CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONSSenate Consideration of Treaty Document 105-43
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[Senate Treaty Document 105-43] [From the U.S. Government Publishing Office] 105th Congress Treaty Doc. SENATE 2d Session 105-43 _______________________________________________________________________ CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS __________ MESSAGE FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS, ADOPTED AT PARIS ON NOVEMBER 21, 1997, BY A CONFERENCE HELD UNDER THE AUSPICES OF THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD). CONVENTION SIGNED IN PARIS ON DECEMBER 17, 1997, BY THE UNITED STATES AND 32 OTHER NATIONS May 4, 1998.--Convention was read the first time and, together with the accompanying papers, referred to the Committee on Foreign Relations and ordered to be printed for the use of the Senate. LETTER OF TRANSMITTAL ---------- The White House, May 1, 1998. To the Senate of the United States: With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the ``Convention''), adopted at Paris on November 21, 1997, by a conference held under the auspices of the Organization for Economic Cooperation and Development (OECD). The Convention was signed in Paris on December 17, 1997, by the United States and 32 other nations. I transmit also, for the information of the Senate, interpretive Commentaries on the Convention, adopted by the negotiating conference in conjunction with the Convention, that are relevant to the Senate's consideration of the Convention. I transmit also, for the information of the Senate, the report of the Department of State with respect to the Convention. Since the enactment in 1977 of the Foreign Corrupt Practices Act (FCPA), the United States has been alone in specifically criminalizing the business-related bribery of foreign public officials. United States corporations have contended that this has put them at a significant disadvantage in competing for international contracts with respect to foreign competitors who are not subject to such laws. Consistent with the sense of the Congress, as expressed in the Omnibus Trade and Competitiveness Act of 1988, encouraging negotiation of an agreement within the OECD governing the type of behavior that is prohibited under the FCPA, the United States has worked assiduously within the OECD to persuade other countries to adopt similar legislation. Those efforts have resulted in this Convention that once in force, will require that the Parties enact laws to criminalize the bribery of foreign public officials to obtain or retain business or other improper advantage in the conduct of international business. While the Convention is largely consistent with existing U.S. law, my Administration will propose certain amendments to the FCPA to bring it into conformity with and to implement the Convention. Legislation will be submitted separately to the Congress. I recommend that the Senate give early and favorable consideration to the Convention, and that it give its advice and consent to ratification. William J. Clinton. LETTER OF SUBMITTAL ---------- Department of State, Washington, April 9, 1998. The President, The White House. The President: I have the honor to submit to you, with a view to transmittal to the Senate for its advice and consent to ratification, the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The Convention was adopted on November 21, 1997 by a conference held in Paris under the auspices of the Organization for Economic Cooperation and Development (OECD). It was signed in Paris on December 17, 1997 on behalf of 33 countries, including the United States: 28 of the 29 OECD Member States (all except Australia) and five non-OECD Members who are participants in the OECD's Working Group on Bribery in International Business Transactions. The signatories include Argentina, Austria, Belgium, Brazil, Bulgaria, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Switzerland, Sweden, Turkey, the United Kingdom, and the United States. I transmit also, for the information of the Senate, interpretive Commentaries on the Convention that were adopted by the negotiating conference in conjunction with the Convention. Although not submitted for the advice and consent of the Senate, the Commentaries are relevant to the Senate's consideration of the Convention. The Convention is a historic achievement in the fight against bribery. It represents the fruit of many years of efforts by the United States to persuade other industrialized countries to adopt laws, similar to the U.S. Foreign Corrupt Practices Act (FCPA), to criminalize the business-related bribery of foreign public officials. In May 1997 the OECD Council approved the opening of negotiations of this Convention, with a view to its signature by the end of 1997 and its entry into force by the end of 1998. The Council also recommended that Member States submit relevant legislative proposals to their parliaments by April 1, 1998, and seek the enactment of such laws by the end of 1998. Article 1(1) of the Convention requires each Party to establish bribery of a foreign public official as a criminal offense under its laws. Such bribery is defined as the intentional offer, promise, or giving of any undue pecuniary or other advantage by any person, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, to induce that official to act or to refrain from acting in