how their respective laws and legal systems implement the Convention and the Revised Recommendation. The Working Group was instructed to report periodically on the results of the Phase I review to

the OECD Ministers. The Phase I questionnaire contained

a comprehensive list of questions on how Parties intend

to fulfill their obligations under the Convention and the

Revised Recommendation. Countries were asked, among

other things, to:

• Provide the dates on which the Convention was

signed and ratified, necessary implementing legislation was enacted, and the Convention entered into

force.

• Review how each of the substantive provisions

of the Convention, from the elements of the offense

(Article 1) to extradition (Article 10), is implemented.

• Explain their laws and policies regarding the tax

deductibility of bribes, accounting requirements, external audit and internal company controls, public

procurement, and international cooperation.

To encourage a candid and frank discussion among

the Working Group members in evaluating each other’s

laws, the Working Group agreed that questionnaire responses would be treated as confidential unless the country examined decided to make public its own responses.

For example, the U.S. responses can be found at

www.usdoj.gov/criminal/fraud/fcpa/intagmt.htm.

The questionnaire responses were circulated to participants in the Working Group and served as the primary basis of analysis for each country examined. At the

onset of the monitoring process, each signatory provided

the OECD Secretariat with the names of two experts to

serve as lead examiners in monitoring implementation.

The secretariat thereafter developed a timetable for countries to be examined. A team of lead examiners drawn

from two states conducted the examination with the assistance of the secretariat.

Several weeks before each Working Group meeting

to examine implementing legislation, the OECD Secretariat prepares a draft analysis and questions based on

the country’s responses to the Phase I questionnaire. The

designated lead examiners also prepare advance written

questions. The examined country then provides written

responses to the secretariat’s analysis and to the questions posed. At the beginning of each segment of the

monitoring meeting, the designated lead examiners and

the examined country have the opportunity to make general opening remarks. The lead examiners begin the questioning and discussion by raising issues that were highlighted as problems during the written exchange stage.

Following discussion and consultation within the Working Group, the lead examiners and the secretariat, in consultation with the examined country, then prepare a summary report and a set of recommendations that must be

approved by the Working Group. The summaries and

recommendations are confidential until the OECD Ministers have approved publication of the reports.

From April 1999 through May 2000, the Working

Group completed the reviews of twenty-one signatory

countries and provided its first report to Ministers at the

June 26-27, 2000 Ministerial meeting. The report summarizing the results of the monitoring process and individual country assessments was subsequently derestricted

and made available to the public on the OECD website.

Since then the implementing legislation of seven additional Parties has been reviewed. The report on the results of the monitoring process through the April 2001

Working Group meeting and individual assessments for

these seven additional Parties of the Working Group was

transmitted to Ministers at the May 15-17, 2001 OECD

Council meeting at Ministerial level and subsequently

derestricted and posted on the OECD website at http://

www.oecd.org//daf/nocorruption/instruments.htm. The

Commerce Department Trade Compliance Center also

maintains a link to these materials through its site at http:/

/www.mac.doc.gov/tcc.

Phase II of the monitoring process—the goal of which

is to study the structures in place to enforce the laws and

rules implementing the Convention and to assess their

application in practice—begins this year with the review

of Finland. Drafting of the Phase II questionnaire and

the procedures for conducting on-site visits was completed at the December 2000 Working Group meeting

and formally adopted by written procedure in January

2001.

To carry out Phase II monitoring, the Working Group

will conduct an evaluation for each country that has undergone a Phase I review, which will include an on-site

visit to the country in question in accordance with established terms of reference or procedures. The subsequent

evaluation will be based on replies by the country to the

Phase II questionnaire, the results of the on-site visits,

deliberations within the Working Group, and discussions

with the private sector.

An objective of Phase II is to improve the capacity

of Parties to fight bribery in international business transactions through critical mutual evaluation of each Party’s

compliance with the requirements of the Convention and

Revised Recommendation. Shortcomings will be identified and effective approaches to implementation will be

shared with the other Group members.

In order to obtain an overall impression of the func-
Chapter 3: Review of Enforcement Measures 77

tional equivalence of a Party’s efforts to implement the

Convention effectively, the questionnaire will request

information on how a Party has dealt with cases under

the Convention and examine the institutional mechanisms

that are in place to effectively enforce its laws. In addition, the questionnaire will seek information on the promotional efforts the country has made to educate the

public on the Convention. Detailed responses will be required on a country’s application of its implementing

legislation as it relates to the elements of the Convention

and the Revised Recommendation. The questionnaire is

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

/daf/nocorruption/selfe2.htm.

On-site examination teams will be comprised of one

to two members of the OECD Secretariat and up to three

experts from each of the two lead examining countries.

The on-site visits will take from two to three days. The

examiners will review questionnaire responses of the

country undergoing review and may request additional

information. The country undergoing review will be expected to provide information concerning the application of its laws and practices implementing the Convention. The on-site reviews will be an opportunity to learn

what remedial steps have been taken by those countries

found to have deficient implementation during the Phase

I review, and also to explore horizontal issues which pertain to situations where Parties have implemented obligations of the Convention in widely divergent ways (e.g.,

varying statutes of limitations or sanctions). While the

country undergoing review will not be expected or required to disclose information otherwise protected by the

country’s laws and regulations, information on enforcement and prosecutions will greatly improve the usefulness of on-site visits for the country reviewed and the

other members of the Working Group.

The secretariat and lead examiners will prepare a

preliminary draft report on the state of enforcement and

application of the Party’s laws and other measures implementing the Convention and Revised Recommendation

in the country undergoing evaluation. The country examined will then be given an opportunity to comment on

the draft report before its submission to the Working

Group. After discussion by the Working Group, during

which the country undergoing examination will be given

an opportunity to make observations, a final report will

be adopted, which will include an evaluation by the

Working Group. Like Phase I reviews, the Phase II report and evaluation may contain recommendations to the

country undergoing review on how to improve its domestic laws and practices to effectively combat bribery

of foreign public officials in international business transactions. As with Phase I evaluations, the reports will remain confidential until transmitted to the OECD Ministers, at which time they will be made available publicly.

As stated above, Finland volunteered to be the first

Convention Party to undergo review and evaluation, expected before the end of 2001. It is envisioned that examinations of all participants in the Working Group will

be completed by 2005 at the latest. The U.S. government

believes that Phase II will be the true litmus test of a

Party’s commitment to the Convention and its eventual

effectiveness.

Although Working Group meetings and on-site visits are confidential proceedings, the monitoring process

will provide opportunities for input by the private sector

and nongovernmental organizations. Throughout Phase

I reviews, Transparency International has submitted its

own assessment of the implementing legislation of a

number of the examined countries and has provided input on various other issues ranging from coverage of

bribes to political parties and candidates to recommendations for implementation of the accounting and auditing provisions of the Convention and the Revised Recommendation.

The Working Group also encourages private sector

input through other channels. It has had a number of consultations concerning the Convention and related issues

with the Business and Industry Advisory Committee and

the Trade Union Advisory Committee (two officially recognized OECD advisory bodies), Transparency International, the International Chamber of Commerce, and international bar groups. The United States will continue

to advocate broad public access to information on implementation and enforcement of the Convention. We will

encourage countries undergoing Phase II on-site examinations to provide opportunities for the secretariat and

lead examiners to meet with a broad section of representatives of the private sector and civil society to ascertain

their views on implementation and enforcement of the

Convention and Revised Recommendation. We will also

continue to urge these same groups to express their views

and submit information to the Working Group when it

meets to discuss and finalize individual country reports

and evaluations.

With Phase II monitoring about to get underway, the

Working Group is moving to a critical phase in making

the Convention an effective instrument—ensuring rigorous enforcement of the Convention’s obligations. The

United States takes monitoring of the Convention very

seriously and has committed significant resources to this

endeavor, at times through supplemental funding for the

Working Group. However, a lack of adequate funding
78 Battling International Bribery, 2001

for the Working Group could jeopardize its ability to carry

out its mandate. The United States will continue to press

for adequate OECD funding for the Working Group, as

it is the responsibility of all OECD Members and Convention signatories to support the work of the Group.

Monitoring of the Convention By the U.S.

Government

Monitoring implementation and enforcement of the

Convention has been a priority for the U.S. government

since it entered into force. The Bush Administration is

equally committed to ensuring full compliance with

agreements with our trading partners. At the Commerce

Department, monitoring compliance with the Convention —and international agreements generally—remains

a high priority. Secretary Evans stated at his confirmation hearing before the Senate Commerce Committee that

“compliance [with trade agreements such as the Convention] is going to be an absolute with me.” Other U.S.

agencies are also actively involved and making important contributions. The Commerce, State, Justice, and

Treasury Departments and the staff of the SEC continue

to cooperate as an interagency team to monitor implementation and enforcement of the Convention. Each

agency brings its own expertise and has a valuable role

to play.

Participation in the OECD Working Group on Bribery is an important part of the U.S. government monitoring process. As part of that process, attorneys in the Commerce Department’s Office of General Counsel, the State

Department Legal Adviser’s Office, and the Justice

Department’s Criminal Division conduct an in-depth review of each Party’s implementing legislation.

Preparation of these annual reports to Congress is

also an integral part of the monitoring process within the

U.S. government. To fulfill the IAFCA’s reporting requirement, the Commerce Department organizes an interagency task force early in the year to coordinate work

on the congressional report and review ongoing initiatives to monitor the Convention over the longer term.

U.S. embassies in signatory countries assist in this process by obtaining information on host government laws

and assessing the progress in implementing the Convention, taking into account the views of both government

officials and private sector representatives. These diplomatic reports provide valuable information for our analysis.

The U.S. government has welcomed private sector

input in monitoring the Convention. U.S. officials have

had numerous contacts with the business community and

nongovernmental organizations on the Convention. We

highly value their assessments and the expertise that they

can bring to bear on implementation issues in specific

countries.

In the year ahead, the Department of Commerce, in

close collaboration with the State and Justice Departments

and other responsible agencies, plans to continue its rigorous monitoring of the Convention. However, because

most signatories now have laws on the books to implement the Convention, we will focus our efforts to monitor enforcement of the Convention. The following specific actions will be taken.

• The Department of Commerce will continue to

ensure that there is an integrated approach to monitoring that includes legal assessments of implementing legislation, outreach to the private sector, appropriate diplomatic initiatives, and timely analysis of

the latest developments on international bribery and

corruption.

• The Trade Compliance Center, which has responsibility in the Commerce Department for monitoring compliance with international trade agreements

with the United States, and the Office of General

Counsel will continue to give heightened attention

to bribery in international business transactions and

implementation of the Convention. This effort will

include strong outreach to the U.S. business community and nongovernmental organizations. The

Trade Compliance Center will, in close cooperation

with the Office of General Counsel and interested

U.S. agencies, also continue to oversee preparation

of the annual reports to Congress required by the

IAFCA.

• Enforcement of implementing legislation is critical to ensuring that the Convention is effective in

deterring the bribery of foreign public officials in

international transactions. As almost all of the signatories are now Parties to the Convention, we will

enhance our efforts to urge the relevant authorities

in each Party to address all credible allegations of

bribery of foreign public officials. When information is received relating to acts of bribery that may

fall within the jurisdiction of other Parties to the

Convention, the information will be forwarded, as

appropriate, to national authorities for action.

• As Parties to the Convention, we must take preventive action when we learn bribes are being solicited in an international tender. We will seek to engage other Parties to take coordinated action when

such allegations are made and approach such gov-
Chapter 3: Review of Enforcement Measures 79

ernments to let them know our companies cannot pay

bribes, will not pay bribes, and that such tenders must

be decided on the commercial merits of the proposal.

• The Department of State will continue to use its

Advisory Committee on International Economic

Policy (ACIEP) to obtain private sector views concerning the Convention and to keep nongovernmental organizations abreast of progress in the fight

against corruption.

• The Departments of Commerce and State, working with other U.S. agencies, will continue to support active diplomatic and public affairs efforts to

promote the goals of the Convention. Senior officials will continue to raise issues relating to the Convention in their meetings with foreign government

officials and speeches to U.S. and foreign audiences.

U.S. diplomatic missions will be kept informed of

current developments on the Convention so that they

can effectively participate in the monitoring process

and engage foreign governments in a dialogue on

key bribery-related issues.

The United States continues to have the most intensive monitoring program of the other signatory countries.

