United States Department of State

Bureau of Economic and Business Affairs

BATTLING

INTERNATIONAL

BRIBERY 2000

The Second Annual Report on Enforcement and Monitoring of the OECD Convention on

Combating Bribery of Foreign Public Officials in International Business Transactions

as Required by Paragraph (c) (1) of the Senate Resolution of Advice and Consent

dated July 31, 1998

E PLURIBUS

U N

D

U M

EPARTMENT OF STATE

UNITED STATES OF AMERICA
United States Department of State 10729

Bureau of Economic and Business Affairs

Released June 2000
United States Department of State

Bureau of Economic and Business Affairs

BATTLING

INTERNATIONAL

BRIBERY 2000

The Second Annual Report on Enforcement and Monitoring of the OECD Convention on

Combating Bribery of Foreign Public Officials in International Business Transactions

as Required by Paragraph (c) (1) of the Senate Resolution of Advice and Consent dated

July 31, 1998
iii

Contents

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 ..................... 13

Australia .................................................................................................................................. 14

Austria ..................................................................................................................................... 15

Belgium ................................................................................................................................... 17

Bulgaria ................................................................................................................................... 19

Canada ..................................................................................................................................... 21

Czech Republic ....................................................................................................................... 22

Finland ..................................................................................................................................... 25

Germany .................................................................................................................................. 27

Greece...................................................................................................................................... 29

Hungary ................................................................................................................................... 31

Iceland ..................................................................................................................................... 32

Japan ........................................................................................................................................ 33

Korea ....................................................................................................................................... 35

Mexico ..................................................................................................................................... 37

Norway .................................................................................................................................... 39

Slovak Republic ...................................................................................................................... 40

Spain ....................................................................................................................................... 42

Sweden ................................................................................................................................... 45

Switzerland ............................................................................................................................. 46

United Kingdom ..................................................................................................................... 48
iv

Chapter 3: Review of Enforcement Measures ...........................................................51

Enforcement of National Implementing Legislation ........................................................ 51

U.S. Efforts to Promote Public Awareness....................................................................... 51

Efforts of Other Signatories.............................................................................................. 52

Monitoring Process for the Convention ........................................................................... 54

Monitoring of the Convention by the U.S. Government .................................................. 56

Chapter 4: Laws Prohibiting Tax Deduction of Bribes ................................................... 59

Chapter 5: Future Negotiations to Strengthen the Convention ....................................... 65

Chapter 6: Expanding the Membership of the Convention ............................................ 69

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 and Antibribery Issues .................... C-1
Executive Summary v

Executive Summary

Bribery of foreign public officials by businesses is a

serious problem in the international marketplace. This

corrupt practice 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 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 2000 is the Department

of State’s second of six annual reports on enforcement

and monitoring of the OECD Convention. The reports

are required by Paragraph (c)(1) of the Senate Resolution of Advice and Consent to ratification of the Convention dated July 31, 1998. 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 second 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 29 OECD members1

 plus Argentina, Brazil, Bulgaria, Chile, and the Slovak Republic, entered into force

for the United States and 11 other signatories on February 15, 1999. As of June 10, 2000, an additional 9 countries had deposited their instruments of ratification of the

Convention with the OECD and several more were expected to do so in the near future.

 This second annual report continues to focus on the

progress that is being 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 and to implement

the OECD Council recommendation to end the tax deductibility of bribes. The assessment of 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, reporting of U.S. embassies, publications, private sector comments, and other public sources. Our

views are not necessarily those of other governments.

The report also addresses other related issues raised in

the Senate Resolution. These include the adequacy of

enforcement, an assessment of the need for strengthening the Convention and the desirability of expanding the

membership of the Convention to other countries.

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

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

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

Zealand, Norway, Poland, Portugal, Spain, Sweden,

Switzerland, Turkey, the United Kingdom, and the United

States.
vi Addressing the Challenges of International Bribery and Fair Competition, 2000

Key Points

Over the past year, further progress has been

made on the first priority of ensuring that all signatories

deposit an instrument of ratification with the OECD. As

of June 10, 2000, twenty-one of the thirty-four signatories, representing approximately 78 percent of OECD

exports, had completed their internal approval processes

and deposited an instrument of ratification with the

OECD secretariat. Nevertheless, a number of significant exporting countries important for the global fight

against bribery, including Brazil, France, Italy, and the

Netherlands, had not yet taken the necessary steps to bring

the Convention into force. The United States will continue to press these countries to complete their legislative and ratification processes without further delay.

The procedures established by the OECD to

monitor implementation of the Convention have proven

effective in providing a thorough, unbiased examination

of parties’ implementing legislation. The review process is continuing. Examination of implementing legislation to date has been rigorous, comprehensive, and frank

in identifying shortcomings. Thus far, the OECD Working Group on Bribery has reviewed the implementing

legislation of twenty-one countries, including the United

States.

The State, Commerce, Justice, and Treasury departments are working 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 OECD meetings on the Convention, bilateral discussions with other

governments on implementation issues, and careful tracking of bribery-related developments overseas.

Countries that have ratified the Convention have

generally taken a serious approach to fulfilling their obligations on criminalizing the bribery of foreign public

officials. The relevant legislation of twenty foreign countries is reviewed in this report. We have concerns, however, about the implementation of the Convention by several countries, including Japan and the United Kingdom,

whose current legislation appears inadequate to accomplish the goals of the Convention. Bilaterally and multilaterally in the OECD Working Group on Bribery, the

United States is urging countries to take action to correct

deficiencies in implementing legislation.

 Since the Convention has been in force for only

a short time and not yet for all signatories, it is still too

early to make judgments regarding the effectiveness of

enforcement measures. Now that the review of implementing legislation is well advanced, the United States

is urging the Working Group on Bribery to begin the review of enforcement actions later in 2000, as originally

endorsed by OECD ministers. Future reports, therefore,

should begin to develop a record of enforcement. As far

as we have been able to determine, the United States remains the only country to have prosecuted persons for

the bribery of foreign public officials.

Both government authorities and nongovernmental organizations have made greater efforts over the past

year to promote public awareness of the Convention and

support anticorruption initiatives. Notable efforts have

been made in Australia, Bulgaria, Canada, the Czech

Republic, Germany, Korea, Poland, the Slovak Republic, and Sweden. The United States continues to encourage all signatories to promote public awareness of

the Convention and the importance of combating corruption.

Substantial progress has been achieved in implementing the OECD Council recommendation to eliminate any remaining tax deductibility for bribes to foreign public officials. We remain concerned, however,

about the effectiveness of some countries’ actions to disallow tax deductibility. The United States, in cooperation with other OECD members, is providing technical

assistance to the OECD’s Fiscal Affairs Committee in

order to improve its monitoring of national laws and practices and to help the Committee establish a more complete record of each signatory’s legal, regulatory, and

administrative framework for disallowing tax deductibility.

As the Convention enters into force for more signatories, greater attention is being given to considering

new participants and using the OECD to promote

antibribery activity among interested nonsignatory countries. The most appropriate candidates for accession to

the Convention are likely to be significant global or regional exporters whose governments are well equipped

to take on the responsibilities of implementing the Convention. The OECD has undertaken initial outreach activities with these criteria in mind.

The United States has succeeded in keeping issues related to strengthening the Convention on the

agenda of the OECD Working Group on Bribery despite
Executive Summary vii

the lack of support from many members. We have made

special efforts to focus attention on issues of particular

importance to the United States: bribery acts in relation

to foreign political parties, party officials, and candidates

for public office. Developing support for addressing our

key issues of concern is expected to require a long-term

effort as we differ sharply with other Working Group

members on the need to expand the scope of the Convention. Other issues on the agenda relating to the Convention include making bribery of foreign public officials a predicate offense for money laundering legislation and the roles of foreign subsidiaries and offshore

financial centers in bribery transactions.

U.S. 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 in signatory countries on the need to enact and enforce

antibribery laws. The U.S. government will continue to

involve the private sector in its efforts to monitor the

Convention and promote its goals. The U.S. government

also actively assists the business community on corruption issues. The Department of State has published a

brochure, “Fighting Global Corruption: Business Risk

Management,” and the Department of Commerce has

opened a bribery hotline on its Internet site. The Department of Justice, under its Foreign Corrupt Practices Act

Opinion Procedure, will issue opinions regarding the

antibribery provisions of the Foreign Corrupt Practices

Act (FCPA) with respect to certain prospective business

transactions.

A classified annex to this report (transmitted

separately) demonstrates that a large number of competitor firms from other countries have been engaged in bribery of foreign public officials. The annex covers the sixyear period since May 1994, most of which period was

prior to the entry into force of the Convention. It lists

foreign firms on which credible information exists indicating that they have been engaging in activities that

would be prohibited by the Convention. During that

period, we received allegations that bribes had been offered in some 353 international contracts worth about

$165 billion. In deals where there were bribery allegations, reported U.S. competitors, and known outcomes,

American firms lost 92 contracts worth approximately

$26 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 in U.S.

foreign policy, and the OECD Convention represents a

key element in this broader campaign. Our leadership in

combating international corruption started with the FCPA

of 1977. Since then our efforts against corruption have

not only involved the OECD. Another important initiative was Vice President Al Gore’s first Global Forum on

Fighting Corruption held in February 1999, in which 90

countries participated. The United States is cosponsoring a second Global Forum scheduled to be held in the

Netherlands in 2001. Over the past year, the United States

has also developed or supported anticorruption and transparency initiatives in a number of other global and regional forums. These include the Organization of American States (the Inter-American Convention Against Corruption, which the United States signed in June 1996, is

currently before the U.S. Senate), the Global Coalition

for Africa, the Organization for Security and Cooperation in Europe, the Stability Pact for Southeast Europe,

the Council of Europe, the Asia-Pacific Economic Cooperation forum, and the World Trade Organization. In

January 2000, the United Nations Ad Hoc Committee

Negotiating the Organized Crime Convention concluded

that a global instrument against corruption is desirable

and that work in the United Nations toward such an instrument should begin once the Organized Crime Convention and its three protocols are complete. Concerned

U.S. government agencies are considering our approach

to this initiative and are consulting with other governments.

Through all the above initiatives, 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.
viii Addressing the Challenges of International Bribery and Fair Competition, 2000
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, 1999.1

As of June 10, 2000, twenty-one countries had deposited an instrument of ratification with the OECD:

Australia, Austria, Belgium, Bulgaria, Canada, the Czech

Republic, Finland, Germany, Greece, Hungary, Iceland,

Japan, Korea, Mexico, Norway, the Slovak Republic,

Spain, Sweden, Switzerland, the United Kingdom, and

the United States. The table on page 6 provides information on all signatories with regard to domestic ratification, enactment of implementing legislation, deposit of

an instrument of ratification, and entry into force of the

Convention.

In most of the signatory countries that have not completed the steps necessary to bring the Convention into

force, there has been notable progress in preparing implementing legislation and obtaining the necessary authorizations for ratifying the Convention. Most of these countries should complete this process by the end of 2000 or

early 2001. The following status report on their internal

legislative process is based on information obtained from

U.S. embassies and reporting from the countries themselves to the OECD, which is now publicly available at

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

Argentina

On November 12, 1999, the government submitted

the Convention for ratification to Parliament. The Chamber of Senators’ Committee on Foreign Relations approved the ratification bill without objection on February 28, 2000, and the full Senate is expected to approve

it without debate as soon as a vote is scheduled. The bill

could clear the Senate before the July recess. The Chamber of Deputies must also approve the bill for it to become law. Separately, the international affairs unit of the

Ministry of Justice is reviewing draft legislation to bring

the criminal code into harmony with the Convention. The

legislation will be submitted after the instrument of ratification is deposited. The government expects to complete ratification of the Convention and enact implement1

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.
8 Addressing the Challenges of International Bribery and Fair Competition, 2000

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

(As of June 10, 2000)

Instrument of Ratification Convention

Deposited With Enters

Signatory Country Ratified Legislation Approved OECD Secretariat1 Into Force

Total s: 34 25 21 21 21

Argentina

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

Austria April 1, 1999 October 1, 19982 May 20, 1999 July 19, 1999

Belgium June 9, 1999 April 3, 19992 July 27, 1999 September 25, 1999

Brazil

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

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

Denmark March 30, 2000

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

France May 25, 1999

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

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

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

The Netherlands

New Zealand

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

Poland April 13, 2000

PortugalMarch 31, 2000

Slovak Republic February 11, 1999 September 1, 19993 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

United Kingdom December 14, 1998 (Need for imple- December 14, 1998 February 15, 1999

menting legislation

still under review)

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

NA = Not available.

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

signatory deposits an instrument of ratification with the OECD.

2 Date legislation came into effect.

3 Date partial implementing legislation came into effect.
Chapter 1: Ratification Status 9

ing legislation before the end of 2000.

Brazil

The bill to ratify the Convention has been approved

by the Chamber of Deputies and is being examined by

the Senate’s Foreign Affairs Committee. Following the

Senate Committee’s approval, the Convention will move

to the Constitution and Justice Committee and then on

to a plenary vote. The Foreign Ministry expects that

the bill could be passed in June or July 2000. After the

bill to ratify the Convention is approved by Congress,

implementing legislation will be drafted. Once the bill

to ratify the Convention and the implementing legislation are approved, both texts will go to the President

for signature. The government expects to complete this

process in 2000.

