1. THE ROLE OF THE OECD IN COMBATING CORRUPTION IN INTERNATIONAL BUSINESS IN THE GLOBAL ECONOMY

The OECD Convention on 'Combating bribery of foreign public officials in international business transactions' signed in Paris on 17 December 1997 (in force since 15 February 1999) represents a major tangible result of a series of international initiatives developed as a number of scandals and investigations revealed, under pressure from global public opinion, the problem of corruption in international affairs.

The OECD Convention covers a narrower range of offences than other conventions, such a the one of the Council of Europe (1999) or that between the Members of the European Union (1997), neither of which is yet in force, since it criminalizes only active corruption besides punishing related offences (money laundering and false accounting). On the other hand, it is in force in all the Members of the OECD plus five other countries, 34 countries in total, and it covers corruption of public officials of any State, not just of the States parties on the basis of reciprocity as is the case for the EU Convention.

As is well known, the work of the OECD in this area began in 1989 at the initiative of the US, whose companies were concerned by the fact that they were the only ones subject to criminal sanctions for bribes paid abroad under the 'Foreign[Page47:] Corrupt Practices Act' (FCPA) of 1977. In almost all other countries, the offence of corruption was aimed only at safeguarding the integrity of the local public administration. Criminalizing the corruption of foreign officials was not provided for, even where the conduct would involve international transactions and the economic interest of several countries. This is the case where, thanks to corruption, a company obtains a market abroad to the detriment of more deserving competitors of a third country. It is not only commercial arguments which justify the international expansion of the sphere of action of the rules against corruption. Other relevant factors are the growing interdependence of economies, financial co-operation in favour of developing countries with use of public funds, the emergence of common values of good government, transparency of public administration, and democracy.

In this context, the lack of interest displayed until recently by a number of the largest countries which dispose of effective intervention instruments on the supply side, i.e. as regards their companies which export to and invest abroad, was difficult to justify further.

In the global economy this "benign neglect" cannot be justified with the contention that it is principally up to each State to "assure that its own house is in order", and that practices and sensibilities are not the same everywhere with regard to a phenomenon which is narrowly linked to the political and administrative organization of each country.

International co-operation is necessary in order to cope effectively with these negative side effects of globalisation. Successful operation of such a convention in the hands of like-minded States and their enforcing authorities means that global business can be policed effectively, by addressing the white-collar criminality which may be associated with (and facilitated by) the opening up of economies and the easiness and lack of controls surrounding most trans-national trade and financial transactions. On the other hand, unilateral actions by a single country incriminating behaviours outside of its territory (even if enforcement only intervenes within) is open to criticism of interference, and all the more so when high political figures of a foreign country (such as the head of State or ministers) are called into question. Unilateral action can also reveal itself to be ineffective in practice when the proceeding country (such as the US under the FCPA) institutes criminal sanctions against corruption abroad in isolation. The legal and factual limitations (for example as regards the collection of evidence) of the (even indirect) extra-territorial exercise of the national penal jurisdiction[Page48:] are well known, especially where the authorities of other countries involved do not collaborate. Business and investment freedom, the use of groups and companies with subsidiaries in off-shore centres and the recourse to obliging intermediaries permit companies to elude obligations enacted in the country where they have their head office when international co-operation is lacking. In any case, while unilateralism may be successful in the case of the United States, thanks to its economic and political position of a world power, this is not so for the majority of other countries.

The aim was therefore at OECD that of organizing effective co-operation between the principal actors in the international economy to promulgate an effective legal instrument containing reciprocal and comparable legal commitments to combat trans-national bribery, building a consensus based on shared objectives1.

2. NEGOTIATION AND ENTRY IN FORCE OF THE CONVENTION

An ad hoc Working Group was established for this purpose by the OECD in 1989. It was successful after many years of preparatory work to draft the text of a treaty (1997), supported by the political will of the Member States2. The Working Group is still the focal point of OECD activities in the field, especially as to the monitoring of compliance by the member countries of their commitment to implement effectively the Convention and the related indications of the 1994 Recommendation, revised in 1997.