It is transparent and open to input from the private sector

and nongovernmental organizations. We expect other signatory countries to find it in their interest to ensure that

the other Parties to the Convention are complying with

the obligations of the Convention. As noted above, a recent Canadian study recommends that the Canadian government create a new body to coordinate federal anticorruption activities. We urge other Parties to bring renewed

energy to the global anticorruption agenda to expose corrupt practices—including bribery of foreign public officials—and bring the sunshine of public scrutiny, where,

ultimately, these practices cannot survive. Among other

anticorruption initiatives, the U.S. government will continue giving a high priority to monitoring implementation of the Convention so that U.S. businesses can fully

realize the benefits of this important international agreement. 1

Since 1977, the U.S. Department of Justice has prosecuted 15 additional cases involving bribery of foreign public

officials under federal criminal statutes other than the FCPA.
80 Battling International Bribery, 2001
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 81

Laws Prohibiting Tax

Deduction of Bribes

4

The OECD Council made an important contribution

to the fight against bribery in 1996: it recommended that

member countries that had not yet disallowed the tax deductibility of bribes to foreign public officials should reexamine such treatment with the intention of denying

deductibility. This recommendation was reinforced in the

OECD Council’s 1997 Revised Recommendation on

Combating Bribery in International Business Transactions, which laid the foundation for negotiation of the

OECD Antibribery Convention. All thirty-four signatories to the Convention have agreed to implement the

OECD Council’s recommendation on denying the tax

deductibility of bribes. Substantial progress on implementing the Council’s recommendation has been made,

with only New Zealand reporting that it has not yet completed action necessary to disallow these deductions.

Nonetheless, deductibility in some countries that have

laws currently in effect may continue for one or more of

the reasons identified below.

As part of the monitoring process on the Convention

and the OECD Council’s recommendation, the OECD

gathers information on signatories’ laws implementing

the recommendation on tax deductibility. Information on

current and pending tax legislation regarding the tax deductibility of bribes is available on the OECD website

(http:www.oecd.org/daf/nocorruption/instruments.htm).

Since 1998, the OECD has posted country-by-country

descriptions of the treatment of the tax deductibility of

bribes in signatory countries and a summary of pending

changes to their laws. The information on the website is

based entirely on reports that the signatories themselves

provide to the OECD Secretariat.

The U.S. Treasury Department has relied heavily on

these reports from signatories to prepare the report in

this chapter on OECD Convention signatories’ laws prohibiting the tax deductibility of bribes. Treasury also drew

on information obtained from U.S. embassies on this issue. This report provides the latest available information

on signatories’ tax laws that was available from these

sources.

We continue to seek more detailed information on

the signatories’ tax and bribery laws so that we will have

a better understanding of how the disallowance of tax

deductibility will be applied in practice. As part of that

effort, the Treasury Department is working to ensure that

the Committee of Fiscal Affairs, the OECD body responsible for tax issues, takes a more active role in monitoring the progress of countries in implementing the OECD

Council’s recommendation. Treasury is also providing

U.S. technical expertise to the Committee on Fiscal Affairs in order to assist members in their monitoring work.

For example, with significant assistance from U.S. Treasury officials, the Committee on Fiscal Affairs has completed work on a Bribery Awareness Handbook. This
82 Battling International Bribery, 2001

handbook, which is designed to serve as a manual for

tax officials in signatory countries to assist them in detecting bribes, includes a discussion of several specific

factors indicating when a bribe may have occurred and

examines techniques for uncovering bribes.

We believe that our information will continue to

improve as the OECD’s monitoring process creates and

makes available publicly a more complete record of each

signatory’s legal, regulatory, and administrative framework for disallowing the tax deductibility of bribes.

Beginning in 2001, the Committee on Fiscal Affairs

will assist the Working Group on Bribery in designing

questions to ask Parties during Phase II reviews regarding their implementation of the Convention and the Revised Recommendation. The Committee on Fiscal Affairs will also participate in reviewing the responses to

these questions. In addition, the Committee on Fiscal

Affairs will continue to work with non-member countries who have expressed an interest in the Convention

and related anticorruption issues and will review the capability of these countries to abide by the Convention

and the Council’s Recommendation. The Department of

State was instrumental in ensuring that adequate funds

were allocated to the Committee on Fiscal Affairs to support this important monitoring work.

Overall Status of Signatories’ Laws Regarding the

Tax Deductibility of Bribes

Signatories to the Convention have made substantial progress on implementing the OECD Council’s recommendation to disallow the tax deductibility of bribes,

and further progress is expected in the year ahead. Only

one OECD member country (New Zealand) has reported

that it has not yet completed action necessary to disallow these deductions. Luxembourg adopted legislation

denying deductibility for bribes in December 2000, and

legislation previously adopted by the Swiss parliament

became effective on January 1, 2001. In addition, France

amended its legislation to remove “grandfather” provisions from its laws that might have allowed tax deductibility to continue for contracts entered into before the

Convention entered into force for France.

Despite important positive steps taken by signatories to the Convention, we remain concerned that tax

deductibility of bribery payments may still exist. Deductibility in some signatory countries (e.g., Austria, Belgium,

Japan, the Netherlands) that have laws currently in effect may continue for one or more of the following reasons: the legal framework may disallow the deductibility of only certain types of bribes or bribes by companies above a certain size; the standard of proof for denying a tax deduction (e.g., the requirement of a conviction

for a criminal violation) may make effective administration of such laws difficult; and the relevant laws may not

be specific enough to deny deductibility of bribes effectively in all circumstances. The United States has noted

its concerns about the effectiveness of measures disallowing tax deductibility in diplomatic exchanges with

other Convention signatories and at meetings of the

OECD Working Group on Bribery and the Committee

on Fiscal Affairs.

The purpose of describing the limitations of country

laws concerning the tax deductibility of bribes is to ensure continued focus on improving the situation. Whatever the nature of the legal or administrative loophole

that makes it possible to deduct a bribe to a foreign public official, the practice must be addressed and eliminated.

Further, it must be recognized that enactment of rules

denying deductibility is only the first step. Careful monitoring is needed to ensure that the rules are enforced.

Report on Country Laws Relating to the Tax

Deductibility of Bribes

Argentina

Tax deductibility of bribes paid to foreign public officials is not allowed.

Australia

On May 31, 2000, Australia enacted a new law

[(Taxation Laws Amendment (No. 2) 2000)] that amends

the Australian Income Tax Assessment Act of 1997 to

explicitly disallow the tax deductibility of losses or payments that are bribes to foreign public officials. The disallowance of such losses and payments became effective on the date of enactment of the new law.

Austria

According to legislation passed in late October 1998,

bribes paid to foreign public officials are generally no

longer deductible for income tax purposes. The Tax

Amendment Law of 1998, published in Bundesgesetzblatt

(Federal Law Gazette) number I/28 of January 12, 1998,

amended Section 20, paragraph 1, subparagraph 5 of the

Income Tax Act. Under the new legislation, any cash or

in-kind remuneration whose granting or receipt is subject to criminal punishment is not deductible from taxable income. The disallowance applies to bribes that are
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 83

subject to criminal punishment under the Criminal Code,

which was amended in August 1998 to extend criminal

liability to bribery of foreign public officials. A deduction may be disallowed before a finding of a criminal

violation. However, if no criminal violation is found in a

court proceeding, the tax administration may have to allow the tax deduction.

Belgium

A bill aimed at criminalizing bribes to foreign public officials and denying the deductibility of so-called

“secret commissions” paid in order to obtain or maintain

public contracts or administrative authorizations was

adopted by the Senate on July 9, 1998, and by the House

of Representatives on February 4, 1999. It was published

in the Official Journal on March 23, 1999, and entered

into force on April 3, 1999. However, the new law does

not disallow the deductibility of all bribes to foreign public officials.

Other types of commissions paid to foreign public

officials will remain deductible if such commissions do

not exceed reasonable limits, are necessary to compete

against foreign competition, and are recognized as a normal customary practice in the relevant country or business sector (i.e., necessary, usual, and normal in the given

sector). A tax equal to at least 20.6 percent of the commission must be paid whether or not the commission is

deductible. The taxpayer must present a request and disclose to the tax administration the amount and the purpose of the commissions for the tax administration to

decide whether the commission is deductible. If all these

conditions are not fulfilled, the deductibility of the commissions is denied, and they are added back to the taxable income of the payer. If the payer is a company, it is

liable to a special tax equal to 309 percent of the amount

of the bribe.

Brazil

Brazil does not allow tax deductibility of bribes to

foreign public officials.

Bulgaria

Bulgarian tax legislation does not allow tax deductibility of bribes to foreign public officials. Bribery is a

criminal activity under Bulgaria’s criminal code. The

deduction of bribes in the computation of domestic taxes

is not permitted. This disallowance, however, is not explicit in Bulgaria’s tax legislation.

Canada

Since 1991, the Income Tax Act has disallowed the

deduction as a business expense of payments in connection with a bribe in Canada of a foreign public official or

a conspiracy to do so. Specifically, effective for outlays

or expenses after July 13, 1990, Section 67.5 of the Income Tax Act states that any payment that would be an

offense identified in several provisions of the criminal

code (including bribes and conspiracy to pay bribes to

foreign public officials, or persons or companies connected to foreign public officials) is not deductible for

income tax purposes. This provision also waives the normal statute of limitations so that an amount may be disallowed any time it is identified, no matter how long after it has been paid.

Chile

Chilean tax legislation does not contain specific provisions or rules concerning bribes paid to foreign public

officials. Because bribe payments are not considered to

be compulsory payments, they are not deductible.

Czech Republic

Czech taxation law and regulations do not allow deductions of bribes paid to foreign public officials. Deductibility is not possible even in cases where the bribe

could be treated as a gift. Gifts are deductible only in

exceptional cases under two specific conditions. The gift

must be made for one of the following specific purposes:

science, education, culture, fire protection, or some other

social, charitable, or humanitarian purposes. The gift must

not be above a strictly determined percentage of the tax

basis. Only if both conditions are fulfilled can the gift be

treated as deductible for tax purposes. Although Czech

law has never permitted the deduction of bribes, this prohibition was not previously explicit in legislation. The

Czech Republic amended its laws on December 12, 2000,

however, to provide that payments to foreign public officials are not deductible, even in countries where such

payments are tolerated or are not considered an offense.

Denmark

The Ministry of Taxation’s Act No. 1097 of December 29, 1997, which amended the Danish income tax assessment act, repealed provisions allowing for tax deductibility for bribes to public officials effective on January 1, 1998.

Finland

Finland does not have statutory tax rules concerning

bribes to foreign public officials. Similar payments to
84 Battling International Bribery, 2001

domestic public officials are nondeductible on the basis

of case law and the practice of the tax administration. It

is expected that this case law would also apply to disallow deductions for bribes paid to foreign public officials.

On this basis, the tax administration in practice currently

denies deductions for bribes to foreign public officials.

France

The French parliament passed legislation denying the

tax deductibility of bribes to foreign public officials on

December 29, 1997, as part of the Corrective Finance

Bill for 1997. The law does not allow the deduction of

amounts paid or advantages granted directly or through

intermediaries to foreign public officials within the meaning of Article 1.4 of the Convention. As originally enacted, the legislation was “grandfathered,” in that it might

have allowed tax deductibility to continue for contracts

entered into before the Convention entered into force for

France.

Responding to criticism by other OECD members,

including the United States, the French parliament voted

in February 2000 to remove the grandfather provision in

the tax legislation. This amendment took effect on September 29, 2000, the date the Convention entered into

force in France.

Germany

Under previous German tax law, deductions or bribes

were disallowed only if either the briber or the recipient had

been subject to criminal penalties or criminal proceedings

which were discontinued on the basis of a discretionary

decision by the prosecution. Legislation adopted on March

24, 1999, eliminated these conditions and denied the tax

deductibility of bribes. The revised legislation is paragraph 4,

Section 5, sentence 1, number 10 of the

Einkommensteuergesetz in the Steuerentlastungsgesetz of

March 24, 1999, as published in the Bundesgesetzblatt dated

March 31, 1999 (BGBl I S. 402).

Greece

Greece does not allow the deductibility of bribes to

foreign public officials.

Hungary

Hungary does not allow the deductibility of bribes

to foreign public officials, since only expenses covered

in the tax laws are deductible, and the tax laws do not

include a specific reference to bribes.

Iceland

Since June 1998, Iceland has not allowed the deductibility of bribes to foreign as well as domestic public

officials and officials of international organizations on

the basis of law (Section 52 of the Act No. 75/1981 on

Tax on Income and Capital as amended by Act No. 95/

1998).

Ireland

It is the view of the Irish Revenue Commissioners,

on the basis of legal advice received, that bribes paid to

foreign public officials are not deductible in principle.

These authorities doubt that the conditions for deductibility could ever be met in practice in Ireland. Therefore, Ireland has not considered it necessary to introduce

specific legislation to deny a deduction.

Italy

Italy does not allow deductions for bribes paid to

foreign public officials. Legislation enacted in 1994 made

gains from illicit sources taxable. The nondeductibility

of bribes was unaffected by this 1994 legislation.

Japan

Bribes to domestic public officials as well as foreign

public officials are treated as “entertainment expenses”

under Japanese law. Such expenses are generally not

deductible. However, small companies (with capital not

exceeding approximately $500,000) can get a deduction

for entertainment expenses. If a bribe is not recorded as

an entertainment expense, a penalty tax is imposed.