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, which is expected to approve it, possibly in October 2000. Ratification requires

the approval of both congressional chambers. Normal

procedures would require three months, at a minimum,

before Senate action. Following ratification, the government will formally propose implementing legislation.

Studies on the necessary amendments to national law

are under way.

Denmark

Draft implementing legislation was submitted to

Parliament in the spring of 1999. The legislation was

approved on March 30, 2000, and went into effect on

May 1, 2000. The government expects to obtain ratification of the Convention in the second half of 2000.

France

The French government completed its internal process for ratification of the Convention with the adoption of law number 99-424 dated May 27, 1999, authorizing ratification. France, however, has not yet formally deposited its instrument of ratification with the

OECD or enacted its implementing legislation. The bill

containing the French implementing legislation has undergone two readings in the Senate and the National

Assembly, in November–December 1999 and in February 2000. A reading by a joint parliamentary commission followed on March 21, 2000. The Senate approved the implementing legislation after a third and

final reading on April 4, 2000. The bill has been scheduled for a third reading and adoption by the National

Assembly on June 20, 2000. France is expected to deposit its instrument of ratification with the OECD

shortly after its implementing legislation is enacted. We

have some concerns regarding the draft French legislation and have been tracking it very closely. We will continue to monitor France’s progress and provide additional information in next year’s report.

Ireland

Legislation to ratify and implement the Convention,

entitled the Prevention of Corruption Bill 2000, was submitted to Parliament in January 2000. The government

expects that all stages in both houses will be completed

before the end of 2000.

Italy

The Chamber of Deputies approved the bill to ratify

and implement the Convention on March 24, 1999. The

Senate approved a similar bill on May 10, 2000, which

was submitted for a second reading by the Chamber of

Deputies on June 7, 2000. The Chamber of Deputies approved the draft bill with some further amendments,

which must be resubmitted for approval to the Senate.

The Italian government is endeavoring to complete the

entire ratification procedure before the OECD ministerial meeting on June 26–27, 2000.

Luxembourg

On February 15, 2000, the State Council gave its

approval to ratify and implement the Convention. The

bill was originally submitted to the Council on January

12, 1998, and amended twice by the government, on December 16, 1998, and on January 31, 2000. With the

Council’s review complete, the Convention moved to the

Legal Affairs Committee of the Chamber of Deputies

for consideration, the final stage in the legislative process prior to a vote by the full Chamber and signature by

the Grand Duke. However, the Committee made some

amendments to the bill, which will have to be resubmitted to the State Council. It is expected that implementing legislation will be adopted by Parliament during the

second half of 2000.

The Netherlands

Bills to ratify and implement the Convention were

sent to Parliament in April 1999. The implementing bill

has been amended to take account of questions raised by

Parliament’s Justice Committee. A full reading of the

implementing legislation by Parliament was scheduled

for June but was removed due to more urgent matters.

The bills must be adopted by both chambers of Parlia-
10 Addressing the Challenges of International Bribery and Fair Competition, 2000

ment. The government is looking to complete the ratification process during 2000.

New Zealand

A bill to ratify the Convention was initially introduced

to Parliament in September 1999 but consideration was

delayed by the change in government. The bill is now being

reviewed by a new parliamentary committee, which completed the public comment phase on the bill on March 3,

2000. Subject to decisions of the new government on the

substance of the bill, passage could come by the end of

2000 or possibly earlier.

Poland

The ratification bill was approved by the two chambers of Parliament in January 2000 and thereafter by the

President. It has since been published in Poland’s Official Journal. Draft implementing legislation was submitted to Parliament on February 15, 2000, and is expected

to be adopted in 2000.

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 Diary of

the Republic on March 31, 2000. However, the legislation necessary to bring Portugal’s criminal law into conformity with the Convention is still at an early stage of

preparation.

Turkey

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

on February 6, 2000. Approval by the cabinet, however,

must be obtained before an instrument of ratification can

be deposited with the OECD. Once secured, articles of

ratification will be forwarded to the President for signature, and then an instrument will be deposited with the

OECD. An inter-ministerial committee has prepared draft

implementing legislation, including amendments to the

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

been sent to the Ministry of Justice for review. Following cabinet approval, the bill is expected to be sent to

Parliament after the summer recess.

Efforts to Encourage Implementation

The Convention’s effectiveness for reducing bribery

will be constrained until all signatories—particularly

important exporters such as Brazil, France, Italy, and the

Netherlands—have brought the Convention into effect.

The United States has therefore 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 underscore U.S. concern that all

signatories implement it as soon as possible. U.S. agencies have also continued to encourage the U.S. and foreign private sectors to support the Convention and work

to eliminate the bribery of foreign public officials in international business.
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 countries: Australia,

Austria, Belgium, Bulgaria, Canada, the Czech Republic, Finland, Germany, Greece, Hungary, Japan, Korea,

Mexico, Iceland, Norway, the Slovak Republic, Spain,

Sweden, Switzerland, and the United Kingdom. Legislative reviews of eleven of these countries appeared in

last year’s report; they have been revised and updated as

necessary. In addition to these reviews, this 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 implementing legislation and related laws of the countries listed above, reporting from U.S. embassies, private sector comments,

publications, nongovernmental organizations, and other

public sources. The Working Group’s assessment of

implementing legislation is expected to be made public

later this summer and will be linked to the Department

of Commerce’s website when available.

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 imposed 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
12 Addressing the Challenges of International Bribery and Fair Competition, 2000

a predicate offense to money laundering (Article 7), provisions on books and records (Article 8), mutual legal

assistance and extradition (Articles 9 and 10), and conspiracy, attempt, and authorization (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 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 separate

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 assure functional equivalence among

the measures taken to sanction bribery, without requiring absolute uniformity or changes in fundamental principles of a party’s legal system.

We are continuing to review information on relevant

legislation and to monitor the signatories’ implementation of the Convention, independently, as well as 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. Completing 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 are generally encouraged by the efforts of other parties to implement 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, including Japan and the

United Kingdom, have implementing or pre-existing legislation that we believe falls short of the Convention’s

requirements. We have called upon these two countries

in particular, since they are key exporters and influential

OECD members, to act expeditiously to bring their implementing legislation into conformity with the Convention.

The following concerns are especially noteworthy and

will require further examination as we progress to the

enforcement stage of the monitoring process of the

Convention:

• 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 substantial loophole in the Japanese implementing legislation. Also, we believe that given the large size of Japanese companies and the high value of many international

transactions, a maximum fine equivalent to approximately $2.8 million does not provide “effective, proportionate, and dissuasive” penalities for legal persons. In

addition, there are serious questions concerning Japan’s

ability to confiscate the proceeds of bribery.

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

United Kingdom, existing corruption laws do not explicitly address bribery of foreign public officials and their

adequacy for implementing the requirements of the Convention is not, even in the views of British legal commentators, certain. The U.K. is expected to enact new

anticorruption legislation, but passage of the new legislation appears unlikely before the May 2001 elections.

• 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,

and Finland, 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 will significantly limit the

ability of these parties to prosecute bribery of foreign

officials.
Chapter 2: Review of National Implementing Legislation 13

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

Slovak Republic, Switzerland, and Spain, have not provided for effective, proportionate, and dissuasive criminal or noncriminal sanctions for legal persons. Austria,

Bulgaria, the Czech Republic, Hungary, the Slovak Republic, and Switzerland have indicated that they are in

the process of amending their legislation in this respect.

• Differing Standards for Bribery of EU Officials: A

number of European Union member countries implemented the Convention in conjunction with various EU

anticorruption instruments. The implementing legislation of some of these countries contains several definitions of the term foreign public official, or different jurisdictional requirements, depending on whether or not

the foreign official is an official of an EU country or an

EU institution or another foreign public official. We have

concerns that this may lead to different penalties or uneven application of a country’s jurisdiction over bribes

to EU officials vis-a-vis bribes to other foreign public

officials.

• Limited Statutes of Limitations: Several countries,

such as Japan, Norway, Iceland, and Hungary, 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.

• 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. Although there may be a rationale for permitting

such a defense for domestic acts of bribery, the U.S. believes this defense is inappropriate for instances of

transnational bribery and may constitute a loophole.

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 on Bribery 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 political 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 formerly 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 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 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 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 Convention calls on parties to assert nationality jurisdiction when consistent with national legal
14 Addressing the Challenges of International Bribery and Fair Competition, 2000

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 U.S.

Fifth and finally, the IAFCA amended the FCPA to

eliminate the current 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 U.S. 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. This is an issue that may

be addressed in future legislative proposals to Congress.

 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.

Australia

Australia signed the Convention on December 7,

1998, and deposited its instrument of ratification with

the OECD Secretariat on October 18, 1999. Australia

has implemented the Convention through the Criminal

Code Amendment (Bribery of Foreign Public Officials)

of 1999 to the Criminal Code Act of 1995. The amendment was enacted on June 17, 1999, and entered into

force on December 18, 1999. The following analysis is

based on the amendment, related laws, and reporting from

the U.S. embassy in Canberra.

Basic Statement of the Offense

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

Foreign Public Official,” provides that a person is guilty

of an offense if

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

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

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

(iv) causes an offer of the provision of a benefit,

or a promise of the provision of a benefit, to be

made to another person; and

(b) the benefit is not legitimately due to the

other person; and

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

intention of influencing a foreign public official

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

the official’s duties as a foreign public official

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

obtain or retain a business advantage that is not

legitimately due to the recipient, or intended recipient, of the business advantage (who may be

the first-mentioned person).

Under Section 70.2(2), in determining whether a

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.
Chapter 2: Review of National Implementing Legislation 15

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 (approximately $38,000), imprisonment for a maximum of ten years, or both. Bodies

corporate are subject to a fine of A$330,000 (approximately $188,000). These exceed the penalties in the

Criminal Code for bribery of domestic 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 (approximately $7,100). 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.

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 jurisdic-
16 Addressing the Challenges of International Bribery and Fair Competition, 2000

tion 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.

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 (approximately $19,752),

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 or-
Chapter 2: Review of National Implementing Legislation 17

derly.” Section 268 provides that annual financial statements and company reports must be examined by an

auditor. The general accounting provisions apply to all

persons engaged in commercial activities, excluding

small merchants. Also, certain small corporations are

exempt from the obligatory annual audit. Under Section 122 of the Federal Law of Private Companies, the

penalty for violation of the accounting provisions is imprisonment for up to two years or a fine. This applies to

managing directors, members of the supervisory board,

and agents. The same penalties apply under the Federal

Law on Public Companies.

Money Laundering

Section 165 of the Austrian Penal Code establishes

all punishable offenses as predicate offenses for money

laundering. Persons may be prosecuted for having money

laundered property deriving from the predicate crime of

bribery even if it was committed abroad. The penalty for

money laundering is imprisonment for up to two years or

a fine.

Extradition/Mutual Legal Assistance

Under Section 11, paragraph 1 of the Extradition and

Mutual Legal Assistance Act, extradition is permitted if

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

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

Extradition and Mutual Legal Assistance Act prohibits

the extradition of Austrian nationals. However, it is our

understanding that where Austria will not extradite its

own nationals, it will exercise jurisdiction over them in

conformity with Convention Article 10.3.

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

signed the European Extradition Agreement which governs extradition requests amongst Belgium, Bulgaria,

the Czech Republic, Denmark, Germany, Finland,

France, Greece, Hungary, Ireland, Iceland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Sweden, Switzerland, the Slovak Republic, Spain, Turkey,

and the United Kingdom. With regard to Belgium, Germany, France, Greece, Italy, Luxembourg, the Netherlands, Portugal, and Spain, the Schengen implementation agreement of 1997 also applies.

Austria has mutual legal assistance treaties with

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

Yugoslavia, and the United States.

It is our understanding that requests originating from

countries not mentioned above will be handled in accordance with Austrian Federal Law on Extradition and Judicial Assistance, and on the basis of reciprocity. 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
18 Addressing the Challenges of International Bribery and Fair Competition, 2000

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

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

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

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

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

by a public authority. Pursuant to Article 250, Articles

246 and 247 now apply to persons who exercise a public

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

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

governed by public international law. These provisions

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

business or other improper advantage in international

business.

Jurisdictional Principles

Under Article 3 of the Criminal Code, jurisdiction

is established over offenses committed within Belgian

territory by Belgian or foreign nationals. Act 99/808

added Article 10 quater to the Code of Criminal Procedure. This provides for jurisdiction in certain cases over

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

Various limitations apply, however. For example, if the

bribe recipient exercises a public function in a European Union member state, Belgian prosecution may not

proceed without the formal consent of the other state.

If the bribe recipient exercises a public function in a

state outside the EU, the formal consent of that state is

again required in order to prosecute. In addition, there

is a requirement that the act be a violation of the laws

of the other state, and that the state would punish such

bribery of a person exercising a public function in Belgium. Bribery involving a person who exercises a public function within an EU institution is subject to prosecution. For bribes involving persons exercising a public function within other public international organizations, the formal consent of the organization is required

before prosecution can proceed.

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

is ten years from the date the offense was committed.

This period may be extended because of the conduct of

investigations or prosecutions.

Coverage of Payor/Offeror

Under the Article 5 of the Criminal Code as amended

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

prosecution for the bribery of a foreign public official.

Coverage of Payee/Offeree

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

in 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 (approximately

$444–$888,000), and/or imprisonment for a period of

six months to fifteen years. Legal persons face fines ranging from BF600,000 to BF72 million (approximately

$13,000–$1.6 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 patrimo-
Chapter 2: Review of National Implementing Legislation 19

nial 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.

