Is the OECD the answer? It's only part of the solution.
I. INTRODUCTION II. BACKGROUND A. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions B. The Impact of International Law on Individual States C. Domestic Implementation of the Convention 1. Implementation of the Convention in the United Kingdom 2. Implementation of the Convention in the United States III. ANALYSIS A. Russia 1. Russia's New Anti-Bribery Laws 2. Russia's Obligation to Combat Bribery by Being Party to the Partnership and Cooperation Agreement B. India C. China 1. China's Anti-Bribery Legislation 2. WTO Membership Urges China to Fight Bribery IV. RECOMMENDATION A. International Economic Pressure B. The Role of Non-Governmental Organizations C. The OECD Can Create a Better Transition for Implementing the Convention D. The WTO Should Create Stronger Rules to Incentivize India and China to Implement the Convention V. CONCLUSION
In 1997, the Organization for Economic Co-operation and Development (OECD) created the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Convention or OECD Convention). (1) Essentially, "[t]he Convention requires that all participating [countries] criminalize the bribery of foreign officials, outline appropriate sanctions for violations, and agree to extradite those charged with a bribery offense." (2) The Convention "is the first and only international anticorruption instrument focused on the 'supply side' of the bribery transaction." (3) Rather than focusing on "passive bribery"--that is, the offense committed by parties who accept bribes--the Convention combats "active bribery"--the offense committed by parties "who promise or give the bribe." (4) So far, 39 countries are parties to the Convention (party-countries)--all 34 OECD member-countries, and 5 non-member-countries. (5)
While the OECD Convention's primary goal is to create a fair business environment for companies conducting business internationally, (6) the Convention may "cause inequities among countries in international business transactions." (7) Some have commented that inequalities already exist between corporations of party-countries due to the Convention's imprecise terminology in defining what constitutes an offense. (8) However, what is more disconcerting is that corporations from party-countries that have implemented the Convention are often more reluctant to invest in certain countries due to the increased risk of violating their home country's anti-bribery laws and incurring costs associated with compliance, potential penalties, and damage to their company's reputation. (9) Consequently, corporations from party-countries that have implemented legislation may abandon countries where bribery is a prerequisite for conducting business. (10) Meanwhile, corporations from countries that have not signed the Convention (non-party-countries) enter into those abandoned countries with the understanding that they may bribe foreign public officials to gain a market advantage but will not face a risk of prosecution in their home country. (11) Thus, implementation and aggressive enforcement of the OECD Convention may simply create the environment the Convention aims to prevent. (12)
Transparency International (13) (TI) emphasizes that the OECD must continue to attempt to engage all major economies--specifically Russia, China, and India (collectively, RIC)--in signing and implementing the Convention to create a more fair international business environment. (14) While China and Russia have shown signs of welcoming the Convention, India has yet to take any substantial steps toward participating in the Convention. (15) This is troubling, especially because TI reports that only 9 party-countries are "moderately" enforcing its statutes, while the remaining 20 countries have "little or no enforcement" of their anti-bribery statutes. (16) These numbers purport that the powerhouse RIC economies are unlikely to fully engage with the Convention. While the OECD is working diligently with countries to sign and implement the Convention, it must use an alternative approach to ensure that the world's major economies are acting in concert to combat bribery of foreign public officials.
This Note argues that while the Convention may be an integral element in abolishing bribery of foreign public officials, it is only part of the solution due to the inability of the OECD to convince all major economies to sign and implement the Convention. (17) Part II of this Note provides a general overview of bribery in the international context, includes a brief description of the relevant provisions of the Convention, and outlines the success many party-countries--such as the United Kingdom and the United States--have had with implementing the Convention. (18) Part III analyzes various other avenues and methods of international law that the international community can use to persuade RIC to implement the Convention. (19) Finally, Part IV recommends that the international community, as a whole, use alternative methods of international law to pressure RIC into condemning bribery of foreign public officials and explains ways the OECD can alter its practices to allow countries to more easily become parties to the Convention. (20)
Bribery deters economic growth and impedes business. (21) According to the World Bank, the total amount in bribes paid around the world exceeds $1 trillion each year, which amounts to approximately three percent of the world economy. (22) In fact, bribery is so prevalent that bribes create approximately a 20% tax on foreign investment, forcing corporations and other businesses to spend much more on transaction costs in foreign countries. (23)
Indeed, bribery is a transnational concern. (24) Various intergovernmental and international organizations have conventions or treaties aimed at preventing and criminalizing bribery. (25) The OECD is the leader in the fight specifically against bribery of foreign public officials. (26) It drafts and helps governments implement economic and social policies aimed at improving the lives of people around the world. (27) It sets international standards on a wide spectrum of subjects, such as education, employment, taxes, and trade. (28) Using these standards, the OECD recommends policies for countries that become party to its conventions. (29)
Established nearly 50 years ago, the OECD provides "a forum in which governments can work together to share experiences and seek solutions to common problems." (30) The 34 member-countries represent a wide array of economic and social development. (31) While the OECD consists of some of the world's largest economies-such as the United States, Japan, Germany, and the United Kingdom--emerging economies such as Mexico, Chile, and Turkey are also members. (32)
A. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
The OECD Convention guides countries through its anti-bribery provisions. (33) Articles One through Three focus on the offense of bribery itself. (34) Article One "defines the offense of bribery of a foreign public official and provides definitions for terms used throughout the Convention." (35) Specifically, Article One asks each party to criminalize the act of any individual or entity that gives or promises to give "any undue pecuniary or other advantage" to a foreign public official to obtain or retain business. (36) In addition, countries must criminalize the act of a person or an entity assisting in such behavior. (37) Article Two requires each government to determine the liability for legal persons who bribe foreign public officials. (38)
Article Three sets forth the requirements for appropriate sanctions for bribing a foreign official:
The bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties. The range of penalties shall be comparable to that applicable to the bribery of the Party's own public officials and shall, in the case of natural persons, include deprivation of liberty sufficient to enable effective mutual legal assistance and extradition. (39)
Article Three also requires statutes to ensure that "the bribe and the proceeds of the bribery of a foreign public official, or property the value of which corresponds to that of such proceeds, are [seized or confiscated] or that monetary sanctions of comparable effect [apply]." (40)
Article Four explains what type of jurisdiction countries should have over bribery of foreign public officials. (41) The Article "directs each party to enact laws establishing the country's jurisdiction ... when the offense is committed in whole or in part in its territory." (42) Also, Article Four requires countries to include bribery of foreign officials into any laws that allow the country to prosecute its nationals for crimes committed abroad. (43) Finally, Article Four fosters cooperation amongst member-countries by requiring countries to consult with one another when more than one country has jurisdiction over the crime. (44)
Articles Nine through Twelve discuss cooperation between countries--or, as the Convention describes, "Mutual Legal Assistance." (45) In general, these provisions require member-countries to: (1) provide expedient assistance to other member-countries that are investigating offenses of the Convention; (46) (2) extradite offenders if there is an extradition treaty between the countries; (47) and (3) work together to implement the Convention. (48)
B. The Impact of International Law on Individual States