Korea

Korea does not allow deductions for bribes paid to

foreign public officials, since they are not considered to

be business-related expenses.

Luxembourg

The Luxembourg parliament adopted legislation on

December 14, 2000 that denies the deductibility of bribes.

Mexico

Mexico does not allow the deductibility of bribes to

foreign public officials, since they would not meet the

general requirements to qualify as deductible expenses.

Such expenses must be strictly essential for the purposes

of the taxpayer’s activities and must be formally documented. Considering that bribes are treated as illicit activities, such payments cannot meet the requirements set

forth in the Mexican Commerce Code. Therefore, the

payment of a bribe is not a business activity and is not a

deductible item.
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 85

The Netherlands

The relevant tax laws do not expressly deny the tax

deductibility of bribes to foreign public officials. Instead,

deductibility is denied only where there has been a conviction by a Dutch court or a settlement upon payment

of a fine, etc., with the Dutch prosecutor to avoid prosecution. On February 9, 2001, however, the Council of

Ministers approved the intention of the State Secretary

of Finance to prepare a bill amending the fiscal treatment of bribes. If enacted, the new law will provide that

tax officials can refuse the deduction of certain expenses

where they are reasonably convinced based on adequate

indicators that the expenses consist of paid bribes, thus

removing the requirement of a conviction.

New Zealand

Legislation to prohibit the tax deductibility of bribes

is being drafted by the Inland Revenue Department and

is expected to be submitted to parliament later in 2001.

Norway

Under Section 44, paragraph 1, litra a, subparagraph

5 of the Norwegian Tax Law, which was passed on December 10, 1996, Norway does not allow deductions for

bribes paid to foreign private persons or public officials.

Poland

Poland does not allow the deductibility of bribes to

foreign public officials. According to Polish law, bribery is

illegal and a punishable offense for both the briber and the

recipient of the bribe. The provisions of the Corporate Tax

Act and Personal Income Tax Act are not applicable to

illegal activities. Therefore, gains and expenses

connected with the offense of bribery cannot be taken into

account by the tax authorities. As a result, the taxpayer is not

allowed to deduct them from his income expenses

concerning bribes to foreign officials.

Portugal

Portugal does not allow the deductibility of bribes to

foreign public officials. On December 20, 1997, parliament adopted new legislation, effective January 1, 1998,

to disallow any deduction relative to illegal payments,

such as bribes, to foreign public officials.

Slovak Republic

The Slovak Republic does not allow deductions of

bribes to foreign public officials or private persons. Bribes

are not considered business–related expenses. Recipients

of bribes are liable to criminal prosecution and expenses

related to bribes are not tax deductible.

Spain

Spain does not allow deductions for bribes paid to

foreign public officials.

Sweden

A bill explicitly denying the deductibility of bribes

and other illicit payments to foreign public officials was

adopted by the Swedish parliament on March 25, 1999,

and became effective on July 1, 1999.

Switzerland

A draft bill on the denial of tax deductibility of bribes

to foreign public officials was submitted in spring 1998

to the cantons and other interested parties for consultation. (Matters of direct taxation are mostly within the

competence of the cantons.) The bill was then submitted

to the national parliament and passed in December 1999.

The bill entered into force and became effective as of

January 1, 2001.

Turkey

Turkey does not allow deductions for bribes paid to

foreign public officials because there is no explicit rule

allowing the deductibility of bribes. Although a possible

loophole could allow Turkish corporations operating

overseas to deduct bribes in certain circumstances, legislation to implement the Convention, which is currently

being reviewed, would eliminate this loophole.

United Kingdom

Under Section 577A of the Income and Corporations

Tax Act 1988, enacted under the U.K. Finance Act of

1993, the U.K. does not allow deductions for any bribe

if that bribe is a criminal offense, contrary to the Prevention of Corruption Acts. The U.K. has declared that the

Prevention of Corruption Acts apply to bribes to foreign

public officials. If any part of the offense is committed

in the U.K.—for example the offer, agreement to pay,

the soliciting, the acceptance, or the payment itself—such

action would violate the Prevention of Corruption Acts

and would then not qualify for tax relief. In addition,

U.K. tax laws also deny relief for all gifts and hospitality

given, whether or not for corrupt purposes.

United States

The United States does not allow deductions for

bribes paid to foreign government officials, if that bribe

is a criminal offense. Both before and after the United

States criminalized bribery of foreign government officials, the government denied tax deductions for such

payments. Before the enactment of the Foreign Corrupt
86 Battling International Bribery, 2001

Practices Act of 1977, tax deductions were disallowed

for payments that were made to an official or employee

of a foreign government and that were either unlawful

under U.S. law, or would be unlawful if U.S. laws were

applicable to such official or employee. The denial of

the tax deduction does not depend on a conviction in a

criminal bribery case.

After the United States criminalized bribery of foreign government officials, U.S. tax laws were changed

to disallow tax deductions for payments that are unlawful under the Foreign Corrupt Practices Act of 1977

(FCPA). With respect to U.S. tax provisions for Controlled Foreign Corporations, any payment of a bribe by

a foreign subsidiary is treated as taxable income to the

U.S. parent. Also, to the extent relevant for U.S. tax purposes, bribes of foreign officials are not permitted to reduce a foreign corporation’s earnings and profits. U.S.

denial of tax deductibility or reduction of earnings and

profits does not depend on whether the person making

the payment has been convicted of a criminal offense.

On tax deductibility, the Treasury Department has the

burden of proving by clear and convincing evidence that

a payment is unlawful under the FCPA.
Chapter 5: Future Negotiations to Strengthen the Convention 87

Future Negotiations to

Strengthen the Convention

5

During the negotiation of the Convention, the United

States sought to include coverage of bribes paid to political parties, party officials, and candidates for public

office. These channels of bribery and corruption are covered in the Foreign Corrupt Practices Act (FCPA). They

are not, however, specifically covered in the Convention.

The United States has repeatedly expressed its concern that failure to prohibit the bribery of political parties, party officials, and candidates for office may create

a loophole through which bribes may be directed in the

future. Although the FCPA has prohibited the bribery of

these persons and organizations since 1977 and no such

loophole in U.S. law has existed, our experience shows

that firms do attempt to obtain or retain business with

bribes of this nature. The first case brought under the

FCPA involved a payment to a political party and party

officials. In the fight against corruption, bribes to political parties, party officials, and candidates are no less

pernicious than bribes to government officials.

The United States has been unable to convince other

Convention signatories to include this broader coverage

of bribery in the Convention. We did succeed, however,

in getting signatories to keep this issue and certain other

issues under study. Five issues were identified by the

OECD Council in December 1997 for additional examination:

• Bribery acts in relation to foreign political parties.

• Advantages promised or given to any person in

anticipation of that person becoming a foreign public official.

• Bribery of foreign public officials as a predicate

offense for money laundering legislation.

• The role of foreign subsidiaries in bribery transactions.

• The role of off-shore centers in bribery transactions.

Although not addressed by the OECD Council, private sector bribery and the question of whether the obligations of the Convention should be extended to include

an explicit prohibition of payments to immediate family

members of foreign public officials are also of interest

to the United States.

The United States has continued to express its concern at OECD meetings about the need to broaden coverage of the Convention and also with signatory governments on a bilateral basis; it has insisted that this subject

remain on the OECD agenda for further discussion. Over
88 Battling International Bribery, 2001

the past year, important work was undertaken within in

the Working Group and under the sponsorship of Transparency International.

Outstanding Issues Relating to the Convention

Political Parties, Party Officials, and Candidates

The United States has kept the issues of bribes to

foreign political parties, and candidates for office on the

OECD’s agenda. Nevertheless, we continue to face indifference and even strong resistance from many other

countries. This resistance seems to arise in part from the

fact that many countries implemented the Convention

by simply amending their domestic corruption laws,

rather than enacting a freestanding law such as the FCPA.

These countries, in particular, have resisted expanding

their definition of “public official” to include political

parties, party officials, and candidates, in large part due

to the potential effect upon domestic corruption law. In

addition, other countries have argued that such bribes

are already covered by their national laws (e.g., through

laws on trading in influence). We are concerned, however, that these laws may not be sufficiently comprehensive to encompass all corrupt payments to political parties, party officials, and candidates. Nevertheless, most

countries are of the view that Parties should implement

the Convention as it is and monitor implementation over

time to see whether changes are necessary.

In successive ministerial communiques, OECD ministers have called for attention to these and the other three

issues. In addressing these issues, the 2001 communique

indicated that ministers expected progress towards final

action on these issues: “OECD will move ahead on related issues: bribery acts in relation with foreign political parties; advantages promised or given to any person

in anticipation of that person becoming a foreign public

official; bribery of foreign public officials as a predicate

offense for money laundering legislation; and the role of

foreign subsidiaries and of off-shore centers in bribery

transactions.” The U.S. delegation has been adamant in

having the issues of bribes to political parties and candidates carefully analyzed by the Working Group. It has

regularly raised the question of further coverage of the

Convention at Working Group meetings and has pressed

to keep these issues on the agenda.

In October 2000, at La Pietra, Italy, Transparency

International (TI) convened a meeting of twenty-eight

individuals from nine countries representing the private

sector, public institutions, and civil society to review issues relating to corruption and political party financing.

The U.S. government participated in these discussions

which resulted in the “La Pietra Recommendations”—

five proposals intended to address concerns that payments

to political parties may be used to circumvent the intentions of the Convention. An informal Working Group

consultation with civil society, the private sector, and

trade union representatives was held in February 2001

to consider possible future actions on the bribery of political parties and candidates. Experts drawn from the

group of participants at La Pietra presented the recommendations and sought to illustrate potential problem

areas due to the lack of coverage of the Convention of

certain bribe payments made to political parties and their

officials. While many Working Group members are still

reluctant to engage in further discussion of revising the

Convention, we were successful in making progress on

exploring these issues further. Recognizing that such a

gap in Convention coverage would be potentially a serious problem, the Working Group agreed to issue a questionnaire to signatories to determine whether their laws

implementing the Convention applied to bribes to political parties and candidates. The questionnaire also will

request information concerning bribery transactions involving foreign subsidiaries. We expect the questionnaire

to be circulated in late summer 2001.

Bribery as a Predicate Offense to

Money Laundering

Article 7 of the Convention requires a Party that has

made bribery of its own public officials a predicate offense for applying its money-laundering legislation do

so on the same terms for the bribery of a foreign public

official. Based on the reviews of implementing legislation, most signatory countries do make bribery of a foreign public official a predicate offense for application of

money-laundering legislation in accordance with this

standard. However, some signatories have not made bribery of their public officials a predicate offense; other signatories have placed conditions on the application of their

money-laundering legislation. For these reasons, there

are differences among the signatories with respect to

money-laundering that could result in uneven application of the Convention.

Many signatory countries, particularly the European

and civil law countries, define money laundering as the

concealment of proceeds from all “serious crimes,” as

that term is defined under their domestic legislation. Others, like the United States, define predicate crimes by

listing specific offenses or statutory provisions.
Chapter 5: Future Negotiations to Strengthen the Convention 89

How jurisdictions define “serious” cannot be generalized. Definitions are based on individual domestic legal systems in each country (i.e., punishable by imprisonment of a certain period of time or roughly the distinction between a misdemeanor and a felony).

Therefore, if all parties to the Convention would

make bribery a serious offense for the purposes of domestic money-laundering legislation, there would seem

to be no need for going beyond the requirements in Article 7 of the Convention. Language endorsing the application of bribery as a predicate offense for money laundering was included in the G-8 conclusions at Moscow

in October 1999. Since then, a consensus appears to have

emerged within the OECD Working Group on Bribery

on the need to make bribery a predicate offense for

money-laundering legislation. In its June 2000 ministerial communique OECD ministers recommended that

bribery of foreign public officials should be made a serious crime for triggering the application of money-laundering legislation. The 2001 ministerial communique

included money laundering among the issues that the

OECD will address further in the coming year. The Working Group has committed to review any action the Financial Action Task Force has taken regarding the recommendation of ministers and will examine this issue

during Phase II reviews.

In the United States, bribery of a foreign public official in violation of the FCPA is a predicate offense for

purposes of the Money Laundering Control Act. As part

of the National Money Laundering Strategy, on January

16, 2001, the U.S. government released new guidance to

help U.S. financial institutions avoid transactions that

might involve the proceeds of official corruption. The

Guidance on Enhanced Scrutiny for Transactions That

May Involve the Proceeds of Foreign Official Corruption encourages U.S. financial institutions to scrutinize

large accounts and transactions that may involve the proceeds of corruption by senior political figures, their immediate families, or close associates. The guidance, issued by the Department of the Treasury, the Board of

Governors of the Federal Reserve System, the Office of

the Comptroller of the Currency, the Federal Deposit

Insurance Corporation, the Office of Thrift Supervision,

and the Department of State, is available on the Internet

at www.treas.gov/press/releases/ps1123.htm.