relation to the performance of official duties in order to obtain or retain business or other improper advantage in the conduct of international business. Such bribery is further defined in Article 1(2) to include complicity in, including incitement, aiding and abetting, or authorization of an act of bribery of a foreign public official. Attempt and conspiracy to bribe a foreign public official must also be criminalized by each Party to the same extent that attempt and conspiracy to bribe a public official of such Party are criminal offenses. This language is generally consistent with U.S. law. However, to comply fully with the Convention, which covers bribes by ``any person,'' the United States will have to expand the scope of the FCPA to encompass bribes paid by foreign persons who are not affiliated with issuers that have securities registered under the Exchange Act. ``Foreign public official'' is defined by Article 1(4) as any person holding a legislative, administrative, or judicial office of a foreign country, whether appointed or elected; any person exercising a public function for a foreign country, including for a public agency or public enterprise; and any official or agent of a public international organization. Paragraph 14 of the Commentaries states that a ``public enterprise'' is any enterprise, regardless of form, over which a government, or governments, may, directly or indirectly, exercise a dominant influence. Under Paragraph 15 of the Commentaries, an official of a public enterprise is deemed to perform a public function unless the enterprise operates on a normal commercial basis in the relevant market, i.e., on a basis which is substantially equivalent to that of a private enterprise, without preferential subsidies or other privileges. Paragraph 17 of the Commentaries notes that ``public international organization'' includes any international organization formed by states, governments, or other public international organizations, including a regional economic integration organization such as the European Community. The FCPA does not cover bribery of officials of ``public international organizations.'' To conform with the Convention, the FCPA will have to be amended to encompass bribery of such officials. The Convention does not apply to bribes to foreign political parties or party officials per se, although it would cover, by its terms, business-related bribes to foreign public officials made through political parties or party officials, as well as bribes directed by corrupt foreign public officials to political parties or party officials. Paragraph 16 of the Commentaries notes that persons that hold de factor public authority, such as political-party officials in single-party states, may be considered to be foreign public officials under the legal principles of some countries. The United States has urged that bribes paid to foreign political parties and party officials be covered under the Convention, as they are under the FCPA, and such coverage will be a topic of future negotiations within the OECD Working Group on Bribery. ``Foreign country'' is defined by Article 1(4) to include all levels and subdivisions of government, from national to local. ``Act or refrain from acting inrelation to the performance of official duties'' is defined to include any use of the public official's position, whether or not within the official's authorized competence. Article 2 provides that each Party shall take such measures as may be necessary, in accordance with its legal principles, to establish that legal persons are liable for the bribery of foreign public officials. Paragraph 20 of the Commentaries explains that Parties are not required to establish such criminal responsibility (as opposed to civil liability) if legal persons cannot be subjected to criminal responsibility under a given Party's legal system. Article 3(1) provides that bribery of foreign public officials shall be punishable by ``effective, proportionate and dissuasive criminal penalties.'' If a Party's legal system does not provide for criminal responsibility of legal persons, under Article 3(2) that Party must ensure that legal persons are subject to effective, proportionate and dissuasive non-criminal sanctions, including monetary sanctions, for bribery of foreign public officials. Under Article 3(3), the bribe and the proceeds of the bribery of a foreign public official, or property corresponding in value to that of such proceeds, are subject to seizure and confiscation, or comparable monetary sanctions are applicable. Parties are required by Article 3(4) to consider imposing additional civil or administrative sanctions upon persons subject to sanctions for bribery of foreign public officials. Article 4(1) requires that each Party take necessary measures to establish its jurisdiction over bribery of a foreign public official when such offense is committed in whole or in part in its territory. Paragraph 25 of the Commentaries states that the territorial basis for jurisdiction should be interpreted broadly so that an extensive physical connection to the act of bribery is not required. Under Article 4(2), those Parties that have jurisdiction to prosecute their nationals for offenses committed abroad must take the necessary measures to establish such jurisdiction, according to the same principles, with respect to the bribery of foreign public officials. Article 4(3) provides that the concerned