GOVERNANCE « No Longer Business as Usual FIGHTING BRIBERY AND CORRUPTION No Longer Why has the OECD, along with other members of the international Business community, mobilised to fight corruption? The answer is simple: corruption respects no borders, knows no economic distinctions and infects all forms as Usual of government. In the long run, no country can afford the social, political or FIGHTING BRIBERY economic costs that corruption entails. AND CORRUPTION Not so long ago, bribing public officials in foreign countries to obtain business deals was, if not an acceptable, at least a tolerated business practice in many OECD countries. Today, corruption has moved to the top of the global political agenda as its dramatic impact on economic GOVERNANCE development and its corrosive effect on political stability and democratic political institutions has become increasingly obvious. In the new millennium, the OECD and associated governments, which account for over 75% of trade and investment worldwide, will play by stricter rules. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions will outlaw the practice of No Longer Business as Usual bribing foreign officials, making competition for international business much more fair and open. Bribery in commercial transactions is only part of the problem. A whole arsenal of legal instruments to combat corruption has now been developed to improve ethical standards in the public sector, to end tax deductibility for bribes, to curtail money laundering, and to clean up public procurement practices. The private sector and civil society will continue to play a critical role in making these new rules a reality. This book provides the key elements needed to build and preserve corruption-free institutions, systems, and private enterprises. http://interdev.oecd.org/subject/bribery ISBN 92-64-17660-8 21 2000 04 1 P www.oecd.org -:HSTCQE=V\[[U\: No Longer Business as Usual Fighting Bribery and Corruption ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non- discriminatory basis in accordance with international obligations. The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996) and Korea (12th December 1996). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). Publié en français sous le titre : AFFAIRISME : LA FIN DU SYSTÈME Comment combattre la corruption © OECD 2000 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, Tel. (33-1) 44 07 47 70, Fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: http://www.copyright.com/. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France. Foreword The OECD first put international corruption on its agenda in 1989 and later evolved two basic objectives for its work: to fight corruption in international business and to help level the competitive playing field for all companies. After several years spent analysing the nature of corruption in international business and studying the measures that countries might take to combat it, OECD countries agreed in 1994 on an initial Recommendation on Bribery in International Business Transactions. Subse- quently, in May 1996, they adopted a Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials. In May, 1997, a revised Recommendation on Com- bating Bribery in International Business Transactions was adopted. The 1997 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was born out of the conviction that bribery of foreign public officials in international business transactions is a serious threat to the development and preservation of democratic institutions. Not only does it under- mine economic development but it also distorts international competition by seri- ously misdirecting resources. The Convention was signed by all 29 OECD countries and five non-member countries and came into force on 15 February 1999. The OECD takes a multidisciplinary approach to fighting corruption, address- ing both the supply and the demand side of bribery. Corruption thrives where public institutions are weak or wherever poor governance is prevalent. The OECD helps countries to improve their systems of governance and public sector management. Ensuring the transparency of public procurement systems is another essential ele- ment in the fight against corruption as is the effective enforcement of money laun- dering legislation. Preventing corruption and enforcing laws to punish it require concerted actions by government, international organisations, business and labour, and civil society. The OECD acknowledges the important initiatives launched by these various actors and this book is, in large measure, a tribute to them as well. Above all, sustained, high-level political will is needed to ensure that anti-corruption strategies can deliver on their promises. © OECD 2000 3 No Longer Business as Usual This publication is the result of the collaborative efforts of many individuals. The project was managed by Enery Quinones, Head of the OECD Anti-Corruption Unit (ACU) in the Directorate for Financial, Fiscal and Enterprise Affairs and co- ordinated by Nicola Ehlermann-Cache. Editing was carried out by Robert Cornell. The ACU wishes to express its gratitude to the Centre for Co-operation with Non- Members for its collaboration and for the support of the Public Affairs and Commu- nications Directorate which has made this publication possible. The ACU is particularly grateful to the contributing authors. The views expressed are those of the authors and do not necessarily reflect those of govern- ments of the OECD and associated Member countries. This book is published on the responsibility of the Secretary-General of the OECD. 4 © OECD 2000 Preface Donald Johnston In 1997 the OECD Members joined by five other countries negotiated and signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. These 34 countries sent a message to the world that the way international business was conducted would never be the same. The Convention, which entered into force in February 1999, requires the parties to make bribery of foreign public officials a crime, levy significant penalties on those who bribe, and tighten up accounting procedures to make it harder to hide illegal payments. The OECD is actively monitoring the effective compliance with the Convention, first the conformity of national implementing legislation with the requirements of the Convention, and in a second phase the application of laws in practice. I believe the 1997 Bribery Convention is making an essential contribution to the broader effort undertaken by OECD Members and partner countries to build a more honest and fair global market place and achieve greater prosperity. The OECD is playing a leading role in the fight against corruption. Not only has the Organisation addressed the supply of bribes with the Convention and its 1996 recommendation against the tax deductibility of bribes, it has also taken steps to address the demand side of the problem. It has adopted Principles for Ethical Conduct in the Public Service, and its SIGMA Program (Support for Improvement in Governance and Management) is helping the countries of Central and Eastern Europe strengthen public procurement systems, establish effective financial controls, and reform civil service laws. The OECD’s initiative has galvanised anti-corruption action in other interna- tional organisations, such as the Council of Europe, the Organisation of American States, the European Union, the United Nations, and many others. Co-operation on a global scale is crucial and must involve all actors in the fight against corruption – national governments, business and labour, non-governmental organisations, and the public.