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The TI Progress Report on Enforcement of the OECD Convention covering 37 countries, shows that there are still only seven countries with active enforcement, nine with moderate enforcement, and 21 with little or no enforcement.
This is the first time in the seven years TI has been reporting on the OECD anti-bribery Convention that no progress has been made in the number of countries enforcing the Convention’s prohibition against foreign bribery. TI’s findings are consistent with the OECD’s own review, which reported that only five parties to the Convention sanctioned individuals or companies in the past year.
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Major support given to the United Nations Convention
The “G20 Anti-Corruption Action Plan” agreed in Seoul represents a major advance in the global fight against corruption. The test is whether the world’s leaders will act on their pledges. Civil society anti-corruption action groups agreed today to monitor progress publicly (see Transparency International press release).
The Action Plan calls for effective implementation of the United Nations Convention against Corruption (UNCAC), enforcement of laws against foreign bribery, international cooperation in preventing illicit flows into G20 financial markets, tracing and recovering stolen assets and for the protection of whistleblowers, which have long been key requests from civil society and anti-corruption fighters.
Huguette Labelle, Chair of Transparency International (TI) stated, “The G20 itself acknowledged that the global financial crisis will push an additional 64 million people into extreme poverty (living on less than $1.25 per day) by the end of 2010. A key cause of this massive human misery – and of the financial crisis itself – is corruption.”
TI’s Chair added, ”The G20 Action Plan is the very first of its kind ever issued by a G8 or G20 Summit and is a significant response to today’s crisis. It builds on the acceptance of and the determined implementation of the United National Convention against Corruption.”
Excerpt from the G-20 Releases Detailed Statement, Seoul, South Korea, November 12, 2010.
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In late November, 2009, the OECD Council released a report that includes recommendations which, when implemented, will increase sharply the pressures on governments and companies to curb corruption.
The actions itemized in the report will need to be fully and carefully assessed by all companies engaged in international trade, especially those that deal with foreign government officials. Further, there are explicit calls on governments to increase their efforts to enforce the OECD Anti-Bribery Convention. Actions to strengthen the Convention, such as banning facilitation payments, are included in the report.
On December 9, 2009, Angel Gurría, Secretary-General, OECD, noted in a speech in Washington DC stressed that, “Billions of dollars are still wasted every year on bribes. Indeed, surveys show that we have some major communication work to do. Many companies doing business abroad are still not fully aware of the OECD Anti-Bribery Convention or its implications for their business. That is why we are launching a drive to raise global awareness, so that companies know that they need to take effective measures to prevent foreign bribery by their employees and agents; and so that law enforcement authorities treat any cases of such bribery as a matter of priority.”
Mr. Gurría emphasized that the new Anti-Bribery Recommendation adopted by the OECD Council and all Parties to the Convention introduces new provisions for combating small facilitation payments, for protecting whistleblowers, and for improving lines of communication between public officials and law enforcement authorities. This new instrument complements the Convention. It improves our ability to prevent, detect and prosecute foreign bribery as a crime. It will make a real change.”
He stressed, “Next year, the Parties to the Convention will start reporting on how they apply the Recommendation. Meanwhile, we are continuing to engage major emerging economies through regional anti-corruption programs spanning the globe. Already, along with the 30 OECD countries, Argentina, Brazil, Bulgaria, Chile, Estonia, Israel, Slovenia and South Africa have signed the Convention. Russia has officially requested to join. We are encouraging other countries to follow suit. The G20 Summit in Pittsburgh gave a big push to the Convention. G20 leaders have called on us to strengthen our efforts to have more countries signing.”
The OECD “Recommendation for Further Combating Bribery of Foreign Public Officials” reported on November 26, 2009, calls on the 38 State Parties to the OECD Anti-Bribery Convention to, inter alia:
The OECD Working Group on Bribery will monitor countries’ progress in putting these measures in place from the beginning of 2010 as part of their quarterly peer-review meetings.
SOME OF THE DETAILED RECOMMENDATIONS
One section of the report recommends that each OECD member country take concrete and meaningful steps in conformity with its jurisdictional and other basic legal principles to examine or further examine the following areas:
i. awareness-raising initiatives in the public and private sector for the purpose of preventing and detecting foreign bribery;
ii. criminal laws and their application, in accordance with the OECD Anti Bribery Convention, as well as sections IV, V, VI and VII, and the Good Practice Guidance as set out in Annex I to this Recommendation;
iii. tax legislation, regulations and practice, to eliminate any indirect support of foreign bribery, in accordance with the 2009 Council Recommendation on Tax Measures for Further Combating Bribery of Foreign Public Officials in International Business Transactions, and section VIII of this Recommendation;
iv. provisions and measures to ensure the reporting of foreign bribery, in accordance with section IX of this Recommendation;
v. company and business accounting, external audit, as well as internal control, ethics, and compliance requirements and practices, in accordance with section X of this Recommendation;
vi. laws and regulations on banks and other financial institutions to ensure that adequate records would be kept and made available for inspection and investigation;
vii. public subsidies, licences, public procurement contracts, contracts funded by official development assistance, officially supported export credits, or other public advantages, so that advantages could be denied as a sanction for bribery in appropriate cases, and in accordance with sections XI and XII of this Recommendation;
viii. civil, commercial, and administrative laws and regulations, to combat foreign bribery; ix. international co-operation in investigations and other legal proceedings, in accordance with section XIII of this Recommendation.