The finalization of the Convention's text in 1996-97, its signature on 17 December of the same year and its entering into force in early 1999, followed by ratification of all signatories within 2001, was a remarkable achievement. It is enough to think of the initial political perplexities voiced in many countries and of the difficult legal problems, due to different traditions (such as on jurisdiction and on the liability of companies) that had to be overcome. The negotiators managed to resolve these difficulties also by drafting explanatory notes, later transformed to become "Commentaries" on the Convention, and adopted at the same time as the text of the Convention by the Negotiation Conference3. However, these Commentaries do not form part of the Convention and have not been signed. Furthermore, they do not have an organic character as do, for example, the explanatory Reports of the conventions of the Council of Europe, and only refer to certain articles of the OECD Conven-tion or to individual clauses. [Page49:]

The weight which should be granted to these "Commentaries" in interpreting the Convention has been discussed. In our opinion, they are not "preparatory documents" to which one can have recourse as a supplementary interpretation tool pursuant to Article 32 of the Vienna Convention on the Law of Treaties of 1969, which codified traditional international law in this area. They are rather, and more significantly, a basic element of the "context" within which the OECD Convention was drafted for the purpose of interpretation pursuant to Article 31 of the Vienna Convention. As for the context, Article 31 mentions any agree-ment relating to a treaty which is entered into by all the parties in connection with the conclusion of such treaty. I doubt whether the Commentaries can be considered to be really an agreement "in simplified form", for the simple reason that it was the specific intention of the contracting parties not to insert the content of the Commentaries in the Convention. However, the "context" is not limited to such an agreement relating to a treaty but includes also other instruments. The Commentaries thus provide guidance in determining, in the event of doubt, the scope of the Convention, although they would not constitute an authentic interpretation. The Commentaries have been in fact relied on by various countries in drafting implementing legislation for the Convention.

3. GENERAL FEATURES OF THE CONVENTION

The Convention is principally characterized (and this is a novelty) by the fact that the industrialized countries in which most large multinational companies are based have bound themselves to prevent and repress bribery by their companies, by criminalizing "active" corruption (that is, bribing) in respect of other countries officials (whether signatory or not), independently of the applicability and enforcement of criminal laws in the latter countries to the "passive" corruption of those officials (that is, taking a bribe). The contracting States thereby do not intend to admit the corruption of these foreign officials, nor any tolerance of such behaviour by the States to which they belong. They just took note of the fact that pursuing the officials themselves would have raised insoluble jurisdictional issues and would have opened them up to the criticism of interfering with the sovereignty of other States4.

This approach is also based on economic and trade concerns, that is, avoiding that international competition be distorted by the recourse to measures considered to be inadmissible. According to a popular expression, the objective is to guarantee the "levelling of the playing field", i.e. to assure common playing[Page50:] rules for companies of different origins in international markets in this regard. The harmonisation of criminal rules, especially when the initiative originates from a group of leading countries rather than from the action of a multilateral institution, is not common. It demonstrates a new orientation in the multi-lateral regulation of

international trade in general, even if there have been precedents such as, for example, the fight against money-laundering. The OECD Convention, open for adhesion to other countries as indicated by Article 13 (2), represents a model for further initiatives, notably the worldwide convention against corruption which is being currently negotiated at the UN.

Before the principal provisions of the text are discussed, another general characteristic of the Convention must be noted. It closely follows the model of the classic penal law conventions (such as those of the Council of Europe or against terrorism) in defining the offence, the jurisdictional basis, the secondary rules and the organization of mutual co-operation between member States in matters of assistance and extradition. However, the OECD Convention distances itself from the traditional model in different respects. First, its norms are not self-executing. In particular, the rule providing for the criminalization of the corruption of foreign public officials, provided by Article 1, has generally required reformulation in order to be introduced in the criminal legislation of the member States. Similarly, other rules regarding the extent and type of sanctions, jurisdiction and statutes of limitation are not formulated exhaustively, but indicate the fundamental content, which the national implementing rules will have to respect.

