On 24 May 2011 Transparency International released its seventh annual Progress Report on Enforcement of the OECD Convention, which shows a continuing trend towards little or no enforcement and raises concerns about whether the Convention is losing momentum as an instrument for combating global corruption.
The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was adopted in 1997 and came into force in February 1999. It requires parties to take measures to criminalise bribery of foreign public officials, with the intention of combating global corruption by focussing on the supply side. There are currently 38 parties to the Convention (the 34 OECD member countries and 4 non-members), which is overseen by the OECD Working Group on Bribery.
The Progress Report reached the following overall conclusions:
- There has been no overall progress in the last year with enforcement. All of the countries have remained in the same categories as 2010, which means there have been no new active enforcers, no increase in the number of moderate enforcers and 21 countries still demonstrate little or no enforcement.
- There is a real risk that with over half the signatories demonstrating little or no enforcement, enforcing governments may start to backslide, posing a serious threat to the stability of the Convention and the progress made over the last decade.
- The principal cause of lagging enforcement is a lack of political commitment by government leaders, in the face of which criticism by the OECD is having little effect.
The UK was moved to the “active enforcer” category in 2010, following the increased enforcement efforts of the SFO. The 2011 report recognises the Bribery Act as being a major step forward for enforcement, particularly in the wake of the termination of the BAE Systems investigation in 2006 and much procrastination by the UK over the last decade. However, the trend towards little or no enforcement by the majority of parties to the Convention will certainly fuel the argument made by a number of British organisations that their ability to compete for foreign business will be significantly affected by the coming into force of the Bribery Act and will make them less competitive compared to their counterparts from other countries. Notably, the 21 countries that demonstrated little or no enforcement activity represent 15% of world exports, with a further 20% being represented by those classed as moderate enforcers.
The Government’s answer to the competition argument is the vast extraterritorial reach of the Bribery Act, which is intended to level the playing field for British businesses. However, whether or not the SFO will vigorously pursue foreign companies, particularly where evidence of wrong doing and key witnesses are all largely outside the UK remains to be seen. The Guidance issued by the Ministry of Justice on 30 March 2011 has led Transparency International to question how rigorously various aspects of the Bribery Act will be enforced and this uncertainty is being exacerbated by the threats posed to the future of the SFO.