The Council went on to recommend that, in view of the corrosive effect of small facilitation payments, particularly on sustainable economic development and the rule of law that Member countries should:
i. undertake to periodically review their policies and approach on small facilitation payments in order to effectively combat the phenomenon;
ii. encourage companies to prohibit or discourage the use of small facilitation payments in internal company controls, ethics and compliance programs or measures, recognizing that such payments are generally illegal in the countries where they are made, and must in all cases be accurately accounted for in such companies’ books and financial records.
The Council urges all countries to raise awareness of their public officials on their domestic bribery and solicitation laws with a view to stopping the solicitation and acceptance of small facilitation payments.
INDEPENDENT EXTERNAL AUDIT
i. Member countries should consider whether requirements on companies to submit to external audit are adequate;
ii. Member countries and professional associations should maintain adequate standards to ensure the independence of external auditors which permits them to provide an objective assessment of company accounts, financial statements and internal controls;
iii. Member countries should require the external auditor who discovers indications of a suspected act of bribery of a foreign public official to report this discovery to management and, as appropriate, to corporate monitoring bodies;
iv. Member countries should encourage companies that receive reports of suspected acts of bribery of foreign public officials from an external auditor to actively and effectively respond to such reports;
v. Member countries should consider requiring the external auditor to report suspected acts of bribery of foreign public officials to competent authorities independent of the company, such as law enforcement or regulatory authorities, and for those countries that permit such reporting, ensure that auditors making such reports reasonably and in good faith are protected from legal action.
KEY CORPORATE ACTIONS
The report said that OECD member countries should encourage:
i. companies to develop and adopt adequate internal controls, ethics and compliance programs or measures for the purpose of preventing and detecting foreign bribery;
ii. business associations and professional organizations, where appropriate, in their efforts to encourage and assist companies, in particular small and medium size enterprises, in developing internal controls, ethics, and compliance programs or measures for the purpose of preventing and detecting foreign bribery;
iii. company management to make statements in their annual reports or otherwise publicly disclose their internal controls, ethics and compliance programs or measures, including those which contribute to preventing and detecting bribery;
iv. the creation of monitoring bodies, independent of management, such as audit committees of boards of directors or of supervisory boards;
v. companies to provide channels for communication by, and protection of, persons not willing to violate professional standards or ethics under instructions or pressure from hierarchical superiors, as well as for persons willing to report breaches of the law or professional standards or ethics occurring within the company in good faith and on reasonable grounds, and should encourage companies to take appropriate action based on such reporting;
vi. their government agencies to consider, where international business transactions are concerned, and as appropriate, internal controls, ethics, and compliance programs or measures in their decisions to grant public advantages, including public subsidies, licenses, public procurement contracts, contracts funded by official development assistance, and officially supported export credits.
In an Annex to the report, the Council stressed that:
1. Member countries should be vigilant in ensuring that investigations and prosecutions of the bribery of foreign public officials in international business transactions are not influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved, in compliance with Article 5 of the OECD Anti Bribery Convention.
2. Complaints of bribery of foreign public officials should be seriously investigated and credible allegations assessed by competent authorities.
3. Member countries should provide adequate resources to law enforcement authorities so as to permit effective investigation and prosecution of bribery of foreign public officials in international business transactions.
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Statement by Transparency International and Civil Society Coalition Partners
At the end of a week-long meeting, the Conference of State Parties to the UN Convention against Corruption in Doha has agreed a review mechanism that falls short of effectively tackling the devastating effects of corruption.
While acknowledging the importance of adopting a review mechanism, and the efforts of the many governments who are committed to the success of this Convention, the UNCAC Civil Society Coalition (Coalition) is disappointed that this mechanism does not adequately reflect transparency, inclusiveness and effectiveness as called for by the G-20 leaders in their September statement.
The Coalition had called for an effective review mechanism, which would have ensured governments fulfilled their obligations under the treaty. More specifically, the Coalition clearly called for full publication of country reports, meaningful participation of civil society organizations, and in-country review visits.