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 officals. 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 limi-
20 Addressing the Challenges of International Bribery and Fair Competition, 2000

tations 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.

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 million to 5 million old Bulgarian levs (approximately $1,600–$2,600). In certain cases, these penalties are increased to imprisonment for one to eight years

and a fine of 5 million to 20 million levs (approximately

$2,600–$10,500).

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.
Chapter 2: Review of National Implementing Legislation 21

Canada

The Canadian Corruption of Foreign Public Officials

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

Sources for this analysis include the text of the act,

diplomatic reporting, and information from nongovernmental organizations.

 We are concerned that Canada, which has previously asserted nationality jurisdiction over certain other

crimes and thus has constitutional authority to do so,

has not done so for offenses created to implement the

Convention.

Basic Statement of the Offense

Section 3(1) of the Corruption of Foreign Public

Officials Act provides:

Every person commits an offense who, in order

to obtain or retain an advantage in the course of

business, directly or indirectly gives, offers or

agrees to give or offer a loan, reward, advantage

or benefit of any kind to a foreign public official

or to any person for the benefit of a foreign public official;

(a) as consideration for an act or omission by

the official in connection with the performance

of the official’s duties or functions; or

(b) to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for

which the official performs duties or functions.

The act contains exceptions for facilitation payments,

payments that are lawful under the written law of the

receiving official’s country, and payments related to bona

fide business promotion and execution of a contract. (See

Sections 3(3) & (4).

Jurisdictional Principles

The Corruption of Foreign Public Officials Act does

not contain any specific provisions governing jurisdiction.

It is also our understanding that Canadian courts will assert territorial jurisdiction where a significant portion of

the activities constituting the nature of the offense takes

place in Canada. There must be a real and substantial link

between the offense and Canadian territory.

It is our understanding that the courts in Canada have

adopted a two-part test for determining whether a crime

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

relevant acts that took place in Canada that may have legitimately given Canada an interest in prosecuting the offense. Second, the court will consider whether it would

offend international comity to assert jurisdiction over those

acts and the offense. (See Libman v. R., 2 S.C.R. 178 (1985).

Canada has not asserted extraterritorial jurisdiction

for this offense. However, Canadian law provides that

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,
22 Addressing the Challenges of International Bribery and Fair Competition, 2000

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

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

Commentary, footnote 14.)

Penalties

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

five years. We understand that corporations are subject

to fines at the discretion of the court with no maximum

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

as to the proper calculation of the fine.

The penalties under the act are roughly congruent to

the penalties for domestic bribery except that a person

convicted of bribery of a foreign public official is not

subject to debarment.

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

bribery (Section 4) and laundering of the proceeds of bribery (Section 5). The penalty for violation of these provisions is up to ten years’ imprisonment, a penalty that is

higher than that for the bribery offense itself.

The act incorporates Section 2 of the Criminal Code

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

We understand that corporations may be prosecuted

criminally in Canada.

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

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

identification of the corporation with the “directing

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

performed by the manager within the sector of operation

assigned to him or her by the corporation. The sector

may be functional or geographic or may embrace the

entire undertaking of the corporation.

Sections 7 and 9 of the Corruption of Foreign Public

Officials Act adds the three offenses created under the act

(bribery, possession of proceeds, and money laundering

of proceeds) to the statutory list of “enterprise crimes”

(see Criminal Code §462.3), thus enabling the government

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

upon conviction. (See Criminal Code §§462.32-.5.)

Books and Records Provisions

Canada has a number of statutes that govern books

and records. They prohibit falsification of books and

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

366, 380, 397, and 400.) However, Canadian business

leaders have criticized the Canadian laws as insufficient

because they do not prohibit off-the-books accounts, inadequately identified transactions, the recording of nonexistent expenses, and the use of false documents.

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

money laundering 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.
Chapter 2: Review of National Implementing Legislation 23

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.” Additional legislation to

implement amendments to accounting and auditing standards and the procurement law is still under way and is

expected to become effective later this year or in 2001.

Sources for this analysis include the Czech implementing legislation, relevant Criminal Code provisions, and

information from the U.S. embassy in Prague.

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

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

fact voluntarily and without delay to the prosecutor or

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

not provide for criminal responsibility for legal persons,

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

Basic Statement of the Offense

The basic statement of the offense is contained in

Section 161, paragraph 2b of the Czech Criminal Code

which states that

(1) Whoever in connection with procuring affairs in the public interest provides, offers, or

promises a bribe shall be sentenced to imprisonment for up to one year or to a monetary fine;

(2) A perpetrator shall be sentenced to imprisonment of one year to five years or to a monetary

fine...(a) if he commits the act referred to in

paragraph 1 with the intent of procuring a substantial benefit for him/herself or for another

person or to cause substantial harm or other particularly serious effect to another person; (b) if

he commits the act referred to in paragraph 1

vis-a-vis a public official.

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

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

or another person receives or is to receive with its consent, and for which there is no entitlement.”

The basic statement of the offense under Section 161,

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

persons. It also covers direct bribes and bribes through

intermediaries, and bribes to foreign officials as well as

third parties. (Although third parties are not specifically

mentioned in the basic statement of the offense (Section

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

mentions “another person” incorporates the concept of

bribes for third parties.) Section 161 also includes the

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

that it does not require that the alleged offender acted in

the context of international business transactions.

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

the criminal nature of bribery and indirect bribery shall

not apply if the offender has provided or promised 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
24 Addressing the Challenges of International Bribery and Fair Competition, 2000

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 (approximately $50–$124,000).

(Section 161, paragraph 2b, Section 53, Criminal Code.)

The guidelines for imposing penalties are contained in Sections 33 and 34 of the Criminal Code. They contain examples for judges to take into account when determining

penalties, such as the state of mind of the offender or the

nature of the motive for the crime.

Civil sanctions applying to both natural and legal persons apparently are possible under Section 451 of the Civil

Code, which provides that the court may render a civil

law judgement on the transfer of illegal gains.

The statute of limitations for the offense of bribery of

foreign public officials is five years (offenses subject to a

maximum prison term of not less than three years). (Section 67, Criminal Code.) The statute of limitations period

does not include the period in which the offender could

not be tried because of legal impediments, when the offender was abroad, or if there is a conditional stay of criminal prosecution. The period shall be interrupted and a new

statute of limitations shall commence where the offender

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

Section 55 of the Czech Criminal Code allows for

forfeiture of an asset belonging to the offender if the bribe

is secured during a criminal proceeding.

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.

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
Chapter 2: Review of National Implementing Legislation 25

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.

Finland

Finland signed the Convention on December 17,

1997, and enacted implementing legislation on October

9, 1998. Finland deposited its instrument of ratification

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

Sources for this analysis include the new provisions

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

Against Public Authorities,” as well as information from

the U.S. embassy in Helsinki.

One concern with the Finnish legislation is that Finland requires dual criminality in order to exercise jurisdiction over Finnish citizens abroad.

Basic Statement of the Offense

The basic statement of the offense of bribing foreign public officials is set forth in Chapter 16 of the Finnish Penal Code, Section 13 on bribery:

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

person in the service of the European Communities, to an official of another Member State

of the European Union, or to a foreign public

official, in exchange for his/her actions in service, promises, offers or gives a gift or other

benefit, intended to the said person or to another, that affects or is intended to affect or is

conductive to affecting the actions in service

of the said person, shall be sentenced for bribery to a fine or to imprisonment for at most two

years.

(2) A person who in exchange for the actions

in service of a public official or another person

mentioned in paragraph (1) promises, offers, or

gives a gift or other benefit mentioned in the said

paragraph to another person, shall also be sentenced for bribery.

Generally, Section 13 provides that persons who

intentionally promise, offer, or give gifts or other benefits either directly or indirectly to a foreign public

official to affect the behavior of such an official may

be imprisoned for a maximum period of two years or

fined. The provision is not limited to bribes in the context of international business. Although intermediaries are not specifically mentioned, the provision says

that bribes “intended” for public officials are covered.

Payments involving third parties are covered under

Section 13(2).

Jurisdictional Principles

Finland practices both territorial and nationality jurisdiction. Chapter 1, Section 1 of the Finnish Penal Code

provides that Finnish law shall apply to offenses committed in Finland. Pursuant to Section 10 of the same

chapter, acts are deemed to have been committed in Finland if the criminal act occurred in Finland or if the consequences of the offense as defined by statute were realized in Finland. Chapter 1, Section 6 of the Finnish Penal Code allows for the prosecution of a Finnish citizen

who commits an offense outside of Finland. Chapter 1,

Section 11 of the Finnish Penal Code requires dual criminality for offenses committed abroad by a Finn. The provisions on jurisdiction have been part of Finnish Penal

law since 1996, and no changes were needed to implement the Convention.
26 Addressing the Challenges of International Bribery and Fair Competition, 2000

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 (approximately $758) to a maximum of FM5 million (approximately $758,289). Chapter 9, Section 2 of the Penal Code

provides that a Finnish corporation may be fined for the

actions of its management representatives or employees,

when acting within the scope of their employment on

behalf of the corporation or for its benefit, if they act as

accomplices in committing an offense or allowed the offense to happen. Section 2(2) states that even if a specific person cannot be identified as the offender, the corporation itself can still be fined.

Penal Code Chapter 9, Sections 4 and 6 set forth illustrative lists of factors that must be taken into account

when determining sentencing of a corporation to a corporate fine and calculating the fines for corporations, including the lack of corporate oversight; the position of the offender in the corporation; the seriousness of the offense;

the consequences to the corporation due to the commission of the offense; measures, if any, taken by the corporation to prevent the offense from occurring; whether the

offender sentenced is part of management; the size of the

corporation; the amount of shares held by the offender;

and the extent to which the offender can be held personally liable for the commitments of the corporation. For

fines, the list also takes into account not only the size of

the corporation, but also its solvency, earnings, and other

indicators of its financial circumstances.

Chapter 9 provides that if the offender is not sentenced to a punishment due to the statute of limitations,

then the corporation on behalf of which he acted cannot

be sentenced either. The minimum statute of limitations

for corporate fines is five years. Chapter 9, Section 9

provides that the enforcement of any corporate fine will

lapse five years from the date the fine was imposed.

Chapter 40, Section 4 of the Finnish Penal Code covers forfeiture of bribes: the gift or benefit or the corresponding value will be forfeited to the State from the

bribe recipient or beneficiary. Section 4 applies to passive bribery. We understand that, although the Finnish

penal code does not specifically address forfeiture for

active corruption, Chapter 2, Section 16 of the Penal Code

provides for forfeiture generally and can be applied to

offenses of active corruption. We understand that there

are no additional civil or administrative sanctions for

bribery under Finnish law.

Under Chapter 12, Section 94, paragraph 2 of the

Act on Credit Institutions, financial institutions must

provide prosecution and investigative authorities all information necessary for crime detection. It is our understanding therefore that bank secrecy should not inhibit

mutual legal assistance in criminal matters under the

Convention.

Books and Records Provisions

The Finnish law on accounting provisions is covered by the Accounting Act, which applies to natural

persons and companies. Chapter 1, Article 1 states that

anyone carrying out business or practicing a profession

must keep accounting records of such activities.
Chapter 2: Review of National Implementing Legislation 27

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.

Germany

Germany signed the Convention on December 17,

1997, and deposited its instrument of ratification with

the OECD on November 10, 1998. The German legislation entered into force on the same date as the Convention, February 15, 1999.

Sources for this analysis include Germany’s implementing legislation, “The Act on the Convention Dated

December 17, 1997, on Combating Bribery of Foreign

Public Officials in International Transactions,” dated

September 10, 1998 (ACIB), and reporting from the U.S.

embassy in Berlin.

Germany will impose sanctions upon legal persons

only where an identifiable natural person employed by

the legal person has committed an offense. Although an

actual prosecution does not seem to be a prerequisite,

this provision may create an impediment to effective

enforcement, depending on how Germany applies this

provision.

Basic Statement of the Offense

Germany’s basic statement of the offense is in two

parts. With respect to officials, soldiers, and judges, the

ACIB prohibits

bribery concerning a future judicial or official

act which is committed in order to obtain or retain for the offender or a third party business or

an unfair advantage in international business

transactions. [ACIB §2(1).]
28 Addressing the Challenges of International Bribery and Fair Competition, 2000

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

German law applies to “whoever” offers or pays a

bribe, although Germany does not at present provide

criminal responsibility for corporations. However, pursuant to Section 30 of the Administrative Offenses Act,

a legal person may be fined when a person acting for the

corporation was authorized by or was himself or herself

“in a leading position.” It is our understanding that the

corporation may be held liable when a person in a leading position fails to properly supervise his subordinates.

(See Administrative Offenses Act, §130.)

German law provides that a corporation cannot be held

administratively liable if the criminal offense itself cannot be prosecuted for “legal reasons.” It is our understanding that this refers to such legal impediments as the statute of limitations and not mere inability to assert jurisdiction over a culpable individual.

Coverage of Payee/Offeree

The implementing legislation covers payments offered or made to (1) judges of a foreign state or an international court; (2) public officials of a foreign state or

“persons entrusted to exercise a public function with or

for an authority of a foreign state, for a public enterprise

with headquarters abroad, or other public functions for a

public state; (3) a public official or other member of the

staff of an international organization or a person entrusted

with carrying out its functions; (4) a soldier of a foreign

state or one who is entrusted to exercise functions of an

international organization; and (5) a member of a legislative body or parliamentary assembly of a foreign state

or international organization. (See ACIB §2(1)(1).) In

addition, German law covers payments made to a third

party.

