OECD Working Group on Bribery Is the World Really Fighting Foreign Bribery? Athens, 10 May 2016 Drago KOS
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997) - 17 th anniversary of its entering into force in February 2016; - 41 member States (Lithuania and Costarica about to join); - Articles on: definition of the offence (including definitions of a » foreign public official «, » foreign country «, » act or refrain from acting in relation to the performance of official duties)” , liability of legal persons, sanctions (effective, proportionate, dissuasive + seizure and confiscation), jurisdiction (allowing double jeopardy), enforcement (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), statute of limitations, money laundering, accounting, mutual legal assistance, extradition, responsible authorities, monitoring and follow-up.
Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions (2009) - Chapters on : general, criminalisation of bribery of fpo, tax deductibility, reporting foreign bribery, Accounting Requirements, External Audit, and Internal Controls, Ethics and Compliance, Public Advantages, including Public Procurement, Officially Supported Export Credits, International Cooperation, Follow-up and institutional arrangements, Co-operation with non Members, Relations with international governmental and non-governmental organisations + - Annex I: Good Practice Guidance on Implementing Specific Articles of the Convention on Combating Bribery of Foreign Public Officials in International Business Transaction - Annex II: Good practice guidance on internal controls, ethics, and compliance
OECD Working Group on Bribery in International Business Transactions It was established in 1994, (generating 80% of the world export and 90% of outward FDI), today it has 41 members + several observers (China, India, Indonesia, Malaysia, Thailand, . . . ). It is responsible for monitoring of implementation and enforcement of the Convention, 2009 Recommendation + related instruments. Its peer-review monitoring system is conducted in three phases (the 4 th will start in 2016) and is considered by Transparency International to be the ‘gold standard’ of monitoring.
Evaluation Phases Phase 1: Initial assessment of countries’ national legislation to determine their conformity with the OECD Convention Phase 2: Assessment of the practical application and implementation of the Convention and related documents Post-Phase 2 assessment mechanism (December 2009, gives the general procedural framework for all future phases) Phase 3: Up-to-date assessment of the countries’ structures to implement the Convention and 2009 Recommendation (WG cross-cutting issues, progress on identified weaknesses, enforcement efforts, changes in the nat’l legislation)
Foreign Bribery Report*, I. Based on the WGB knowledge and drawing on that gain by the 17 most active countries in dealing with 427 concrete cases of foreign bribery from 1999 to 2014, the OECD issued the analytical Foreign Bribery Report at the end of 2014. In it, the OECD attempted to identify common characteristics, mechanisms, areas and procedures manifested in foreign bribery. *http: //www. oecd. org/corruption/oecd-foreign-bribery-report 9789264226616 -en. htm
Foreign Bribery Report*, II. The four main sectors involved in foreign bribery cases were the extractive (19%), construction (15%), transportation and storage (15%) and information and communication (10%) sectors. Almost half of the cases involved bribery of public officials from countries with high to very high levels of human development. *http: //www. oecd. org/corruption/oecd-foreign-bribery-report-9789264226616 -en. htm
Foreign Bribery Report*, III. In 41% of cases, management-level employees paid or authorised the bribe, whereas the company CEO bribed in 12% of cases. *http: //www. oecd. org/corruption/oecd-foreign-bribery-report-9789264226616 -en. htm
Foreign Bribery Report*, IV. Bribes were promised, offered or given most frequently to employees of public enterprises (27% of cases), followed by customs officials (11%), health officials (7%) and defence officials (6%). *http: //www. oecd. org/corruption/oecd-foreign-bribery-report-9789264226616 -en. htm
Foreign Bribery Report*, V. In the majority of cases, bribes were paid to obtain public procurement contracts (57%), followed by clearance of customs procedures (12%). The bribes were considerable: on average, bribes equalled 10. 9% of the total transaction value and 34. 5% of the profits. *http: //www. oecd. org/corruption/oecd-foreign-bribery-report-9789264226616 -en. htm
Foreign Bribery Report*, VI. One in three cases came to the attention of authorities through self-reporting by defendant companies or individuals. The next most common sources were law enforcement authorities (13%) and mutual legal assistance between countries (13%). Companies that self-reported became aware of the foreign bribery in their international operations primarily through internal audits (31% of cases) and merger and acquisition due diligence procedures (28% of cases). *http: //www. oecd. org/corruption/oecd-foreign-bribery-report 9789264226616 -en. htm
Foreign Bribery Report*, VII. Prison sentences were handed down only to 80 individuals who were found guilty of foreign bribery; the longest combined prison sentence imposed to date in a case involving a conviction for conspiracy to commit foreign bribery is 13 years for one individual. In total, there were also 261 fines imposed on individuals and companies, with the highest combined fine against a single company totalling EUR 1. 8 billion. The highest monetary sanction imposed against an individual in a foreign bribery case was a forfeiture order amounting to USD 149 million. *http: //www. oecd. org/corruption/oecd-foreign-bribery-report 9789264226616 -en. htm