The adopted mechanism has only made non-mandatory provisions for governments to receive input from civil society, instead of ensuring that these inputs are given to independent reviewers.
Going forward, the Coalition expects most governments will permit country visits and the publication of reports. Civil society must continue to press their governments to fulfill their obligations under the Convention. Opting out sends a strong signal of lack of transparency and accountability, and puts the spotlight on those who choose to opt out.
On the implementation review group, instead of an effective review body, it provides for a group of unlimited size which could prove unmanageable. In addition the group will not be reviewing country reports.
The Conference also adopted a weak statement on asset recovery that failed to advance key issues. It did not press signatories to comply with Convention mandates on misuse of corporate vehicles, and non-conviction based asset seizure.
The Coalition will continue to monitor the situation very closely, in order to ensure that UNCAC lives up to its potential to become a global framework for overcoming the devastating effects of corruption.
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- New Sub-Working Groups To Address Reporting and Supply-Chain Management -
The United Nations Global Compact, in collaboration with a broad alliance of business participants and other stakeholders, has stepped up efforts to advance awareness and implementation of its tenth principle on anti-corruption.
The integration of anti-corruption into the corporate responsibility agenda has sent a strong worldwide signal that business shares responsibility for the challenges of eliminating corruption. Yet, the issue still presents one of the most difficult implementation challenges.
“The fight against corruption is an ongoing process which needs dedication and support”, said Eckart Suenner, Chief Compliance Officer at BASF. “To report on progress in that fight means that you not only look back and report what has been done but that you also become aware what else can - and should be - done in future. This is real value for the own path in the fight against corruption”.
MNCs HQ to Subsidiaries, Suppliers and Subcontractors
“Multi-national companies face significant corruption risks in their supply chains, where many small and medium size local businesses may be unable or unwilling to avoid temptations to corruption”, said Mark Snyderman, Chief Ethics and Compliance Officer & Assistant General Counsel, The Coca-Cola Company. “MNCs are uniquely positioned to educate, help and direct these suppliers in dealing with corruption”.
Anti-Corruption Education Initiative
Anti-Corruption Tools and Resources
Multi-Stakeholder Dialogue Networks Initiative
CEO Statement Initiative
Media Engagement Initiative
“Widespread corruption is a cross-cutting challenge to the advancement of the Global Compact’s ten principles”, said Georg Kell, Executive Director of the UN Global Compact. “ The important work of the Global Compact Working Group on Anti-Corruption will give practical meaning to the tenth principle and help companies develop effective policies and practices that ultimately benefit all their efforts at becoming more sustainable”.
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Major OECD report stimulated by UK's decisionm to quwash investigations into alleged bribery by BAE Systems, calls for radical overhaul of UK law. The OECD's Working Group on Bribery sharply criticised the United Kingdom’s failure to bring its anti-bribery laws into line with its international obligations under the OECD Anti-Bribery Convention and urged the rapid introduction of new legislation.
Current UK legislation makes it very difficult for prosecutors to bring an effective case against a company for alleged bribery offenses. Although the UK ratified the OECD Anti-Bribery Convention 10 years ago, it has so far failed to successfully prosecute any bribery case against a company.
The OECD Working Group, which brings together all 37 countries that are parties to the OECD Anti-Bribery Convention
RECOMMENDATIONS OF THE WORKING GROUP AND FOLLOW UP
The Working Group is disappointed and seriously concerned with the unsatisfactory implementation of the Convention by the UK. The continued failure of the UK to address deficiencies in its laws on bribery of foreign public officials and on corporate liability for foreign bribery has hindered investigations. The Working Group reiterates its previous 2003, 2005 and 2007 recommendations that the UK enact new foreign bribery legislation at the earliest possible date.
The Group also strongly regrets the uncertainty about the UK‘s commitment to establish an effective corporate liability regime in accordance with the Convention, as recommended in 2005, and urges the UK to adopt appropriate legislation as a matter of high priority. The Working Group recognises that the UK government has taken some measures to strengthen the fight against foreign bribery and notes a first conviction in September 2008 for foreign bribery in international business transactions. It also notes the recent UK anti-corruption strategy to improve and strengthen the UK‘s law and structures to tackle foreign bribery. Reforms are urgently needed and should be dealt with as a matter of political priority.