This approach is not fortuitous. The negotiators had to take note of the fact that the criminal systems of different States were inspired by different criteria on a number of crucial matters, such as the subjection of legal persons to criminal law, the extension of jurisdictional competence on the basis of the nationality of the person charged or, on the contrary, solely on a territorial basis, and the obligatory or discretionary character of criminal prosecution. Given the method followed in the Convention, stated in the preamble, of combating the evil of corruption through equivalent national measures, the member States can fulfil their obligations by having recourse to different measures depending on their legislative structure, on the condition that these are adequate to attain the prescribed result5.

Secondly, the Convention also contains non-criminal rules, more specifically as to the requirements for corporate accounting and auditing, with a transparency[Page51:] and preventive purpose. Finally, the convention provides for a multilateral supervisory role for the OECD Group on corruption, to promote and monitor the full implementation of the Convention through the periodic examinations of measures adopted and their concrete application by States. This mechanism replaces a procedure for the settlement of disputes, often present in criminal conventions. It appears more flexible and efficient to ensure the respect of reciprocal commitments and, in general, the realization of the Convention's objectives. It aims, and this point must be emphasized, not just at introducing criminal rules in the legislation of signatories countries, but more specifically at deterring, preventing and combating international corruption, an element of serious global concern, through effective national co-ordinated measures.

4. THE OFFENCE OF ACTIVE BRIBERY OF FOREIGN PUBLIC OFFICIALS

The Convention contains, in Article 1, the obligation to establish the corruption of foreign public officials as an offence in the same manner as the corruption of national officials is criminalized in domestic law. The

Convention includes preventive and repressive accompanying rules, which may require the update of provisions relating to internal corruption as well. In conformity with the non-self-executing approach of the Convention, the Commentaries specify that the undertaking can be implemented through different means, such as on the basis of a law which would punish corruption in general, or by extending the application of the offence of corruption of national public agents in the penal code, or by having recourse to ad hoc provisions, as in the case of the US with the FCPA.

Article 1 (1) of the text defines the offence as "the act of offering, promising or giving an undue advantage, whether pecuniary or not, to a foreign public official, for that official or for a third party, in order for him to act or to 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" 6.

Thus a bribe can consist of a gift besides an amount of money; it is irrelevant moreover whether it is given to a third party (such as a relative, an institution or a political party), provided it is the "quid pro quo" of the improper conduct of the public official. [Page52:]

On the basis of Article 1 (2), complicity (participation) and incitement to corruption, including 'authorization', also constitute criminal offences. For example, an authorization given by a parent company to a foreign subsidiary to pay a bribe will lead to the exercise of jurisdictional competence and application of criminal law against the former and/or any of its managers who are responsible.

A foreign public official is defined in Article 1 (3) as any person who - in a foreign country - holds a legislative, administrative or judicial office, or who exercises a public function for a foreign country, including a public agency or enterprise, and any official of an international organization. This is a wide definition, which combines subjective qualifications with the objective exercise of public functions in a manner similar to the approach taken by numerous national criminal legal systems. For example, this definition aims at taking into account the fact that the framework within which economic functions are directly exercised by the State varies from one country to another, and that, given the current progression of privatisation, the private sector is being entrusted functions which, objectively, are of a public nature.

The extension of the offence in respect of the behaviour of managers of companies, which are private but controlled by the State, gave rise to discussions and it was not possible to insert supplemental specifications in the text. The commentary specifies that a company is deemed 'public' if it is one on which the State can exercise a dominant influence, something which can be done by different means. In addition, it is specified that the person responsible in such a company does exercise a public function, unless the company operates as a private company on a normal commercial basis and without State support.