Countries often use international law as a method to combat bribery (49) because it is precise and gives nations discretion as to how they should apply the law. (50) A country individually benefits from international agreements that make its "commitments more credible because they increase the cost of reneging, whether on account of legal sanctions or on account of the costs to a [country's] reputation where it is found to have violated its legal commitments." (51) International agreements can also have a direct legal impact within a given country's domestic jurisdiction by requiring a country to enact specific statutes. (52) This increases a country's credibility because the statutes create an "audience"--that is, a country's citizenry--to hold the country accountable. (53) This, in turn, helps the country's reputation. (54)
International agreements can be costly because they can restrict a country's behavior and, in some cases, its sovereignty. (55) Additionally, international agreements can sometimes be rigid if they do not allow for much variation for situations that may require adjustment and experimentation. (56) The international community often uses contract theory to hold countries accountable in following international agreements. (57)
Through contract law, countries sign "credible commitments," which are important when both parties must perform for them to benefit from the agreement. (58) These commitments help bolster a country's credibility because other parties to the agreement depend on it to participate. (59) Additionally, parties often sign agreements to improve their reputation to attract foreign investors. (60) These laws are also advantageous due to the enforceability by third parties, which persuades countries to follow through with their commitments. (61) For example, the World Trade Organization (WTO) and the European Union (EU) both allow members to bring legal action if a country is allegedly violating the agreement. (62)
The international community also uses non-binding law to influence behavior. (63) Oftentimes, countries will agree to a set of "rules of conduct which, in principle, have no legally binding force but which nevertheless may have practical effects." (64) While these laws generally do not impose legal sanctions on a country that defies an agreement, the laws "are enforceable or sanctionable at various different levels by means, not of law, but of some form of perceived international responsibility." (65) These laws are commonly used in situations where several parties are involved, the issue is "politically charged," and where there is "factual uncertainty." (66) As one commentator has plainly stated, these laws are "nonbinding rules or instruments that interpret or inform our understanding of binding legal rules or represent promises that in turn create expectations about future conduct." (67) Countries benefit from these laws because they reduce contracting and sovereignty costs and can "facilitate constitutive processes such as persuasion, learning, argumentation, and sociali[z]ation." (68)
To help guide party-countries through the process of adopting and implementing the Convention, the OECD established the OECD Working Group on Bribery in International Business Transactions (Working Group). (69) All party-countries are members of the Working Group, which meets quarterly to review all party-countries' participation and implementation of the Convention. (70) This peer review process includes three phases. (71) Phase one examines a country's domestic laws that attempt to implement the Convention. (72) Phase two looks to the effectiveness of those laws and the country's efforts in curbing bribery. (73) Finally, Phase three reviews the country's effectiveness in enforcing the laws and addresses weaknesses that the laws expose. (74) As the Working Group monitors the countries' progress, it creates monitoring reports that are available to the public. (75) The Working Group creates an "audience" for party-countries that implicitly holds the party-countries accountable and encourages them to maintain their reputation by implementing the Convention quickly and completely. (76)
Because other avenues of international law exist, what international law mechanisms can persuade RIC to fully implement the Convention? Are these countries already obliged to implement laws prohibiting the bribery of foreign public officials because of other treaties? Should RIC be concerned about their reputation for not signing onto the Convention? This Note addresses these questions, and others, and may help guide the international community in persuading RIC to implement the Convention.
C. Domestic Implementation of the Convention
The international community holds states accountable to the Convention by pressuring states to implement and enforce their own domestic law. (77) Since the Convention's inception, party-countries have made steady progress in implementing it by passing laws that criminalize bribery of foreign public officials in their countries. (78) TI's 2010 progress report highlighted three major improvements in the OECD's efforts. (79) TI applauded the OECD for increasing its anti-corruption programs from 2009 to 2010, and for spending additional time evaluating party-countries' progress. (80) TI noted that from 2009 to 2010, more party-countries were "actively" enforcing anti-bribery statutes. (81)
1. Implementation of the Convention in the United Kingdom
TI was pleased with specific countries that enacted anti-bribery statutes. (82) For example, the United Kingdom strengthened its anti-bribery laws--including harsher penalties for entities that bribe foreign public officials (83)--by passing the Bribery Act of 2010. (84) While the Bribery Act may be overly broad and disadvantageous to British corporations that wish to globally expand, (85) TI commended the United Kingdom because the Act drastically improves U.K. bribery laws and brings the United Kingdom--the fourth largest exporter among the Convention's member-countries--in line with the OECD Convention. (86) In fact, the U.K. Bribery Act has been coined the "toughest anticorruption legislation in the world." (87) Furthermore, the Bribery Act is unique in that it allows for a compliance defense, (88) which the United States considered and rejected. (89)
2. Implementation of the Convention in the United States
The United States has also become a leader in implementing the Convention by creating domestic law that coincides with the Convention's standards. (90) In one report, the OECD praised the United States as a model for ideal OECD Convention implementation, specifically mentioning how "[g]ood practices ... within the U.S. legal and policy framework ... have helped [the United States] achieve a significant enforcement level...." (91)
In 1977, Congress enacted the Foreign Corrupt Practices Act (FCPA), which was the first law in the world to confront and effectively eliminate corporate bribes paid to foreign public officials. (92) Generally, the FCPA's anti-bribery provision--which is jointly enforced by the U.S. Department of Justice and Securities and Exchange Commission (93)--prohibits corporations from offering money or "anything of value" to foreign officials that will assist the corporation "in obtaining or retaining business." (94) The law is applied broadly and pertains to virtually any entity doing business abroad. (95) The United States enforces the FCPA both within and outside of U.S. territories, "[so] long as the act[ion] [of a business] is in furtherance of the improper payment or offer." (96)
Furthermore, the entity must have offered a payment or gift "corruptly," (97) "meaning with an 'evil motive or purpose, an intent to wrongfully influence the recipient.'" (98) Thus, the FCPA focuses on the intent of the actor, rather than on whether the actual bribe occurred. (99) A foreign official need not "actually solicit, accept, or receive the corrupt payment for the bribe payor to be liable." (100) To be held liable under the FCPA, the actor must have acted "willfully," which means he or she committed the act "voluntarily and purposefully, and with a bad purpose." (101)
Certain types of payments are exempt from FCPA's anti-bribery provisions. (102) When a payment is made to further a "routine governmental action," such as "processing visas, providing police protection or mail service, and supplying utilities like phone, service, power, and water," the payment will likely not fall under the FCPA. (103) Although these types of payments may not fall under the jurisdiction of the FCPA, these types of payments may still be against the law of the country where the actor is making the payment. (104)
In addition to the United Kingdom and United States, other countries, such as Spain, Chile, and Turkey, have also substantially reformed their laws. (105) TI was pleased with the number of settlements that prosecutors reached in the United States, Germany, and United Kingdom in foreign bribery cases. (106) The fines totaled hundreds of millions of dollars, providing "a sharp wake-up call to international business regarding the gravity of foreign bribery." (107)
For the OECD to be successful in using the Convention as a means to eliminate bribery of foreign public officials in international business transactions, all individual countries need to implement the Convention's standards. (108) As noted above, Russia and China have both attempted to prevent their corporations from bribing foreign public officials; however, India has not. (109) The OECD and the international community can urge these countries to adopt and enforce stronger provisions using other avenues of international law other than the Convention itself. Two specific ways the international community can assist in this process is by (1) insisting that countries enforce their already existing anti-bribery laws; and (2) abide by certain anti-bribery provisions that exist in treaties or international agreements to which these countries are parties.