The Working Group understands that the Law Commission will deliver its final report in November 2008 and that the Government will publish a draft bill for pre-legislative scrutiny early next year. The Working Group expects that a bill be introduced in Parliament in 2009. The Working Group‘s priority is indeed to ensure that the UK will enact new legislation on foreign bribery which is effective and comprehensive (including on liability of legal persons). In this context, the Working Group will seek to confer with the Law Commission about this Report and the concerns raised therein prior to the Commission‘s publication of its report. In addition, the Group welcomes the invitation of the UK government to discuss the content of the Law Commission report soon after its publication in order to fully apprise the UK of the views of the Working Group before a draft bill is submitted for pre-legislative scrutiny. The modalities of such discussion will need to be agreed between the United Kingdom and the Management Group. In addition, in light of the numerous issues of serious concern, the Working Group requests the UK to provide a written report on legislative progress at each Working Group meeting and reserves the right to carry out follow-up visits to the UK as it deems appropriate. The Working Group may also take further appropriate action after it considers the reports or any on-site visits.
The Working Group stresses that failing to enact effective and comprehensive legislation undermines the credibility of the UK legal framework and potentially triggers the need for increased due diligence over UK companies by their commercial partners or Multilateral Development Banks. In light of the above and based on its findings regarding the UK‘s implementation of the Convention and the Revised Recommendation, the Working Group also (i) makes the following recommendations to the UK under part I; and (ii) will follow up the issues in part II when there is sufficient relevant practice.
Part I. Recommendations
1. Regarding the offence of foreign bribery, the Working Group recommends that the UK:
(a) enact effective and modern foreign bribery legislation in accordance with the Convention at the earliest possible date and as a matter of high priority (Convention Article 1);
2. Regarding the liability of legal persons, the Working Group recommends that the UK adopt on a high priority basis appropriate legislation to achieve effective corporate liability for foreign bribery (Convention Articles 2 and 3).
3. Regarding jurisdiction over foreign bribery cases, the Working Group recommends that the UK:
(a) satisfy the Working Group, by enacting legislation or otherwise, that it has established a broad territorial basis for jurisdiction that does not require an extensive physical connection to the bribery act (Convention Article 4(1));
4. Regarding the application of Article 5, the Working Group recommends that the UK:
(a) take all necessary measures to ensure that Article 5 applies effectively to investigators and prosecutors at all stages of a foreign bribery investigation or prosecution, and in respect of all investigative and prosecutorial decisions including those made by the SFO, police and Attorney General (Convention Article 5);
5. Regarding the investigation and prosecution of foreign bribery cases, the Working Group recommends that the UK:
(a) ensure that the Attorney General‘s superintendence role does not include the power to give directions to the Director in individual foreign bribery cases, and eliminate the statutory requirements for the Attorney General to consent to prosecutions of foreign bribery (Convention Article 5; Revised Recommendation Paragraphs I and II); 72
6. Regarding resources for foreign bribery cases, the Working Group recommends that the UK ensure that the SFO and the relevant investigative agencies have sufficient human and financial resources so as to carry out their role effectively in foreign bribery cases (Revised Recommendation Paragraphs I and II).
7. Regarding export credits, the Working Group recommends that Export Credits Guarantee Department (ECGD):
(a) in any case where a criminal investigation into a transaction supported by ECGD has been blocked for reasons other than on the merits, make vigorous use of all of its powers, including notably its audit powers, to investigate whether the transaction involves foreign bribery (Convention Article 3(4), Revised Recommendation Paragraph I);
Part II. Follow-up by the Working Group
8. The Working Group will follow up on the issues below, as practice develops, in order to assess:
(a) the rules for appointing and removing the SFO Director, and the powers of the Attorney General and SFO Director in foreign bribery cases (Convention Article 5; Revised Recommendation Paragraphs I and II);
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The United Nations Global Compact Office has removed a total of 630 companies from its list of participants for failure to communicate progress on governance. The delisting policy was first implemented in January 2008, when 394 companies were removed from the participant list. Since then, an additional 236 companies have been delisted – bringing to 630 the total number of companies delisted since the policy was implemented. Companies that have been blacklisted are based all over the world, with almost an equal balance between the developing and industrialized countries. Many subsidiaries of well-known brands, such as L’Oreal, Hilton, Mitsubishi, and Barclays, also made the list.
The Global Compact is a voluntary initiative that seeks to advance universal principles on human rights, labor, environment and anti-corruption through the active engagement of the corporate community, in cooperation with civil society and representatives of organized labor, according to the UNGC website. In accordance with the Integrity Measures, introduced to the Global Compact in 2004 as a, companies are required to communicate annually to their stakeholders on progress made in implementing the ten principles of the UNGC.
The Global Compact’s policy on communicating progress asks participants to communicate annually to all stakeholders their progress in implementing the GC principles. Participants are also expected to submit a link to or description of their communication on progress to the Global Compact website and/or, Global Compact local network website. The 630 companies that have been delisted have failed to submit a communication on progress for three years in a row. The UNGC office states that the companies may seek reinstatement as an “active” participant to the Global Compact and to the list of participants on the Global Compact website if appropriate actions are undertaken.
