News

USIS Washington File

14 February 2000

Text: State Dept.'s Larson on OECD Anti-Corruption Drive

(Says monitoring of enforcement is next step) (1090)

U.S. Under Secretary of State Alan Larson says that on the first
anniversary of the anti-bribery convention of the Organization for
Economic Cooperation and Development (OECD), 21 of the 34 signatory
countries have ratified it.

"For the first time in history, 21 countries have laws that make it a
crime for their citizens to bribe a foreign government official to
obtain or retain international business," Larson said in a news
briefing in Washington February 14.

On February 15, 1999, the OECD treaty went into effect in the United
States and 11 other countries. During the ensuing 12 months, nine more
countries have ratified it.

The 29 OECD members, comprising many of the world's market economies,
plus five countries from Latin America and eastern Europe have signed
the treaty.

A review of the anti-bribery laws in 16 countries has uncovered
several loopholes that need to be closed, though, Larson said.

France is considering legislation that appears to authorize the
payment of bribes if companies claim that the bribes had been promised
in the past, Larson said.

The United Kingdom relies on a 1906 law that does not cover acts of
bribery committed outside the country, he said. Japan's anti-bribery
legislation lacks strong penalties and contains loopholes, Larson
added. He said some signatory countries still allow tax deductions for
bribes.

Larson appealed to the countries that have not yet??? ratified the
convention to ratify it. He said the next phase of anti-corruption
work will deal with monitoring enforcement of the convention.

Following is the text of Larson's statement:

(begin text)

Combating Corruption in International Business Transactions
Press Statement by Under Secretary Alan Larson
at the Department of State
February 14, 2

Tomorrow marks the first anniversary of the entry into force of the
OECD Anti-bribery Convention. To mark that occasion, I'd like to give
you a brief progress report on the Administration's effort to combat
corruption in international business transactions.

The fight against corruption is a high priority in our foreign policy.
Corruption undermines democratic accountability; it can be an
especially pernicious phenomenon in developing or transition states
with weak institutions.

Corruption distorts and undercuts development. And corruption erodes
confidence in the international trading system.

The United States has taken a leadership position in combating
overseas commercial bribery ever since the enactment in 1977 of the
Foreign Corrupt Practices Act ("FCPA").

We led the effort to negotiate an international convention that would
enshrine the basic provisions of the FCPA. Those efforts came to
fruition in December 1997 when the 29 members countries of the
Organization for Economic Cooperation and Development ("OECD") --
joined by five non-OECD members -- signed the OECD Convention on
Combating Bribery of Foreign Public Officials in International
Business Transactions.

Secretary Albright signed on behalf of the United States. The United
States Senate ratified the Convention in 1998 and Congress passed that
same year implementing legislation that broadened the FCPA slightly to
conform to our obligations under the convention.

On February 15th of 1999, the Convention entered into force for the
United States and the eleven other countries that had by then ratified
the Convention. In the past year, another nine countries have
ratified, bringing the total to 21.

For the first time in history, 21 countries have laws that make it a
crime for their citizens to bribe a foreign government official to
obtain or retain international business.

In addition, a rigorous monitoring mechanism, a key to effective
enforcement, is up and running. This is the only anti-corruption
treaty in the world that has a functioning system of peer review.

Already the domestic laws of 16 countries have been reviewed. Soon the
participating countries will begin a new phase of monitoring that will
focus on the enforcement of laws.

In practice, what will really make a difference is the day-to-day
compliance procedures that businesses put into place to keep
themselves and their employees on the right side of the law.

Overall, our progress on the OECD Anti-bribery Convention is a tribute
to the strong bipartisan support of the Congress and the steadfast
backing of the U.S. business community.

Despite this gratifying progress, we are concerned -- as Secretary
Albright stressed in her recent speech in Davos -- about lagging
implementation.

Thirteen signatory states still have not ratified the Convention; they
include: Argentina, Brazil, Chile, Denmark, France, Ireland, Italy,
Luxembourg, Netherlands, New Zealand, Poland, Portugal and
Switzerland.

France is now considering legislation, but the draft text would appear
to grandfather future bribes if companies claimed they had been
promised in the past.

That's a big loophole.

Further, some countries that have ratified do not appear to have in
place domestic legislation adequate to meet their obligations under
the Convention.

We are concerned that the United Kingdom is relying on a 1906 law that
does not appear to cover acts of bribery committed outside the U.K.
and apparently has not been used in 94 years.

Japan's law appears to lack strong penalties and to suffer from
significant loopholes.

Finally, some signatory states still allow tax deductions for bribes
paid to foreign government officials.

This is a particularly objectionable practice that entangles developed
country authorities and their taxpayers into the corrosive practice of
bribery.

The Administration is combating corruption on many other fronts:

In February of last year Vice President Gore hosted the Global Forum
on Fighting Corruption, which was attended by representatives from
over 90 countries.

We have pushed a strong anti-corruption initiative in the Stability
Pact for Southeast Europe.

The Administration has encouraged the IMF and World Bank to
incorporate anti-corruption principles in their programs.

We negotiated an Inter-American Convention Against Cooperation in the
OAS.

We are supporting a business-led transparency initiative in APEC.

We participated in drafting an anti-corruption convention in the
Council of Europe.

The Administration has strongly supported the Global Coalition for
Africa, whose members have adopted 25 anti-corruption principles.

The global fight against corruption in business transactions will not
succeed unless we cut the source of bribes.

The developed countries need to be part of the solution, not part of
the problem. So we encourage all signatories to the OECD Convention
that have not already done so, use the next six months to ratify the
Convention, to enact effective domestic implementing legislation and
to end the practice of granting tax deductions for overseas commercial
bribes.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State)

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