Is the OECD the answer? It's only part of the solution.

• Author: Nadipuram, Abhay M.
• Position: Organization for Economic Co-operation and Development, anti-bribery measures

1. INTRODUCTION II. BACKGROUND A. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions B. The Impact of International Law on Individual States C. Domestic Implementation of the Convention 1. Implementation of the Convention in the United Kingdom 2. Implementation of the Convention in the United States III. ANALYSIS A. Russia 1. Russia's New Anti-Bribery Laws 2. Russia's Obligation to Combat Bribery by Being Party to the Partnership and Cooperation Agreement B. India C. China 1. China's Anti-Bribery Legislation 2. WTO Membership Urges China to Fight Bribery IV. RECOMMENDATION A. International Economic Pressure B. The Role of Non-Governmental Organizations C. The OECD Can Create a Better Transition for Implementing the Convention D. The WTO Should Create Stronger Rules to Incentivize India and China to Implement the Convention V. CONCLUSION I. INTRODUCTION

   In 1997, the Organization for Economic Co-operation and Development (OECD) created the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Convention or OECD Convention). (1) Essentially, "[t]he Convention requires that all participating [countries] criminalize the bribery of foreign officials, outline appropriate sanctions for violations, and agree to extradite those charged with a bribery offense." (2) The Convention "is the first and only international anticorruption instrument focused on the 'supply side' of the bribery transaction." (3) Rather than focusing on "passive bribery"--that is, the offense committed by parties who accept bribes--the Convention combats "active bribery"--the offense committed by parties "who promise[] or give[] the bribe." (4) So far, 39 countries are parties to the Convention (party-countries)--all 34 OECD member-countries, and 5 non-member-countries. (5)

   While the OECD Convention's primary goal is to create a fair business environment for companies conducting business internationally, (6) the Convention may "cause inequities among countries in international business transactions." (7) Some have commented that inequalities already exist between corporations of party-countries due to the Convention's imprecise terminology in defining what constitutes an offense. (8) However, what is more disconcerting is that corporations from party-countries that have implemented the Convention are often more reluctant to invest in certain countries due to the increased risk of violating their home country's anti-bribery laws and incurring costs associated with compliance, potential penalties, and damage to their company's reputation. (9) Consequently, corporations from party-countries that have implemented legislation may abandon countries where bribery is a prerequisite for conducting business. (10) Meanwhile, corporations from countries that have not signed the Convention (non-party-countries) enter into those abandoned countries with the understanding that they may bribe foreign public officials to gain a market advantage but will not face a risk of prosecution in their home country. (11) Thus, implementation and aggressive enforcement of the OECD Convention may simply create the environment the Convention aims to prevent. (12)

   Transparency International (13) (TI) emphasizes that the OECD must continue to attempt to engage all major economies--specifically Russia, China, and India (collectively, RIC)--in signing and implementing the Convention to create a more fair international business environment. (14) While China and Russia have shown signs of welcoming the Convention, India has yet to take any substantial steps toward participating in the Convention. (15) This is troubling, especially because TI reports that only 9 party-countries are "moderately" enforcing its statutes, while the remaining 20 countries have "little or no enforcement" of their anti-bribery statutes. (16) These numbers purport that the powerhouse RIC economies are unlikely to fully engage with the Convention. While the OECD is working diligently with countries to sign and implement the Convention, it must use an alternative approach to ensure that the world's major economies are acting in concert to combat bribery of foreign public officials.

   This Note argues that while the Convention may be an integral element in abolishing bribery of foreign public officials, it is only part of the solution due to the inability of the OECD to convince all major economies to sign and implement the Convention. (17) Part II of this Note provides a general overview of bribery in the international context, includes a brief description of the relevant provisions of the Convention, and outlines the success many party-countries--such as the United Kingdom and the United States--have had with implementing the Convention. (18) Part III analyzes various other avenues and methods of international law that the international community can use to persuade RIC to implement the Convention. (19) Finally, Part IV recommends that the international community, as a whole, use alternative methods of international law to pressure RIC into condemning bribery of foreign public officials and explains ways the OECD can alter its practices to allow countries to more easily become parties to the Convention. (20)

2. BACKGROUND

   Bribery deters economic growth and impedes business. (21) According to the World Bank, the total amount in bribes paid around the world exceeds $1 trillion each year, which amounts to approximately three percent of the world economy. (22) In fact, bribery is so prevalent that bribes create approximately a 20% tax on foreign investment, forcing corporations and other businesses to spend much more on transaction costs in foreign countries. (23)

   Indeed, bribery is a transnational concern. (24) Various intergovernmental and international organizations have conventions or treaties aimed at preventing and criminalizing bribery. (25) The OECD is the leader in the fight specifically against bribery of foreign public officials. (26) It drafts and helps governments implement economic and social policies aimed at improving the lives of people around the world. (27) It sets international standards on a wide spectrum of subjects, such as education, employment, taxes, and trade. (28) Using these standards, the OECD recommends policies for countries that become party to its conventions. (29)

   Established nearly 50 years ago, the OECD provides "a forum in which governments can work together to share experiences and seek solutions to common problems." (30) The 34 member-countries represent a wide array of economic and social development. (31) While the OECD consists of some of the world's largest economies-such as the United States, Japan, Germany, and the United Kingdom--emerging economies such as Mexico, Chile, and Turkey are also members. (32)

   1. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

      The OECD Convention guides countries through its anti-bribery provisions. (33) Articles One through Three focus on the offense of bribery itself. (34) Article One "defines the offense of bribery of a foreign public official and provides definitions for terms used throughout the Convention." (35) Specifically, Article One asks each party to criminalize the act of any individual or entity that gives or promises to give "any undue pecuniary or other advantage" to a foreign public official to obtain or retain business. (36) In addition, countries must criminalize the act of a person or an entity assisting in such behavior. (37) Article Two requires each government to determine the liability for legal persons who bribe foreign public officials. (38)

      Article Three sets forth the requirements for appropriate sanctions for bribing a foreign official:

      The bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties. The range of penalties shall be comparable to that applicable to the bribery of the Party's own public officials and shall, in the case of natural persons, include deprivation of liberty sufficient to enable effective mutual legal assistance and extradition. (39) Article Three also requires statutes to ensure that "the bribe and the proceeds of the bribery of a foreign public official, or property the value of which corresponds to that of such proceeds, are [seized or confiscated] or that monetary sanctions of comparable effect [apply]." (40)

      Article Four explains what type of jurisdiction countries should have over bribery of foreign public officials. (41) The Article "directs each party to enact laws establishing the country's jurisdiction ... when the offense is committed in whole or in part in its territory." (42) Also, Article Four requires countries to include bribery of foreign officials into any laws that allow the country to prosecute its nationals for crimes committed abroad. (43) Finally, Article Four fosters cooperation amongst member-countries by requiring countries to consult with one another when more than one country has jurisdiction over the crime. (44)

      Articles Nine through Twelve discuss cooperation between countries--or, as the Convention describes, "Mutual Legal Assistance." (45) In general, these provisions require member-countries to: (1) provide expedient assistance to other member-countries that are investigating offenses of the Convention; (46) (2) extradite offenders if there is an extradition treaty between the countries; (47) and (3) work together to implement the Convention. (48)

   2. The Impact of International Law on Individual States

      Countries often use international law as a method to combat bribery (49) because it is precise and gives nations discretion as to how they should apply the law. (50) A country individually benefits from international agreements that make its "commitments more credible because they increase the cost of reneging, whether on account of...