In addition, on October, 30, 2000, eleven major U.S.

and European private banks concluded their year-long

effort to establish money-laundering guidelines. The

Global Anti-Money Laundering Guidelines for Private

Banking, also known as the Wolfsberg AML Principles,

stipulate that the banks will conduct due diligence on the

source of wealth and the source of funds and will accept

only those clients reasonably established to be legitimate.

The principles, which were discussed at the December

2000 Working Group meeting, can be viewed at

www.wolfsbergprinciples.com.

The Role of Foreign Subsidiaries

Foreign-incorporated subsidiaries are potentially

subject to the law of the country in which they are incorporated and the law of any country in which they operate, or where they take any action in furtherance of an

unlawful payment. For example, a foreign-incorporated

subsidiary of an American company—just like any foreign company—is subject to the FCPA if it takes any act

in furtherance of the offer, promise to pay, payment, or

authorization of an offer, promise, or payment of a bribe

within U.S. territory. We understand that other Parties to

the Convention may assert a similar form of territorial

jurisdiction, although there are some gaps in the coverage of extraterritorial acts by corporations.

No OECD member country holds parent corporations

absolutely liable for the criminal acts of their subsidiaries. In the United States and other Convention signatories that impose liability on legal persons, parent corporations may be held liable only for the acts of their subsidiaries that are authorized, directed, or controlled by

the parent corporation. The United States has, therefore,

urged further examination of strong standards of corporate governance, business ethics, and international accounting standards to ensure that foreign subsidiaries do

not use their independence to obtain business through

means prohibited to their parents.

The Working Group has recommended that countries

introduce the concept of corporate responsibility of the

parent in the supervision of the activities of the foreign

subsidiary. It also has considered whether civil sanctions

arising from the lack of effective supervision merited

further examination. The Group also recommended the

encouragement of corporate governance programs to

promote self-regulation. The Working Group will focus

on the nature and the extent of the issues concerning bribery transactions that involve foreign subsidiaries when

it issues the questionnaire to signatories in late summer

2001 with regard to bribes to political parties and candidates.

The Role of Offshore Financial Centers

There appears to be broad agreement on the need to

encourage adherence to internationally accepted minimum standards regarding anti-money laundering, financial regulation, company law, and mutual legal assistance.
90 Battling International Bribery, 2001

These issues are not exclusive to off-shore centers, nor

are they restricted to the fight against bribery and corruption. The Working Group has dedicated several sessions to the issue of off-shore centers to determine the

significance of the problem as it relates to bribery of foreign public officials and whether there are aspects of the

problem not being dealt with in other forums that might

benefit from Working Group activity. This work continues.

Compliance with international norms is a focal point

of the Financial Stability Forum’s Working Group on

Offshore Financial Centers, while the Financial Action

Task Force’s Ad Hoc Group on Noncooperative Countries and Territories is concentrating on the ability and

willingness of jurisdictions to cooperate in the fight

against money laundering. Other international forums

with related initiatives are the United Nations, the European Union, the Council of Europe, and the G-8. Bribery transactions frequently are carried out, at least in part,

in jurisdictions that do not participate in arrangements

for international cooperation. This greatly complicates

multilateral efforts to promote transparency in financial

and commercial transactions and greater mutual legal

assistance.

Other Issues Relating to Coverage

Immediate Family Members of Foreign Public

Officials

In the Working Group on Bribery, the United States

has informally raised the question of whether the Convention provides adequate coverage of bribes paid to

immediate family members of foreign public officials.

There is general agreement that bribes paid to a government official through a family member—either at the

direction of a corrupt foreign official, or where there is

an understanding that the family member will pay some

or all of the bribe to the official, or the official will otherwise benefit—is adequately covered by the Convention.

Since all other bribes paid to officials through intermediaries are already covered by the Convention, we thus

far have found no support for expanding the Convention

to provide for an explicit prohibition against bribes paid

to immediate family members in the absence of the direction of a government official or absent the intent or

expectation of the bribe payor that all or a part of the

bribe will be paid to a government official or the official

will otherwise benefit. Indeed, we do not provide in our

FCPA for coverage of payments to family members apart

from such cases.

In the ongoing process within the OECD of reviewing the implementation and enforcement of the Convention by each party, we will continue to examine whether

bribes paid to immediate family members may provide a

loophole of sufficient magnitude so as to undermine effective implementation of the Convention.

Private Sector Corruption and Other Issues

The issue of private sector corruption, which goes

beyond the scope of the Convention, has been addressed

in sessions of the Working Group and in informal consultations with representatives of civil society, notably

the OECD Trade Union Advisory Committee (TUAC)

and the Business and Industry Advisory Committee

(BIAC). The Working Group concluded in July 1999 that

the question of bribery within the private sector was

largely undefined and unexplored, but nevertheless important. A summary and conclusions of the International

Chamber of Commerce study on “private to private bribery” are expected to be presented to the Working Group

after its finalization in the autumn of 2001. The Working

Group has not addressed the question of corruption of

officials for purposes other than to obtain or retain business.

The Working Group sessions with TUAC and BIAC

also have dealt with the solicitation of bribes and the

protection of whistle blowers (either within government

or business) who come forward to expose corruption.

Solicitation remains on the agenda of the Working Group

as an area of concern and possible followup in the context of the Revised Recommendation. Whistle blowing

is a subject that goes beyond the scope of bribery of foreign public officials. Nonetheless, in considering further

actions to explore the potential problems of solicitation

and the role played by whistle blowing in the fight against

corruption, the Working Group agreed to include questions related to both subjects in the Phase II questionnaire.

In addition, the Working Group has been examining

private sector corruption in terms of the relationship between the Convention and related OECD anticorruption

initiatives and the OECD Guidelines for Multinational

Enterprises (the Guidelines). The OECD guidelines offer yet another vehicle for advancing the goals of the

Convention. Originally adopted in 1976, the Guidelines

are non-binding recommendations to enterprises, made

by the thirty-three governments that adhere to them. Their

aim is to help Multinational Enterprises (MNEs) operate

in harmony with government policies and with societal

expectations. In the most recent revision adopted by the
Chapter 5: Future Negotiations to Strengthen the Convention 91

OECD ministers on June 27, 2000, an entire chapter on

combating bribery that tracks closely the key provisions

of the Convention was inserted into the text of the Guidelines. While the Guidelines are voluntary and not legally

enforceable, they draw attention to the pernicious effects

of bribery and corruption and encourage companies to

take a proactive approach to addressing the problems.

The follow-up mechanism described in the Procedural

Guidance details how the National Contact Points for

the guidelines can assist parties in resolving issues pertaining to the Guidelines.
92 Battling International Bribery, 2001

Expanding the Membership

of the Convention

6

As we approach complete ratification and implementation of the Convention, the Working Group and the

United States have concluded that a targeted expansion

of the Convention membership to appropriate states could

contribute to the elimination of bribery of foreign public

officials in international business transactions. Therefore,

the Working Group has developed criteria for accession

to the Convention, and since our last report, one applicant country has been favorably considered for accession. We expect a small number of additional qualified

applicants to satisfy the conditions for Working Group

observership or full accession to the Convention in the

coming years.

Development of Accession Criteria

Article 13.2 of the Convention provides that it shall

be open to accession by nonsignatories that have become

full participants in the OECD Working Group on Bribery or any successor to its functions. In addition, the

OECD Commentaries on the Convention encourages

nonsignatories to participate in the Working Group provided that they accept the 1997 OECD Revised Recommendation of the Council on Combating Bribery in International Business Transactions and the 1996 OECD

Recommendation on the Tax Deductibility of Bribes to

Foreign Public Officials.

Faced with an increasing number of requests for accession to the Convention, in mid-1999, the Working

Group began discussions on the subject and asked the

United States to lead an ad hoc group to define criteria

and entrance procedures for Working Group membership and Convention accession. The ad hoc group produced an approach intended to permit a selective increase

in signatory states, while at the same time eliminating

inappropriate motivations for membership or accession

(e.g., use of accession as a prestige symbol or as a stepping stone to participation in other OECD bodies). In

presupposing a slow expansion and limiting it to carefully chosen states, the policy proposals also were intended to preserve the critically important ability of the

Working Group to continue its effective evaluation of

Convention implementation and, equally significant, to

not hinder the near-term start of enforcement reviews or

broadening of Working Group attention to new issues.

The proposals developed by the U.S.-led ad hoc

group were approved by the full Working Group in October 1999, as set forth in an OECD Council resolution,

the accession criteria require that signatory states be

“major players” and demonstrate that their inclusion

would be of “mutual benefit.”

The Working Group also agreed that other factors

could be taken into account in order to provide some flexibility. For example, it was agreed the term “major player”
Chapter 6: Expanding the Membership of the Convention 93

should apply to states with regional importance or significant market shares in particularly sensitive export

sectors where commercial bribery is prevalent. Defense,

aviation, construction, and telecommunications were

cited as examples. In addition, “mutual benefit” not only

was seen as encompassing a readiness to participate constructively in Working Group deliberations, but also was

regarded as dependent on the existing legal framework

of a prospective signatory, including legislation for the

criminalization of bribery. Without such a legal infrastructure, serious doubts were raised by many regarding

the ability of a state to participate in the Working Group

in a meaningful way.

A first step toward the enlargement of Convention

membership was taken at an outreach session on June 5,

2000. Fourteen states and Hong Kong1

 responded to invitations issued by the OECD Secretariat. At this information session, accession criteria, Convention obligations, and Working Group activities and admission procedures were explained. All participants in the session

were asked to respond to a questionnaire seeking information on entrance qualifications. Eight of these applicants responded to this initial request for information and

only two, including Slovenia, responded to a later request for additional information in a timely manner.

Application of Accession Criteria

In April 2001, the Working Group on Bribery completed its first examination of an applicant for accession

to the Bribery Convention. In response to instructions of

the OECD Council to provide a technical opinion on the

participation of Slovenia in the Working Group, the group

recommended that Slovenia be invited to become a full

participant in the Working Group. The group judged that

Slovenia is a “major player,” as interpreted by the Working Group, and that its accession would offer necessary

“mutual benefit.”

Slovenia’s prospective accession will be historic. It

will mark the first time that Convention accession and

Working Group membership have been offered since the

Convention came into force in February 1999. In part,

this first expansion of membership is linked to the fact

that Convention ratification is now virtually complete. It

is also key that implementation appears to be well in hand

and that Phase II examinations of Convention enforcement are about to commence. Taken as a whole, these

factors appear to ensure that initiation of expansion now

will not detract from the overall goal of maintaining a

high-standard Convention with rigorous peer monitoring.

At the time of this writing, there are still nine countries in the applicant queue, and we anticipate that a measured and targeted expansion may take place in the next

several years. However, in its report to Council on

Slovenia’s examination, the Working Group noted that

resource constraints will need to be factored into future

decisions on expansion. In addition, the Group cautioned

that the recommendation for immediate full participation for Slovenia should not be regarded as a precedent

for future candidates. The Group determined that candidates not as well qualified as Slovenia might expect to

be offered a period of observership in the Group, or be

advised to pursue association with other anticorruption

instruments. It is also apparent that the Group remains

concerned that applicant states not see accession as a

prestige symbol or as a stepping stone to participation in

other OECD bodies. Finally, the United States and other

members of the Working Group expressed special interest in seeking more regional diversity among prospective signatories.

Anticorruption Declaration

An earlier proposal for a possible anticorruption declaration has been shelved by the Working Group, at least

for the time being. The United States and some other

delegations had viewed such an instrument as useful both

for current parties to the Convention and for

nonsignatories interested in a closer association with

anticorruption activities. It was, among other things,

viewed as a means of letting nonsignatories demonstrate

their commitment to an improved investment climate and

contribute to better governance standards worldwide.

However, advances concerning other anticorruption instruments over the past year, including the decision to

begin negotiation of a comprehensive United Nations

convention against corruption, have persuaded a majority of the Working Group that an OECD anticorruption

declaration for nonsignatories is unnecessary at this time.