Despite the large number of companies removed from the participant list, the overall number of participants continues to rise. During the first half of 2008, 701 new companies have joined the UN Global Compact, increasing the total number of business participants to 4619.
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Germany shows more aggression on combating bribery, but many countries still falling behind
Germany has undertaken the highest number of investigations for bribery, surpassing even the United States, according to a 2008 Progress Report on enforcement of the OECD Anti-Bribery Convention, produced by Transparency International (TI). The top three countries that showed the strongest enforcement are Germany, the United States and France. It seems clear that Germany’s strong actions were prompted by the scandal at Siemens, where investigations are still ongoing. In 2008, data shows Germany has had 43 bribery cases open and undertaken 88 investigations, exceeding U.S. investigations by 19.
Despite the strong enforcement by some countries, over half of the OECD signatory countries have made no progress on enforcement, TI says. G-7 countries that have made little to no progress on enforcement include Japan, the United Kingdom and Canada, a trend TI says is having a very damaging effect on the effectiveness of the Convention.
The business community is receiving mixed messages, the progress report says. Germany is taking very strong action against Siemens, which has prompted other investigations, while the UK took no action against BAE Systems, whose alleged involvement in arms-related bribery with Saudi Arabia drew global attention. The effectiveness of the Convention is also being undermined by the number of non-signatory countries taking a larger role in international trade, such as China, India and Russia.
Based on these challenges, TI has issued a number of recommendations:
UK commitment should be intensified. The proposed Corruption Bill 2008-2009 should be passed quickly, and further investigations should be undertaken by the Serious Fraud Office.
Other lagging governments should catch up. More G-7 states need to be involved in investigations to set an example that the Convention works.
Action by the Secretary-General and the OECD Ministerial Council should be taken. Higher leadership within the OECD needs to be involved in order to bring pressure on governments lagging in enforcement.
A rigorous monitoring program should be continued. The Working Group on Bribery should continue its monitoring activities, which are currently under review, and step up high-level missions to signatory states to verify enforcement.
Accession by other major exporting states should be encouraged. Examples should be set by the current signatory states in order to encourage other countries to join as well. A watch list should be created for those countries lagging in enforcement, high-level missions should be part of the monitoring program and suspension should be issued if enforcement standards are not met.
In addition to this overview of progress on enforcement, TI includes a summary on the status of the level of access to information in many signatory countries. The United States leads in this category. A major part of the report is also devoted to a description of enforcement systems within each country, followed by recommendations for improvement. Finally, major cases and investigations are explained in detail, each of which could make a large impact on the success of countries’ abilities to confront corporations that continue to be involved in bribery.
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Journal of Corporate Citizenship 29 (Spring 2008): 33-48
This article provides a helpful overview of the challenges to curbing supply-side corruption. More and more legal and regulatory frameworks are being adopted around the world, but there is still a problem with implementing these frameworks into local, binding legislation. The article discusses the main Conventions, such as the OECD Convention Against Bribery, and provides case studies of OECD member countries who have more successfully translated the frameworks into legislation and those who have had less success. Both Stevulak and Campbell believe that lessons can and should be drawn from these case studies in order to improve the international system.
In addition to discussing international frameworks, the authors see value in civil society and consumer-based initiatives that demand high standards from companies. The authors used CSR initiatives as a model for how consumer demand for more ethical business could complement what governments are doing legally. The article cites a number of initiatives that already exist, such as the Transparency International Bribe Payers Index, which are focused on increasing public access to information.
Stevulak and Campbell argue setting a higher priority on good governance and anti-corruption practices and the creation of more collaborative efforts by industry and region to combat corruption would be signs of further progress.
See the full article in the Spring 2008 issue of the Journal of Corporate Citizenship.
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TI says Bali Conference failed to develop any monitoring system for implementing the UN Convention against Corruption
Ahead of the meeting of convention signatories, the so-called Conference of States Parties (CoSP), Transparency International released a position paper, which can be downloaded here, with specific technical recommendations for a long-range, phased review of country progress.
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TI’s Annual Report Asserts the Convention is at Crossroads
Eight years after the OECD Convention entered into force only 14 of the 34 countries to have ratified the Convention are pursuing what TI calls “significant enforcement,” while there is little or no enforcement in 20 countries. This includes 12 countries where there are no prosecutions.
A critical setback to the Convention, according to TI’s new report relates to the decision by the UK Government to terminate investigations into alleged bribery by BAE Systems. The TI report states: “The termination by the United Kingdom of the investigation of bribery allegations against BAE Systems on the Al Yamamah arms project in Saudi Arabia presents a serious threat to the convention. The UK government's assertion that national security concerns overrode the commitment to prosecute foreign bribery opens a dangerous loophole that other parties could assert when investigations may offend powerful officials in important countries.”