In TI's 2010 corruption perception index, Russia ranked 154 out of 178 countries, scoring a 2.1 on TI's Corruption Index out of a possible score of 10. (110) TI noted that Russian companies are most likely to bribe when conducting business abroad compared to all other countries in the Index, and bribery "was reportedly most common to win public sector works and construction contracts." (111) The report specifically recommended that more international cooperation was needed to prevent corporations from paying foreign bribes. (112) While some have commented that there is little hope for Russia to become less corrupt, (113) Russia enacted legislation to fight bribery of foreign public officials and has made other commitments to international agreements that require Russia to combat bribery and corruption.
1. Russia's New Anti-Bribery Laws
Russia adopted a law similar to the FCPA in May 2011 (114) to battle its ongoing corruption problem and to become eligible for OECD participation. (115) In February 2012, Russia accepted an invitation to join the OECD, and in March 2012, the Working Group completed its phase one assessment of Russia's anti-bribery law. (116)
Similar to the FCPA, Russia's new law "prohibits acceptance [and giving] of bribes directly or through intermediaries [and] ... applies to government officials, foreign government officials or officials of public international organizations." (117) An individual must have intentionally or carelessly committed the crime, and the person can be found guilty if the crime was committed "directly" or "indirectly." (118) A crime is committed directly if the "person was conscious of the social danger of his actions (or failure to act), foresaw the possibility or the inevitability of the ensuing socially dangerous consequences, and wished the ensuing thereof." (119) The crime is committed "indirectly" "if the person reali[z]ed the social danger of his actions (inaction), foresaw the possibility of the onset of socially dangerous consequences, did not wish, but consciously allowed these consequences or treated them with indifference." (120) The sanctions for violating the law are harsh and seem to be even harsher than those in the FCPA. (121) According to the OCCD's phase one report on the law, the fine for a natural person can be as large as 100 times the amount of the bribe, without exceeding 500 million rubles--approximately 12 million [euro]. (122) The report indicates that these penalties are a product of amendments after the adoption of the law in 2011 and are a "significant increase ... compared to the maximum amount of 1 million [rubles] ... in the previous legislation." (123)
The law characterizes a "foreign government official" similarly to a "foreign official" under the FCPA, in that it applies to any "appointed or elected official who has a position in any legislative, executive, administrative, or judicial branch of a foreign country" and any other individual who serves in any "public function." (124) Essentially, it is a crime to bribe a foreign public official either personally or through an intermediary; however, the law distinguishes different amounts of the bribe. (125) The law also specifically exonerates from criminal liability those who assist in the investigation of bribery of a public official and those who voluntarily report the crime. (126) According to the Working Group, any natural person over the age of 16 is otherwise subject to criminal liability under the law. However, both the Russian statutes and the Russian Constitution create many immunities from criminal prosecution, which may prevent the Russian law from complying with all parts of the Convention. (127)
The Working Group has suggested that "Russia ensure that any person can be investigated, charged, or prosecuted for foreign bribery and that the process for lifting immunity for persons alleged to be involved in foreign bribery is effective and transparent to allow investigation, prosecution and adjudication of the offence." (128) The Working Group has also suggested that Russia "ensure that third party beneficiaries are covered by the foreign bribery offence for legal persons." (129) While Russia has made significant strides in complying with the Convention, the Working Group will only be able to examine the law's effectiveness in phases two and three of the peer review process. Until then, however, as indicated in Part III.A.2, Russia is still obligated to follow anti-bribery rules through other law. (130)
2. Russia's Obligation to Combat Bribery by Being Party to the Partnership and Cooperation Agreement
Russia has not only established its own domestic law prohibiting bribery of foreign public officials, it also has a commitment to the European Union to prevent "corruption"--i.e., bribery. (131) The Partnership and Cooperation Agreement (PCA) (132) lays out the terms and is the legal basis for the EU's bilateral economic relationship with Russia. (133) Article 84 of Title 8 of the PCA specifically states that the two parties pursue a relationship void of illegal activities, "including corruption." (134)
The PCA is economically significant for Russia. In 2010, the EU exported over U.S. $144 billion (108 billion [euro]) in goods to Russia and imported U.S. $265 billion (199 billion [euro]) in goods from Russia. (135) Eighty percent of the EU's imports comprises minerals, while the EU exports mostly "[p]roducts of the chemical or allied industries," machinery, and vehicles, aircraft and other large vessel transport equipment. (136)
While the Convention is more of a model for party-countries to implement, parties are bound to Article 101 of the PCA, which delegates power to a third party to resolve any disputes between the parties. (137) Furthermore, the EU and Russia signed a subsequent protocol clarifying that the countries will apply the provisions. (138) Thus, Russia is liable to the parties of the agreement.