Penalties

As noted, Germany implemented the Convention by

adding bribery of foreign officials to its existing domestic bribery statutes. The penalties, therefore, are the same.

Under Sections 334 and 335, bribery of a public official is punishable under a three-tier system: “less severe offenses” earn a prison term of up to two years, or a

fine; “general” offenses earn a prison term of three

months to five years; “particularly severe cases” earn a

prison term of one to ten years.

There is no statutory definition of “less severe offenses.” A “particularly severe case” is one that “concerns an advantage of large proportions,” where the perpetrator “continuously accepts advantages which he requested in return for the future performance of a public

service,” and where the perpetrator “conducts the activity as a business or as a member of a gang, which he

joined in order to continuously commit such acts.”

As noted, corporations are not subject to criminal

liability. However, they may be prosecuted administratively and subjected to fines under the Administrative
Chapter 2: Review of National Implementing Legislation 29

Offenses Act. The statutory fines on corporations are up

to DM1 million (approximately $461,000) for intentional

acts by a leading person and up to DM500,000 (approximately $231,000) 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 money

laundering provision. (See Criminal Code §261.) As with

domestic bribery, however, bribery committed within

German territory is always a predicate offense, whereas

bribery committed abroad is only a predicate offense if

it is also punishable at the place of the offense.

Extradition/Mutual Legal Assistance

Pursuant to bilateral agreements and various European conventions, Germany will render mutual legal assistance in investigations of foreign bribery. Germany

also has a law permitting non-treaty-based mutual legal

assistance.

Pursuant to the Convention, bribery of a foreign public official is an extraditable offense. The United States

has an extradition treaty in force with Germany. However, the German Basic Law prohibits the extradition of

its nationals.

Complicity, Attempt, Conspiracy

Attempt and complicity are both covered by German law. (See Criminal Code §§25(2), 26, 27, and 334

and ACIB §1(2).)

Greece

Greece signed the Convention on December 17, 1997,

and ratified it on November 5, 1998. It deposited its instrument of ratification with the OECD on February 5, 1999.

Greece’s implementing legislation was adopted on November 5, 1998, and became effective on December 1, 1998.

Sources for this analysis include Greek Law 2656/

1998 implementing the Convention, as well as other information obtained by the U.S. embassy in Athens.

Under Article 28 of the Greek Constitution, generally approved rules of international law and international

conventions that have been ratified under Greek law form

an integral part of domestic Greek law and supersede

any existing conflicting law, to the extent that they do

not conflict with the Constitution. Accordingly, the Convention became an integral part of Greek law when

Greece enacted Law 2656/1998 ratifying the Convention and including specific provisions to criminalize bribery of foreign public officials.

Basic Statement of the Offense

The basic statement of the offense is set forth in Article 2(1) of Law 2656/1998:

Any person who, in the conduct of international

business and in order to obtain or retain business

or other improper advantage, promises or gives,

whether directly or through intermediaries, any

undue gift or other advantage, to a foreign public

official, for that official or for a third party, in

order that the official act or refrain from acting in

relation to the performance of official duties, is

punished with imprisonment of at least one year.

Jurisdictional Principles

Although the statute itself does not contain any information about jurisdictional principles, Greek law provides

for both territorial and nationality jurisdiction. Article 5

of the Greek Criminal Code provides that Greece follow

the principle of territoriality: Greek criminal laws apply

to all acts committed in Greek territory, either by Greeks

or other nationals. Article 16 generally defines the place

where acts are committed as the place where the act or

omission was carried out in whole or in part. It is our understanding that if only part of the act in furtherance of

the bribery took place in Greece, the crime would still fall

within Greek jurisdiction. Article 6 of the Criminal Code

provides that Greek criminal laws apply to criminal acts

committed abroad by a Greek national if the act is punishable under the laws of the country in which it occurs.
30 Addressing the Challenges of International Bribery and Fair Competition, 2000

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.

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
Chapter 2: Review of National Implementing Legislation 31

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.

The OECD public website indicates that Hungary is

currently preparing draft amendments to be submitted

to Parliament in Autumn 2000 to correct several deficiencies in its legislation, including its statute of limitations, eliminating the defense of “unlawful disadvantage”

and the sanctioning of legal persons.

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.

• 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
32 Addressing the Challenges of International Bribery and Fair Competition, 2000

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

General Penal Code, the penalties for such offenses are

limited to those of the country where the crime is committed. We understand that the statute of limitations for

bribery of foreign public officials is five years with respect to both natural persons and legal persons.

Coverage of Payor/Offeror

Iceland’s General Penal Code applies to whoever

offers or pays a bribe, without reference to nationality.

Legal entities are also covered under Act No. 144/1998

on the Criminal Liability of Legal Persons on Account

of Bribery of Public Officials.
Chapter 2: Review of National Implementing Legislation 33

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 maxiumum 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.

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
34 Addressing the Challenges of International Bribery and Fair Competition, 2000

confiscation, as required under Convention Article 3(3).

The “main office” exception to territorial jurisdiction is

problematic, as is the fact that bribery is not included

among the crimes subject to the application of nationality

jurisdiction. Other concerns relate to the definition of “foreign public official,” coverage of payments made to a third

party at the direction of a foreign public official, and the

length of the statute of limitations.

 Basic Statement of the Offense

Article 10 bis (1) of the UCPL provides:

No person shall give, offer or promise any pecuniary or other advantage to a foreign public official, in order that the official act or refrain from

acting in relation to the performance of official

duties, or in order that the official, using his position, exert upon another foreign public official

so as to cause him to act or refrain from acting

in relation to the performance of official duties,

in order to obtain or retain improper business

advantage.

Article 10 bis (1) does not include the element of

intent. Intent is generally an element in all criminal

offenses pursuant to Article 38 of the Penal Code.

Article 8 provides that general provisions such as Article 38 apply to crimes under statutes other than the

Penal Code. Article 10 bis (1) does not address bribes

offered, promised, or given through intermediaries, nor

bribes paid, on behalf of a public official, to a third

party.

Jurisdictional Principles

Article 10 bis of the UCPL does not address basic

jurisdictional principles. However, Article 1 of the Penal

Code sets forth the principle of territoriality. We understand that in order to establish jurisdiction, at least one

element of the offense must be committed in Japan. Pursuant to Article 8 of the Penal Code, the provisions of

Article 1 apply to the UCPL.

Under Article 10 bis (3) of the UCPL, Article 10 bis

(1) does not apply if the country of the foreign official

who is the bribe recipient is the same country in which

the “main office” of the briber is located. Under this exception, therefore, a bribe transaction that occurred in

whole or in part in Japan would not be covered under the

UCPL if the briber’s “main office” were located in a certain country and the bribe recipient were an official of

the government of that same country.

Under Article 3 of the Penal Code, nationality jurisdiction is applied only for specified crimes: arson, forgery, rape, murder, bodily injury, kidnapping, larceny, robbery, fraud, extortion, or embezzlement. Bribery, either

domestic or foreign, is not included.

The statute of limitations for active bribery of foreign officials, like bribery of domestic officials, is three

years. Article 250 of the Code of Criminal Procedure

prescribes a three-year statute of limitations for offenses

with a potential sentence of less than five years. Article

255 bis (1) provides that the statute of limitations does

not run during the period in which the offender is outside Japan.

Coverage of Payor/Offeror

Article 10 bis (1) prohibits conduct by any “person,”

without reference to nationality.

Coverage of Payee/Offeree

In Article 10 bis (2), “foreign public official” is defined to include:

• 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 (approximately $2.8 million). There is no comparable penalty

for domestic bribery because the Penal Code, which cov-
Chapter 2: Review of National Implementing Legislation 35

ers 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 (approximately $27,500). 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 (approximately

$22,900). 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 (approximately $4,590) 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 (approximately $9,170) 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 (approximately $4.6

million) or more, or total liabilities of ¥20 billion (approximately $183 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 (approximately $45,900) ) for persons

who submit false registration statements. The corporation may also be penalized under Article 207. Individuals submitting false registration statements may also,

under Article 18 of the SEL, be held civilly liable to injured investors.

Money Laundering

Under the Anti-Organized Crime Law, the acceptance

of a bribe by (but not the act of bribing) a domestic or

foreign official is a predicate offense for the purpose of

Japan’s money laundering laws. Penalties include imprisonment for maximum terms of three to five years, or

fines ranging from a maximum of ¥1 million to ¥10 million (approximately $9,170–$91,700).

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 legisla-
36 Addressing the Challenges of International Bribery and Fair Competition, 2000

tion entered into force on February 15, 1999. Sources

for this analysis include the Foreign Bribery Prevention

Act in International Business Transactions of 1998

(FBPA) and diplomatic reporting from the U.S. embassy

in Seoul.

One concern with the Korean legislation is that currently neither domestic or foreign bribery is a predicate

offense to Korean money laundering legislation. However, we understand that Korea will enact new legislation so that bribery will be a predicate offense.

Basic Statement of the Offense

Article 1 sets forth the purpose of the FBPA, which

is to contribute to the establishment of sound practice in

international business transactions by criminalizing bribery of foreign public officials and providing the details

necessary for implementing the OECD Convention. The

basic statement of the offense of bribery is contained in

the FBPA’s penalty provisions for natural (Article 3) and

legal (Article 4) persons. Article 3, “Criminal Responsibility of Bribery,” provides that

Any person, promising, giving or offering [a]

bribe to a foreign public official in relation to

his/her official business in order to obtain [an]

improper advantage in the conduct of international business transactions, shall be subject to

[penalties].

We understand that under Korean law generally a

bribe is “any undue advantage in relation to a public

official’s duty or business.” Furthermore, it is our understanding that although its implementing law does

not explicitly include liability for payments for the benefit of third parties, the Korean law does cover situations in which payments are made to a third party for

the benefit of a public official and in which payments

are made to a public official for the benefit of a third

party.

Article 4 covers such bribes on behalf of a legal person by a “representative, agent, employee or other individual working for [a] legal person...in relation to its

business.” There are two exceptions to the basic statement of the offense. Article 3(2) provides an exception

for (1) bribes where they are “permitted or required by

the law” in the country of the foreign public official and

(2) facilitating payments.

Jurisdictional Principles

Article 2 of the Korean Criminal Code provides for

territorial jurisdiction. Jurisdiction will be established

over any offense that has been committed in the territory

of the Republic of Korea. Article 3 of the Korean Criminal Code allows Korea to prosecute its nationals for offenses committed abroad (nationality jurisdiction). Article 6 of the Korean Criminal Code confers Korean jurisdiction over any offenses in which the Republic of

Korea or a Korean national is a victim.

Coverage of Payor/Offeror

Article 3 covers bribes made by “any person,” without reference to nationality. Article 4 of the FBPA provides for criminal responsibility of legal persons.

Coverage of Payee/Offeree

“Foreign public officials” are defined in Article 2

of the FBPA. Article 2 covers officials, whether appointed or elected, in all branches of government, at

either the national or local level. The FBPA covers all

foreign public officials who perform public functions,

such as those in “business, in the public interest, delegated by the foreign government,” people “working

for a public organization established by law to carry

out specific business in the public interest,” officials of

public international organizations, and persons working for companies “over which a foreign government

holds over 50 percent of its subscribed capital” or over

which the government exercises “substantial control.”

Article 2(2)(c) of the FBPA provides an exception for

employees of businesses that operate on a “competitive basis equivalent to entities of [an] ordinary private

economy [sic]” and that do not receive “preferential

subsidies or other privileges.”

Penalties

For individuals, Article 3(1) of the FBPA provides

for a maximum prison sentence of five years or a maximum fine which is the greater of 20 million won (approximately $17,900) 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 (approximately

$17,900).

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
Chapter 2: Review of National Implementing Legislation 37

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 (approximately $895,660) 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 money

laundering legislation shall do so on the same terms for

the bribery of a foreign public official. Currently, bribery of neither domestic nor foreign officials is a predicate offense for the application of Korean money laundering legislation.

Extradition/Mutual Legal Assistance

It is our understanding that Korea’s Extradition Act

provides for granting extradition requests on a reciprocal basis even in the absence of a treaty, but reserves

discretionary authority to the government to deny extradition in cases involving a Korean national. We understand that dual criminality is a mandatory condition for

extradition under the Korean Extradition Act, but that

Korea may deem the requirement of dual criminality

fulfilled if the offense falls within the scope of Article 1

of the Convention.

Under its International Mutual Legal Assistance in

Criminal Matters Act, Korea requires reciprocity before

it will provide mutual legal assistance to countries with

which it does not have mutual legal assistance treaties.

In the absence of contrary treaty provisions, Korea further requires dual criminality. It is our understanding that

the requirement of dual criminality will be met for requests made within the scope of the Convention. Banking records may be obtained by court warrant under the

International Mutual Legal Assistance in Criminal Matters Act and the Act on Real Name Financial Transaction and Protection of Confidentiality.

Complicity, Attempt, Conspiracy

Complicity is covered under the Korean Criminal

Code, which categorizes the offense as coauthoring, abetting, and aiding. Article 30 of the Korean Criminal Code

provides that when two or more persons jointly commit

an offense, each person shall be punished as an author.