This year’s TI report on the OECD Convention is based on the research of TI experts across the world. The report is detailed and provides country-by-country comments on the state of corruption investigations and prosecutions and the factors, including political considerations, that are influencing governments to enforce/ or not enforce the Convention.
FOREIGN BRIBERY PROSECUTIONS AND INVESTIGATIONS
* The Belgian authorities are also prosecuting 6 cases referred to them by OLAF and 1 NATO case
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The Socio-Economic Rights & Accountability Project (SERAP) Launches CampaignThe application of the United Nations Convention Against Corruption in Nigeria can “Strengthen the national anti-corruption legal framework in order to increase transparency and accountability in the management of Nigeria’s wealth and resources, facilitate mutual legal assistance, and promote repatriation of stolen funds sent abroad by corrupt officials.”
-SERAP’s Executive Director, Adetokunbo Mumuni
SERAP, supported by the National Endowment for Democracy (NED), US, has launched a campaign in Nigeria in early July to build support and understanding for the new UN Convention. At the same time, SERAP is campaigning to secure National Assembly support for the prompt ratification of the African Union Convention on Preventing and Combating Corruption (AU Anti-Corruption Convention).
Nigeria ratified the UN Convention against Corruption in December 2004, but domestic implementation and enforcement of the Convention is hindered by the clause in section 12 of the Nigerian Constitution, which stipulates that the National Assembly must enact all international treaties into law before they can have the force of law.
Following the deposit of the 15th instrument of ratification by Algeria on 6th July 2006, the AU Anti-Corruption Convention entered into force on 5th August 2006. Article 23 of the AU Anti-Corruption Convention provides that the Convention shall enter into force 30 days after the deposit of the 15th instrument of ratification. Although Nigeria signed the Convention on 16th of December 2003, it has failed and/or refused to ratify the pan African anti-corruption treaty.
SERAP said the rationale behind its campaign is that: “The criminal code provisions relating to corruption are mostly outdated and very limited. While Nigeria has enacted a new Anti-Corruption Act, this Act does not sufficiently articulate provisions relating to recovery of Nigerian stolen money, and there are no adequate guarantees in the Act to ensure the full independence of the Commission established under the Act. Making the UN Convention against Corruption part of national laws is especially important at a time when the independence and effectiveness of national anti-corruption institutions are being questioned.”
Adetokunbo Mumuni noted that, “Much of the fight against corruption in Nigeria has almost always focused on criminal prosecution and punishment, not recovery of stolen funds stashed abroad. Yet, over $400 billion of Nigeria’s wealth has been stolen and sent abroad by corrupt officials since independence in 1960, contributing to ruining the economy and impoverishing the majority of the citizens.”
SERAP explained: “The UN Convention against Corruption is the most comprehensive global anti-corruption treaty and includes provisions on recovery of stolen funds stashed abroad. This is particularly important given that efforts to recapture stolen money are often stalled because of many legal and procedural obstacles faced in the states which provide a haven for stolen money.”
The organization also argued that asset-recovery is fundamental in the fight against corruption, “especially in Nigeria where high-level corruption has plundered the national wealth, and where resources are badly needed for reconstruction and the rehabilitation of the society.” It said, “The domestication of the UN Convention against Corruption can help support the efforts of Nigeria to redress the worst effects of corruption, while at the same time, sending a message to corrupt officials that there will be no place to hide their illicit assets,” the organization stated.
African Union Convention
SERAP said it is calling on the Nigerian National Assembly to:
The organization said this Convention brings striking novelties to international efforts against corruption by specifically linking corruption and human rights and represents a significant step in the efforts to develop international standards to counteract the systemic corruption across Africa. It imposes obligations on African countries to take a leadership role in the international fight against corruption in the public and private spheres.
The Convention also establishes an Advisory Board on Corruption within the AU to promote and encourage the adoption and application of anti-corruption measures in the continent and to advise governments on how to deal with corruption in their domestic jurisdictions.
Ratifying the Convention would ensure that the Board has jurisdiction to deal with the problem of corruption in Nigeria and give Nigeria an important role as a state party, since it would then be able to participate in the Convention oversight body and to nominate candidates to the Board.
The ratification of the Convention by Nigeria would also provide the framework to comprehensively reform the country’s substantive municipal laws in order to remove impunity for perpetrators of acts of corruption. By imposing obligations on governments to tackle bank secrecy, the Convention would reduce the attractiveness of jurisdictions that often serve as a destination point for stolen funds. In addition, it could serve as a tool to bring criminal complaints against those suspected to have been involved in acts of corruption, no matter where the offence is committed. It could also make offshore jurisdictions more accountable in terms of co-operating with requests for mutual legal assistance and to limit bank secrecy in criminal cases, said SERAP.