Parties shall, at the request of one, consult with a view to determining the most appropriate jurisdiction for prosecution if more than one Party has jurisdiction over an offense covered by the Convention. Parties are required, under Article 4(4), to review whether their current basis for jurisdiction are effective with regard to bribery of foreign public officials and, if not, to take remedial steps. Current U.S. law governing foreign bribery contains a territorial element and is generally limited to bribery by U.S. persons and foreign persons affiliated with issuers that have securities registered under the Exchange Act. To implement fully the Convention, the United States will have to expand the FCPA to encompass acts within its territory by other foreign persons. The United States also proposes to assert jurisdiction over the acts of U.S. persons outside the United States. Article 5 states that investigation and prosecution of the bribery of a foreign public official is subject to the applicable rules and principles of each Party. It further provides that considerations of national economic interest, the potential effect upon relations with another State, or the identity of the persons involved shall not influence such investigation and prosecution. Article 6 provides that any statute of limitations applicable to bribery of foreign public officials shall allow an adequate period of time for the investigation and prosecution of the offense. Article 7 requires that each Party that has made bribery of its own public officials a predicate offense under its money laundering legislation do so on the same terms for bribery of foreign public officials, without regard to the place where the bribery occurred. The United States has already enacted such legislation. Article 8(1) requires that each Party take necessary measures, within the framework of its laws and regulations regarding the maintenance of books and records, financial statement disclosures, and accounting and auditing standards, to prohibit the following acts by companies for the purpose of bribing foreign public officials or of hiding such bribery: establishment of off-the-books accounts, the making of off-the- books or inadequately identified transactions, the recording of non-existent expenditures, the entry of liabilities with incorrect identification of their object, or the use of false documents. Each Party must, under Article 8(2), provide effective, proportionate and dissuasive civil, administrative or criminal penalties for such omissions and falsifications. This provision is consistent with the books and records and reporting requirements under U.S. securities laws. Article 9(1) requires that each Party, to the fullest extent possible under its laws and relevant treaties and arrangements, provide prompt and effective legal assistance to another Party for the purpose of criminal investigations and proceedings brought by a Party concerning offenses within the scope of the Convention, as well as for the purpose of non- criminal proceedings within the scope of the Convention brought by a Party against a legal person. Pursuant to Article 9(2), where a Party makes mutual legal assistance conditional upon the existence of dual criminality, dual criminality is deemed to exist if the offense for which the assistance is sought is within the scope of the Convention. Article 9(3) states that a Party may not, on the ground of bank secrecy, decline to render mutual legal assistance for criminal matters within the scope of the Convention. This provision is particularly important, because U.S. prosecutions have sometimes been frustrated by difficulty in obtaining foreign evidence because of lack of dual criminality. Article 10(1) provides that bribery of a foreign public official shall be deemed to be included as an extraditable offense under the laws of the Parties and the extradition treaties between them. Under Article 10(2), a Party that receives a request for extradition regarding bribery of a foreign public official from another Party with which it has noextradition treaty may consider the Convention to be the legal basis for such extradition. Each Party must, pursuant to Article 10(3), ensure that it can either extradite or prosecute its nationals for bribery of a foreign public official. If a Party declines to extradite a person for bribery of a foreign public official solely on the ground that the person is its national, that Party is required to submit the case to its competent authorities for the purpose of prosecution. Article 10(4) states that extradition for bribery of a foreign public official is subject to the conditions set out in the domestic law and applicable treaties and arrangements of each Party. Where a Party makes extradition conditional upon the existence of dual criminality, dual criminality shall be deemed to exist if the offense for which extradition is sought is within the scope of Article 1 of the Convention. Article 11 provides that each Party shall designate an authority or authorities responsible for making and receiving requests and serving as a channel of communication regarding consultations on overlapping jurisdiction under Article 4, mutual legal assistance under Article 9, or extradition under Article 10. The United States intends to designate the Department of Justice as the relevant authority for purposes of Articles 4 and 9, and the Department of State as the relevant