As of 2010, India did not have laws prohibiting its own entities from bribing foreign officials (139) and has declined to enact legislation implementing the Convention. (140) However, India is the fourth largest economy in the world, (141) a member of the WTO, and its exports totaled nearly U.S. $220 billion in 2010. (142)
While it may not be party to the Convention, India is a member of the WTO. While the WTO itself does not have explicit provisions dealing with bribery and corruption, provisions of various WTO agreements are intended to battle corruption. (143) These provisions aim to make transactions more transparent, hold parties accountable for the transactions, and reduce levels of bureaucracy. (144) In general, the "Customs Valuation, Pre-shipment Inspection, Government Procurement and Rules of Origin, [aim] to clarify applicable rules, reduce the complexity of procedures and improve the predictability of the regulatory system." (145)
More specifically, the 1994 General Agreement on Tariffs and Trade (GATT) promotes transparency by requiring all judicial and administrative decisions and rulings, laws, and regulations to be published as soon as possible to inform other member-countries of changes in trade rules. (146) Another example is the Agreement on Technical Barriers to Trade, which requires countries to charge equal trade fees for both foreign and domestic goods. (147)
The "most immediately recognizable" document to fight corruption among WTO members is the Agreement on Government Procurement (148) (GPA). (149) India is an observer of this Agreement. (150) The main goals of the GPA are to increase transparency of laws and regulations, and create fair procedures for procurement. (151) In addition,
the provisions of the transparency articles of the GPA do allow for some degree of external oversight of officials' actions. Not only must a covered governmental entity give a reasoned opinion as to why the winning bid was chosen and the relative failings of the inquiring bidder ... but if the reasoning is unconvincing, a losing supplier may bring a legal challenge against the tender decision with the possibility of suspending procurement procedures and/or gaining compensation. (152)
Because India is an observer of the GPA, it does have an incentive to implement these transparency measures to avoid any penalty that could result from failing to implement the GPA procedures.
Along with Russia, China also scored low on TI's corruption perception index. (153) TI identified Chinese--along with Russian--corporations as corporations that are among the most likely to pay foreign bribes. (154) This is disturbing because China is the world's second-largest economy. (155) In 2011, China exported nearly U.S. $1.9 trillion and imported over U.S. $1.7 trillion in merchandise. (156) Because China is continuing to invest globally and Chinese businesses have an increasing global presence, bribery is "likely to have a substantial impact on the societies in which they operate and on the ability of companies to compete fairly" in those markets. (157)
1. China's Anti-Bribery Legislation
Like the United States and Russia, China has implemented legislation to prohibit its corporations from paying bribes to foreign public officials. (158) Recently, China amended its anti-bribery laws to prohibit bribery of foreign officials. (159) The new law amends Article 164 of the Chinese law and is based on Article 16 of the United Nations Convention Against Corruption. (160) Under the new law, violating individuals may be detained for several years and their companies may be fined. (161)
Unlike the FCPA, this new Chinese law does not contain any affirmative defenses or exceptions nor does it clearly define the term "foreign public official." (162) However, it does exercise broad jurisdiction over all Chinese citizens, regardless of location. (163) Some have commented that this statute is the Chinese version of the FCPA; however, because the statute is new, not nearly as detailed as the FCPA, and has not faced judicial interpretation, it is hard to determine what impact this law will have on Chinese corporations. (164) What is more certain is that this law gives the international community some leverage in pressuring China to cooperate in the fight against bribery of foreign public officials. (165)
2. WTO Membership Urges China to Fight Bribery
As noted above, several WTO agreements do aim to fight bribery and corruption. (166) The GPA's provisions ensure transparent transactions by requiring countries to have an open-bidding process and provide a legal remedy for other parties to the GPA if one party fails to follow the provisions. (167) Specifically, China is a member of the GPA, meaning it is obligated to follow the GPA and is liable to the other countries party to the GPA. (168)
The OECD's efforts in reducing bribery of foreign public officials have improved greatly since the Convention's inception. As noted above, more party-countries are implementing and enforcing the Convention, and large economies, such as the United States and United Kingdom, are becoming models for other party-countries that are attempting to implement the Convention. (169) However, Russia, China, and India must be active participants in the Convention to subside the economic inequalities that the Convention is causing. (170) The international community can assist the OECD in pressuring RIC to implement the Convention by leveraging RIC's commitments to other international agreements and its enacted legislation, and by using non-governmental organizations (NGOs) to persuade RIC to implement the Convention. Finally, the OECD may also adjust aspects of the Convention to allow for a more steady transition for implementing countries.
A. International Economic Pressure
The international community can be integral in persuading RIC to fully implement the Convention. The analysis above shows that RIC have either instituted some sort of hard law to combat bribery of foreign public officials or have made some commitment to strengthen its bribery provisions in the future. (171) NGOs such as TI have paid particularly close attention to the implementation of the Convention and issued reports on OECD's effectiveness in implementing the Convention. (172) However, while TI--and similar organizations--may take the time to shine light on the issue, RIC is not obligated to adjust its policies according to NGO standards. It is more likely that RIC will respond to pressure from party-countries that have strong economic ties--for example, the economic incentives the PCA provides Russia. Russia trades extensively with the EU through the PCA, which provides Russia with over U.S. $27 billion (20 billion [euro]) of exports annually. (173) With these figures in mind, Russia may be forced to tighten enforcement of its anti-bribery laws to avoid the risk of losing the economic incentives the PCA provides. While Russian President Dimitri Medvedev signed into law legislation to combat bribery, there is still doubt as to what extent Russia will enforce it. (174) The Act may receive international recognition that could result in more foreign investors; however, it does not necessarily mean that Russia will prosecute its own corporations for bribing foreign public officials.
The EU and its member-countries could cooperate with the OECD and demand that Russia put forth a good faith effort in implementing the OECD Convention as a means of complying with the PCA. It is in Russia's best interest to comply because of the economic incentives it receives through the PCA. In fact, the United Kingdom--a member of the EU--should play an important role in persuading Russia because of the perceived inequalities that the Convention causes between corporations of party-countries--such as the United Kingdom--and non-party-countries--such as Russia. (175)
The WTO can also help foster implementation of the Convention in Russia and India. Both the WTO and OECD would benefit from this collaboration--the WTO can further its commitments to fighting bribery and corruption with its organization, while the OECD can further its cause by recruiting Russia and India to become signatories. Similar to the EU, the WTO is able to use its economic leverage to convince its member-countries to implement the statute. In fact, while helping create a more level playing field around the entire world, implementation of the Convention amongst WTO countries can also help create a more level playing field within the WTO itself.