The offence must be punished by each State by "effective, proportionate and dissuasive criminal penalties", including imprisonment, which are to be equivalent to those provided for the corruption of national public officials. The application of other punitive measures, such as seizure and confiscation of the bribe and of the proceeds of the bribery, is to be provided for7.

5. THE RESPONSIBILITY OF COMPANIES

With reference to the author of the offence, the text of the Convention in Articles 2 and 3 addresses the central question of the responsibility of companies which bribe, or for whose benefit such payment are made, in light of the fact that the criminal responsibility of a company is recognized only by certain legal systems. [Page53:]

The Convention does not impose an obligation to introduce criminal responsibility of legal persons in countries where it is not recognized, an obligation that would have exceeded its scope. States which do not recognize the criminal responsibility of companies have committed themselves to introduce effective, proportionate and dissuasive non-criminal (essentially pecuniary) sanctions. This should limit the risk of divergence between countries where companies are subject to criminal law and countries where they are not. Just introducing noncriminal sanctions applicable to companies where such a system does not exist in general entails substantive legislative changes, as the experience of some signatories in complying (notably Italy) has shown. The question of jurisdictional competence in this non-criminal administrative matter also arises, and finally that of the level of the penalties. As regards this last aspect, non-pecuniary sanctions such as the exclusion from participation in invitations to tender, or the deprivation of directors of their functions when they are guilty even just for lack of due diligence, could be more effective than criminal sanctions applied only to the managers responsible8.

6. JURISDICTIONAL CRITERIA

The other delicate point is that of the criteria for determining jurisdiction, which was debated at great length throughout the negotiation, with a view to achieving a balance between the obligations of the different signatory States, as well as a balanced and effective enforcement. A number of predominantly civil law countries such as France, Germany and Italy consider the nationality of the defendant to be a criterion in determining jurisdiction so that they can prosecute offences committed by their nationals abroad (given certain conditions). The US has changed its traditional exercise of criminal jurisdiction on a purely territorial basis, amending the FCPA so as to take into account nationality in order to implement more fully the Convention.

Article 4 of the Convention requires States to prosecute the offence by applying the legal criteria traditional to their own system. A balance in the way corrup-tion is punished between countries with different legal systems should be obtained through non-criminal penalties on companies, which may be imposed also in case of strict territorial criminal jurisdiction, in all cases where bribe payment is attributable to a company. The fact that these bribes have been promised or paid abroad through an intermediary, or through subsidiaries which are not under the management of nationals of the home country, would not avoid prosecution in this respect. [Page54:]

7. APPLICATION OF ANTI-MONEY LAUNDERING LEGISLATION

The reference to money laundering legislation in Article 7 of the Convention is crucial to its successful enforcement as well as for the prevention of bribery by making the hiding of the bribe and of the proceeds more risky and difficult.

Money laundering consists in the transferring of funds, gained in criminal activities or meant to commit crime, through international financial channels (banks and other intermediaries) hiding their origin through various passages with the complicity of institutions, trustees, professionals, etc.

Anti-laundering legislation was developed first against drug trafficking; it has been progressively extended to the transfer of proceeds of other serious crimes, as agreed internationally both under the auspices of a G7 Task Force operating within the OECD (FATF) and within the UN, from the late 1980's on. Measures agreed by all main industrialized countries, to which a few other States have adhered, include not only criminal law sanctions and mutual co-operation. They entail, crucially, the obligation of banks and similar institutions not to carry out suspicious deals (such as large cash transactions) and to report them secretly to police and prosecutors.

