Beyond good intentions: the OECD Anti-Bribery Convention's pursuit of prescriptive enforcement.

• Author: Graves, Courtney
• Position: Organisation for Economic Co-operation and Development

1. INTRODUCTION

   The first step to fixing a problem is recognizing there is one. (1) Initially, forty nations signed an agreement to internationally combat bribery by foreign public officials under uniformed terms and conditions enforced by the Organisation for Economic Co-Operation and Development (OECD). (2) Unfortunately, the OECD pursued unviable goals of establishing harmony and leveling the playing field because their agreement lacked the power to demand performance. (3) Specifically, non- complying signatories of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) will not face any consequences for disregarding their obligations. (4) The Anti-Bribery Convention took a primary bite at being the first to establish uniformed standards for internationally combating bribery. (5) The Anti-Bribery Convention's primary bite lacked teeth because it ratified a historically soft law treaty that relied on a functionally equivalent approach, which resulted in the Anti-Bribery Convention's lack of power to mandate signatories' performance. (6) For this reason, the Anti-Bribery Convention needs a method of prescriptive enforcement in order to effectively combat bribery and establish harmony--this is the Anti-Bribery Convention's primary problem. (7)

   This Note analyzes the Anti-Bribery Convention's implementation and enforcement methods and attempts to indicate the primary causes of its impediments. (8) Specifically, this Note will evaluate the Anti-Bribery Convention's effectiveness and conclude by proposing prescriptive enforcement methods to resolve complications. (9) Part II of this Note will discuss how and why the Anti-Bribery Convention was created, its sole reliance on peer reviews for enforcement, its concerns regarding commitment, and how the functional equivalency approach of the Anti-Bribery Convention lacks clarity resulting in misinterpretations. (10) Part III of this Note will illustrate concerns about the signatories' lack of commitment by analyzing the 2012 Annual Report's executive summaries. (11) Part IV of this Note will prescribe a hybrid alignment method consisting of current enforcement methods and adds a Phase 4 mandatory implementation with consequences for non-compliance. (12) Finally, Part V of this Note acknowledges the Anti-Bribery Convention's efforts, but reiterates how the Anti-Bribery Convention's passivity will continue to result in discontinuity and prevent harmony. (13)

2. HISTORY: INTERNATIONALLY COMBATING BRIBERY BY FOREIGN PUBLIC OFFICIALS PRE-ANTI-BRIBERY CONVENTION:

   1. Initial Attempts to Combat Bribery

      The OECD created the Anti-Bribery Convention to combat bribery by foreign public officials primarily in response to the United States' regional efforts to control and monitor corruption among their business entities doing business abroad. (14) The United States encouraged other industrialized countries to adopt legislation similar to their Foreign Corrupt Practices Act (FCPA) in order to level the playing field for competing businesses and increase market integrity and stability. (15) The trend of expanding global financial markets allows participants to transition from national markets to international markets, but such an expansion requires a robust and comprehensive system of international regulation in order to combat corruption. (16)

   2. Post-Anti-Bribery Convention: Global Expansion of Financial Markets

      As a result of the global expansion of financial markets, combating bribery required a robust and comprehensive system because acts of corruption demand quick detection and subsequent prosecution in order to lessen, prevent, or eliminate future financial crises or the perception of corruption. (17) Without international regulation and cooperation, national crises could quickly and easily spread across borders "because the increasing interconnectedness of the world means that financial crises and financial scandals are much more likely to be transnational and global events, rather than just national occurrences." (18) For example, the United States' aggressive regulation, enforcement, and litigation led market participants to exit the U.S. market and enter markets with less regulations. (19) In response, the Anti-Bribery Convention created a platform to reduce these new systematic risks by establishing provisions based on cooperation and international regulatory standards. (20) Although the Anti-Bribery Convention established transitional legislation for combating bribery in global financial markets, it fell short of a robust and comprehensive system because its provisions required ongoing cooperation, and it lacked a framework to guarantee the signatories' commitment to subsequently cooperate. (21)

