USIS Washington 

24 February 1999


(Johnston urges OECD involvement in private sector) (2084)

Washington -- The Organization for Economic Cooperation and
Development (OECD) and its member countries need to extend the reach
of their anti-corruption efforts to include the private sector, says
OECD Secretary General Donald Johnston.

"It seems absurd that bribes offered to officials of a state owned
airline are caught by the (OECD Bribery) Convention while those to
officials of a privatized airline are not," Johnston said February 24
at Vice President Gore's Forum on Fighting Corruption.

"Corruption in government undermines democracy and economic well
being" by fostering criminal elements, wasting public resources,
slowing economic development and distorting trade, Johnston said.

He stressed that fighting corruption "is a complex undertaking" that
requires the involvement not only of government, but also of civil
society, enterprises, trade unions and the media.

The OECD's Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions entered into force February 15
and Johnston is confident that all OECD members and some nonmembers
such as Argentina, Brazil, Chile, the Slovak Republic, and Israel will
join the Convention.

Signing this convention means that each country agrees to "make it a
crime in their country to bribe foreign officials in order to get
business" advantage, Johnston said, adding that the accord makes OECD
members responsible for "upholding the trading system."

He invited non-OECD members to join the Bribery Convention as soon as
possible to "widen the net" of corruption prevention.

Following is the text of Johnston's remarks as prepared for delivery:

(begin text)

Statement by the Honorable Donald J. Johnston,
Secretary-General of the OECD
"Building Integrity in Government: The OECD as part of a Multiple
24 February 1999

Mr. Vice President, distinguished participants, ladies and gentlemen,

I am honored to help open this important Conference convened by Vice
President Gore. He has brought together an impressive gathering:
senior politicians -- including some heads of government -- officials,
experts on ways to fight corruption and leaders of civil society
representing citizens' interest in integrity in government. I am sure
that under the leadership of the Vice President, this assembly will
develop concrete principles, strategies and commitment for fighting
corruption and safeguarding integrity.

Corruption in government undermines democracy and economic well being.
I am sure that if this Conference has attracted so many experts, it is
because you are convinced of the tremendous harm caused by corruption.
It undermines confidence in democratic government (and this is a
problem for established democracies as well as new democracies);
fosters criminal elements; wastes public resources; slows economic
development; distorts trade. I do not need to dwell on this for you.

Fighting corruption is a complex undertaking. Effective action
requires a broad-based approach involving all social partners --
government, civil society, enterprises, trade unions and the media --
as well as official policies of prevention, correction and

The OECD is helping its Members fight corruption in several different
ways. The OECD addresses corruption from both the "demand side,"
through work on public service ethics, and the "supply side" by taking
action against bribe givers.

On the "demand" side, corruption should be seen as more than
individual criminal actions. It results from flawed government
systems, faulty legislation and weak public institutions that do not
enforce laws, and fail to provide adequate control, oversight, and

Drawing on their collective experience, OECD is helping its Member
governments get their own houses in order. Our members have reflected
together on the different tools that governments use to prevent
corruption and promote integrity in the public sector. They have
developed the concept of an "ethics infrastructure" to help members
assess their own strengths and weakness in protecting the integrity of
own governments.

As a result, last April, OECD countries adopted the "Recommendation on
Improving Ethical Conduct in the Public Service," which is built upon
these principles for managing ethics. This Recommendation has been
distributed to the Conference and I hope you will find it a valuable
source of information.

On the "supply side" the OECD negotiated the Convention on Combating
Bribery of Foreign Public Officials in International Business
Transactions. I am proud to tell you (as did the Vice President) that
this Convention entered into force last week on February 15. Twelve of
the 34 signatories have ratified the Convention. I am confident that
over the coming months they will be joined by the other signatories as
well as by new countries wanting to join the Convention. Already 5
non-OECD countries have joined this effort -- Argentina, Brazil,
Bulgaria, Chile and the Slovak Republic. Israel recently requested to

The United States can take particular pride in the OECD anti-bribery
Convention. It was the U.S. that ten years ago asked the OECD to take
up the issue of bribery in international business. All OECD countries
-- in fact, all countries -- have laws making it a crime to bribe
their own officials. At that time, only the United States, through the
Foreign Corrupt Practices Act of 1977, had extended this prohibition
to bribery of foreign officials.

When the United States brought this issue to the OECD in 1989, there
was not much enthusiasm for a multilateral anti-corruption effort.
Working with its Members, the OECD gradually built a consensus. In
1994 we achieved a general agreement that each OECD country should
combat bribery in international business transactions. In 1997 we
achieved a recommendation on more specific measures, and received a
mandate to negotiate a binding criminal law treaty. We were asked to
finish the negotiation in just 6 months. The fact that we met the
deadline testifies to how the commitment of OECD countries to fight
corruption had grown.

The countries that sign the Convention agree to make it a crime in
their country to bribe foreign officials in order to get business or
an undue business advantage. Essentially, the OECD Members, who are
the major trading countries, are taking responsibility for upholding
the trading system. They are the major competitors in most
international markets. Their companies supply much of the large-scale
bribery that undermines fair competition in the trading system.