Where domestic corruption is a basis for the application of the money laundering legislation (which is currently the case in several countries and which is becoming the rule in several other States), Article 7 of the Convention requires the application of the same rules against the money laundering of funds to corruption of foreign public officials: it prescribes thus "national treatment" in this respect. This is a point which is fundamental to the effective application of the Convention. It is well known that bribery paid to high-ranking foreign officials are made 'from abroad to abroad' by using banking channels and financial intermediaries in third countries, usually off-shore financial centres protected by bank secrecy and hostile to international collaboration. These payments did not entail money laundering in the past, since trans-national corruption was not a crime. Things have now changed. With the adherence to the OECD Convention of countries like Luxembourg and Switzerland (but not other non-co-operative off-shore centres!), the local regulation against money-laundering, including reporting and disclosure obligations as to a transaction, and seizure and confiscation of the funds, has become applicable when the offence of corruption of a foreign public official is at issue. Participating to such dubious financial transactions entails the risk of criminal responsibility. [Page55:]

The Commentary to the Convention explains that reference is made to the bribe both before the payment is made (i.e. funds earmarked for the illicit payment) and after they have been transferred and made available to the corrupt beneficiary. This is a significant specification. As the Convention only incriminates active corruption (that is, promising or giving a bribe), it was important to specify that the transfer of funds by the beneficiary after they are obtained (typically from the official to a bank) does not exempt this trans-action from the rules against money laundering, as the money nevertheless remains the result of the offence of active corruption of a foreign public official.

8. ACCOUNTING AND FINANCIAL STATEMENTS OF COMPANIES

The provision of Article 8, which deals with companies' accounting, assumes a fundamental importance. It has a great practical and certainly innovative dimension, which goes beyond the penal framework and assumes a predominantly preventive role. This Article prescribes that, in order to combat international corruption effectively:

1. "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 or inadequately identified transactions, the recording of non-existent expenditures, the entry of liabilities with incorrect identi-fication 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."

The obligations in question are already found in national legislation in this area, as well as in the accounting principles applicable to large companies or listed corporations. However, there are practical difficulties in detecting suspect payments in a company's records and accounts. [Page56:]

The Group had made enquiries and commissioned studies between 1994 and 1997 as to this subject matter in order to grasp fully the issue. In fact, national legislation and practices which require large companies and in any case those listed in a stock exchange to maintain accounting books and financial records require that entries and other records be complete, accurate, detailed and systematic, listing correctly all payments made and received as well as their nature also in relation to international transactions, including payments to agents and other intermediaries. Those records are generally subject to internal and external audit: sanctions, in some cases even criminal sanctions, are imposed for record keeping violations.

However when irregularities are carried out it may be quite difficult to find them. Illegal payments will normally be disguised, often as commercial commissions or fees. Auditors do not look at every transaction. They generally check whether adequate procedures and internal controls are in place and applied. Moreover, auditors organize their work in order to discover errors, omissions and irregularities that are substantial enough to have a "material" impact on the financial statements, that is, which affect generally the financial statements. Not all incorrect payments, even of a large amount, will be discovered under this approach. Finally auditors usually do not have to disclose the results of their investigation to public authorities, except in regulated industries such as banking and insurance. The duty of confidentiality may even prevent auditors from doing so. Irregularities detected may have to be disclosed only to the management (which may be responsible for them), or to some committee of the board.

The purpose of Article 8 is in any case to reinforce the preventive function of the accounting requirement and of controls thereon in order to avoid that large sums of money be diverted from company accounts and used for "grand" corruption abroad, as has appeared from certain investigations in various countries in recent years.

Moreover, this provision should result in a re-examination by competent national authorities of the effectiveness of the controls (internal and upon audit) in place on accounting. The provision is also relevant, as the Commentary recalls, as to the consideration of potential liabilities in financial statements, and as to the discharge of their duties by auditors. In other words, after the entry into force of the Convention auditors would be liable if they have not detected corruption by properly examining a company's books and records. [Page57:]

The proper implementation of these obligations does not concern only noncriminal pecuniary sanctions as regards accounting, balance sheets and the auditing standards which apply (a matter which, in the European Union is included mostly within the competence of the Commission). Article 8.2 requires indeed the application of criminal sanctions for grave omissions, such as forgery, falsification and fraud.