Foreign Bribery Report*, VIII. In 69% of foreign bribery cases, sanctions were imposed by way of settlement between the prosecution service or court and the company responsible. Sometimes it is difficult to shake off the impression that settlements are used more as a way of damage control by companies and the individuals involved rather than as a means of ensuring that justice is really done. *http: //www. oecd. org/corruption/oecd-foreign-bribery-report 9789264226616 -en. htm
Transparency International Progress Report 2015*, I. Since 1999: 20 WGB MS with 20, 5% world exports with little or no enforcement (Japan, Russia, Spain, Belgium, Mexico, Brazil, Ireland, Poland, - Turkey, Denmark, Czech Republic, Luxembourg, Argentina, Chile, Israel, Slovak Republic, Colombia, Slovenia, Bulgaria, Estonia) 9 WGB MS with 12, 6 world exports with limited enforcement (France, Netherlands, South Korea, Sweden, Hungary, South Africa, - Portugal, Greece, New Zealand) 6 WGB MS with 8, 9% world exports with moderate enforcement (Italy, Canada, Australia, Austria, Norway, Finland) - - 4 WGB MS with 22, 8% world exports with active enforcement (US, Germany, UK, Switzerland) *http: //issuu. com/transparencyinternational/docs/2015_exportingcorruption_oecdprogre/1? e=2496456/14890701
European Enforcement • • • Active Enforcement • Little or No Enforcement Germany Belgium Switzerland Bulgaria UK Czech Republic Moderate Enforcement Denmark Austria Estonia Finland Ireland Italy Luxembourg Norway Poland Limited Enforcement Slovak Republic France Slovenia Greece Spain Hungary Netherlands Portugal Sweden 15
Transparency International Progress Report 2015*, II. Countries improving: Norway, Greece, Netherlands, South Korea (France, . . ) Country regressing: Argentina
Transparency International Recommendations - - - The WGB should: monitor whether governments provide additional resources for fighting international bribery in some of the countries, - take action to ensure that enforcement efforts result in effective, proportionate and dissuasive sanctions, undertake a review of settlement practices in foreign bribery cases to ensure that settlement agreements receive judicial approval, that their terms are transparent, and that penalties are effective, proportionate and dissuasive, - remedy concerns regarding full compliance with Article 5 of the Convention, give high priority to correcting the deficiencies in developing effective laws and practices for the protection of whistleblowers, , make sure that availability of, and access to, enforcement information is improved
Future Activities of the WGB - to keep standards of the Convention alive (=to enhance efforts for its implementation, incl. by the Ministerial meeting from March 2016) -to continue issuing targeted and focused recommendation - to continue cooperating with other governmental, non-governmental and business partners, continue building a trustworthy platform for global governance, ensure fair conditions in global trade for all (member and non-member) states of the world
Future Challenges of the WGB - selection of topics for evaluation for Phase IV and for further phases - big players at the door (China, India, Indonesia, UAE, . . ), -equal treatment, -monitoring “fatigue”, -reluctance of some of the existing members to undergo serious monitoring, -different levels of activities of national delegations, - workload during the WG sessions, . .
Topics for the Evaluation in Phase IV Taylor-made approach on: - Progress on Phase III recommendations - - - Detecting foreign bribery (incl. protection of whistleblowers, acces to public information, role of the media) Enforcement of foreign bribery (incl. new challenges arising from changes made after Phase III, cases, LE resources and expertise, int‘l cooperation, Article 5, enforcement results) Engagement with legal persons (incl. responsibility of legal persons, engaging with the private sector)
Topics for the Evaluation in Future Phases What to do: to continue monitoring of existing texts (Convention + 2009 Recommendation) OR to expand area of monitoring (e. g. to demand side + ? )
Enforcement, I. Statistics as of December 2014: 361 individuals and 126 entities from 17 State Parties were sanctioned under criminal proceedings between 1999 and the end of 2014 At least 95 individuals were sentenced to prison At least 110 individuals and 200 entities in 8 State Parties were sanctioned in different proceedings for other offences related to foreign bribery (ML, accounting) Around 393 investigations in 25 State Parties were taking place at the end of 2014, the same as prosecutions against 142 individuals and 14 entities in 12 State Parties The largest single fine foreign bribery was imposed against Siemens – 1, 8 billion EUR in total sanctions in 4 jurisdictions
Enforcement, II. The WGB will also try to: Improve usefulness of the WGB Foreign Bribery Matrix Analyse reasons for the acquittals and for interruptions of pre-trial proceedings in foreign bribery cases Analyse effectiveness of international coooperation
Our Final Goal To ensure a level playing field !
. THANK YOU ! QUESTIONS, COMMENTS, REMARKS ?
Sources 1. OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions: http: //www. oecd. org/corruption/oecdantibriberyconvention. htm 2. OECD Foreign Bribery Report: http: //www. oecd. org/corruption/oecd-foreign-bribery-report-9789264226616 -en. htm 3. OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions: http: //www. oecd. org/daf/anti-bribery/oecdantibriberyrecommendation 2009. htm 4. OECD Working Group on Bribery, Country reports on the implementation of the OECD Anti-Bribery Convention: OECD Anti-Bribery Convention http: //www. oecd. org/daf/anti-bribery/countryreportsontheimplementationoftheoecdantibriberyconvention. htm 5. Transparency International Progress Report 2015: http: //issuu. com/transparencyinternational/docs/2015_exportingcorruption_oecdprogre/1 ? e=2496456/14890701
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