FACT SHEET: SECOND ANNUAL REPORT TO CONGRESS

IMPLEMENTATION OF THE OECD ANTI-BRIBERY CONVENTION

Major Findings of the Report to Congress

• There has been progress on implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, with the number of countries depositing an instrument of ratification with the OECD increasing from 15 to 21 since last year's report. The ratification process is advancing in the remaining signatories, and most countries should become parties to the Convention by the end of 2000 or early 2001. Many signatories have also taken steps to implement the OECD recommendation to disallow the tax deductibility of bribes to foreign public officials.



• It is still too early to make judgments about the effectiveness of countries' enforcement of anti-bribery laws. The United States, which enacted the Foreign Corrupt Practices Act (FCPA) more than 20 years ago, appears to be the only country to have prosecuted persons for bribery of foreign public officials. U.S. representatives are urging the Working Group on Bribery to begin the review of enforcement mechanisms in 2000.
  

• Bribery of foreign public officials has been a widespread practice in international commerce. From May 1994 through April 2000, information available to the U.S. government indicates that the outcome of 353 foreign contracts valued at approximately $165 billion may have been affected by bribes to public officials. U.S. firms are alleged to have lost 92 of these contracts worth about $26 billion.



• The U.S. agencies that prepared this report also have concerns about the legislation of several countries, including Japan and the United Kingdom. As currently drafted, these countries' laws appear inadequate to accomplish the goals of the Convention.



• The United States has succeeded in keeping issues related to strengthening the Convention on the OECD's agenda. U.S. officials continue to raise the need for coverage of bribes to political parties, party officials, and candidates for public office, all of which are included in the FCPA. Developing a consensus on broadened coverage will require a longer-term effort as other signatories strongly disagree on the need to expand the scope of the Convention.



• The Department of Commerce and other U.S. agencies are involving the private sector in efforts to monitor implementation of the Convention and promote its goals. U.S. business associations and non-governmental organizations, such as Transparency International, are playing a key role in educating the business community and the public generally on the need to enact and enforce effective anti-bribery laws.

Background on Bribery and the OECD Convention

• Business-related bribery of public officials is not just a commercial concern. This corrupt practice retards economic development, results in lost tax revenues, and undermines democracy and good governance. The damaging effects of bribery are the greatest in the world's poorest countries.



• The Foreign Corrupt Practices Act (FCPA) of 1977 made it a crime for U.S. companies to bribe foreign public officials. Up until recently, however, foreign companies were free to bribe without fear of penalty and could even deduct the bribes from their taxes. Consequently, firms that tried to compete fairly and ethically were often disadvantaged.



• The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions entered into force in February 1999. All 29 OECD members and five nonmembers signed the Convention.* As of June 10, 2000, 21 countries have deposited an instrument of ratification with the OECD and taken steps to criminalize the bribery of foreign public officials. Several significant exporting countries, however, including Brazil, Italy, and the Netherlands, are among the 13 signatories that have yet to complete their internal processes and formally ratify the Convention.



• U.S. support for implementation of the OECD Convention is part of broader effort to promote ethical business practices and good governance around the world. Under the leadership of Vice President Gore, the United States sponsored a global anti-corruption conference in February 1999 and will co-sponsor with the Netherlands a second global conference in May 2001. The United States is supporting anti-corruption initiatives in Eastern Europe, Asia, and Africa, and urging international organizations and international financial institutions to continue strengthening their anti-bribery programs and help member countries combat corruption.



• The July 2000 report to Congress is the second of six annual reports mandated by the International Anti-Bribery and Fair Competition Act of 1998 (IAFCA). The IAFCA authorized changes in U.S. law to implement the Convention.

The report and more information on the IAFCA, the Convention, and bribery issues can be found on the following websites: www.mac.doc.gov/tcc/ and www.ita.doc.gov/legal. Businesses can report complaints concerning bribery of foreign public officials on www.mac.doc.gov/tcc/tcc2/hotline/index.html.