9. MUTUAL ASSISTANCE AND EXTRADITION

Effective mutual assistance is fundamental given the frequent use of inter-national financial channels to effect and hide trans-national bribery. Article 9 on international judicial mutual assistance lays down an obligation for signatory States to reciprocally provide prompt and effective legal assistance, also as to non-criminal procedures. It requires them to keep the requesting authorities informed of the implementation of any request for judicial assistance (such as searches, transmission of documents, deposition by witnesses). This binding commitment will certainly be precious to the prosecutors and judges of foreign countries investigating or judging such cases. They are often disappointed by the lack of collaboration by other States and by the delays with which they get the information and documents sought. Provisions on co-operation are completed by the usual rules on extradition, which include an obligation for countries which refuse to extradite their nationals to prosecute them directly (Article 10 (3)) 9.

10. THE BUSINESS WORLD AND THE OECD CONVENTION

From the point of view of business, having recourse to bribery of officials of foreign countries in order to obtain international contracts and procurements has become a dangerous activity in OECD countries and by their enterprises, one to refrain from if the risk of prosecution and incrimination is to be avoided. The direct peril of criminal incrimination is not the only factor to take into account when evaluating the impact of the Convention on the conduct of international business. There are both side-aspects of criminal law to take into account, as well as the spill-off on the competitive climate. From the first point of view, the "successful" carrying out of trans-national bribery implies relying on a network of intermediaries, such as agents, lawyers, fiduciaries and banks, in order to divert funds from corporate accounts, set up off-shore companies, transfer the bribe and the proceeds through national borders hiding their illegal origin. With the new legal conventional framework in place in major countries, professionals should be wary of supplying their services for operations that pertain now to[Page58:] white-collar criminality. Serious banks should deny their financial channels for the purpose of carrying out transfers: money laundering reporting obligations should not be taken lightly by serious financial operators. Effective international co-operation under the Convention and under anti-money laundering instruments is now available to make illegal operations involving bribery highly risky and visible. In fact, recent scandals involving Russian and Indonesian (to name only some) banks, companies and politicians show that secrecy in this respect is becoming more difficult.

Also from the point of view of international competition, the Convention may or should become a relevant instrument. Up to now a company that had reasons to believe that it had lost a foreign deal due to corruption by a competitor had no direct action for redress, especially if it had no full evidence, as is normally the case. This may now change if the Convention is properly implemented and its provisions are taken seriously by companies operating in world market. Options now open are the following:

• to make a denunciation in the country of the public official ( this was possible before, but may be ineffective or even risky);

• to make a denunciation with the competent public prosecutor of the country

of the head office of the corrupt competitor in order that an investigation be

opened, since the bribing is a crime there;

• to make a claim for damages in a civil court against the competitor in its home country as a consequence of the illegal action of bribery.

On the other hand, the action of bribery by a manager is now unlawful, and detecting action and compliance programs are necessary in order to avoid corporate responsibility towards investigating authorities; loss of benefits and contracts as sanction; actions against incompetent auditors for failure to discover and evidence incorrect accounting, false statements and illegal payments; and dulcis in fundo derivative suits by shareholders.

Taking such an action is unpopular in business circles, as is well known; equivalent actions may be envisaged. Leaking to the press the facts would entail an obligation of prosecutors in the home country to act in most cases, although examples of these initiatives are still lacking. Actions by authorities in home countries may give courage to prosecutors in the country of the public official to enforce more effectively their laws against local corrupt politicians. [Page59:]

11. MONITORING AND IMPLEMENTING THE CONVENTION

The effectiveness of any legal and enforcement action as to trans-national bribery has often aroused perplexity (to say the least), as economic crime takes on a global scale whereas States tend to act in a dispersed manner. When assessing the effectiveness of the Convention, one can not therefore ignore the creation of a mechanism of constant monitoring and follow-up entrusted by Article 12 on the OECD Working Group on corruption in international business.