Article 31(1) of the Korean Criminal Code provides that

any person who abets another person in committing an

offense shall be subject to the same criminal liability as

that of the actual offender. Article 32 of the Korean Criminal Code provides that any person who aids another

person’s commission of an offense shall be punished by

a 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.

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.
38 Addressing the Challenges of International Bribery and Fair Competition, 2000

Mexico’s implementation of the Convention raises

three concerns. First, Mexico has made prosecution of

corporations contingent upon prosecution of a natural

person, thus creating a potential bar to prosecution if such

a person evades Mexican jurisdiction or is otherwise not

subject to prosecution. Second, Mexico has not adopted

an autonomous definition of “public official,” thus making its prosecutions dependent upon a foreign state’s law.

Finally, Mexico’s penalties for natural persons are based

upon multiples of the daily minimum wage and are

grossly inadequate when applied to executives of companies engaged in international business.

Basic Statement of the Offense

The basic statement of the offense is contained in

Article 222 bis of the Federal Penal Code:

The same penalties provided in the previous article shall be imposed on [a person] who, with the

purpose of retaining for himself/herself or for another party, undue advantages in the development

or conducting of international business transactions,

offers, promises, or gives, whether by himself/herself or through a third party, money or any other

advantage, whether in assets or services:

1. To a foreign public official in order that he/

she negotiates or refrains from negotiating the

carrying out or the resolution of issues related

to the functions inherent to his/her job, post, or

commission;

2. To a foreign public official in order to perform the carrying out or the resolution of any

issue that is beyond the scope of the inherent

functions to his/her job, post, or commission...

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 $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 $150
Chapter 2: Review of National Implementing Legislation 39

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 $450,000. (See Securities Market Law §26 bis.)

In addition, Mexico imposes auditing requirements

on large or profitable companies. Under these audit rules,

the auditors themselves are required to ensure that a companies books are accurate and are subject to a range of

sanctions for noncompliance. (See Fiscal Code §§52,

91B, 96.)

Money Laundering

Mexico’s money laundering law applies to transactions involving the product of any illicit activity, and thus

applies to the proceeds of bribery of a foreign official.

(See Penal Code §400 bis.) However, under Mexican law,

a money laundering prosecution may only be brought after there has been a conviction for the underlying offense.

Extradition/Mutual Legal Assistance

Mexico can provide mutual legal assistance in both

criminal and civil matters. In addition, Mexico will honor

extradition requests. Although Mexico does not, except in

exceptional circumstances, extradite its own nationals, it

will commence its own prosecution in lieu of extradition.

Complicity, Attempt, Conspiracy

Mexican law holds that accomplices are punishable

as principals. (See Penal Code §13.) Accomplices include

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.)

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 inter-
40 Addressing the Challenges of International Bribery and Fair Competition, 2000

pret this term in accordance with the requirements of

the Convention.

Penalties

Under Section 128, the penalty for natural persons

for bribery of domestic or foreign public officials is a

fine or imprisonment for a term not exceeding one year.

It is not clear from the statute whether both a fine and

imprisonment could be imposed. There is no stated limit

on the amount of the fine.

Under Section 48(a) of the Penal Code, enterprises

may be held criminally liable when “a penal provision is

contravened by a person who has acted on behalf” of the

enterprise. “Enterprise” is defined as “a company, society or other association, one-man enterprise, foundation,

estate or public activity.” There is no stated limit to such

fines; Section 48(b) lists factors that are to be considered in determining the size of the fine. Under Section

48(a), an enterprise may also “be deprived of the right to

carry on business or may be prohibited from carrying it

on in certain forms.”

Confiscation of both the bribe itself and the proceeds

of bribery is authorized under Sections 34–37(d) of the

Penal Code.

Books and Records Provisions

Section 2.1 of the Norwegian Accounting Act requires that records be kept of all information that is “of

importance for the size and composition of property,

debts, income and expenditure.” Section 8.5 provides

that violations of the Accounting Act are punishable by

fines or imprisonment ranging from three months to

six years.

Under Section 5.1 of the Auditing Act, auditors are

required to ensure that accounts are correct, that the company manages its capital in a prudent fashion, and that

there are satisfactory internal controls. Pursuant to Section 9.3, violators of the Auditing Act are subject to fines

or imprisonment for up to one year.

Money Laundering

Section 317 of the Penal Code makes it a crime to

receive or obtain the proceeds of any criminal act under

Norwegian law, as well as to aid and abet the securing of

such proceeds for another person. As a result, bribery of

domestic or foreign officials is a predicate offense for

the purpose of application of money laundering

legislation.Violations of Section 317 are punishable by

fines or imprisonment for a term not exceeding three

years. For “aggravated offenses,” the penalty is imprisonment for a term not to exceed six years.

Extradition/Mutual Legal Assistance

Under the extradition treaty between the United States

and Norway, bribery is an extraditable offense so long as

it is punishable in both states by a penalty of deprivation

of liberty for a period of more than one year. This dual

criminality requirement is also found in Section 3.1 of the

Extradition Act. As previously noted, currently Section

128 of the Penal Code provides that imprisonment shall

not exceed one year. However, Section 3.2 of the Extradition Act provides that the “King-in-Council” may enter

into extradition agreements covering criminal acts with

penalties under Norwegian law of one year’s imprisonment or less. Section 2 of the Extradition Act prohibits the

extradition of Norwegian nationals.

The United States and Norway do not have a mutual

legal assistance treaty. Norway is a party to various European conventions relating to mutual legal assistance.

It is our understanding that irrespective of other agreements, the OECD Convention provides a sufficient basis

for Norway to provide mutual legal assistance to other

parties to that Convention.

Complicity, Attempt, Conspiracy

Section 128 of the Penal Code expressly applies to

those who are accessories. Section 128 does not directly

address attempt; rather the statute includes the phrase

“seeks to induce.” The Penal Code contains no specific

provisions on conspiracy.

The 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 under way.

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:
Chapter 2: Review of National Implementing Legislation 41

Whoever offers, promises or gives a bribe or

other undue advantage, whether directly or

through an intermediary, to a foreign public official in order that the official act or refrain from

acting in relation to the performance of official

duties with the intention to obtain or retain business or other improper advantage in the conduct

of international business, shall be punished...

Section 161c provides similar coverage for bribery

of members of foreign public assemblies, judges and

officials of international courts, and representatives and

employees of intergovernmental organizations of which

the Slovak Republic is a member or whose jurisdiction

it accepts.

Slovak law recognizes a defense of “effective regret,” which applies when the offender is solicited for

a bribe by an official and immediately reports the crime

to authorities. (See Cr. Code §163.) Although the purpose of this defense is to assist law enforcement in detecting and investigating domestic corruption by ensuring that corrupt officials are reported before they take

any action in response to the bribe, this defense creates

a potential loophole in cases of bribery of a foreign

official where the Slovak Republic is not able to intervene immediately and prosecute the official before any

benefit is conferred.

Jurisdictional Principles

The Slovak Republic asserts both territorial and nationality jurisdiction over criminal offenses. Pursuant to

Section 17 of the Criminal Code, Slovak law applies to

offenses committed in whole or in part on Slovak territory as well as offenses committed abroad that were intended to have an effect within Slovak territory. Pursuant to Section 18 of the Criminal Code, Slovak law also

applies to extraterritorial acts by Slovak nationals, as well

as stateless persons and foreign nationals with permanent residency in the Slovak Republic. This nationality

jurisdiction is qualified, however, by a requirement that

the offense be punishable in the country in which the

crime takes place. Finally, pursuant to Section 20 of the

Criminal Code, the Slovak Republic will apply its law to

the extraterritorial crimes of a non-national who is apprehended in the Slovak Republic but not extradited to

the foreign state in which the crime took place, again

subject to the condition of dual criminality.

Coverage of Payor/Offeror

Slovak law imposes criminal liability only upon natural persons. Although there are some limited civil and administrative sanctions available, Slovak law does not provide for effective and dissuasive sanctions against legal

persons for the offense of bribery of foreign public officials. We understand that the Slovak Republic intends to

address this issue in its recodification of the Criminal Code.

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 (approximately $47,600), the range of imprisonment is increased from one to five years. In addition,

an offender may be fined up to SKK5 million (approximately $117,000) 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
42 Addressing the Challenges of International Bribery and Fair Competition, 2000

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 SKK1 million (approximately

$23,800). (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.

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 SKK4 million

(approximately $9,500). (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
Chapter 2: Review of National Implementing Legislation 43

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.)

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.
44 Addressing the Challenges of International Bribery and Fair Competition, 2000

Pursuant to Spanish Penal Code Articles 131 and 33,

the length of the statute of limitations depends on the

severity of crime allegedly committed. Accordingly, the

statute of limitations for bribery of foreign public officials subject to punishment under Article 419 is ten years,

and the statute of limitations for bribery punishable under Article 420 is five years. Article 132 provides that

the statute of limitations period begins on the date the

offense was committed, or when the last act of a continuous series of offenses took place, or when the illegal

activity ceased.

Books and Records Provisions

Bookkeeping is regulated under the Spanish Commercial Code and several other related laws. Article 25.1 of

the Spanish Commercial Code provides that “all entrepreneurs must keep orderly accounts suitable to the business conducted to provide for chronological monitoring

of all the respective operations, and draw up balance sheets

and inventories on a regular basis.” Article 1 defines an

entrepreneur as an individual who owns a company or a

corporate body. Article 25.2 provides that the entrepreneur or duly authorized person must maintain accounting

books. Article 29.1 states that all accounting book entries

must be in chronological order and clearly comprehensible. Article 30.1 requires that books and records be kept

for six years. Financial statements, including balance and

income sheets, must be submitted at 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
Chapter 2: Review of National Implementing Legislation 45

Extradition Act provides that where extradition is refused

due to nationality, the charge will be reported to the Attorney General for appropriate legal action.

Complicity, Attempt, Conspiracy

Article 27 of the Spanish Penal Code provides that principal offenders and accomplices are responsible for crimes

and misdemeanors. Article 28 provides that principal offenders are those who carry out the offense, jointly or by

using another as an instrument, including those who assist

either directly or indirectly and those who cooperate by

performing an act necessary for the perpetration of the crime.

Article 29 defines accomplices as those not covered by Article 28 who cooperate in the execution of a crime through

previous or simultaneous actions. Pursuant to Article 63 of

the Spanish Penal Code, accomplices receive a lower penalty than the main perpetrator of the offense.

Sweden

Sweden signed the Convention on December 17, 1997,

and deposited its instrument of ratification with the OECD

on June 8, 1999. Implementing legislation amending the

Penal Code was enacted on March 25, 1999, and entered

into force on July 1, 1999. The following analysis is based

on those amendments, related Swedish laws, and reporting from the U.S. embassy in Stockholm.

The maximum sentence for bribery of a foreign public official is imprisonment for only two years, raising

questions about whether the penalties are sufficiently

“effective, proportionate and dissuasive.”

Basic Statement of the Offense

Under Chapter 17, Section 7 of the Penal Code, it is

unlawful to give, promise, or offer a bribe or other improper reward, whether for one’s self or any other person,

to, inter alia, a minister of a foreign state, a member of a

foreign legislative assembly, a person exercising public

authority in a foreign state, or a member of the European

Commission, the European Parliament, or the European

Court of Auditors, or judges of the European Court of Justice for the exercise of official duties. This provision does

not expressly address bribes offered or made through intermediaries. The law is not limited to bribes given in order to obtain or retain business or other improper advantage in the conduct of international business.

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 min-
46 Addressing the Challenges of International Bribery and Fair Competition, 2000

isters of foreign states, members of foreign legislatures,

and officials of certain EU institutions.

Penalties

Chapter 17, Section 7 provides that bribery of foreign (or domestic) public officials is punishable by a

fine or imprisonment for a maximum of two years. (The

maximum sentence in Sweden for the most severe

crimes is imprisonment for ten years.) Guidelines for

determining the appropriate penalty, including aggravating and mitigating circumstances, are listed in Chapter 29 of the Penal Code. Fines, which are assessed in

accordance with Chapter 25 of the Penal Code, generally range from 900 to 150,000 Swedish crowns (approximately $100–$16,500).

Under Chapter 36, Section 8, corporate fines for

“entrepeneurs” may range from 10,000 to 3 million

Swedish crowns (approximately $1,100–$330,000).

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
Chapter 2: Review of National Implementing Legislation 47

and no monetary fines for natural persons. However, it is

our understanding that a new provision on the responsibility of legal persons has been introduced within the

framework of ongoing revisions of the general provisions

of the Penal Code.

Basic Statement of the Offense

The basic statement of the offense of bribery of a

foreign public official is contained in Title 19, Article

322 septies of the Swiss Penal Code (PC), which provides that

Anyone who offers, promises, or grants an undue advantage to a person acting for a foreign

state or an international organization, as a member of a judicial or other authority, a civil servant, expert, translator, or interpreter employed

by an authority, or an arbitrator or military person, for that person or for another, for him to act

or not to act in his official capacity, contrary to

his duties, or using his discretionary powers, will

be punished by five years of imprisonment...