For further information contact SERAP at email@example.com.
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Allegations of bribery should be investigated; the law is the law
"Shaming Britain" is the headline on an editorial in The Financial Times on June 28, 2007 that asserts that, "The British government was mistaken if it thought last December's shabby decision to drop its investigation into alleged corruption around the £43bn Al-Yamamah fighter export deal with Saudi Arabia would end the matter."
It noted that the US Department of Justice has decided to launch its own probe into whether BAE Systems has violated the Foreign Corrupt Practices Act. It said this decision shows the UK government's arguments for suspending its investigation - that it would wreck a vital national security relationship with the Saudis and cost thousands of jobs - for what they are: specious realpolitik and economic excuses. It added, “Allegations of bribery should be investigated; the law is the law.” And, it said, “The British government has been pusillanimous and the DoJ has exposed it.”
To read past news coverage of the BAE scandal, see News.
UPDATE! UK Government Letter Cites Security As Reason For Ending Major Corruption Probe. On January 25, 2007, the office of the UK Attorney General wrote to the UK's Campaign Against Arms Trade (who forwarded the letter to Ethicsworld - attached here) denying that commercial considerations influenced the Blair Government’s much-criticized decision to quash a corruption investigation into contracts between British Aerospace Systems (BAE Systems) and Saudi Arabia. The letter said the decision was driven by serious anti-terrorism and national security concerns. Denying that the action violates the OECD Anti-Bribery Convention, the letter includes a detailed statement on new UK efforts to enforce the Convention. Governments frequently cite 'national security' in refusing to disclose defense contracts. The letter implies that the UK bowed to Saudi government pressures and saw the investigation as a threat to the two countries' intelligence relationship.
Very rarely does the Organization of Economic Cooperation and Development (OECD) - an organization of 30 countries that promotes democratic government and the market economy - publicly rebuke one its member countries, let alone one of its most powerful. However, on January 18, 2007 the new OECD Secretary-General Angel Gurría voiced serious concerns about the recent action by UK Prime Minister Tony Blair to suppress a corruption investigation into alleged bribes paid to senior Saudi Arabian Government officials by the UK’s British Aerospace Systems plc (BAeS) in regard to major defense equipment contracts.
The early termination of the investigation for reasons that do not relate to the legal merits of the case sends the message that companies trading with countries that a government claims to be of strategic importance are above the law and can bribe with impunity. This decision risks reversing the progress made in recent years by the 36 signatories to the OECD Anti-bribery Convention to raise standards and level the playing field in international business transactions.”
The NGOs added, “It also threatens the implementation of the more recent United Nations Convention against Corruption (UNCAC), which requires all parties, including the new trading powers of China, India and Russia, to investigate and prosecute companies that pay bribes overseas. Finally, it is likely to cause irreparable damage to the UK’s reputation as an anti-corruption champion on the world stage. At the OECD, for example, it is hard to see how the UK can credibly continue to play its role in the process of peer review, through which parties hold each other to account for their implementation of the Convention. Similarly, future efforts by the UK to impose governance standards on developing countries in receipt of aid and debt relief are likely to be viewed as nothing less than double standards. Given the devastating impacts of corruption on democracy, sustainable development, human rights and poverty we call upon the UK Government to re-open the investigation of the Al Yamamah case.”
In 1985, with the encouragement and support of the Government of Margaret Thatcher, British Aerospace (now BAE Systems/BAeS) signed a contract to supply the Saudi Air force with 200 Tornado fighter planes and related equipment and services: the "Al Yamamah" contract. There were several related contracts, involving Rolls Royce aero engines and others. The first two phases of the contract are estimated to have been worth some £40 billion ($80 billion/€60 billion). BAeS still employs some 3,000 expatriate staff on the contract in Saudi Arabia. The sales were facilitated by the Defence Export Sales Organisation, part of the Ministry of Defence, and involved some government-to-government arrangements.
Currently, the third phase of Al Yamamah has been agreed in principle (Mr. Blair visited Saudi Arabia last July). Reports varied as to whether there is much work to be done before a firm agreement is concluded, or about delivery of aircraft under the contract being imminent, or over whether confirmation of the contract was being held up by the criminal investigation. A further £20 billion further £20 billion ($40 billion) of sales of Eurofighter aircraft is said to be involved.
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Iraq & Corruption
“Losing Iraq, One Truckload at a Time”
The corruption allegations in a sensitive UK-Saudi Arabian defense contract coincide with rising concerns in the United States about corruption in Iraq. In a remarkable article in The New York Times on January 14, 2007, Captain Luis Carlos Montalvan, an active duty officer at Fort Benning in Georgia in the U.S., who has completed two full tours in Iraq, described in great detail key aspects of corruption in Iraq.