   3. Anti-Bribery Convention's Implementation and Enforcement

      The Anti-Bribery Convention successfully established an instrument to level the playing field as a result of its signatories' ratification; however, the Anti-Bribery Convention failed to establish harmony because it solely relied on a functionally equivalent enforcement method. (22) Specifically, the Anti-Bribery Convention's legally binding instrument established foreign bribery as a crime even if tolerated in the foreign country, and it extended liability to individuals and companies through third parties' involvement in bribery transactions. (23) Although this instrument was applauded for its ability to maintain a fair global market, this platform for leveling the playing field lacks the strength necessary to support the weight of long-term enforcement because the platform's structure consists of a weak functionally equivalent framework. (24)

      1. Anti-Bribery Convention's Working Group on Bribery

         a. Working Group's Creation and Expectations

         The OECD Working Group on Bribery in International Business Transactions' (Working Group) commitment to implement and enforce the Anti-Bribery Convention represented the heart of the operation constantly working to achieve harmony. (25) The Working Group monitored the implementation and enforcement of the Anti-Bribery Convention by conducting peer reviews that held signatories accountable for preventing, detecting, investigating, and prosecuting bribery. (26) The Working Group consisted of a representative from each signatory who collaborated and cooperated to produce considerable amounts of information from a variety of unique and diverse resources. (27) Although the Anti-Bribery Convention's multilateral monitoring peer reviews created a plethora of feedback, the Working Group lacked the power to globally combat bribery because to do so would require uniformity of interpretation. (28)

         b. Working Group's Peer Reviews

         The peer reviews consisted of lengthy, organized, and detailed meetings with signatories to implement the Anti-Bribery Convention and monitor progress. (29) First, the Working Group, consisting of experts from governments other than the one under review, visited the subject country to meet with prosecutors, members of private industry, and representatives from civil society groups. (30) Next, the Working Group compiled three phase reports based on information collected. (31) The phase reports consisted of evaluations and written and oral follow-up reports. (32) Notably, the Working Group shared the results publicly in Annual Reports to encourage complaince and guarantee commitment. (33)

         The three phases conducted by the Working Group focus on different evaluations. (34) Phase 1 assessed the extent of conformity of a signatory's anti-bribery laws with the Anti-Bribery Convention. (35) Phase 2 assessed the state of the operation and enforcement of relevant national provisions and then generated the signatories' reports. (36) The Working Group met on-site for a week with actors from a variety of backgrounds: government, trade councils, development agencies, businesses, and civil society. (37) Phase 3 existed as the toughest round of evaluations that focused on investigation, enforcement, and prosecution. (38) The Working Group appointed two signatories to act as lead examiners to meet with a signatory on-site for three days, and then the Working Group would draft the signatory's executive summary, which a signatory would subsequently provide oral and written follow-ups on. (39) Although the Anti-Bribery Convention suggested the peer reviews' exposure existed as a method to guarantee the signatories' implementation, public shaming only led to minimal implementation. (40)

      2. Anti-Bribery Convention's Reliance on Signatories

         a. Signatories' Responsibilities

         In order to effectively combat bribery among international financial markets that breed new systematic risks of bribery, the signatories must remain actively involved in cooperating and fulfilling their Anti-Bribery Convention obligations. (41) Notably, the world's major exporters and investors joined the Anti-Bribery Convention consisting of forty signatories: thirty-four OECD members and six non-members. (42) Signatories were required to make bribery a criminal offense and, where appropriate, investigate and prosecute those who offer, promise, or give bribes to foreign public officials internationally. (43) In addition, signatories provided the Anti-Bribery Convention's funding primarily by assessed and voluntary contributions, within the framework of a biennial program of work and budget, which takes into account the size of each signatory's economy. (44) As a result of the Anti-Bribery Convention's financial constraints, signatories are encouraged to support each other, especially economically depressed countries, by supplementing funding through a percentage of the fines collected from bribery violations. (45)

         b. Signatories' Lack of Commitment

         The Anti-Bribery Convention's detrimental reliance on signatories' commitment existed as one of the primary reasons for the lack of harmony. (46) Specifically, the Anti-Bribery Convention...