The Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery has released its Annual Report for 2013. The Annual Report contains its Phase 3 Monitoring Report on the United Kingdom, and countries like Spain and Sweden, focussing on their efforts to investigate, enforce and prosecute foreign bribery following their ratification of the OECD Anti-Bribery Convention (“the Convention”).
Background to the Working Group
The Working Group on Bribery was established in 1994 and is responsible for the implementation and enforcement of the Convention and related instruments. December 2012 marked the 15th anniversation of the signing of Convention, which was a major breakthrough in combatting corruption internationally. At the time of inception, it committed the world’s leading exporting countries to criminalise bribery of foreign public officials when engaging in cross-border business. There are now 40 parties to the Convention, 34 of which are OECD members; together these 40 members account for nearly 80% of world exports and 90% of global outward flows of foreign direct investment.
The peer-review monitoring system under the Convention is considered by Transparency International to be the ‘gold standard’ of monitoring. It is the only international, legally binding instrument to focus exclusively on the bribery of foreign public officials.
The 2013 Annual Report, looking at the data for 2012, therefore marks an important milestone in the Convention’s history and provides a good indication of how far parties to the Convention have come in tackling bribery as a criminal offence since its introduction in 1994.
Collection of data from all parties to the Convention
To date, all parties to the Convention have provided enforcement data. The data held as of December 2012 illustrates the positive effect of the Convention:
- 221 individuals and 90 entities have been sanctioned in criminal proceedings for bribery in 14 States between 1999 and the end of 2012 (the highest number being in Germany and the USA), with at least 83 of the individuals sentenced to prison for foreign bribery.
- At least 85 individuals and 120 entities have been sanctioned in criminal, administrative and civil cases for other offences relating to bribery, such as money-laundering or accounting in five state parties.
- There are currently approximately 320 investigations ongoing in 24 state parties to the Convention.
Phase 3: Evaluation Process
Since 2010, the Working Group has been conducting Phase 3 of its peer reviews; 2012 saw it pass the halfway point of this phase. Phase 1 was an initial examination of the participants’ legal texts through which the Convention was implemented and whether they met the required standard. Phase 2 was then an assessment of the structures put in place to enforce the laws and rules implementing the Convention. Phase 3 is an up to date evaluation of the structures put in place by the parties to the Convention, looking in particular at (a) progress made in weaknesses identified in Phase 2, (b) the impact of any changes in domestic legislation or institutional framework, and (c) enforcement efforts and results.
The Working Group evaluated 12 countries in 2012 as part of Phase 3: Australia, Austria, France, Greece, Hungary, Netherlands, Slovak Republic, Spain, Sweden and the United Kingdom. Each of these countries will provide a written follow-up report in two years’ time to report on the steps taken to implement the Working Group’s recommendations. An executive summary of the monitoring report for each country evaluated in 2012 can be found in Appendix 2 of the 2013 Annual Report (including the recommendations). Reports for previous years can also be found online on the OECD’s website.
The UK was evaluated by experts from France and South Africa. The Phase 3 evaluation report commended the UK for the significant increase in foreign bribery enforcement actions since Phase 2 and Phase 2bis, and also for publishing the Guidance to Commercial Organisations which led to the entry into force of the Bribery Act after the Phase 1 evaluation. The UK government was praised for raising awareness of the Bribery Act and the foreign bribery offence through its overseas missions. Furthermore, its approach of requiring companies to compensate the country of a bribed official was also noted (although further refinements suggested).
The Working Group did, however, have concerns that UK authorities were relying too heavily on civil recovery orders, which were less transparent and require less judicial oversight than criminal plea agreements. There was particular concern that many settlements, for example, with the SFO, were confidential, meaning that no proper assessment of the sanctions could be made. There was also some criticism of the length of time being taken to extend the Convention into the UK’s Overseas Territories (a number of which were considered offshore financial centres and therefore liable to be used to facilitate corrupt transactions).
The UK will have one year to make an oral follow-up report on the implementation of various recommendations, with a written report on the implementation of all recommendations to be submitted within 2 years.
The number of (public) UK prosecutions of individual (5) and companies (2) since ratification of the Convention is still markedly low compared to countries such as Germany and the USA, even with their larger economies. It will be interesting to see if the Bribery Act and recent introduction of Deferred Prosecution Agreements will drive that up that number; the US experience suggests it will.
New Parties to the Anti-Bribery Convention
In December 2012, Russia became the 39th party to the Convention, with Colombia following behind closely, becoming the 40th party on 19 January 2013. Russia adopted the Phase 1 evaluation in March 2012 and has sought to bring its anti-corruption framework in line with the Convention. There are some recommendations, which will be followed up in late 2013. Columbia adopted the Phase 1 evaluation in December 2012, and will adopt the Phase 2 evaluation in June 2014.
The Working Group is also actively working with major emerging economies that are not currently parties to the Convention, including China, India, Indonesia, Malaysia and Thailand. The Working Group has proposed a Key Partners process with China, India and Indonesia, which aims to create a more structured and coherent partnership with a view to possible membership of the Convention, if those countries wish to join. Relations with China, India and Indonesia were also reinforced in 2012 through the renewal of the 2010 Seoul G20 Anti-Corruption Action Plan, which called on G20 countries to strengthen their foreign bribery laws.
Global Relations Activities
The OECD and Working Group has continued to be involved in a number of regional initiatives around the world in 2012, including the Anti-Corruption Network for Eastern Europe and Central Asia, the Asian Development Bank/OECD Anti-Corruption Initiative for Asia and the Joint OEC/AfDB Initiative to Support Business Integrity and Anti-Bribery Efforts in Africa, the OECD Latin America Anti-Corruption Programme and the various initiatives in the Middle East.