He noted that Iraqi unit commanders receive cash to pay unit Iraqi soldiers, but many of the names on the list may just be fiction and that the commanders may well be receiving far more cash than they need to pay active salaries. The vast amounts that these commanders pocket, up to 30% above legitimate claims, may go into the commanders’ pockets, or be passed along to insurgent groups. More vast sums of cash regularly disappear as smuggling of oil by trucks across Iraq’s borders is now commonplace with the direct involvement of hundreds of customs officials.
In order to complement the Organization for Economic Co-Operation and Development’s (OECD) Anti-Bribery Convention, OECD countries have agreed to step up efforts to avoid giving official support to export contracts that are tainted by bribery. Government-backed export credit agencies provide about $US 60 billion in loans and loan guarantees annually to finance exports for projects around the world.
According to the OECD's press release, the new agreement calls for greater due diligence when an exporter appears on the debarment list of the World Bank or other major multilateral financial institutions or if an exporter or their agent is under charge in a national court or has been convicted for violation of laws against bribery of foreign public officials of any country within the last five years. When appropriate, this scrutiny may lead to the suspension of applications and/or denial of support/loss of cover.
Members of the OECD Working Party on Export Credits and Export Guarantees reached several agreements, including the following:
To take appropriate measures to deter bribery in international business transactions benefiting from official export credit support, in accordance with the legal system of each member country and the character of the export credit and not prejudicial to the rights of any parties not responsible for the illegal payments, including:
a) Informing exporters and, where appropriate, applicants, requesting support about the legal consequences of bribery in international business transactions under its national legal system including its national laws prohibiting such bribery and encouraging them to develop, apply and document appropriate management control systems that combat bribery.
b) Requiring exporters and, where appropriate, applicants, to provide an undertaking/ declaration that neither they, nor anyone acting on their behalf, such as agents, have been engaged or will engage in bribery in the transaction.
c) Verifying and noting whether exporters and, where appropriate, applicants, are listed on the publicly available debarment lists of the following international financial institutions: World Bank Group, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development and the Inter-American Development Bank.
d) Requiring exporters and, where appropriate, applicants, to disclose whether they or anyone acting on their behalf in connection with the transaction are currently under charge in a national court or, within a five-year period preceding the application, have been convicted in a national court or been subject to equivalent national administrative measures for violation of laws against bribery of foreign public officials of any country.
e) Requiring that exporters and, where appropriate, applicants, disclose, upon demand: (i) the identity of persons acting on their behalf in connection with the transaction, and (ii) the amount and purpose of commissions and fees paid, or agreed to be paid, to such persons.
f) Undertaking enhanced due diligence if: (i) the exporters and, where appropriate, applicants, appear on the publicly available debarment lists of one of the international financial institutions referred to in 2 c); or (ii) the Member becomes aware that exporters and, where appropriate, applicants or anyone acting on their behalf in connection with the transaction, are currently under charge in a national court, or, within a five-year period preceding the application, has been convicted in a national court or been subject to equivalent national administrative measures for violation of laws against bribery of foreign public officials of any country; or (iii) the Member has reason to believe that bribery may be involved in the transaction.
g) In case of a conviction in a national court or equivalent national administrative measures for violation of laws against bribery of foreign public officials of any country within a five-year period, verifying whether appropriate internal corrective and preventive measures (1) have been taken, maintained and documented.
h) Developing and implementing procedures to disclose to their law enforcement authorities instances of credible evidence (2) of bribery in the case that such procedures do not already exist.
i) If there is credible evidence at any time that bribery was involved in the award or execution of the export contract, informing their law enforcement authorities promptly.
j) If, before credit, cover or other support has been approved, there is credible evidence that bribery was involved in the award or execution of the export contract, suspending approval of the application during the enhanced due diligence process. If the enhanced due diligence concludes that bribery was involved in the transaction, the Member shall refuse to approve credit, cover or other support.
k) If, after credit, cover or other support has been approved bribery has been proven, taking appropriate action, such as denial of payment, indemnification, or refund of sums provided.
1. Such measures could include: replacing individuals that have been involved in bribery, adopting an appropriate anti-bribery management control systems, submitting to an audit and making the results of such periodic audits available.
2. For the purpose of this instrument, credible evidence is evidence of a quality which, after critical analysis, a court would find to be reasonable and sufficient grounds upon which to base a decision on the issue if no contrary evidence were submitted.
To read the entire agreement please see the OECD's 2006 Action Statement on Bribery and Officially Supported Export Credits.
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Massive Loopholes in OECD Anti-Corruption Convention Give “Legal” Cover to Corrupt International Business, Say U.S. Scholars