Jurisdictional Principles

Article 3, line 1 of the PC provides that it is applicable to anyone who commits a crime or offense in Switzerland. It is our understanding that bribery of a foreign

public official which occurs in whole or in part in Switzerland will fall within Swiss jurisdiction. Switzerland

exercises jurisdiction over extraterritorial offenses committed by Swiss nationals in limited circumstances. Under Article 6 of the PC,

Swiss criminal law may apply to a Swiss person who commits a crime or offense overseas

that would be extraditable under Swiss law, if

the act is also a crime in the foreign state where

committed, and if the actor resides in Switzerland or is extradited to the Confederation because of his infraction. The foreign law will be

applicable if it is more favorable to the guilty

party.

Although non-Swiss persons within Swiss territory

currently cannot be prosecuted, it is our understanding

that within the framework of ongoing revisions to the

general parts of the PC, the application of Swiss law will

be enlarged to cover acts by such persons.

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 comanies 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
48 Addressing the Challenges of International Bribery and Fair Competition, 2000

official. According to Article 71, the statute of limitations will run from the day when the accused committed

the act; or, if the actions were done in several stages,

then from the day of the last of the acts; or, if the actions

lasted over a longer period, then from the last day of

their completion. Article 72 provides that the statute of

limitations will not run during an ongoing investigation

or following a judicial decision concerning the accused.

In the case of bribery of a foreign public official, the

clock may be stopped for a maximum of fifteen years.

Books and Records Provisions

The Swiss Debtors Code (“Obligations”) contains

the Swiss provisions on books and records. Any company that must register its trade name with the commercial register is required to maintain its books and records

in accordance with Swiss accounting rules. It is our understanding that Article 957 of the Swiss Debtors Code

generally covers the acts prohibited by Article 8 of the

Convention.

Money Laundering

Article 305 bis of the Penal Code on money laundering provides that anyone who commits acts that may

prevent the identification of the origin, discovery, or

confiscation of sums which the person knows or should

have known resulted from a crime, will be punished by

imprisonment or a fine. Just as with bribery of domestic officials, bribery of foreign public officials will be a

predicate offense for the application of Swiss money

laundering legislation. Under line three of article 305

bis of the PC, the money launderer is punishable when

the predicate offense was committed outside of Switzerland and is also punishable in the state where it was

committed.

Extradition/Mutual Legal Assistance

Article 35 of the Federal Law on International Mutual Legal Assistance in Criminal Matters (EIMP) provides that extradition may be granted if: (1) the act is

punishable under both Swiss law and the requesting country by imprisonment of a maximum of at least a year or

a more severe penalty, and (2) Switzerland does not have

jurisdiction.

Swiss law on mutual legal assistance is provided for

in the EIMP. Mutual legal assistance in foreign criminal

proceedings is provided for in Part III of the EIMP. More

specifically, discovery of procedural or official Swiss

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

a 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. is considering a new corruption statute.

The U.S. embassy reports that the U.K. was scheduled

to publish a “consultation paper” in May 2000, which

would be followed by a short (approximately ninety-day)

public comment period. The full bill may be introduced

to Parliament in the fall of 2000.

We based our analysis on the texts of relevant U.K.

laws, a March 1998 report of the U.K. Law Commission
Chapter 2: Review of National Implementing Legislation 49

that considered how the U.K. would meet the requirements of the Convention, information obtained from

nongovernmental organizations, and reporting from the

U.S. embassy in London.

Our main concern with the existing legislation on

which the U.K. is basing implementation of the Convention is that it is unclear whether it applies to the bribery of

foreign public officials. Under U.K. law, bribery of public

officials is primarily covered under the common law and

under three statutes: the Public Bodies Corrupt Practices

Act 1889, the Prevention of Corruption Act 1906, and the

Prevention of Corruption Act 1916, referred to collectively

as the Prevention of Corruption Acts. Although these statutes address the bribery of domestic public officials, they

do not specifically address the bribery of foreign public

officials, and we are unaware of any specific cases that

interpret the law as applying to foreign public officials.

Another concern we have is that although the U.K. has

the constitutional authority to assert nationality jurisdiction, it has thus far declined to consider doing so with

respect to offenses covered by the Convention.

Basic Statement of the Offense

The U.K. is basing its implementation of the Convention upon the Prevention of Corruption Acts and the

common law. Specifically, the U.K. considers that its laws

comply with Article 1 of the Convention under the 1906

act, as amended by the 1916 act. Section 1(1) of the 1906

act states that

If any person corruptly gives or agrees to give or

offers any gift or consideration to any agent as an

inducement or reward for doing or forbearing to

do, or for having after the passing of this Act done

or forborne to do, any act in relation to his

principal’s affairs or business, or for showing or

forbearing to show favour or disfavour to any person in relation to his principal’s affairs or business ... he shall be guilty of a misdemeanor.

Generally, the 1906 act criminalizes bribes corruptly

offered or given by any person to an agent to induce him

or her to act or not to act in relation to his or her principal’s

affairs or business. “Agent” is defined under the Prevention of Corruption Acts as any person employed by or

acting for another, a person serving under the Crown, or

any local or public authority. It is our understanding that

this definition covers domestic public officials, but it is

unclear whether foreign public officials are covered.

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.
50 Addressing the Challenges of International Bribery and Fair Competition, 2000

Penalties

The penalty for corruption in a magistrate’s court is

a maximum of six months imprisonment and/or a fine of

£5,000 (approximately $7,500). For convictions in crown

courts, the penalty is a maximum of seven years imprisonment and/or an unlimited fine. There are no express

provisions on corporate criminal liability, but we understand that companies can be fined for breaches of the

criminal law. There is no statute of limitations under U.K.

laws for prosecution of bribery cases. U.K. courts may

order confiscation of the bribe and the bribe proceeds

under the Criminal Justice Act of 1988, as amended by

the Proceeds of Crime Act of 1995. Following a conviction, Section 43 of the Powers of Criminal Courts Act of

1973 allows a court to order forfeiture from the offender

of lawfully seized property used to commit or facilitate

the offense. It is our understanding that under Section 4

of the Criminal Justice (International Cooperation) Act

of 1990, the U.K. Secretary of State may decide whether

to grant a request for receiving assistance in obtaining

evidence, such as bank records, inside the U.K.

Books and Records Provisions

The Companies Act of 1985, Sections 221, 222, and

722 prohibit generally the establishment of off-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 (approximately $8,000), 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 51

Review of Enforcement

Measures

3

Enforcement of National Implementing

Legislation

As of June 2000, the implementing legislation of

most parties to the Convention, other than the United

States, has not been in effect for a sufficient time to gauge

the effectiveness of the parties’ enforcement efforts. We

are not aware of any prosecution by another party to the

Convention for payments to foreign public officials.

In the United States, FCPA investigations of the bribery of foreign public officials and prosecutions are subject to the same rules and principles as govern any 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-three years since the passage of the

FCPA, the Department of Justice has brought approximately thirty criminal prosecutions1

 and six civil injunctive actions. In addition, the 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 January1999 to June 2000, the Justice Department brought one criminal FCPA prosecution, resulting in a fine and home confinement for one

defendant, and one civil injunctive action, resulting in a

consent order and a $400,000 fine.

The Department of Justice has also provided assistance to American businesses who were in the process

of undertaking international business transactions. Since

1980, the Department has issued thirty-four opinions in

response to requests from American businesses stating

whether it would take enforcement action if the requestors proceeded with actual proposed transactions.

U.S. Efforts to Promote Public Awareness

 For many years prior to the adoption of the Convention, the U.S. government sought to educate the business

community and the general public about international bribery and the FCPA. As a result, U.S. companies engaged in

international trade are generally aware of the requirements

of U.S. law. Since U.S. ratification of the Convention and

the passage of the IAFCA, the Clinton Administration has

1

In addition, there have been several cases where the absence of dual criminality has made it impossible to use foreign evidence obtained under a mutual legal assistance treaty

in a FCPA prosecution, and charges were therefore brought

under other federal criminal statutes.
52 Addressing the Challenges of International Bribery and Fair Competition, 2000

stepped up efforts to raise public awareness of U.S. policy

on bribery and initiatives to eliminate bribery in the international marketplace.

Over the past two years, Secretary of Commerce

William Daley and other senior Commerce officials, including General Counsel Andrew Pincus and Under Secretary David Aaron, have repeatedly spoken out against

international bribery to business audiences and urged

support for the Convention. Since taking on the position

of Acting Under Secretary for International Trade in April

2000, Robert LaRussa has also raised the Convention

and antibribery issues in meetings with a number of senior officials of signatory governments.

The secretaries of State and the Treasury and senior

officials in both agencies have been supportive as well. At

the 2000 World Economic Forum in Davos, Switzerland,

Secretary of State Madeleine Albright urged signatory governments to send a clear message against bribery and enact strong implementing legislation that fully meets the

requirements of the Convention. In February 2000, Under

Secretary of State Alan Larson used the occasion of the

first anniversary of the Convention’s coming into force to

hold a press conference at which he reviewed progress on

implementing the antibribery agreement and pressed all

signatories to bring it into effect. Under Secretary Larson

also raised implementation with his G-8 counterparts during preparations for the Summit of the Eight in Japan. At

the IMF/World Bank joint meetings in April 2000, Treasury Secretary Lawrence Summers highlighted the importance of the Convention during bilateral meetings with

other ministers attending the sessions.

Officials of the Commerce, State, and Justice Departments are also in regular contact with business representatives to brief them on new developments relating

to antibribery issues and discuss problems they encounter in their operations. In addition, 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 2000,

the State Department, in cooperation with the Commerce

and Justice departments, also 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 the various international initiatives underway to combat business corruption. The brochure is being made

available to U.S. companies and business associations.

Efforts of Other Signatories

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

have expanded their activities over the past year. Yet in

many signatory countries, including important economies

such as Belgium, Italy, Japan, the Netherlands, and Spain,

there has been relatively little activity on publicizing the

Convention or encouraging 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, well publicized anticorruption programs, and the appointment of an anticorruption

spokesperson. 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 just since the Convention

came into effect, have also 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 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 publi-
Chapter 3: Review of Enforcement Measures 53

cizing 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 being

made available to the business community. The Justice,

Foreign Affairs, and International Trade Ministries also

prepare an annual report to Parliament on the implementation of the Convention. 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 organized a number of seminars since November 1999 to brief

national and municipal officials on anticorruption legislation. Czech officials have also 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.

In France, senior officials have affirmed the

government’s determination to combat corruption in international trade and its support for the Convention, although we have yet to see the latter translated into final

legislative action. The draft French implementing legislation, legislative history, and the parliamentary debates have been made publicly available on the French

government’s website, and publicly debated in numerous press reports.

We have received reports from our embassy of increased public awareness of bribery issues through

greater media coverage. Over the past year, the

government’s anticorruption policies have also received

increased attention as a result of the well publicized investigation of alleged bribes by a major French oil company. The French chapter of Transparency International

has also been particularly active.

In Germany, public outrage over alleged improper

donations to the Christian Democratic Union political

party has served to raise awareness of bribery. The German government and business associations have been

working together to publicize antibribery laws in seminars and newsletters. Increasingly, German companies

are starting to develop internal procedures to promote

compliance with the law. To encourage companies in that

direction, the German government is now requiring all

applicants for Hermes export credit guarantees to declare

that financed transactions have been and will remain free

of corruption.

Korea has seen a dramatic increase in national anticorruption activities over the past year. 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, named

“Shinmungo,” on which Korean citizens could 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. Mayor Goh spoke out against public corruption

and described Korea’s new initiatives at the International

Anti-Corruption Conference sponsored by Transparency

International on October 14, 1999, in Durban, South

Africa. In 1999, more than 800 civic groups also formed

a new umbrella civic organization called the “Anticorruption National Solidarity” to mobilize public support

against corruption and to serve as a clearing housing for

complaints on corrupt practices.

In Poland, President Aleksandr Kwasniewski hosted

an international conference on fighting corruption in

March 1999. Deputy Prime Minister and Finance Minister Leszek Balcerowicz has actively supported the activities of nongovernmental organizations that are working for openness and integrity in government. Over the

past year, the government has sought to encourage public discussion of the costs of bribery and the need to address the problem. At the request of Minister Balcerowicz, the World Bank prepared a study on bribery

and corruption in Poland that was published in April 2000.

Local nongovernmental organizations, including the

Transparency International branch in Poland, have started

projects to raise public awareness of corruption and improve the legal foundations for transparent governance.

Poland has also accepted U.S. offers of technical assistance to help promote good governance practices.
54 Addressing the Challenges of International Bribery and Fair Competition, 2000

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. In

1999 the Transparency International branch in the Slovak Republic sponsored a conference on corruption and

bribery at which the Convention was discussed. Transparency International also publishes a newsletter that

provides information about the Convention and other

anticorruption initiatives.

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. Over the past year, the

Swedish government also appointed a senior official in

the Ministry of Foreign Affairs, Ambassador Lennart

Klackenberg, to serve as government spokesman on corruption and to help broaden public awareness. In December 1999, Ambassador Klackenberg released an interagency-approved report on the subject titled “The Fight

Against International Corruption—Swedish Positions

and Activities.” In February 2000, Sweden’s Minister for

Trade, Leif Pagrotsky, co-hosted and addressed a colloquium on corruption in the arms trade, calling for a sustained and purposeful effort to address the problem.