1

Attendees were Benin, Colombia, Croatia, Estonia, Hong

Kong, Latvia, Lithuania, Malaysia, Peru, Romania, Russia,

Slovenia, South Africa, Thailand, and Venezuela.
Appendix A: Senate Resolution of Advice and Consent of July 31, 1998 A-1

Senate Resolution of

Advice and Consent of

July 31, 1998

A
A-2 Battling International Bribery, 2001
Appendix A: Senate Resolution of Advice and Consent of July 31, 1998 A-3
A-4 Battling International Bribery, 2001
Appendix B: OECD Documents B-1

OECD Documents

B

OECD Convention on Combating Bribery of Foreign Public Officials

in International Business Transactions ................................................................... B-2

Commentaries on the Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions .................................................... B-6

Revised Recommendation of the OECD Council on Combating Bribery in

International Business Transations ....................................................................... B-10

Recommendation of the OECD Council on the Tax Deductibility of Bribes

to Foreign Public Officials ................................................................................... B-13
 B-2 Battling International Bribery, 2001

OECD Convention on Combating Bribery

of Foreign Public Officials in International

Business Transactions

(Signed December 17, 1997)

Preamble

The Parties,

Considering that bribery is a widespread phenomenon in

international business transactions, including trade and

investment, which raises serious moral and political concerns,

undermines good governance and economic development,

and distorts international competitive conditions;

Considering that all countries share a responsibility to

combat bribery in international business transactions;

Having regard to the Revised Recommendation on Combating Bribery in International Business Transactions,

adopted by the Council of the Organization for Economic

Cooperation and Development (OECD) on 23 May 1997,

C(97)123/FINAL, which, inter alia, called for effective

measures to deter, prevent and combat the bribery of foreign

public officials in connection with international business

transactions, in particular the prompt criminalization of such

bribery in an effective and coordinated manner and in

conformity with the agreed common elements set out in that

Recommendation and with the jurisdictional and other basic

legal principles of each country;

Welcoming other recent developments which further

advance international understanding and cooperation in

combating bribery of public officials, including actions of

the United Nations, the World Bank, the International

Monetary Fund, the World Trade Organization, the Organization of American States, the Council of Europe and the

European Union;

Welcoming the efforts of companies, organizations and

trade unions as well as other non-governmental organizations to combat bribery;

Recognizing the role of governments in the prevention of

solicitation of bribes from individuals and enterprises in

international business transactions;

Recognizing that achieving progress in this field requires

not only efforts on a national level but also multilateral

cooperation, monitoring and follow-up;

Recognizing that achieving equivalence among the measures to be taken by the Parties is an essential object and

purpose of the Convention, which requires that the Convention be ratified without derogations affecting this equivalence;

Have agreed as follows:

Article 1 - The Offense of Bribery of Foreign

Public Officials

1. Each Party shall take such measures as may be necessary to establish that it is a criminal offense under its law

for any person intentionally to offer, promise or give any

undue pecuniary or other advantage, whether directly or

through intermediaries, to a foreign public official, for that

official or for a third party, in order that the official act or

refrain from acting in relation to the performance of

official duties, in order to obtain or retain business or other

improper advantage in the conduct of international

business.

2. Each Party shall take any measures necessary to establish

that complicity in, including incitement, aiding and abetting,

or authorization of an act of bribery of a foreign public

official shall be a criminal offense. Attempt and conspiracy

to bribe a foreign public official shall be criminal offenses

to the same extent as attempt and conspiracy to bribe a

public official of that Party.

3. The offenses set out in paragraphs 1 and 2 above are

hereinafter referred to as “bribery of a foreign public

official.”

4. For the purpose of this Convention:

a. “foreign public official” means any person holding a

legislative, administrative or judicial office of a foreign

country, whether appointed or elected; any person exercising a public function for a foreign country, including for a

public agency or public enterprise; and any official or agent

of a public international organization;

b. “foreign country” includes all levels and subdivisions of

government, from national to local;

c. “act or refrain from acting in relation to the performance

of official duties” includes any use of the public official’s

position, whether or not within the official’s authorized

competence.

Article 2 - Responsibility of Legal Persons

Each Party shall take such measures as may be necessary, in

accordance with its legal principles, to establish the liability

of legal persons for the bribery of a foreign public official.
Appendix B: OECD Documents B-3

Article 3 - Sanctions

1. The bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal

penalties. The range of penalties shall be comparable to that

applicable to the bribery of the Party’s own public officials

and shall, in the case of natural persons, include deprivation

of liberty sufficient to enable effective mutual legal assistance and extradition.

2. In the event that, under the legal system of a Party,

criminal responsibility is not applicable to legal persons,

that Party shall ensure that legal persons shall be subject to

effective, proportionate and dissuasive non-criminal

sanctions, including monetary sanctions, for bribery of

foreign public officials.

3. Each Party shall take such measures as may be necessary

to provide that the bribe and the proceeds of the bribery of a

foreign public official, or property the value of which

corresponds to that of such proceeds, are subject to seizure

and confiscation or that monetary sanctions of comparable

effect are applicable.

4. Each Party shall consider the imposition of additional

civil or administrative sanctions upon a person subject to

sanctions for the bribery of a foreign public official.

Article 4 - Jurisdiction

1. Each Party shall take such measures as may be necessary

to establish its jurisdiction over the bribery of a foreign

public official when the offense is committed in whole or in

part in its territory.

2. Each Party which has jurisdiction to prosecute its

nationals for offenses committed abroad shall take such

measures as may be necessary to establish its jurisdiction to

do so in respect of the bribery of a foreign public official,

according to the same principles.

3. When more than one Party has jurisdiction over an

alleged offense described in this Convention, the Parties

involved shall, at the request of one of them, consult with a

view to determining the most appropriate jurisdiction for

prosecution.

4. Each Party shall review whether its current basis for

jurisdiction is effective in the fight against the bribery of

foreign public officials and, if it is not, shall take remedial

steps.

Article 5 - Enforcement

Investigation and prosecution of the bribery of a foreign

public official shall be subject to the applicable rules and

principles of each Party. They shall not be influenced by

considerations of national economic interest, the potential

effect upon relations with another State or the identity of the

natural or legal persons involved.

Article 6 - Statute of Limitations

Any statute of limitations applicable to the offence of

bribery of a foreign public official shall allow an adequate

period of time for the investigation and prosecution of this

offence.

Article 7 - Money Laundering

Each Party which has made bribery of its own public

official a predicate offence for the purpose of the application

of its money laundering legislation shall do so on the same

terms for the bribery of a foreign public official, without

regard to the place where the bribery occurred.

Article 8 - Accounting

1. In order to combat bribery of foreign public officials

effectively, each Party shall take such measures as may be

necessary, within the framework of its laws and regulations

regarding the maintenance of books and records, financial

statement disclosures, and accounting and auditing standards, to prohibit the establishment of off-the-books

accounts, the making of off-the-books or inadequately

identified transactions, the recording of nonexistent expenditures, the entry of liabilities with incorrect identification

of their object, as well as the use of false documents, by

companies subject to those laws and regulations, for the

purpose of bribing foreign public officials or of hiding such

bribery.

2. Each Party shall provide effective, proportionate and

dissuasive civil, administrative or criminal penalties for

such omissions and falsifications in respect of the books,

records, accounts and financial statements of such

companies.

Article 9 - Mutual Legal Assistance

1. Each Party shall, to the fullest extent possible under its

laws and relevant treaties and arrangements, provide prompt

and effective legal assistance to another Party for the

purpose of criminal investigations and proceedings brought

by a Party concerning offences within the scope of this

Convention and for non-criminal proceedings within the

scope of this Convention brought by a Party against a legal

person. The requested Party shall inform the requesting

Party, without delay, of any additional information or

documents needed to support the request for assistance and,

where requested, of the status and outcome of the request

for assistance.

2. Where a Party makes mutual legal assistance conditional

upon the existence of dual criminality, dual criminality shall

be deemed to exist if the offence for which the assistance is

sought is within the scope of this Convention.

3. A Party shall not decline to render mutual legal assistance

for criminal matters within the scope of this Convention on

the ground of bank secrecy.
 B-4 Battling International Bribery, 2001

Article 10 - Extradition

1. Bribery of a foreign public official shall be deemed to be

included as an extraditable offence under the laws of the

Parties and the extradition treaties between them.

2. If a Party which makes extradition conditional on the

existence of an extradition treaty receives a request for

extradition from another Party with which it has no extradition treaty, it may consider this Convention to be the legal

basis for extradition in respect of the offence of bribery of a

foreign public official.

3. Each Party shall take any measures necessary to assure

either that it can extradite its nationals or that it can prosecute its nationals for the offence of bribery of a foreign

public official. A Party which declines a request to extradite

a person for bribery of a foreign public official solely on the

ground that the person is its national shall submit the case to

its competent authorities for the purpose of prosecution.

4. Extradition for bribery of a foreign public official is

subject to the conditions set out in the domestic law and

applicable treaties and arrangements of each Party. Where a

Party makes extradition conditional upon the existence of

dual criminality, that condition shall be deemed to be

fulfilled if the offence for which extradition is sought is

within the scope of Article 1 of this Convention.

Article 11 - Responsible Authorities

For the purposes of Article 4, paragraph 3, on consultation,

Article 9, on mutual legal assistance and Article 10, on

extradition, each Party shall notify to the Secretary-General of

the OECD an authority or authorities responsible for making

and receiving requests, which shall serve as channel of

communication for these matters for that Party, without

prejudice to other arrangements between Parties.

Article 12 - Monitoring and Follow-up

The Parties shall cooperate in carrying out a program of

systematic follow-up to monitor and promote the full

implementation of this Convention. Unless otherwise

decided by consensus of the Parties, this shall be done in the

framework of the OECD Working Group on Bribery in

International Business Transactions and according to its

terms of reference, or within the framework and terms of

reference of any successor to its functions, and Parties shall

bear the costs of the program in accordance with the rules

applicable to that body.

Article 13 - Signature and Accession

1. Until its entry into force, this Convention shall be open

for signature by OECD members and by non-members

which have been invited to become full participants in its

Working Group on Bribery in International Business

Transactions.

2. Subsequent to its entry into force, this Convention shall

be open to accession by any non-signatory which is a

member of the OECD or has become a full participant in the

Working Group on Bribery in International Business

Transactions or any successor to its functions. For each such

non-signatory, the Convention shall enter into force on the

sixtieth day following the date of deposit of its instrument of

accession.

Article 14 - Ratification and Depositary

1. This Convention is subject to acceptance, approval or

ratification by the Signatories, in accordance with their

respective laws.

2. Instruments of acceptance, approval, ratification or

accession shall be deposited with the Secretary-General of

the OECD, who shall serve as Depositary of this Convention.

Article 15 - Entry into Force

1. This Convention shall enter into force on the sixtieth

day following the date upon which five of the ten countries which have the ten largest export shares (see annex),

and which represent by themselves at least sixty per cent

of the combined total exports of those ten countries, have

deposited their instruments of acceptance, approval, or

ratification. For each signatory depositing its instrument

after such entry into force, the Convention shall enter

into force on the sixtieth day after deposit of its instrument.

2. If, after 31 December 1998, the Convention has not

entered into force under paragraph 1 above, any signatory

which has deposited its instrument of acceptance, approval

or ratification may declare in writing to the Depositary its

readiness to accept entry into force of this Convention under

this paragraph 2. The Convention shall enter into force for

such a signatory on the sixtieth day following the date upon

which such declarations have been deposited by at least two

signatories. For each signatory depositing its declaration

after such entry into force, the Convention shall enter into

force on the sixtieth day following the date of deposit.

Article 16 - Amendment

Any Party may propose the amendment of this Convention. A proposed amendment shall be submitted to the

Depositary which shall communicate it to the other Parties

at least sixty days before convening a meeting of the

Parties to consider the proposed amendment. An amendment adopted by consensus of the Parties, or by such other

means as the Parties may determine by consensus, shall

enter into force sixty days after the deposit of an instrument of ratification, acceptance or approval by all of the

Parties, or in such other circumstances as may be specified

by the Parties at the time of adoption of the amendment.
Appendix B: OECD Documents B-5

ANNEX

STATISTICS ON OECD EXPORTS

1990–96 1990–96 1990–96

US$ million % of total OECD % of total 10

United States 287,118 15.9 19.7

Germany 254,746 14.1 17.5

Japan 212,665 11.8 14.6

France 138,471 7.7 9.5

United Kingdom 121,258 6.7 8.3

Italy 112,449 6.2 7.7

Canada 91,215 5.1 6.3

Korea (1) 81,364 4.5 5.6

Netherlands 81,264 4.5 5.6

Belgium-Luxembourg 78,598 4.4 5.4

 Total 10 1,459,148 81.0 100.0

Spain 42,469 2.4

Switzerland 40,395 2.2

Sweden 36,710 2.0

Mexico (1) 34,233 1.9

Australia 27,194 1.5

Denmark 24,145 1.3

Austria* 22,432 1.2

Norway 21,666 1.2

Ireland 19,217 1.1

Finland 17,296 1.0

Poland (1) ** 12,652 0.7

Portugal 10,801 0.6

Turkey * 8,027 0.4

Hungary ** 6,795 0.4

New Zealand 6,663 0.4

Czech Republic *** 6,263 0.3

Greece * 4,606 0.3

Iceland 949 0.1

 Total OECD 1,801,661 100.0

Notes: * 1990-1995; ** 1991-1996; *** 1993-1996

Source: OECD, (1) IMF

Concerning Belgium-Luxembourg: Trade statistics for Belgium and Luxembourg are available only on a combined basis for

the two countries. For purposes of Article 15, paragraph 1 of the Convention, if either Belgium or Luxembourg deposits its

instrument of acceptance, approval or ratification, or if both Belgium and Luxembourg deposit their instruments of acceptance, approval or ratification, it shall be considered that one of the countries which have the ten largest exports shares has

deposited its instrument and the joint exports of both countries will be counted towards the 60 percent of combined total

exports of those ten countries, which is required for entry into force under this provision.

