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U.S. Department of State

Department Seal Alan Larson, Under Secretary of State
for Economic, Business, and Agricultural Affairs

Combating Corruption in International Business Transactions
Press Statement, U.S.Department of State, February 14, 2000
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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 especially a 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 5 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 11 other countries that had by then ratified the Convention. In the past year, another 9 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, Nerhterlands, 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 negotiate 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 6 months to ratify the Convention, to enact effective domestic implementing legislation and to end the practice of granting tax deductions for overseas commercial bribes.

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