The OECD approach might seem anomalous. It asks each country to be
responsible for the conduct of its companies. This can create
concerns. Countries and their companies worry that, given the high
economic stakes, its neighbor will not match its own effort -- either
by putting a weak a statute on the books or by neglecting enforcement.

The key issue is the level playing field. If you read the Convention,
you will see that it sets a standard for the national laws to make it
a crime to bribe a foreign official. The Convention also contains a
commitment to engage in systematic monitoring of each country's
performance. In practice we have now agreed to monitor performance in
two phases. Starting immediately, the OECD will examine all the
national laws to implement the Convention to make sure they are up to
standard. After that, the Parties to the Convention will investigate
how each country is enforcing these laws.

For my part, the OECD and its member governments have a responsibility
to extend the reach or anti-corruption efforts to transactions within
the private sector.

The OECD Convention goes very far to protect international public
procurement from corruption. It covers bribes not only to persons who
have a public office, but also to anyone who performs a service for
the government or who works in a public enterprise. But does it make
sense to stop there?

In fact, the almost global appreciation of the value of market
principles will mean that the part of the international market that is
not covered by the OECD Convention, will grow! Everywhere, major state
owned enterprises are being privatized ... utilities, airlines, ports,
airports and so on. It seems absurd that bribes offered to officials
of a state owned airline is caught by the Convention while those to
officials or a privatized airline are not! That will be the case until
the principles are extended. That is why I assert that our work at the
OECD in this area has made an important beginning, but only a

Honesty in commercial transactions is essential to making the market
system work. It is fundamental to engendering and maintaining public
support for the global market system. And the health of the global
market is critical for the wealth creation process that has brought us
so far so fast with great promise for the world of the 21st century.
That honesty which we have sought to establish within our nation
states now must reach beyond as an important and logical consequence
of globalization.

I intend to pursue this issue within the OECD while inviting non
members to join as soon as possible. We must widen the net to cover
more international corruption practices.

Finally, the OECD, naturally, has a responsibility to look beyond its
borders. For a start, the OECD Development Assistance Committee has
endorsed a strategy to combat corruption in bilateral aid-funded
procurement. And all DAC Members are using or require anti-corruption
provisions in aid-funded procurement contracts. The OECD Development
Center -- which held a conference in Washington this week on the role
of the private sector in fighting corruption -- conducts research on
how to adjust strategies to the needs of developing countries.

Fortunately, the OECD and its Member governments are not alone -- far
from it. An international response and new partnerships to fight
corruption are taking form.

Sharing this platform with me this morning are representatives of the
United Nations and Transparency International -- significantly, an
international citizens organization. I am sure the Conference will
also have the opportunity to consider the activities of the IMF, the
World Bank, the Organization of American States and others.

The OECD is working with these and many other organizations, in
particular to share experience beyond OECD.

-- Our SIGMA program -- a joint initiative of the OECD and the
European Union -- advises governments in Central and Eastern Europe on
how to raise integrity in state institutions through improved laws and
regulations, better audit functions, and more transparent public

-- With the support of the USAID, the OECD has created an
Anti-Corruption Network for these countries and the former Soviet
Union. The Network will provide support for national anti-corruption
strategies and encourage co-operation among national and international

-- In Asia, the OECD, with the Asian Development Bank and the United
Nations Development Programme (UNDP) is creating a forum for
exchanging experience on ways to improve integrity and transparency in
government and to mobilise civil society and business to join these

I would also like to signal the important activities of the private
sector in the fight against bribery. It is business firms that face
extortion and the hard choice of whether to enter the bribery
competition. Organizations like the International Chamber of Commerce
are helping them to develop their individual responses and helping to
shape OECD's policies and recommendations.

I draw attention to these multiple efforts because I think that in the
fight against corruption, we need many partnerships and many leaders.

I am often asked by journalists: Isn't the OECD Anti-bribery
Convention rather naive? How can it work in corrupt countries where
you have to bribe to do any business at all?

I think this question contains a fallacy. The various "corruption
indexes" tell us that some countries are perceived as more corrupt
than others -- and probably they do have more corrupt officials. But,
to my mind, there are no "corrupt countries." Even in the countries at
the top (or bottom) of the Transparency International index there are
many honest officials, businesses and citizens and institutions
mobilized to fight corruption.

Fighting corruption requires leadership and partnership. We can thank
the United States and Vice President Gore for their leadership in
convening this conference and offering us the opportunity to work
together, learn together and commit together to fight corruption. The
word "together" is important. Because fighting corruption requires
many leaders. In national and local governments, in parliaments and
city councils, in the judiciary and security forces and among citizens
in every community. It also requires partnership. No single effort
will do the job.

Many leaders are here for this Conference. I hope that the work of the
OECD and of this Conference will help you and the other leaders around
the world who are determined to fight corruption.

(end text)