Article 17 - Withdrawal

A Party may withdraw from this Convention by submitting

written notification to the Depositary. Such withdrawal shall

be effective one year after the date of the receipt of the

notification. After withdrawal, cooperation shall continue

between the Parties and the Party which has withdrawn on

all requests for assistance or extradition made before the

effective date of withdrawal which remain pending.
 B-6 Battling International Bribery, 2001

General:

This Convention deals with what, in the law of some

countries, is called “active corruption” or “active bribery,”

meaning the offense committed by the person who promises

or gives the bribe, as contrasted with “passive bribery,” the

offense committed by the official who receives the bribe.

The Convention does not utilize the term “active bribery”

simply to avoid it being misread by the non-technical reader

as implying that the briber has taken the initiative and the

recipient is a passive victim. In fact, in a number of situations, the recipient will have induced or pressured the briber

and will have been, in that sense, the more active.

This Convention seeks to assure a functional equivalence

among the measures taken by the Parties to sanction bribery

of foreign public officials, without requiring uniformity or

changes in fundamental principles of a Party’s legal system.

Article 1. The Offense of Bribery of Foreign Public

Officials:

Re paragraph 1:

Article 1 establishes a standard to be met by Parties, but does

not require them to utilize its precise terms in defining the

offense under their domestic laws. A Party may use various

approaches to fulfil its obligations, provided that conviction

of a person for the offense does not require proof of elements

beyond those which would be required to be proved if the

offense were defined as in this paragraph. For example, a

statute prohibiting the bribery of agents generally which does

not specifically address bribery of a foreign public official,

and a statute specifically limited to this case, could both

comply with this Article. Similarly, a statute which defined

the offense in terms of payments “to induce a breach of the

official’s duty” could meet the standard provided that it was

understood that every public official had a duty to exercise

judgement or discretion impartially and this was an “autonomous” definition not requiring proof of the law of the

particular official’s country.

It is an offense within the meaning of paragraph 1 to bribe

to obtain or retain business or other improper advantage

whether or not the company concerned was the best qualified bidder or wasotherwise a company which could

properly have been awarded the business.

“Other improper advantage” refers to something to which

the company concerned was not clearly entitled, for exCommentaries on the Convention on

Combating Bribery of Foreign Public Officials

in International Business Transactions

Adopted by the Negotiating Conference on November 21, 1997

ample, an operating permit for a factory which fails to meet

the statutory requirements.

The conduct described in paragraph 1 is an offense whether

the offer or promise is made or the pecuniary or other

advantage is given on that person’s own behalf or on behalf

of any other natural person or legal entity.

It is also an offense irrespective of, inter alia, the value of

the advantage, its results, perceptions of local custom, the

tolerance of such payments by local authorities, or the

alleged necessity of the payment in order to obtain or retain

business or other improper advantage.

It is not an offense, however, if the advantage was permitted

or required by the written law or regulation of the foreign

public official’s country, including case law.

Small “facilitation” payments do not constitute payments

made “to obtain or retain business or other improper

advantage” within the meaning of paragraph 1 and, accordingly, are also not an offense. Such payments, which, in

some countries, are made to induce public officials to

perform their functions, such as issuing licenses or permits,

are generally illegal in the foreign country concerned. Other

countries can and should address this corrosive phenomenon

by such means as support for programs of good governance.

However, criminalization by other countries does not seem a

practical or effective complementary action.

Under the legal system of some countries, an advantage

promised or given to any person, in anticipation of his or her

becoming a foreign public official, falls within the scope of

the offenses described in Article 1, paragraph 1 or 2. Under

the legal system of many countries, it is considered technically distinct from the offenses covered by the present

Convention. However, there is a commonly shared concern

and intent to address this phenomenon through further work.

Re paragraph 2:

The offenses set out in paragraph 2 are understood in terms

of their normal content in national legal systems. Accordingly, if authorization, incitement, or one of the other listed

acts, which does not lead to further action, is not itself

punishable under a Party’s legal system, then the Party

would not be required to make it punishable with respect to

bribery of a foreign public official.
Appendix B: OECD Documents B-7

Re paragraph 4:

“Public function” includes any activity in the public interest,

delegated by a foreign country, such as the performance of a

task delegated by it in connection with public procurement.

13. A “public agency” is an entity constituted under public

law to carry out specific tasks in the public interest.

A “public enterprise” is any enterprise, regardless of its

legal form, over which a government, or governments, may,

directly or indirectly, exercise a dominant influence. This is

deemed to be the case, inter alia, when the government or

governments hold the majority of the enterprise’s subscribed

capital, control the majority of votes attaching to shares

issued by the enterprise or can appoint a majority of the

members of the enterprise’s administrative or managerial

body or supervisory board.

An official of a public enterprise shall be deemed to

perform a public function unless the enterprise operates on

a normal commercial basis in the relevant market, i.e., on a

basis which is substantially equivalent to that of a private

enterprise, without preferential subsidies or other

privileges.

In special circumstances, public authority may in fact be

held by persons (e.g., political party officials in single party

states) not formally designated as public officials. Such

persons, through their de facto performance of a public

function, may, under the legal principles of some countries,

be considered to be foreign public officials.

“Public international organization” includes any international organization formed by states, governments, or other

public international organizations, whatever the form of

organization and scope of competence, including, for

example, a regional economic integration organization such

as the European Communities.

“Foreign country” is not limited to states, but includes any

organized foreign area or entity, such as an autonomous

territory or a separate customs territory.

One case of bribery which has been contemplated under the

definition in paragraph 4.c is where an executive of a

company gives a bribe to a senior official of a government,

in order that this official use his office—though acting

outside his competence—to make another official award a

contract to that company.

Article 2. Responsibility of Legal Persons:

In the event that, under the legal system of a Party, criminal

responsibility is not applicable to legal persons, that Party

shall not be required to establish such criminal responsibility.

Article 3. Sanctions:

Re paragraph 3:

The “proceeds” of bribery are the profits or other benefits

derived by the briber from the transaction or other improper

advantage obtained or retained through bribery.

The term “confiscation” includes forfeiture where applicable and means the permanent deprivation of property by

order of a court or other competent authority. This paragraph

is without prejudice to rights of victims.

Paragraph 3 does not preclude setting appropriate limits to

monetary sanctions.

Re paragraph 4:

Among the civil or administrative sanctions, other than noncriminal fines, which might be imposed upon legal persons

for an act of bribery of a foreign public official are: exclusion from entitlement to public benefits or aid; temporary or

permanent disqualification from participation in public

procurement or from the practice of other commercial

activities; placing under judicial supervision; and a judicial

winding-up order.

Article 4. Jurisdiction:

Re paragraph 1:

The territorial basis for jurisdiction should be interpreted

broadly so that an extensive physical connection to the

bribery act is not required.

Re paragraph 2:

Nationality jurisdiction is to be established according to the

general principles and conditions in the legal system of each

Party. These principles deal with such matters as dual

criminality. However, the requirement of dual criminality

should be deemed to be met if the act is unlawful where it

occurred, even if under a different criminal statute. For

countries which apply nationality jurisdiction only to certain

types of offenses, the reference to “principles” includes the

principles upon which such selection is based.

Article 5. Enforcement:

Article 5 recognizes the fundamental nature of national

regimes of prosecutorial discretion. It recognizes as well

that, in order to protect the independence of prosecution,

such discretion is to be exercised on the basis of professional motives and is not to be subject to improper influence

by concerns of a political nature. Article 5 is complemented

by paragraph 6 of the Annex to the 1997 OECD Revised

Recommendation on Combating Bribery in International

Business Transactions, C(97)123/FINAL (hereinafter, “1997

OECD Recommendation”), which recommends, inter alia,
 B-8 Battling International Bribery, 2001

that complaints of bribery of foreign public officials should

be seriously investigated by competent authorities and that

adequate resources should be provided by national governments to permit effective prosecution of such bribery.

Parties will have accepted this Recommendation, including

its monitoring and follow-up arrangements.

Article 7. Money Laundering:

In Article 7, “bribery of its own public official” is intended

broadly, so that bribery of a foreign public official is to be

made a predicate offense for money laundering legislation

on the same terms, when a Party has made either active or

passive bribery of its own public official such an offense.

When a Party has made only passive bribery of its own

public officials a predicate offense for money laundering

purposes, this article requires that the laundering of the

bribe payment be subject to money laundering legislation.

Article 8. Accounting:

Article 8 is related to section V of the 1997 OECD Recommendation, which all Parties will have accepted and which

is subject to follow-up in the OECD Working Group on

Bribery in International Business Transactions. This

paragraph contains a series of recommendations concerning

accounting requirements, independent external audit and

internal company controls the implementation of which will

be important to the overall effectiveness of the fight against

bribery in international business. However, one immediate

consequence of the implementation of this Convention by

the Parties will be that companies which are required to

issue financial statements disclosing their material contingent liabilities will need to take into account the full

potential liabilities under this Convention, in particular its

Articles 3 and 8, as well as other losses which might flow

from conviction of the company or its agents for bribery.

This also has implications for the execution of professional

responsibilities of auditors regarding indications of bribery

of foreign public officials. In addition, the accounting

offenses referred to in Article 8 will generally occur in the

company’s home country, when the bribery offense itself

may have been committed in another country, and this can

fill gaps in the effective reach of the Convention.

Article 9. Mutual Legal Assistance:

Parties will have also accepted, through paragraph 8 of the

Agreed Common Elements annexed to the 1997 OECD

Recommendation, to explore and undertake means to

improve the efficiency of mutual legal assistance.

Re paragraph 1:

Within the framework of paragraph 1 of Article 9, Parties

should, upon request, facilitate or encourage the presence

or availability of persons, including persons in custody,

who consent to assist in investigations or participate in

proceedings. Parties should take measures to be able, in

appropriate cases, to transfer temporarily such a person in

custody to a Party requesting it and to credit time in

custody in the requesting Party to the transferred person’s

sentence in the requested Party. The Parties wishing to use

this mechanism should also take measures to be able, as a

requesting Party, to keep a transferred person in custody

and return this person without necessity of extradition

proceedings.

Re paragraph 2:

Paragraph 2 addresses the issue of identity of norms in the

concept of dual criminality. Parties with statutes as diverse

as a statute prohibiting the bribery of agents generally and a

statute directed specifically at bribery of foreign public

officials should be able to cooperate fully regarding cases

whose facts fall within the scope of the offenses described

in this Convention.

Article 10. Extradition

Re paragraph 2:

A Party may consider this Convention to be a legal basis for

extradition if, for one or more

categories of cases falling within this Convention, it

requires an extradition treaty. For example, a country may

consider it a basis for extradition of its nationals if it

requires an extradition treaty for that category but does not

require one for extradition of non-nationals.

Article 12. Monitoring and Follow-up:

The current terms of reference of the OECD Working Group

on Bribery which are relevant to monitoring and follow-up

are set out in Section VIII of the 1997 OECD Recommendation. They provide for:

i) receipt of notifications and other information submitted to

it by the [participating] countries;

ii) regular reviews of steps taken by [participating] countries

to implement the Recommendation and to make proposals,

as appropriate, to assist [participating] countries in its

implementation; these reviews will be based on the following complementary systems:

• a system of self evaluation, where [participating]

countries’ responses on the basis of a questionnaire will

provide a basis for assessing the implementation of the

Recommendation;

• a system of mutual evaluation, where each [participating] country will be examined in turn by the Working

Group on Bribery, on the basis of a report which will

provide an objective assessment of the progress of the

[participating] country in implementing the Recommendation.
Appendix B: OECD Documents B-9

iii) examination of specific issues relating to bribery in

international business transactions;

...v) provision of regular information to the public on its

work and activities and on implementation of the Recommendation.

The costs of monitoring and follow-up will, for OECD

Members, be handled through the normal OECD budget

process. For non-members of the OECD, the current rules

create an equivalent system of cost sharing, which is

described in the Resolution of the Council Concerning Fees

for Regular Observer Countries and Non-Member Full

Participants in OECD Subsidiary Bodies, C(96)223/FINAL.