The monitoring process at OECD is meant to ensure that the equivalent obligations undertaken by the participants to the Convention be carried out fully and evenly thanks to their domestic enforcing legislation and prosecution activity. This monitoring activity falls within the wide range of "national compliance monitoring and reporting" activity that many international organ-izations carry out as to treaty and other obligations in many areas. The moni-toring of compliance of human rights obligations by UN bodies is the most prominent, but many other examples are available. The legal obligations involved in these mechanisms vary, as is the case for the legal consequences of non- compliance, the format and effect of the reports issued and the level of openness to the public. In all cases, one may venture to say that the "reputation" effects, the echo in the public opinion and through the press, and the reaction of NGOs may be more important to induce compliance than formal legal considerations.

The OECD model does reflect these experiences. The Working Group relies on a combination of detailed technical assessment by the Secretariat, of confidential "peer pressure" by fellow members and finally of public disclosure of the Group's evaluation and reporting of each country's compliance. Through a procedure of mutual review of national implementation measures and application practice, the Working Group systematically monitors the respect for the obligations subscribed to by the contracting States, and the effectiveness of the application of the Convention by each of them in actually combating trans-national bribery. This is an important mutual assurance that the solemn commitment subscribed to by all industrialized OECD countries to render their territories "off-limits" to such practices shall be carried out.

Has the Working Group been successful• How do you measure success in this respect• What about the recently criticism voiced by representatives of some countries, that not all countries do enforce seriously the Convention• What about the view expressed by Transparency International that the business world[Page60:] (notably major multi-national companies) based in the OECD countries are not taking the Convention obligations seriously• That trans-national bribery flourishes, that small and medium enterprises often ignore its very existence•

As to the tasks of the Working Group, I will recall that it has already completed "Phase 1" of the monitoring process: the review of participants implementing legislation was carried out between 1999 and 2002 and was duly reported through the OECD "Committee on International Investment and Multinational Enterprises" (CIME) to the OECD governing body, the Ministerial Council, in 2000, 2001 and 200210. These examinations have been a serious exercise, putting strain on the examined countries: each time detailed reports on all relevant point of implementing legislation, in respect of each Convention provisions, have been prepared by the Secretariat based on the lengthy answers to specific questionnaires by each country. The answers have been checked with relevant legislation, two countries in turn have been appointed for each examined country with the task of checking the most delicate issues and leading the discussion, as "lead examiners", within the Group at meetings devoted to these examinations, country after country. Political considerations of "comity" have played no role.

Each final report contains an "evaluation" of the implementing legislation, which points to specific issues where, as often has been the case, the Group has detected shortcomings, to the need for correction or completion or expressing doubts which should be dispelled through appropriate application in the future. The final reports with the evaluations have been made public and have been the basis for open criticism and pressure by other governments, through the press and by public opinion, to seek and obtain completion and changes of domestic legislation when found inadequate by the Group. The cases of the United Kingdom and of Japan may be singled out in this respect as examples of subsequent adoption of further legislation by some members in view of the shortcomings detected by the Group and the criticisms voiced at those countries11.

The subsequent stage of monitoring by the Working Group is the so called Phase

2. It involves a detailed review of implementation practice, notably by means ofencounters with the national judicial and administrative authorities entrusted with enforcement, thus making multilateral monitoring fully effective. As of mid2002, Phase 2 monitoring had been carried out for Finland and the US, and was proceeding for Germany. [Page61:]

Finally, an important result of Phase 1 monitoring are the conclusions that the Group has drawn as to possible shortcomings of the Convention itself in the light of an "horizontal" comparison of the review of the various national implementing legislations. The Group has reflected on this issue especially with a view to the aim of the Convention to ensure not only effective combating of bribery but also comparable levels of enforcement by signatory countries.