B. The Role of Non-Governmental Organizations
Since the 20th century, NGOs have played a critical role in the implementation and oversight of international agreements. (176) NGOs are especially active in "major multilateral agreements." (177) They are often given access to special negotiations and meetings and facilitate better conversation amongst member states than large international organizations. (178) For example, the UN invited the International Committee of the Red Cross (ICRC) to serve as an expert observer at the 1995 Review Conference of the Convention on Certain Conventional Weapons. (179) The ICRC, and several other NGOs, "served on delegations of certain key States, including Canada and Australia." (180) NGOs have been critical in implementation of conventions and treaties. (181) As noted above, TI's progress reports on the Convention provide useful analysis to the international community on how countries are implementing it. This gives the international community an opportunity to understand how other countries are acting. It is not a hidden fact that the international community relies on reports from organizations like TI. (182)
While advocacy NGOs--such as TI--are generally well received, they have also been criticized as being ineffective. (183) As Reimann states, "[a]dvocacy NGOs promoting a variety of causes internationally and transnationally in areas such as the environment, human rights, and trade have been criticized for misrepresenting facts and doing harm to those they intend to protect." (184) Reimann cites various examples, including advocacy NGOs that have attempted to battle child labor in developing countries, which results in large corporations--such as Nike--closing their plants due to negative press and boycotts, leaving a large portion of the population unemployed. (185) She also cites to the criticisms of environmental NGOs that have protested against the use of genetically modified organisms (GMOs), which has hurt many farmers in developing countries who were attempting to use less pesticide. (186)
Advocacy NGOs have also been criticized as being pro-Western and imperialistic. (187) This school of thought--which tends to be leftist or liberal--believes that NGOs are merely taking the place of state services, which allows the free market to develop and profit from a state's society without creating friction with a state's government. (188) On the opposite end of the spectrum, conservative critics believe that NGOs are simply used as pawns for dismantling corporations and preventing them from facilitating a free market. (189) This school of thought believes that "NGOs are trying to set standards for business behavior that conservative critics find unreasonable and detrimental to the normal functioning of businesses and free markets." (190)
Despite these criticisms, TI must continue to issue reports on OECD implementation; however, NGOs can play a more significant role by educating the RIC citizenry and business communities on the benefits of implementing the Convention. (191) Oftentimes, change in policy must come from those that will be most affected. NGOs may be able to convince the RIC public and corporations to convince its governments to implement the OECD Convention as a means of boosting the reputation of its corporate communities. In turn, the corporate communities may earn a better reputation amongst customers and shareholders, RIC will earn a better reputation for implementing the Convention, and the OECD will further its goals of implementing the Convention.
C. The OECD Can Create a Better Transition for Implementing the Convention
As noted above, the Convention is very specific as to what party-countries are required to include in its anti-bribery statutes and how countries are to enforce such statutes. (192) While the specificity of the Convention is a good guide for party-countries to follow, it is a rather intimidating list of demands. For any party-country, these requirements are revolutionary, and because these requirements can adversely affect a country's corporations' global presence, there is a high risk that implementing the Convention could have an adverse economic impact on a country. (193) However, the OECD could loosen its restrictions to allow for countries to transition into full implementation. For example, the OECD could set certain deadlines that require countries to have different parts of the Convention implemented at different stages. This implementation allows for corporations to phase into new domestic law and adjust its business models accordingly. This phasing possibility would assist the private sector while avoiding any sudden negative economic impact that could result from an immediate, full implementation of the Convention. Furthermore, the OECD should reach out to corporations within RIC to better understand the corporate perspective on the Convention. This outreach may reveal that the Convention requires significant changes to become more effective and attractive to RIC and its corporations.
D. The WTO Should Create Stronger Rules to Incentivize India and China to Implement the Convention
"If a WTO member is found to violate a relevant WTO rule, the dispute settlement body (DSB) recommends that the scofflaw state 'bring the measure into conformity' with the covered agreement." (194) Furthermore, Article Six of the WTO's Dispute Settlement Understanding (DSU) allows a "complaining party" to request a panel to oversee the dispute resolution. (195) If the violating member does not comply with the panel's recommendation, "the prevailing party may retaliate by suspending trade concessions that it owes the offending member. This retaliation can continue until the offending member implements the WTO's decision, for example, by changing its laws." (196)
Evidently, the WTO has enforcement powers that allow it to suspend a member-country's trade relations with other countries. If the WTO can act to that extent, it should use its authority to mandate its member-countries to enact laws that prohibit corporations from bribing foreign officials. In doing so, it can assist the OECD in enforcement of the Convention's purpose, but more importantly, such regulations may also urge India and China to sign on to the Convention.
The OECD Convention is an important tool to curb corporate bribery of foreign public officials, but it is only part of the solution. Without the full participation of RIC, the Convention will not be effective in creating a fair playing field for corporations that are competing on the global front. This Note identifies various avenues of international law that the international community can use to hold RIC accountable and to pressure them to adopt the Convention. RIC economically benefits from various international arrangements that urge countries to combat bribery and corruption. (197) If the OECD cannot persuade RIC to implement the Convention, the international community can pressure them to follow other avenues of international law that RIC are already obligated to follow. Additionally, the OECD could adjust its standards to allow countries to more easily implement the Convention. In turn, RIC may do more to prevent its corporations from bribing foreign public officials, thus creating a more level playing field for multinational corporations competing in the global market.
(1.) Organization for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and Related Documents, May 23, 1997, 37 I.L.M. 1 (1998) [hereinafter OECD Convention], available at http://www.oecd.org/investment/briberyin internationalbusiness/anti-briberyconvention/38028044.pdf.
(2.) Andrea Dahms & Nicolas Mitchell, Foreign Corrupt Practices Act, 44 Am. CRIM. L. REV. 605, 624 (2007).
(3.) Bribery in International Business: OECD Convention, ORG. FOR ECON. CO-OPERATION & DEV., http://www.oecd.org/daf/briberyininternationalbusiness/oecdantibriberyconvention.htm (last visited Mar. 31, 2013) [hereinafter About OECD Convention].
(4.) OECD Convention, supra note 1, at 14.
(5.) See CRIMINAL DIV., U.S. DEP'T OF JUSTICE & THE ENFORCEMENT DIV., U.S. SEC. & EXCH. COMM'N, A RESOURCE GUIDE TO THE U.S. FOREIGN CORRUPT PRACTICES ACT 7 (2012) [hereinafter USDOJ 2012 FCPA Guidance], available at http://www.justice.gov/criminal/fraud/fcpa/guide.pdf (stating the number of member and non-member-countries that are party to the Convention). The member-countries that are party to the Convention include Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States of America. Id. The non-member-countries that are party to the Convention include Argentina, Brazil, Bulgaria, Russia, and South Africa. Id; see also Monitoring Reports, infra note 75 (showing the parties to the Convention).
(6.) Lisa Miller, No More "This for That"? The Effect of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, 8 CARDOZO J. INT'L & COMP. L. 139, 140 (2000).