The follow-up of any aspect of the Convention which is not

also follow-up of the 1997 OECD Recommendation or any

other instrument accepted by all the participants in the

OECD Working Group on Bribery will be carried out by the

Parties to the Convention and, as appropriate, the participants party to another, corresponding instrument.

Article 13. Signature and Accession:

The Convention will be open to non-members which

become full participants in the OECD Working Group on

Bribery in International Business Transactions. Full participation by non-members in this Working Group is encouraged and arranged under simple procedures. Accordingly,

the requirement of full participation in the Working Group,

which follows from the relationship of the Convention to

other aspects of the fight against bribery in international

business, should not be seen as an obstacle by countries

wishing to participate in that fight. The Council of the

OECD has appealed to non-members to adhere to the 1997

OECD Recommendation and to participate in any institutional follow-up or implementation mechanism, i.e., in the

Working Group. The current procedures regarding full

participation by non-members in the Working Group may be

found in the Resolution of the Council concerning the

Participation of Non-Member Economies in the Work of

Subsidiary Bodies of the Organization, C(96)64/REV1/

FINAL. In addition to accepting the Revised Recommendation of the Council on Combating Bribery, a full participant

also accepts the Recommendation on the Tax Deductibility

of Bribes of Foreign Public Officials, adopted on 11 April

1996, C(96)27/FINAL.
 B-10 Battling International Bribery, 2001

THE COUNCIL,

Having regard to Articles 3), 5a) and 5 b) of the Convention

on the Organization for Economic Cooperation and Development of 14 December 1960;

Considering that bribery is a widespread phenomenon in

international business transactions, including trade and

investment, raising serious moral and political concerns and

distorting international competitive conditions;

Considering that all countries share a responsibility to

combat bribery in international business transactions;

Considering that enterprises should refrain from bribery of

public servants and holders of public office, as stated in the

OECD Guidelines for Multinational Enterprises;

Considering the progress which has been made in the

implementation of the initial Recommendation of the

Council on Bribery in International Business Transactions

adopted on 27 May 1994, C(94)75/FINAL and the related

Recommendation on the tax deductibility of bribes of

foreign public officials adopted on 11 April 1996, C(96)27/

FINAL; as well as the Recommendation concerning

Anti-corruption Proposals for Bilateral Aid Procurement,

endorsed by the High Level Meeting of the Development

Assistance Committee on 7 May 1996;

Welcoming other recent developments which further

advance international understanding and co-operation

regarding bribery in business transactions, including actions

of the United Nations, the Council of Europe, the European

Union and the Organization of American States;

Having regard to the commitment made at the meeting of

the Council at Ministerial level in May 1996, to criminalize

the bribery of foreign public officials in an effective and

coordinated manner;

Noting that an international convention in conformity with

the agreed common elements set forth in the Annex, is an

appropriate instrument to attain such criminalization rapidly.

Considering the consensus which has developed on the

measures which should be taken to implement the 1994

Recommendation, in particular, with respect to the modalities and international instruments to facilitate criminalization of bribery of foreign public officials; tax deductibility

of bribes to foreign public officials; accounting requireRevised Recommendation of the OECD

Council on Combating Bribery in

International Business Transactions

Adopted by the Council on May 23, 1997

ments, external audit and internal company controls; and

rules and regulations on public procurement;

Recognizing that achieving progress in this field requires

not only efforts by individual countries but multilateral

co-operation, monitoring and follow-up;

General

I. RECOMMENDS that Member countries take effective

measures to deter, prevent and combat the bribery of foreign

public officials in connection with international business

transactions.

II. RECOMMENDS that each Member country examine the

following areas and, in conformity with its jurisdictional

and other basic legal principles, take concrete and meaningful steps to meet this goal:

i) criminal laws and their application, in accordance

with section III and the Annex to this Recommendation;

ii) tax legislation, regulations and practice, to eliminate

any indirect support of bribery, in accordance with

section IV;

iii) company and business accounting, external audit

and internal control requirements and practices, in

accordance with section V;

iv) banking, financial and other relevant provisions, to

ensure that adequate records would be kept and made

available for inspection and investigation;

v) public subsidies, licences, government procurement

contracts or other public advantages, so that advantages

could be denied as a sanction for bribery in appropriate

cases, and in accordance with section VI for procurement contracts and aid procurement;

vi) civil, commercial, and administrative laws and

regulations, so that such bribery would be illegal;

vii) international co-operation in investigations and

other legal proceedings, in accordance with section VII,

Criminalization of Bribery of Foreign Public Officials

III. RECOMMENDS that Member countries should criminalize the bribery of foreign public officials in an effective

and coordinated manner by submitting proposals to their

legislative bodies by 1 April 1998, in conformity with the
Appendix B: OECD Documents B-11

agreed common elements set forth in the Annex, and

seeking their enactment by the end of 1998.

DECIDES, to this end, to open negotiations promptly on an

international convention to criminalize bribery in conformity with the agreed common elements, the treaty to be

open for signature by the end of 1997, with a view to its

entry into force twelve months thereafter.

Tax Deductibility

IV. URGES the prompt implementation by Member countries of the 1996 Recommendation which reads as follows:

“that those Member countries which do not disallow the

deductibility of bribes to foreign public officials re-examine

such treatment with the intention of denying this deductibility. Such action may be facilitated by the trend to treat

bribes to foreign officials as illegal.”

Accounting Requirements, External Audit and Internal

Company Controls

V. RECOMMENDS that Member countries take the steps

necessary so that laws, rules and practices with respect to

accounting requirements, external audit and internal

company controls are in line with the following principles

and are fully used in order to prevent and detect bribery of

foreign public officials in international business.

A. Adequate accounting requirements

i) Member countries should require companies to

maintain adequate records of the sums of money

received and expended by the company, identifying the

matters in respect of which the receipt and expenditure

takes place. Companies should be prohibited from

making off-the-books transactions or keeping off-thebooks accounts.

ii) Member countries should require companies to

disclose in their financial statements the full range of

material contingent liabilities.

iii) Member countries should adequately sanction

accounting omissions, falsifications and fraud.

B. Independent External Audit

i) Member countries should consider whether requirements to submit to external audit are adequate.

ii) Member countries and professional associations

should maintain adequate standards to ensure the

independence of external auditors which permits them

to provide an objective assessment of company accounts, financial statements and internal controls.

iii) Member countries should require the auditor who

discovers indications of a possible illegal act of bribery

to report this discovery to management and, as appropriate, to corporate monitoring bodies.

iv) Member countries should consider requiring the

auditor to report indications of a possible illegal act of

bribery to competent authorities.

C. Internal company controls

i) Member countries should encourage the development

and adoption of adequate internal company controls,

including standards of conduct.

ii) Member countries should encourage company

management to make statements in their annual reports

about their internal control mechanisms, including those

which contribute to preventing bribery.

iii) Member countries should encourage the creation of

monitoring bodies, independent of management, such

as audit committees of boards of directors or of supervisory boards.

iv) Member countries should encourage companies to

provide channels for communication by, and protection

for, persons not willing to violate professional standards

or ethics under instructions or pressure from hierarchical superiors.

Public procurement

VI. RECOMMENDS:

i) Member countries should support the efforts in the

World Trade Organization to pursue an agreement on

transparency in government procurement;

ii) Member countries’ laws and regulations should

permit authorities to suspend from competition for

public contracts enterprises determined to have bribed

foreign public officials in contravention of that

Member’s national laws and, to the extent a Member

applies procurement sanctions to enterprises that are

determined to have bribed domestic public officials,

such sanctions should be applied equally in case of

bribery of foreign public officials.(1)

iii) In accordance with the Recommendation of the

Development Assistance Committee, Member countries

should require anti-corruption provisions in bilateral

aid-funded procurement, promote the proper implementation of anti-corruption provisions in international

development institutions, and work closely with

development partners to combat corruption in all

development co-operation efforts.(2)

International Cooperation

VII. RECOMMENDS that Member countries, in order to

combat bribery in international business transactions, in
 B-12 Battling International Bribery, 2001

conformity with their jurisdictional and other basic legal

principles, take the following actions:

i) consult and otherwise cooperate with appropriate

authorities in other countries in investigations and other

legal proceedings concerning specific cases of such

bribery through such means as sharing of information

(spontaneously or upon request), provision of evidence

and extradition;

ii) make full use of existing agreements and arrangements for mutual international legal assistance and

where necessary, enter into new agreements or arrangements for this purpose;

iii) ensure that their national laws afford an adequate

basis for this cooperation and, in particular, in accordance with paragraph 8 of the Annex.

Follow-up and Institutional Arrangements

VIII. INSTRUCTS the Committee on International Investment and Multinational Enterprises, through its Working

Group on Bribery in International Business Transactions, to

carry out a program of systematic follow-up to monitor and

promote the full implementation of this Recommendation,

in co-operation with the Committee for Fiscal Affairs, the

Development Assistance Committee and other OECD

bodies, as appropriate. This follow-up will include, in

particular:

i) receipt of notifications and other information submitted to it by the Member countries;

ii) regular reviews of steps taken by Member countries

to implement the Recommendation and to make

proposals, as appropriate, to assist Member countries in

its implementation; these reviews will be based on the

following complementary systems: a system of selfevaluation, where Member countries’ responses on the

basis of a questionnaire will provide a basis for assessing the implementation of the Recommendation; a

system of mutual evaluation, where each Member

country will be examined in turn by the Working Group

on Bribery, on the basis of a report which will provide

an objective assessment of the progress of the Member

country in implementing the Recommendation.

iii) examination of specific issues relating to bribery in

international business transactions;

iv) examination of the feasibility of broadening the

scope of the work of the OECD to combat international

bribery to include private sector bribery and bribery of

foreign officials for reasons other than to obtain or

retain business;

v) provision of regular information to the public on its

work and activities and on implementation of the

Recommendation.

IX. NOTES the obligation of Member countries to cooperate closely in this follow-up program, pursuant to Article 3

of the OECD Convention.

X. INSTRUCTS the Committee on International Investment

and Multinational Enterprises to review the implementation

of Sections III and, in co-operation with the Committee on

Fiscal Affairs, Section IV of this Recommendation and

report to Ministers in Spring 1998, to report to the Council

after the first regular review and as appropriate there after,

and to review this Revised Recommendation within three

years after its adoption.

Cooperation with Nonmembers

XI. APPEALS to non-member countries to adhere to the

Recommendation and participate in any institutional

follow-up or implementation mechanism.

XII. INSTRUCTS the Committee on International Investment and Multinational Enterprises through its Working

Group on Bribery, to provide a forum for consultations with

countries which have not yet adhered, in order to promote

wider participation in the Recommendation and its

follow-up.

Relations with International Governmental and

Nongovernmental Organizations

XIII. INVITES the Committee on International Investment

and Multinational Enterprises through its Working Group on

Bribery, to consult and co-operate with the international

organizations and international financial institutions active

in the combat against bribery in international business

transactions and consult regularly with the nongovernmental

organizations and representatives of the business community

active in this field.

Notes.

1. Member countries’ systems for applying sanctions for

bribery of domestic officials differ as to whether the

determination of bribery is based on a criminal conviction,

indictment or administrative procedure, but in all cases it is

based on substantial evidence.

2. This paragraph summarizes the DAC recommendation

which is addressed to DAC members only, and addresses it

to all OECD Members and eventually nonmember countries

which adhere to the Recommendation.
Appendix B: OECD Documents B-13

THE COUNCIL,

Having regard to Article 5 b) of the Convention on the

Organization for Economic Cooperation and Development

of 14th December 1960;

Having regard to the OECD Council Recommendation on

Bribery in International Business Transactions [C(94)75];

Considering that bribery is a widespread phenomenon in

international business transactions, including trade and

investment, raising serious moral and political concerns and

distorting international competitive conditions;

Considering that the Council Recommendation on Bribery

called on Member countries to take concrete and meaningful

steps to combat bribery in international business transactions, including examining tax measures which may

indirectly favor bribery;

Recommendation of the OECD Council

on the Tax Deductibility of Bribes

to Foreign Public Officials

Adopted by the Council on April 11, 1996

On the proposal of the Committee on Fiscal Affairs and the

Committee on International Investment and Multinational

Enterprises:

I. RECOMMENDS that those Member countries which do

not disallow the deductibility of bribes to foreign public

officials re-examine such treatment with the intention of

denying this deductibility. Such action may be facilitated by

the trend to treat bribes to foreign officials as illegal.