authority for purposes of Article 10. Article 12 states that the Parties shall cooperate in carrying out a program of systematic follow-up to monitor and promote implementation of the Convention. Unless the Parties decide otherwise by consensus, this is to be done within the framework of the OECD Working Group on Bribery in International Business Transactions or any successor to its functions, and the Parties will bear the costs of the program in accordance with the rules applicable to that body. Article 13(1) provides that the Convention shall be open, until its entry into force, for signature by OECD members and by non-members that have been invited to become full participants in the Working Group on Bribery in International Business Transactions. Under Article 13(2), after the Convention enters into force, it shall be open to accession by any non-signatory that is an OECD member or that has become a full participant in the Working Group on Bribery in International Business Transactions or any successor to its functions. For each such non-signatory, the Convention shall enter into force on the sixtieth day following the date of the deposit of its instrument of accession. OECD members contemplate an active outreach program to encourage non-members to accede to the Convention. Article 14(1) provides that the Convention is subject to acceptance, approval or ratification by signatories in accordance with their respective laws. Article 14(2) states that instruments of acceptance, approval, ratification, or accession shall be deposited with the OECD Secretary-General. Article 15 sets forth a two-track process for entry into force of the Convention. Under Article 15(1), the Convention will enter into force on the sixtieth day following the date on which five of the ten OECD countries with the ten largest export shares for 1990-1996, as set forth in the Annex, and which by themselves represent at least sixty percent of the combined total exports of those ten countries, deposit their instruments of acceptance, approval or ratification. For each signatory depositing its instrument after such entry into force, the Convention will enter into force on the sixtieth day following the date of deposit. If, after December 31, 1998, the foregoing requirement has not been satisfied, under Article 15(2) any signatory that has deposited its instrument of acceptance, approval, or ratification may declare in writing to the OECD Secretary- General its readiness to accept entry into force of the Convention. For such a signatory, the Convention will enter into force on the sixtieth day following the date on which such declarations have been deposited by at least two signatories. For each signatory depositing its declaration after such entry into force, the Convention will enter into force on the sixtieth day following the date of deposit. Article 16 provides that any Party may propose, through submission to the OECD Secretary-General, an amendment of the Convention. The Secretary-General shall communicate the proposed amendment to the other Parties at least sixty days before convening a meeting of the Parties to consider it. An amendment adopted by consensus of the Parties, or by such other means as the Parties may determine by consensus, shall enter into force for all Parties sixty days after the deposit of an instrument of ratification, acceptance, or approval by all Parties, or in such other circumstances as the Parties may specify at the time of adoption of the amendment. Article 17 provides that a Party may withdraw from the Convention, effective one year after the OECD Secretary- General's receipt of written notification thereof. After withdrawal, cooperation shall continue between the withdrawing Party and other Parties on all pending requests for assistance or extradition made before the effective date of withdrawal. The final clauses of the Convention do not contain a provision prohibiting reservations. However, the Preamble recognizes that achieving equivalence among measures to be taken by the Parties is an essential object and purpose of the Convention, and that this requires that the Convention be ratified ``without derogations affecting this equivalence.'' This is a call upon Parties to refrain from entering reservations that would affect such equivalence, and it is consistent with the international practice that States may not formulate a reservation that is incompatible with the object and purpose of the treaty. The Annex includes OECD and International Monetary Fund (IMF) statistics, in absolute and percentage terms, on the value of exports for each OECD member for the period 1990-96. These figures will be used in determining whether the entry into force requirements of Article 15(1) have been satisfied. The Convention is largely consistent with existing U.S. law. However, as set forth above, certain amendments to the FCPA are proposed in order to conform with and to implement the Convention. Proposed legislation is being prepared and is expected to be submitted to the Congress at an early date. The Department of Justice, the Department of Commerce, the Department of the Treasury, the Securities and Exchange Commission, and the Office of the United States Trade Representative join the Department of State in recommending that the Convention be transmitted to the Senate at an early date for its advice and consent to ratification. Respectfully submitted, Strobe Talbot.