In addition to the United States, twenty signatories

to the Convention have posted their national implementing legislation or draft legislation on their government

websites or the OECD Anticorruption Unit website: Australia, Austria, Belgium, Canada, Denmark, Finland,

France, Germany, Greece, Hungary, Iceland, Japan, Korea, the Netherlands, New Zealand, Norway, Poland,

Spain, Sweden, and Switzerland. (See Appendix D 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

follow-through 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 the 1997 Revised Recommendation. Our experience with the first stage 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 year, 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 follow-up to

monitor and promote the full implementation of the Convention through the Working Group on Bribery. Guidance for the Working Group on monitoring and follow-up

is provided in Section VIII of the Revised Recommendation of the Council on Combating Bribery in International Business Transactions (Revised Recommendation).

The key elements of the monitoring program are as

follows:

• A self-evaluation provided in responses 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
Chapter 3: Review of Enforcement Measures 55

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. These modalities are summarized below

and are also available on the OECD’s public website at

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

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.

Phase I began in the latter part of 1998 with the distribution of a questionnaire to signatories soliciting information on how their respective laws and legal systems implement the Convention and the Revised Recommendation. The Working Group was instructed to report on the results of the Phase I review to the OECD

Ministers at their annual meeting to be held on June 26–

27, 2000. An ad hoc subgroup of the Working Group is

now developing procedures and questionnaires for the

start-up of Phase II.

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.

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.

At the first monitoring session, held April 12–14,

1999, the Working Group examined the implementing

legislation of the United States, Norway, and Germany.

Since then, the legislation of additional signatories has

been reviewed: Finland, Bulgaria, Greece, Canada, and

Korea in July 1999; Japan, Hungary, Belgium, Sweden,

and Iceland in October 1999; Australia, Austria, and the

United Kingdom in December 1999; Mexico, the Slovak Republic, and Switzerland in February 2000; and

the Czech Republic and Spain in March 2000.

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 unresolved during the written exchange stage. A discussion

and consultation within the Working Group follows. 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.

Working Group members have agreed to keep the

summaries and recommendations confidential until the

OECD ministers have approved publication of the report. When the OECD releases the report, a link will be

provided on the Department of Commerce’s website

(http://www.mac.doc.gov/tcc/index.html). The OECD

Council is expected to approve the release at the ministerial meeting on June 26–27, 2000.

Although Working Group proceedings are confidential, the monitoring process still provides ample opportunities for input by the private sector and nongovernmental organizations. Transparency International has

submitted its own assessment of the implementing legislation of a number of the examined countries. In addition, the American Bar Association has provided input

with regard to the Foreign Corrupt Practices Act (FCPA)
56 Addressing the Challenges of International Bribery and Fair Competition, 2000

and on how the FCPA had affected the behavior of U.S.

companies.

The Working Group also encourages private sector

input through other channels. It has had a number of consultations on the Convention 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. Prior to Working Group meetings, U.S. delegates

consult with representatives of the private sector and

nongovernmental organizations to identify issues of particular concern. The United States will continue to advocate broad public access to information on implementation and enforcement of the Convention.

The Phase I process has proven to be highly useful

for monitoring implementation of the Convention. The

process is facilitating an open exchange of information

among Working Group members and providing opportunities for the private sector to present its views and

analysis for consideration.

The timing of Phase II monitoring of enforcement is

still under review. Some countries have resisted the initiation of Phase II until more signatories have enacted

implementing legislation and brought the Convention in

force. The United States has supported the initiation of

Phase II activities before the end of 2000 as originally

scheduled. We are concerned that implementation of the

Convention may lose momentum if Phase II does not

begin soon. To help start the process and provide a benchmark for subsequent reviews, the United States has offered to be the first country to have its enforcement regime examined.

Review of enforcement is an important part of U.S.

government monitoring of the Convention. Future reports

should provide more detailed information on enforcement activities as governments begin to confront cases

involving bribery of foreign public officials and a record

of enforcement action develops. In addition, the U.S.

government will also, where appropriate, apprise other

governments of information relating to the bribery of

foreign public officials by persons falling within their

jurisdiction.

Monitoring of the Convention

by the U.S. Government

The U.S. government is devoting considerable resources to monitoring implementation of the Convention. At the Commerce Department, monitoring compliance with the Convention—and international commercial agreements generally—has a high priority because,

as Secretary Daley has repeatedly emphasized, “Compliance is the true litmus test for what we achieve in our

negotiations and trade practices.” 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 are working 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 make an in-depth review of each party's

implementing legislation.

Preparation of these annual reports to Congress also

helps to strengthen 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 making assessments of 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

have highly valued 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 vigorous monitoring 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 monitor-
Chapter 3: Review of Enforcement Measures 57

ing 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. 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.

• 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. Over the past year, the ACIEP

discussed implementation of the Convention at three

of its meetings.

• The Departments of Commerce and State, working with other U.S. agencies, will support active diplomatic and public affairs efforts to promote the goals

of the Convention. Senior officials will continue to

include points on 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 they can effectively participate in

the monitoring process and engage foreign governments in a dialogue on key bribery-related issues.

The United States has the most intensive monitoring program of any of the signatory countries. It is transparent and open to input from the private sector and

nongovernmental organizations. 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.
58 Addressing the Challenges of International Bribery and Fair Competition, 2000
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 59

Laws Prohibiting Tax

Deduction of Bribes

4

The OECD Council made an important contribution

to the fight against bribery in 1996 by recommending

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.

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 Treasury Department relied heavily on these reports from signatories to prepare the report in Chapter 4

on laws prohibiting the tax deductibility of bribes. Treasury also drew on information obtained from U.S. embassies on this issue. The 2000 report to Congress provides

the latest available information on signatories’ tax laws

that was available from these sources.

We continue to seek more detailed information on the

entire body of 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. In 2000, the Treasury Department made arrangements to provide U.S. technical expertise to the Committee on Fiscal Affairs in order to assist

members in their monitoring work. We believe that our

information will continue to improve as the OECD’s monitoring process creates a more complete record of each

signatory’s legal, regulatory, and administrative framework

for disallowing the tax deductibility of bribes and makes

that record publicly available.

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
60 Addressing the Challenges of International Bribery and Fair Competition, 2000

three OECD member countries (Luxembourg, New

Zealand, and Switzerland) have reported that they have

not yet completed action necessary to disallow these deductions. Luxembourg has drafted legislation to disallow the tax deductibility of bribes, and New Zealand is

in the process of doing so. Switzerland’s Parliament approved legislation denying the deductibility of bribes in

December 1999. The Swiss cantons have until December 2000 to integrate the federal law into their own tax

legislation. If they fail to do so, the federal law will become effective. In addition, the French Parliament recently approved a draft amendment that, when the legislation is enacted, will remove “grandfather” provisions

from its laws that might have allowed tax deductibility

to continue even after the Convention comes into force

for France.

Despite important positive steps taken by signatories

to the Convention, we remain concerned that tax deductibility is still continuing. France and the Netherlands have

changed their tax laws to disallow the tax deductibility of

bribes, but these changes become effective for payments

to foreign public officials only when each country brings

the Convention into force. Even with the Convention in

force, deductibility in the Netherlands as well as several

other countries that have laws currently in effect (such as

Austria, Belgium, and Japan) 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. 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.

Because we believe it is vital that the OECD play

an active role in critically evaluating the information

provided by member countries, we are working within

the Committee on Fiscal Affairs to ensure that adequate

resources are devoted to ongoing monitoring of the

OECD Council’s recommendation on tax deductibility. Committee members support our position. Several

members are joining the United States in helping the

committee prepare a manual that will assist countries

in enforcing the nondeductibility rules and will also enable the committee to better perform its monitoring

function. With this and other U.S. assistance, we are

confident that the committee will continue to develop

more reliable methodologies for monitoring implementation of the OECD Council’s recommendation.

The purpose of describing the limitations of country

laws in 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 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 actually 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 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
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 61

“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 has never been made explicit in

legislation. The Czech Republic has indicated, however,

that it intends to amend its tax law with an explicit statement that bribes cannot be deducted. Such legislation is

expected to enter into force on January 1, 2001.

Denmark

The Danish Parliament adopted the bill proposed by

the government to deny the deductibility of bribes to foreign public officials. The legislation came into force on

January 1, 1998.

Finland

Finland does not have statutory tax rules concerning

bribes to foreign public officials. Similar payments to

domestic public officials are nondeductible on the basis

of case law and the practice of the tax 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 mean-
62 Addressing the Challenges of International Bribery and Fair Competition, 2000

ing of Article 1.4 of the Convention. As originally enacted, the legislation was “grandfathered,” in that it did

not disallow deductions for bribes tied to pre-existing

contracts. 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, which is included in the draft implementing legislation on the Convention, will take effect when the legislation is passed

and the Convention comes into force for France (i.e.,

sixty days after France deposits an instrument of ratification with the OECD).

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

exceeing 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 Minister of Justice and Budget has prepared draft

legislation that would criminalize bribes to foreign public

officials as well as deny their tax deductibility. At present,

Luxembourg allows deductions for bribes paid to foreign

public officials as any business expense.

Mexico

Mexico does not allow the deductibility of bribes to

foreign public officials since they would not meet the general requirements to qualify as deductible expenses. Such

expenses must be strictly essential for the purposes of the

taxpayer’s activities and must be formally documented.

Considering that bribes are treated as illicit activities, such

payments cannot meet the requirements set forth in the

Mexican Commerce Code. Therefore, the payment of a

bribe is not a business activity and is not a deductible item.

The Netherlands

A law that entered into force as of January 1, 1997,

denies the deductibility of expenses in connection with

illicit activities if a criminal court has ruled that a criminal offense has been committed. This law will apply to

bribes of foreign public officials only when Dutch criminal law is amended to ensure that bribery of foreign public

officials is a criminal offense.

Until the criminal law incorporating the provisions

of the Convention into Dutch law is brought into effect,

bribes of foreign government officials will remain deductible unless certain conditions are met. Although there

is no jurisprudence on the question, the Netherlands has
Chapter 4: Laws Prohibiting Tax Deduction of Bribes 63

indicated that, according to well-established opinion,

bribery of a foreign public official committed outside

the territorial jurisdiction of the Netherlands constitutes,

if certain conditions are met, the criminal offense of falsification of documents or fraud or imposture.

Under the1997 law, an income tax deduction is denied for costs connected with a criminal offense for which

the taxpayer has been irrevocably convicted by a Dutch

criminal judge or has met the conditions of a settlement in

lieu of conviction. The period between the deduction of

costs connected with a criminal offense on the one hand

and the conviction for a criminal offense or a settlement

in lieu of conviction on the other hand normally takes several years. The law provides that these deductions will be

disallowed and added back to income only if the bribe

payment took place within the five years preceding the

year of the conviction or of meeting the conditions of the

settlement. The bribe payment is added back to income in

the year in which the conviction becomes irrevocable or

the year in which the conditions of the settlement are met.

New Zealand

Legislation is being prepared to disallow deductions for bribery. At present, deductions are allowed

for bribes paid to foreign officials, provided the recipient is identified.

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 an offense for both the briber and the recipient of the bribe, and both are punishable. 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 referring 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. Expenses related to any bribes are not deductible for taxation purposes.

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 legislation is an outline law, and the cantonal parliaments are to integrate its provisions into cantonal tax

law by December 2000. Should they fail to do so, the

provisions of the federal law on direct taxes become directly applicable at the canton level.

Until such legislation becomes effective, under

longstanding administrative practice in Switzerland, bribe

and commission payments to non-Swiss recipients are

considered business expenses, provided that their effective payment and their relationship to the business of the

corporate taxpayer is proven.

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 Preven-
64 Addressing the Challenges of International Bribery and Fair Competition, 2000

tion 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—it

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, it denied tax deductions for such payments. Before the enactment of the Foreign Corrupt 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 did 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 65

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 important channels of bribery and corruption are covered in the 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 since 1977 the FCPA has prohibited the

bribery of these persons and organizations and no such

loophole in U.S. law has existed, our experience has

shown that such bribery may be effective. In fact, the

very 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 was not able to convince other 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.

In all, 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 offshore 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. These issues remain under review

within the U.S. government.

The United States has continued to raise its concerns

about broadened coverage at OECD meetings and also

with signatory governments on a bilateral basis, and has

insisted that this subject remain on the OECD agenda

for further discussion. However, given the lack of consensus on expanding coverage, the United States has

made its highest priority encouraging all signatories to

complete ratification and implementation of the existing

Convention as soon as possible.
66 Addressing the Challenges of International Bribery and Fair Competition, 2000

Outstanding Issues Relating to the

Convention

Political Parties, Party Officials, and Candidates

Over the past year, the United States has sought to keep

the issue of bribes to foreign political parties, party officials, and candidates for office on the OECD’s agenda. We

have, however, faced indifference and even strong resistance from many signatories. Most countries are of the view

that signatories should implement the Convention as it is

and monitor implementation over time to see whether

changes are necessary.

Nonetheless, at the May 1999 OECD ministerial

meeting, ministers did endorse further consideration of

all five issues as part of the OECD’s work to strengthen

the fight against corruption. Since then, the U.S. delegation has regularly raised the issue of further coverage at

Working Group meetings and pressed to keep this issue

on the agenda. The delegation made particularly strong

statements on the importance of addressing coverage of

political parties, party officials, and candidates at the

Working Group meetings in December 1999 and March

2000. While Working Group members have been reluctant to engage in further discussion of revising the Convention, they did accept the U.S. recommendation to include an update on issues related to bribery coverage

and the other outstanding issues in the June 2000 report

to the OECD ministerial meeting. Clearly, however, developing support for strengthening the Convention, particularly regarding the bribery of political parties, party

officials, and candidates for public office, will require a

longer-term effort as most signatories have yet to accept

the need for any changes to the Convention.