II. INSTRUCTS the Committee on Fiscal Affairs, in

cooperation with the Committee on International Investment

and Multinational Enterprises, to monitor the implementation of this Recommendation, to promote the Recommendation in the context of contacts with nonmember countries

and to report to the Council as appropriate.
 B-14 Battling International Bribery, 2001
Appendix C: Websites Relevant to the Convention and Antibribery Issues C-1

C

Websites Relevant to the

Convention and Antibribery

Issues

United States Government

Department of Commerce—Commerce Home

Page: (www.doc.gov). Market Access and Compliance/

Trade Compliance Center: Annual Reports to Congress

on Implementation of the OECD Bribery Convention,

Trade Complaint Hotline, Trade and Related Agreements

Database (TARA), Exporter’s Guides, Market Access

Reports, Market Monitor, and “Market Access and Compliance-Rule of Law for Business Initiatives”

(www.mac.doc.gov/tcc). Also, Country Commercial reports and guides, trade and export-related information

(www.ita.doc.gov/ita_home/itacnreg.htm); trade counseling and other services in other countries (1-800-USATRADE); Office of the Chief Counsel for International

Commerce, Information on Legal Aspects of International

Trade and Investment, The Anti-Corruption Review, the

FCPA, and other anticorruption materials

(www.ita.doc.gov/legal).

Department of State—Information on the OECD

Bribery Convention and First Global Forum on Fighting

Corruption Materials; documents related to the OECD

Bribery Convention (www.state.gov/www/issues/economic/bribery.html); First Global Forum on Fighting

Corruption and Safeguarding Integrity, Washington, D.C.,

February 1999 (www.state.gov) and Second Global Forum, The Hague, The Netherlands, May 28-31, 2001

(www.gfcorruption.org). A copy of the First Global Forum Final Conference Report and Guiding Principles for

Fighting Corruption and Safeguarding Integrity among

Justice and Security Officials can also be purchased from

the U.S. Government Printing Office (ISBN 0-16-050150-

4); Country Reports, Economic Practices and Trade Practices (www.state.gov).

Department of Justice, Fraud Section—Comprehensive information on the FCPA, legislative history of

FCPA, 1998 amendments, opinion procedures, and international agreements (www.usdoj.gov/criminal/

fraud.html).

Office of Government Ethics (OGE)—Information on ethics, latest developments in ethics, ethics programs, and informational and educational materials including OECD Public Service Management (PUMA)

(www.usoge.gov/).

Department of the Treasury—Information on

money laundering, customs, and international financial

institutions (www.treas.gov).

Securities and Exchange Commission (SEC)—

Information about SEC enforcement, actions, Complaint

Center, and further information for accountants and auditors (www.sec.gov).
Agency for International Development

(USAID)—Center for Democracy and Governance,

USAID’s Efforts onAnticorruption, Handbook on Fighting Corruption (www.info.usaid.gov/democracy/anticorruption).

Inter-Governmental Organizations

Organization for Economic Cooperation and

Development (OECD)—Anticorruption-OECD Bribery

Convention. Country compliance assessment reports

(www.oecd.org/daf/nocorruption); ANCORRSEB, the

OECD Anticorruption Ring Online, a collection of materials on effective policies and practices (http://

www.oecd.org/daf/nocorruptionweb/index.htm).

Financial Action Task Force on Money Laundering (FATF)—(www.oecd.org/fatf/).

International Criminal Police Organization

(INTERPOL)—(www.interpol.int).

Council of Europe (COE)—COE Anticorruption

Convention, related programs, and resources

(www.coe.fr).

Organization for Security and Cooperation in

Europe (OSCE)—Charter for European Security, Rule

of Law and Fight Against Corruption (www.osce.org).

Stability Pact for South Eastern Europe—Special Coordinator of the Stability Pact for South Eastern

Europe, Anticorruption Initiative and Compact of the

Stability Pact (http://www.stabilitypact.org).

Organization of American States (OAS)—The

Fight Against Corruption in the Americas; Inter-American Convention Against Corruption; resolutions of the

General Assembly, studies, and supporting documents

(www.oas.org).

Middle East and North Africa (MENA)—The

World Bank Group (http://wbln0018.worldbank.org/mna/

mena.nsf), World Bank Institute, Anticorruption (http://

www.worldbank.org/wbi/governance/links.htm).

Asia-Pacific Economic Cooperation (APEC)—

Information on the Transparency Initiative, investment,

government procurement, and customs

(www.apecsec.org).

Association of Southeast Asian Nations

(ASEAN)—(www.aseansec.org).

United Nations—Centre for International Crime

Prevention (CICP), Global Program Against Corruption (www.UNCJIN.org/CICP/cicp.html); UN Development Program (UNDP), Management Development and

Governance Division (www.magnet.undp.org).

World Trade Organization (WTO)—Working

Group on Transparency in Government Procurement

Practices (www.wto.org).

The Global Corporate Governance Forum—An

OECD and World Bank Initiative to help countries improve corporate governance standards and corporate ethics (www.worldbank.org/html/extdr/extme/2217.htm);

OECD Principles of Corporate Governance

(www.oecd.org/daf/governance/principles.htm).

World Customs Organization (WCO)—

(www.wcoomd.org).

International Financial Institutions

The World Bank—Public Sector Group, World

Bank Anticorruption Strategy, information on preventing corruption in WB projects, helping countries reduce

corruption, and supporting international efforts

(www.worldbank.org/publicsector/anticorrupt/); Economic Development Institute (EDI), World Bank Anticorruption Diagnostic Surveys(www.worldbank.org/wbi/

governance).

International Monetary Fund (IMF)—Codes of

Good Practices in Monetary and Financial Policies

(www.imf.org/external/np/mae/mft/index.htm).

Inter-American Development Bank (IDB)—

(www.iadb.org).

Asian Development Bank (ADB)—

(www.adb.org).

African Development Bank (AfDB)—

(www.afdb.org).

European Bank for Reconstruction and Development (EBRD)—(www.ebrd.com).

C-2 Battling International Bribery, 2001
Appendix C: Websites Relevant to the Convention and Antibribery Issues C-3

Other Organizations

U.S. Chamber of Commerce (USCOC)—Center

for International Private Enterprise (CIPE), an affiliate

of the USCOC, information on corporate governance and

anticorruption (www.cipe.org).

International Chamber of Commerce (ICC)—

Rules of Conduct and Bribery, ICC Commercial Crime

Services, and due diligence (www.iccwbo.org).

Transparency International (TI)—TI Corruption

Index and Bribe Propensity Index; TI Source Book on

anticorruption strategies and other international initiatives by governments, NGOs, and the private sector

(www.transparency.de) and TI-USA

(www.transparencyusa.org). 10TH IACC

(www.10iacc.org).

U.S. International Council for Business—

(www.uscib.org).

The Conference Board—Information on corporate ethics (www.conference-board.org).

American Bar Association (ABA)—Taskforce on

International Standards on Corrupt Practices

(www.abanet.org/intlaw/divisions/public/corrupt.html);

ABA-Central and East European Law Initiative (CEELI)

(www.abanet.org/ceeli/).

Ethics Resource Center—(www.ethics.org).

COSO—The Committee of Sponsoring Organizations of the Treadway Commission (www.coso.org). The

COSO (“Treadway Commission”) is a volunteer private

sector organization consisting of the five major financial

professional associations dedicated to improving the

quality of financial reporting through business ethics,

effective internal controls, and corporate governance. The

five associations are: the American Accounting Association (AAA) (www.AAA-edu.org); the American Institute

of Certified Public Accountants (AICPA)

(www.aicpa.org); the Financial Executives Institute (FEI)

(www.fei.org); the Institute of Internal Auditors (IIA)

(www.theiia.org); and the Institute of Management Accountants (IMA) (www.imanet.org).

The Association of Government Accountants

(AGA)—(www.agacgfm.org); Sites Directory for U.S.

and International Accounting Associations and State CPA

Societies (taxsites.com/associations2.html).

International Organization of Supreme Audit

Organizations (INTOSAI)—(www.intosai.org).

Global Coalition for Africa (GCA)—Principles

to Combat Corruption in Africa Countries; Collaborative Frameworks to Address Corruption (www.gcacma.org/ecorrtion.htm).

South Asian Association for Regional Cooperation—(www.saarc.org).

Pacific Basin Economic Council (PBEC)—An

association of senior business leaders, which represents

more than 1,200 businesses in 20 economies in the Pacific Basin region (www.pbec.org).

Americas’ Accountability/Anti-Corruption

(AAA) Project—(www.respondanet.com).

Anti-Corruption Network for Transition Economies—(www.nobribes.org).

Inter-Parliamentary Union—(www.ipu.org).

World Forum on Democracy—

(www.fordemocracy.net).

National Democratic Institute for International

Affairs (NDI)—(www.ndi.org).

The International Republican Institute (IRI)—

(www.iri.org).

International Center for Journalists—

(www.icfj.org); World Association of Newspapers

(www.fiej.org).

The Carter Center—(www.cartercenter.org).

The Asia Foundation—

(www.asiafoundation.com).

The National Endowment for Democracy

(NED)—(www.ned.org).
C-4 Battling International Bribery, 2001

Websites with Country-Specific Convention-Related

Legislation

Implementing legislation of many Parties can be

down-loaded directly from the OECD website

(www.oecd.org/daf/nocorruption/links1.htm). Several

countries also have posted legislation on their government websites. Legislation of the following countries is

available from one or more of these sources.

Australia

The government response (tabled in the Senate on

March 11, 1999) to the Treaties Committee Report on

the OECD Convention and the Draft Implementing Legislation may be found at http://www.aph.gov.au/hansard/

hanssen.htm (Select March 11, 1999 and go to p.2634).

The Criminal Code Amendment (Bribery of Foreign

Public Officials) Bill 1999 is at http://www.aph.gov.au/

parlinfo/billsnet/main.htm. (Search “current bills.”) The

Bill’s Explanatory Memorandum is also on that site.

Austria

The German text of the Austrian implementing legislation (Strafrechtsanderungsgesetz 1998 BGBI No. I

153) is available in pdf format on the OECD website.

Belgium

The text of the law passed on February 10, 1999, is

available in pdf format on the OECD website.

Brazil

The English text of two relevant legal documents

(Law no. 9.613, passed on March 3, 1998, and Decree

1171 of June 1994) is available in pdf format on the

OECD website.

Canada

Access to the legislation can be obtained through

the website for the Department of Justice/Ministère de

la Justice (http://canada.justice.gc.ca/Loireg/

index_en.html). Alternatively, the Act concerning the

Corruption of Foreign Public Officials is located at http:/

/www.parl.gc.ca/36/1/parlbus/chambus/house/bills/government/S-21/S-21_4/S-21_cover-E.html. The English

text is also available in pdf format on the OECD website.

Denmark

Implementing legislation can be found on the Department of Justice web site (in Danish only) at http://

www.jm.dk/forslag/.

Finland

Implementing legislation can be found on the government web site (in Finnish and Swedish) at http://

www.vn.fi/vn/english/index.htm Excerpts showing

amendments to the Finnish Penal Code are also available in pdf format on the OECD website.

France

The draft law modifying the penal code and the

penal procedure code relating to combating bribery and

corruption can be found on the website of Legifrance (in

French only) at http://www.legifrance.gouv.fr/citoyen/

index.ow. The French text of the legislation is also available in pdf format on the OECD website.

Germany

The English and German texts of the implementing legislation dated September 10, 1998, the relevant

criminal code, and the Administrative Offence Act are

available in pdf format on the OECD website.

Greece

The French text of the implementing legislation

dated November 11, 1998, and the English text of the

Greek law No. 2331 on money laundering of August 1995

are both available in pdf format on the OECD website.

Hungary

The English text of the relevant implementing legislation is available in pdf format the the OECD website.

Iceland

The English text of the Icelandic Extradition and

other Assistance in Criminal Proceedings Act (Law no.

3 of April 17, 1984, and relevant articles of the Icelandic

Penal Code are available in pdf format on the OECD

website.

Japan

An unofficial English translation of the Japanese

implementing legislation (the amended Unfair Competition Act, adopted on September 18, 1998, is available in

pdf format on the OECD website.
Appendix C: Websites Relevant to the Convention and Antibribery Issues C-5

Korea

An English translation of the Korean implementing legislation (The Act on Preventing Bribery of Foreign Public Officials in International Business Transactions) is available in pdf format on the OECD website.

Norway

The implementing legislation (Amendments to the

Norwegian Penal Code of May 22, 1902, chapter 2, para.

128) is available in pdf format at the OECD website and

also on the Norwegian government website:

(www.lovdata.no/all/).

Spain

The provisions to the Spanish Penal Code, implementing the Convention, is available in pdf format on

the OECD website.

Sweden

The Swedish implementing legislation is available

in pdf format on the OECD website.

Switzerland

Swiss laws can be found on Recueil Systématique

du Droit Fédéral (available in French, German and Italian only) at (http://www.admin.ch/ch/f/rs/rs.html). Search

for the Swiss Penal Code of December 21, 1937, which

will soon be amended to comply with the Convention.

The following legislation is available in French on the

OECD website: modification of the Swiss Penal Code

and the Amendments to the Swiss Penal Code; the Law

of April 19, 1999, authorizing the ratification of the Convention; and Recueil Systématique du Droit Fédéral.