(8.) Id. at 142.
(9.) Alvaro Cuervo-Cazurra, Who Cares About Corruption?, 37 J. Int'l Bus. Stud. 803, 808 (2006).
(10.) See Andrew Brady Spalding, The Irony of International Business Law: U.S. Progressivism and China's New Laissez Faire, 59 UCLA L. Rev. 354, 407 (2011) (concluding that Chinese corporations are taking the place of U.S. corporations in certain parts of the world that U.S. corporations withdraw from, fearing Foreign Corrupt Practices Act (FCPA) violations).
(13.) Transparency International is a global organization dedicated to researching and eradicating corruption. Who We Are, TRANSPARENCY INT'L, http://www.transparency.org/whoweare/organisation (last visited Mar. 31, 2013). TI has over 90 local chapters and chapters-in-formation and is a lead organization in the global anti-corruption movement. Id TI was heavily involved in the drafting of both the United Nations (UN) Convention against Corruption and the African Union Convention on Preventing and Combating Corruption, two important international agreements that involved governments more in the fight against corruption in their respective countries. Id. In sum, Tl's work has led a united, global effort in fighting corruption. See id. (explaining that Transparency International has built a reputation for taking a stand against corruption).
(14.) FRITZ HEIMANN & GILLIAN DELL, TRANSPARENCY INT'L, PROGRESS REPORT 2010: ENFORCEMENT OF THE OECD ANTI-BRIBERY CONVENTION 9 (2010), available at http://www.transparency.org/content/ download/57988/927658/3rd_Progress_Report_2010_OECD_Anti_Bribery_Convention.pdf.
(15.) See Spalding, supra note 10, at 410 (stating that Russia and India have declined invitations to join the Convention while China has enacted laws but has "taken absolutely no enforcement action," and also has not signed the Convention); see also Max Chester, Russian FCPA: The Law Has Been Signed, Will the Culture Change Result?, FCPA PROFESSOR BLOG (June 17, 2011, 5:03 AM), http://fcpaprofessor.blogspot.com/ 2011/06/russian-fcpa-law-has-been-signed-will.html (stating that Russia recently enacted a law that apparently resembles the United Kingdom's Bribery Act and may even have further reach than the U.S. FCPA; so far, Russia has only incarcerated 26% of those convicted of bribery and most of those cases dealt with small bribes, making it hard for judges to impose harsh sanctions).
(16.) HEIMANN & DELL, supra note 14, at 11.
(17.) Infra Part V.
(18.) Infra Part II.
(19.) Infra Part III.
(20.) Infra Part IV.
(21.) See Foreign Corrupt Practices Act: Hearing Before the H. Subcomm. on Crime, Terrorism, and Homeland Security, 112th Cong. 6 (2011) [hereinafter House Hearing] (statement of Greg Andres, Dep't of Justice) (stating that "in our free market system, it is basic that the sale of product should take place on the basis of price, quality and service").
(24.) See Timothy W. Schmidt, Sweetening the Deal: Strengthening Transnational Bribery Laws Through Standard International Corporate Auditing Guidelines, 93 MINN. L. REV. 1120, 1125-30 (2009) (describing various laws and international treaties and conventions aimed at combating transnational bribery of foreign public officials).
(25.) See, e.g., G.A. Res. 58/4, U.N. Doc. A/RES/58/4, at 42 (Oct. 31, 2003) (adopting the United Nations Convention Against Corruption (UNCAC) and explaining that the adoption of the UNCAC "will send a clear message that the international community is determined to prevent and control corruption"). UNCAC essentially "enjoins each State Party to establish and promote effective practices aimed at the prevention of corruption"; criminalizes corrupt practices; renders mutual legal assistance between UN nations; and assists in asset recovery--provided that states are given any confiscated funds. The United Nations Convention Against Corruption: Convention Highlights, THE UNITED NATIONS OFF. ON DRUGS & CRIME, http://www.unodc.org/ unodc/en/treaties/CAC/convention-highlights.html (last visited Mar. 31, 2013).
(26.) About OECD Convention, supra note 3.
(29.) Id. "Along the way, [the OECD] set[s] out to make life harder for the ... crooked businessmen and others whose actions undermine a fair and open society." Id.
(30.) About OECD Convention, supra note 3.
(31.) Members and Partners, About the OECD, ORG. FOR ECON. CO-OPERATION & DEV., http://www.oecd.org/about/membersandpartners/ (last visited Mar. 31, 2013) [hereinafter Members and Partners of OECD].
(33.) OECD Convention, supra note 1. Although there are a total of 17 Articles in the Convention, only Articles One through Twelve are pertinent to this discussion.
(34.) Id. at 7-8.
(35.) Miller, supra note 6, at 141.
(36.) OECD Convention, supra note 1, at 7.
[Article One] requires each party to the Convention to take measures to establish as a criminal offense under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or 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. In addition, any person who participates in inciting, aiding, abetting or authorizing an act of bribery of a foreign public official shall also be guilty of a criminal offense.
Miller, supra note 6, at 141-42.
(37.) OECD Convention, supra note 1, at 7.
(38.) See id at 143 (stating that the Article "requires each party to 'establish the liability of legal persons for the bribery of a foreign public official'" (quoting OECD Convention, supra note 1, at 7)). There is a caveat to this provision: "[I]f a party's legal system does not apply criminal responsibility to legal persons, there is no requirement to establish criminal responsibility." Id.
(39.) OECD Convention, supra note 1, at 8.
(42.) Miller, supra note 6, at 144.
(43.) Id. at 144-45; see also OECD Convention, supra note 1, at 8 ("Each Party shall take such measures as may be necessary to establish its jurisdiction over the bribery of a foreign public official when the offence is committed in whole or in part in its territory.").
(44.) Miller, supra note 6, at 145.
(45.) OECD Convention, supra note 1, at 10-11.
(46.) See Miller, supra note 6, at 145 (stating that the provisions require parties to assist one another in an "investigation or proceeding relating to an offense within the scope of the Convention").
(47.) Id. "For parties that do not have an extradition treaty but require the existence of such a treaty as a condition for extradition, the Convention may act as the legal basis for extradition for those charged with the offense of bribery of a foreign public official." Id. at 145-46.
(48.) See OECD Convention, supra note 1, at 11 (stating that the countries should work together to "monitor and promote the full implementation of [the] Convention").
(49.) See generally Kenneth W. Abbott & Duncan Snidal, Hard and Soft Law in International Governance, 54 Int'l Org. 421, 421 (2000) (arguing that "international actors choose to order their relations through international law and design treaties and other legal arrangements to solve specific substantive and political problems").