Bribery as a Predicate Offense to

Money Laundering

With regard to the relationship between bribery and

money laundering legislation, 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. A potential problem

arises in that there could be uneven application of the

Convention between parties that make bribery of domestic officials a predicate offense for purposes of money

laundering legislation and those that do not.

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 in

domestic legislation by cross-referencing a list of other

specific offenses or statutory provisions.

How jurisdictions define “serious” cannot be generalized. Definitions are based on individual domestic legal systems in each country (i.e., punishable by imprisonment of a certain period of time or roughly the distinction between a misdemeanor and a felony).

Thus, 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 entire Working Group on

Bribery, including the G-8 countries, on the need to

make bribery a predicate offense for money laundering legislation.

In November 1999, the Administration sent to Congress the Money Laundering Act of 2000. The proposed

legislation expands the list of foreign crimes that may

serve as a predicate offense for a money laundering prosecution when the proceeds of the crime are laundered in

the United States. Among the crimes included in this

expanded list is fraud against a foreign government. If

enacted, this provision would permit the United States

to prosecute, as a violation of American anti-money laundering laws, the laundering of the proceeds of the bribery of a foreign government official.

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 in which they take any action in furtherance

of an unlawful payment. Thus, as an 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 cor-
Chapter 5: Future Negotiations to Strengthen the Convention 67

porations 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 Role of Offshore Financial Centers

On the role of offshore financial centers, there appears to be broad agreement on the need to encourage

adherence to internationally accepted minimum standards

in the areas of anti–money laundering, financial regulation, company law, and mutual legal assistance. These

issues are not exclusive to offshore centers, nor are they

restricted to the fight against bribery and corruption. The

Working Group has dedicated two sessions to the issue

of offshore 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 initiatives on related issues 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 bribes paid to officials through intermediaries

are already covered, 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 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 two 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. The Working Group is awaiting an International

Chamber of Commerce study of bribery within the private sector that should be completed within two years.

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

have also dealt with the solicitation of bribes and the protection of whistle-blowers (either within government or

business) who come forward to expose corruption. Discussion to date has not produced a suitable means for addressing the solicitation of bribes by government or corporate officials. Solicitation remains on the agenda of the

Working Group as an area of concern and possible follow-up in the context of the 1997 OECD Council Recommendation on Combating Bribery in International Business Transactions. Whistle-blowing, however, is a subject

that goes beyond the scope of bribery of foreign public

officials, and thus the Working Group has deferred immediate follow-up action. The issue could be revisited in connection with the Phase II monitoring of the implementa-
68 Addressing the Challenges of International Bribery and Fair Competition, 2000

tion of the Convention and in a future review of the 1997

OECD Council Recommendation.

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 OECD guidelines, initially adopted in 1976, are nonbinding recommendations addressed by OECD member countries to multinational enterprises operating in their territories. The

guidelines are currently undergoing review in the Committee on International Investment and Multinational

Enterprises. CIME is considering the best means of reflecting in the guidelines the OECD’s intensified anticorruption activities.

In April 2000, Transparency International presented

to the Working Group a major new study on accounting

issues. Transparency International directed a private sector task force which collected and analyzed data to assist

the Working Group in developing expertise with regard

to: books and records; internal controls; and auditing practices. The study documented current practices in sixteen

countries, including the ten largest exporters, and developed both general and country-specific findings. Requirements in the areas of financial transparency and accountability are important in the fight against bribery since they

deter use of slush funds and help guard against coverups.

Conclusion

During the monitoring of the implementation and

enforcement of the Convention, we will continue to raise

the above issues with other Working Group members.

We will also work closely with the private sector and

nongovernmental organizations to convince the other

parties to the Convention that additional prohibitions on

bribe offers and payments will strengthen the Convention and advance our common goal of eliminating bribery in international business transactions. We expect that

other parties will show more interest in private sector

issues, such as whistle-blowing and books and records

provisions, as they begin enforcing their antibribery laws

under the Convention. At that point, these issues will become a more practical and less theoretical concern.
Chapter 6: Expanding the Membership of the Convention 69

Expanding the

Membership of

the Convention

6

In mid-1999 the OECD secretariat sought guidance

from signatories about how to deal with the increasing

number of requests for accession to the Convention. The

primary focus of the United States and the Working Group

on Bribery was then, and continues to be, the completion of ratification and implementation of the Convention by all thirty-four signatory states. It has become clear,

however, that a targeted expansion of Convention membership to appropriate states could make a significant

contribution to the general elimination of bribery of foreign public officials in international business transactions.

Despite this general agreement and existing guidance in the Convention and its Commentaries on the subject of expansion, the Working Group initially was unable to agree on a selection mechanism or precise criteria for new signatory states. That signatories anticipated

further expansion is clear enough. 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 the OECD Commentaries on the Convention, nonsignatories are encouraged to participate in

the Working Group provided that they accept the 1997

OECD Revised Recommendation on Combating Bribery in International Business Transactions and the 1996

OECD Recommendation on the Tax Deductibility of

Bribes to Foreign Public Officials. These conditions, in

effect, put in place some selection principles.

Faced with a lack of consensus on how to put general encouragement and basic selection principles into

practice, the Working Group asked the United States to

lead an ad hoc group to define criteria and entrance procedures for Working Group membership and Convention accession. Over the course of several months in the

latter half of 1999, the ad hoc group produced an approach that should permit a selective increase in signatory states. It should also eliminate 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.

Accession and membership proposals developed by

the U.S.-led group were approved by the full Working

Group in October 1999. They were put in final form and

derestricted for public distribution later in the year. Subsequent discussion in both the ad hoc accession group

and the full Working Group sessions then produced a

practical application of the original proposals. Essential
70 Addressing the Challenges of International Bribery and Fair Competition, 2000

elements of the accession criteria include application of

an OECD Council resolution that emphasized that signatory states be “major players” and that “mutual benefit” be demonstrated.

The Working Group also agreed that other factors

could be taken into account in order to provide some

flexibility. For example, it was agreed the term “major

player” should apply to states with regional importance

or significant market shares in particularly sensitive export sectors where commercial bribery is prevalent. Defense, aviation, construction, and telecommunications

were cited as examples. In addition, “mutual benefit”

not only was seen as encompassing a readiness to participate constructively in Working Group deliberations,

but also was regarded as dependent on the existing legal

framework of a prospective signatory, including legislation for the criminalization of bribery. Without such a

legal infrastructure, serious doubts were raised by many

regarding the ability of a state to participate in the Working Group in a meaningful way.

A first step toward the enlargement of Convention

membership was taken at an outreach session on June 5,

2000. Fourteen states and Hong Kong1

 responded to invitations issued by the OECD secretariat. At this information session, accession criteria, Convention obligations, and Working Group activities and admission procedures were explained.

A proposal for a possible anticorruption declaration

was also presented to invitees, and their comments were

solicited. Such a declaration could be a useful instrument both for current parties to the Convention and for

those nonsignatories interested in a closer association

with anticorruption activities. It would signal to the

OECD and the general business community a readiness

to deal firmly with bribery and to cooperate with parties

to the Convention. This is seen as a means of letting

nonsignatories demonstrate their commitment to an improved investment climate and contribute to better governance standards worldwide.

Several invitees to the outreach session stressed their

interest in acceding to the Convention in the near future.

In anticipation of an initial review of applicants in October 2000, all participants in the session were asked to respond as soon as possible to a questionnaire seeking information on entrance qualifications. At present it is unclear how many attendees will continue their interest, be

offered the opportunity to join the Working Group, and

ultimately accede to the Convention. Nevertheless, it would

be reasonable to conclude that a small number of qualified applicants could satisfy the conditions for Working

Group observership or full membership in the coming year.

1

Attendees were Benin, Columbia, 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 Addressing the Challenges of International Bribery and Fair Competition
Appendix A: Senate Resolution of Advice and Consent of July 31, 1998 A-3
A-4 Addressing the Challenges of International Bribery and Fair Competition
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 Addressing the Challenges of International Bribery and Fair Competition

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 Addressing the Challenges of International Bribery and Fair Competition

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

Portugal10,801 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 Addressing the Challenges of International Bribery and Fair Competition

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 Addressing the Challenges of International Bribery and Fair Competition

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 Addressing the Challenges of International Bribery and Fair Competition

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 Addressing the Challenges of International Bribery and Fair Competition

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

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 Addressing the Challenges of International Bribery and Fair Competition
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: http://www.doc.gov

• Market Access and Compliance: http://www.mac.doc.gov

• Trade Compliance Center:

http://www.mac.doc.gov/tcc/index.html

Trade Agreements:

http://www.mac.doc.gov/tcc/index.html

(Select “Bribery Hotline”)

Exporter’s Guide to the OECD Anti-Bribery Convention:

http://www.mac.doc.gov/tcc/tcc2/guides/index.html

Trade Complaint Hotline:

http://www.mac.doc.gov/tcc/tcc2/hotline/index.html

• Office of the General Counsel:

http://www.ita.doc.gov/legal

Anti-Corruption Review:

http://www.ita.doc.gov/legal/master.html

Department of State

• Home page: http://www.state.gov

(Search “bribery”)

Department of Justice

• Criminal Division, Fraud Section:

http://www.usdoj.gov/criminal/fraud/fcpa/

United States Agency for

International Development

• Home page: http://www.info.usaid.gov/

(Search “bribery and corruption”)

Notable Websites on Global Initiatives

International Chamber of Commerce

• Home page: http://www.iccwbo.org

• Standing Committee on Extortion and Bribery:

http://www.iccwbo.org/home/menu_extortion_bribery.asp

Organization for Economic Cooperation

and Development

• Home page: http://www.oecd.org/

• OECD Anti-Corruption Ring Online (AnCorr Web):

http://www.OECD.org/daf/nocorruption/#Ancorr

• OECD Anti-Corruption Unit Combating Bribery and

Corruption in International Business Transactions:

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

Downloaded documents and links to national legislation

can be accessed at the above address or at

http://www.oecd.org/daf/nocorruption/links1.htm

Organization of American States

• Anticorruption Network:

http://www.oas.org/juridico/english/FightCur.html

Transparency International

• Home page: http://www.transparency.de/

United Nations

• Home page: http://www.un.org

(Search “bribery and corruption”)

World Bank

• World Bank Anti-Corruption Website:

http://www.worldbank.org/publicsector/anticorrupt/
C-2 Addressing the Challenges of International Bribery and Fair Competition, 2000

Country Websites With

Convention-Related Legislation

Implementing legislation of many signatories can be downloaded directly from the OECD website www.oecd.org/daf/

nocorruption/links1.htm. A number of countries have also

posted legislation on their government website. 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. The government site (in German only) is

http://www.ris.bka.gv.at/iausw2.html

Belgium

The text of the law passed on February 10, 1999, is available on the site of the Moniteur Belge at

http://www.just.fgov.be/html/fd2_w3.htm

To find the text, choose the Moniteur published on March

23, 1999. The French text 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 directly at

http://www.parl.gc.ca/36/1/parlbus/chambus/house/bills/

government/S-21/S-21_4/S-21_cover-E.html

The English text is also available in pdf format on the

OECD website.

Denmark

Implementing legislation can be found on the Department of

Justice web site (in Danish only) at

http://www.jm.dk/forslag/

Finland

Implementing legislation can be found on the government

web site (in Finnish and Swedish) at

http://www.vn.fi/vn/english/index.htm

Excerpts showing amendments to the Finnish Penal Code

are also available in pdf format on the OECD website.

France

The draft law modifying the penal code and the penal

procedure code relating to combating bribery and corruption

can be found on the website of Legifrance (in French only) at

http://www.legifrance.gouv.fr/citoyen/index.ow

The French text of the legislation is also available in pdf

format on the OECD website.

Germany

The English and German texts of the implementing legislation dated September 10, 1998, the relevant criminal code,

and the Administrative Offence Act are available in pdf

format on the OECD website.

Greece

The French text of the implementing legislation dated

November 11, 1998, and the English text of the Greek law

No. 2331 on money laundering of August 1995 are both

available in pdf format on the OECD website.

Hungary

The English text of the relevant implementing legislation is

available in pdf format the the OECD website.

Iceland

The English text of the Icelandic Extradition and other

Assistance in Criminal Proceedings Act (Law no. 3 of April

17, 1984, and relevant articles of the Icelandic Penal Code

are available in pdf format on the OECD website.

Japan

An unofficial English translation of the Japanese implementing legislation (the amended Unfair Competition Act,

adopted on September 18, 1998, is available in pdf format

on the OECD website.

Korea

An English translation of the Korean implementing legislation (The Act on Preventing Bribery of Foreign Public

Officials in International Business Transactions) is available

in pdf format on the OECD website.

Norway

The implementing legislation (Amendments to the Norwegian Penal Code of May 22, 1902, chapter 2, para. 128) is

available in pdf format at the OECD website and also on the

Norwegian government website:

www.lovdata.no/all/

Poland

The text of the implementing legislation (in Polish only) can

be found at Poland's parliamentary website:

http://ks.sejm.gov.pl:8009/proc3/opisy/1718.html.
Appendix C: Websites Relevant to the Convention and Antibribery Issues C-3

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 Systematique du Droit Federal.
C-4 Addressing the Challenges of International Bribery and Fair Competition, 2000