Major issues and discrepancies highlighted in 2001 concern: available defenses under some penal law systems, the responsibility of legal persons, effectiveness of sanctions (imprisonment and monetary sanctions), effectiveness of jurisdiction, length of the statute of limitation, accounting and auditing standards13. Work is in progress by the Group as to the financing of parties and candidates (which is at the borderline between lawful political activity and illegal bribery), off-shore centres' role in facilitating money laundering of bribery (in connection with other OECD bodies focusing on the more general issue), and the coverage of subsidiaries in non-signatory countries (as conduit for multinational companies based in signatory countries evading their obligations). This highlights some weak points of the Convention, where completion through protocols, extensive interpretation of obligations, and the expansion of jurisdiction would be desirable in order to avoid circumvention and ineffectiveness. [Page62:]

1
See C. Yannaca Small, "Les paiements illicites dans le commerce international et les actions entreprises pour les combattre", AFDI 1994, p. 792 ff. ; F. Cavalerie, "La Convention de l'OCDE de 1997", ibid, 1998, p.609 ff.

2
Another major achievement of the WG in cooperation with the OECD Committee on Fiscal Affairs was the passing in 1996 of a Recommendation outlawing tax deductibility for bribery payment which in some countries were considered "legitimate business expenses" when paid to foreign public officials.

3
The OECD published the official text of the Convention in a bilingual brochure (English and French) DOC/DAFFE/IME/BR(97) 16, together with the Commentaries (Doc. 17). See also: OECD, "No Longer Business as Usual: Fighting Bribery and Corruption" (contribution by various authors), Paris 2000,p. 276.

4
The fight against corruption in countries which benefit from international multilateral assistance is now being pursued through other means, such as making any aid and assistance conditional upon the reorganization of their administration in accordance with the principle of "good governance"; see World Bank, Helping countries to combat corruption, 1997. For the European context, see a communication of the EC Commission Une politique de l'Union contre la corruption, COM (97)192 of 21 May 1997.

5
In this perspective, the Convention does not admit any reservations even if this exclusion is mentioned only in the preamble and not in the operative part. No signatory has made a reservation.

6
The US has not been successful in obtaining the support of other countries in order to extend criminalization to include the illicit (corrupt) financing of political parties, a specific case which is regulated differently in different countries and which is not everywhere subject to criminal sanctions. If the granting of a pecuniary advantage to a political party or its officers is the vehicle for corruption in the true sense , it will clearly fall under the Convention. In any case the Group has done further work in this matter, which remains on the agenda.

7
The text does not define "international business transactions", which must be interpreted broadly. Furthermore, according to Article 1 (1), corruption must occur "with a view to obtaining or retaining business or other improper advantage in the conduct of international business." The text therefore not only covers bribery in transboundary export operations, procurement or investment, but also in contracts and related business, even if it arises only at a later stage (for instance, the bribery by an established foreign investor in order to escape or reduce due taxation).

8
The European Union Convention addresses this question differently in its Art. 6 relating to the "criminal responsibility of company directors". The criminal responsibility of directors or others responsible in the event of acts of corruption "committed by persons subject to their authorities or for the benefit of the company" is provided for. The cases to be covered by the OECD are for all purposes the same.

9
The Working Group held in 1997 a session with prosecutors of several countries (such as France, Switzerland and Italy) in order to learn about the practical difficulties they encounter in investigating bribery cases with an international dimension. A direct result of these contacts is Art. 9.3 of the Convention: "A party shall not decline to render mutual assistance for criminal matters within the scope of this Convention on the ground of bank secrecy".

10
The text of all countries examinations is available on the OECD web site. As the latest Report indicates Brazil, Chile and Turkey have ratified the Convention but have enacted no implementing legislation "and are requested to do so as a matter of urgency".

11
The U.K. adopted implementing legislation as recommended by the Group through the Anti-Terrorism Law adopted in early 2002 in the wake of the Sept.11, 2001, terrorist attacks in the US.

12
See the Report by the Secretariat, doc BR (2001) 9.