(50.) See id. (stating that countries often use "legally binding obligations that are precise ... and that delegate authority for interpreting and implementing the law"). This is often referred to as "hard law." Id. Legal theorists often distinguish this type of law from "soft law"; however, this Note does not discuss this distinction.
(51.) Gregory C. Shaffer & Mark A. Pollack, Hard vs. Soft Law: Alternatives, Complements, and Antagonists in International Governance, 94 MINN. L. REV. 706, 717-18 (2010).
(52.) Id. at 718.
(55.) Abbott & Snidal, supra note 49; see also Shaffer & Pollack, supra note 51, at 718-19 ("[I]t can encourage states to bargain fiercely, and at length, over legally binding commitments.").
(56.) See Abbott & Snidal, supra note 49, at 422 ("By using hard law to order their relations, international actors reduce transactions costs, strengthen the credibility of their commitments, expand their available political strategies, and resolve problems of incomplete contracting. Doing so, however, also entails significant costs: hard law restricts actors' behavior and even their sovereignty.").
(57.) Id. at 426 (stating that "credible commitments are crucial when one party to an agreement must carry out its side of the bargain before other parties are required to perform").
(59.) See id. (stating that "some parties must make relation-specific investments in reliance on future performance by others").
(60.) See id. (explaining that Mexico signed onto the North American Free Trade Agreement (NAFTA) to look attractive to foreign investors).
(61.) Abbott & Snidal, supra note 49, at 427.
(63.) Id. at 422. This is oftentimes referred to as "soft law." Id.
(64.) Francis Snyder, The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques, 56 MOD. L. REV. 19, 32 (1993).
(65.) Graham Mather, Is Soft Law Taking Over? The Perils and Benefits of Non-Traditional Legislation 4 (Oct. 20, 2010) (unpublished manuscript), available at http://www.progressfoundation.ch/PDF/referate/ 220_Referat%20Graham%20Mather_20.10.2010.pdf.
(66.) Shaffer & Pollack, supra note 51, at 720 (citing Kenneth W. Abbott & Duncan Snidal, Pathways to International Cooperation, in THE IMPACT OF INTERNATIONAL LAW ON INTERNATIONAL COOPERATION: THEORETICAL PERSPECTIVES 50, 54 (Eyal Benvenisti & Moshe Hirsch eds., 2004)).
(67.) Andrew T. Guzman & Timothy L. Meyer, Explaining Soft Law 2 (Mar. 13, 2009) (unpublished manuscript), available at http://www.asil.org/files/guzman.pdf (emphasis added).
(68.) David Trubek et al., "Soft Law, " "Hard Law," and European Integration: Toward a Theory of Hybridity, in LAW AND NEW GOVERNANCE IN THE EU AND THE US 65, 67 (Grainne de Burca & Joanne Scott eds., 2006).
(69.) See OECD Working Group on Bribery in International Business Transactions, ORG. FOR ECON. COOPERATION & DEV., http://www.oecd.org/daf/briberyininternationalbusiness/oecdworkinggrouponbriberyin internationalbusinesstransactions.htm (last visited Mar. 31, 2013) [hereinafter OECD Working Group] ("Established in 1994, the OECD Working Group ... is responsible for monitoring the implementation and enforcement of the OECD Anti-Bribery Convention....").
(70.) See USDOJ 2012 FCPA Guidance, supra note 5 (discussing the Working Group's responsibilities).
(75.) Country Reports on the Implementation of the OECD Anti-Bribery Convention, ORG. FOR ECON. COOPERATION & DEV., http://www.oecd.org/daf/briberyininternationalbusiness/countryreportsonthe implementationoftheoecdanti-briberyconvention.htm (last visited Mar. 31, 2013) [hereinafter Monitoring Reports] (listing reports by country).
(76.) Shaffer & Pollack, supra note 51.
(78.) See infra Part III (discussing Russia's, India's, and China's implementation of the Convention).
(79.) HEIMANN & DELL, supra note 14, at 9.
(80.) Id. The OECD evaluates and reports member-countries' implementation of the Convention by issuing "Phase Reports." TI was content with the OECD adding a third phase of evaluation of member-countries. Id.
(81.) Id. at 8. TI moved Denmark, Italy, and Germany into the active enforcement category from the "moderate" enforcement category because they all passed and enforced implementing legislation. Other countries included in the "actively" enforcing group are the United States, Norway, Switzerland, and the United Kingdom. Id.
(82.) HEIMANN & DELL, supra note 14, at 9 (commending the United Kingdom on its progress in implementing the Convention).
(83.) Id. at 9.
(84.) Bribery Act, 2010, c. 23 (U.K.), available at www.justice.gov.uk/legislation/bills-and-acts/acts/ bribery-act-2010. Section Six of the Bribery Act prohibits any individual from offering, giving, or promising to give a financial payment--or any other advantage--to a foreign public official with the expectation of influencing the official into acting in a certain manner. THE U.K. MINISTRY OF JUSTICE, THE BRIBERY ACT 2010 Guidance 11 (2010) [hereinafter BRIBERY ACT GUIDANCE], available at http://www.justice.gov.uk/ guidance/docs/bribery-act-2010-guidance.pdf. A "foreign public official" is any elected, unelected, or appointed official "who hold[s] a legislative, administrative or judicial position of any kind of a country or territory outside the [United Kingdom]." Id. "[The term] also includes any person who performs public functions in any branch of the national, local or municipal government of such a country or territory." Id. The definition also includes officials or agents for international organizations. Id.
(85.) Claudius O. Sokenu, Bribery Act Is Not Perfect but Brings U.K. into Line with the OECD, THE GUARDIAN (Feb. 4, 2011, 8:48 AM), http://www.guardian.co.uk/law/2011/feb/04/bribery-act-delay.
(86.) HEIMANN & DELL, supra note 14, at 9.
(87.) Matt Atkins, Introduction to the UK Bribery Act, FINANCIERWORLDWIDE.COM (June 2011), http://www.financierworldwide.com/article.php?id=8188.
(88.) See BRIBERY ACT GUIDANCE, supra note 84, at 15 (stating that a "commercial organisation will have a full defence if it can show that despite a particular case of bribery it nevertheless had adequate procedures in place to prevent persons associated with it from bribing").
(89.) See Mike Koehler, Compliance Defense Legislative History, FCPA PROFESSOR BLOG (Sept. 13, 2011), http://www.fcpaprofessor.com/compliance-defense-legislative-history.
(90.) See ORG. FOR ECON. CO-OPERATION & DEV., UNITED STATES: PHASE 3--REPORT ON THE APPLICATION OF THE CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS 4 (2010) [hereinafter U.S. Phase 3 Report], available at http://www.oecd.org/corruption/anti-bribery/anti-briberyconvention/UnitedStatesphase3reportEN.pdf (commending "the United States for its visible and high level of support for the fight against the bribery of foreign public officials, including engagement with the private sector, substantial enforcement, and stated commitment by the highest echelon of the Government"). While the FCPA is a model for the OECD, many argue that the law is "vague, over-broad, and often leads to confusion about what is legal and what is illegal." Joseph W. Yockey, Choosing Governance in the FCPA Reform Debate, 38 J. Corp. L. 325, 332 (2013).
(91.) See U.S. PHASE 3 REPORT, supra note 90 ("Vigorous enforcement and record penalties, alongside increased private sector engagement, has encouraged the establishment of robust compliance programmes and measures, particularly in large companies, which are verified by the accounting and auditing profession and monitored by senior management.").
(92.) Foreign Corrupt Practices Act of 1977, 15 U.S.C. [section][section] 78dd-1-dd-3 (2012).
(93.) Id. [section] 78dd-3.
(94.) Id. [section][section] 78dd-1(a)(1), dd-2(a)(1). "Anything of value" generally depends on what subjective value the recipient places on what the entity is offering him. See United States v. Gorman, 807 F.2d 1299, 1305 (6th Cir. 1986) (holding that "anything of value" is anything that can "cloud" a government agent's judgment "concerning his official duties"). Id. at 1304.
[Some] examples include, but are not limited to stocks, travel expenses, entertainment, hospitality provided to a foreign official's spouse or children, discounts on products or services, forgiveness of outstanding debt, donations to a charitable organization on behalf of the foreign official, or employing a foreign official or the official's relative.
Jessica Tillipman, Foreign Corrupt Practices Act Fundamentals 1 (George Washington Univ. Law Sch., Thompson West Briefing Paper No. 8-10, 2008), available at http://scholarship.law.gwu.edu/cgi/viewcontent .cgi?article=1038&context=faculty_publications.
(95.) Both provisions "apply to any U.S. 'issuer' or 'domestic concern' as well as any official, employee, agent, or other party acting on behalf of the issuer or domestic concern." Tor Krever, Curbing Corruption? The Efficacy of the Foreign Corrupt Practices Act, 33 N.C. J. INT'L L. & COM. REG. 83, 88 (2007); see 15 U.S.C. [section] 78dd-1(a) (defining "issuer[s]"); id. [section] 78dd-2(a) (defining "domestic concern[s]"); id. [section] 78dd-3(a) (defining those who are "acting on [their] behalf). An "issuer" is a "U.S. or foreign company, or an officer, employee, agent or stockholder thereof, that either issues securities (or American Depository Receipts) or must file reports with the SEC." Tillipman, supra note 94, at 4. A "domestic concern" is "any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship," 15 U.S.C. [section] 78dd-2(h)(1), "with its principal place of business in the U.S. or organized under U.S. law." Krever, supra, at 88 n.17.
(96.) Tillipman, supra note 94, at 4. The United States enforces the FCPA in two types of jurisdictions. "Territorial[-based] jurisdiction covers persons or companies that commit [any] act within the territory of the United States 'in furtherance of a corrupt payment or offer of payment." Nationality-based jurisdiction applies to acts of domestic concerns and U.S. issuers "taken entirely outside the United States." Id. at 3-4.
(97.) 15 U.S.C. [section][section] 78dd-1(a), dd-1(g), dd-2(a), dd-2(i), dd-3(a).
(98.) Tillipman, supra note 94, at 4 (quoting S. REP. No. 915-114, at 10 (1977)).
(99.) See USDOJ 2012 FCPA GUIDANCE, supra note 5, at 14 ("By focusing on intent, the FCPA does not require that a corrupt act succeed in its purpose.").
(101.) Id.; see also United States v. Kay, 513 F.3d 432, 448 (5th Cir. 2007) ("[The actor] must have acted with the knowledge that he was doing a 'bad' act under the general rules of the law.").
(102.) Krever, supra note 95, at 89 (quoting 15 U.S.C. [section] 78dd-1(b)). The payment is not considered illegal under the FCPA if it is: (1) "to expedite or to secure the performance of a routine governmental action"; (2) "legal under the laws of the receiving official's country"; or (3) "for a 'reasonable and bona fide expenditure,' such as travel and lodging expenses." Id. (quoting 15 U.S.C. [section] 78dd-1(c)).
(103.) USDOJ 2012 FCPA GUIDANCE, supra note 5, at 25.
(104.) See id. ("Although true facilitating payments are not illegal under the FCPA, they may still violate local law in the countries where the company is operating.").
(105.) HEIMANN & DELL, supra note 14, at 9.
(108.) See Nicola Bonucci & Patrick Moulette, The OECD Anti-Bribery Convention 10 Years on, OECD OBSERVER, Dec. 2007-Jan. 2008, available at http://www.oecdobserver.org/news/fullstory.php/aid/2475/The_ OECD_Anti-Bribery_Convention_10_years_on.html (stating "if businesses or the individuals who run them are now being prosecuted for bribing foreign public officials, it is because national laws transposing the obligations of the OECD Convention have in fact been adopted in the 37 countries adhering to the Convention, and because the courts and relevant authorities are ensuring that those laws are enforced" (emphasis added)).
(109.) See supra Part I (discussing Russia's, China's, and India's approach to preventing bribery of foreign public officials).
(110.) TRANSPARENCY INT'L, CORRUPTION PERCEPTIONS INDEX 2010, at 3 (2010) [hereinafter TI 2010 CORRUPTION INDEX], available at http://www.transparency.org/content/download/55725/890310/CPI_report_ ForWeb.pdf. On TI's scale, a score of "10" means virtually no corruption, while a "1" means there exists a high amount of corruption. Id. at 2.
(111.) Russian and Chinese Companies "Most Likely to Bribe", BBC NEWS (Nov. 1, 2011, 8:04 PM), http://www.bbc.co.uk/news/business-15544841 (citing TRANSPARENCY INT'L, BRIBE PAYERS INDEX REPORT 2011 (2012), available at http://bpi.transparency.org/bpi2011/results/). This information was gathered through a survey of 3000 business executives. Id.
(112.) See id. (stating "the report called for more international action to outlaw companies from paying bribes in foreign countries").
(113.) "'There are no islands of integrity in Russian public and business life,' said TI Russian director, Elena Panfilova." Id.
(114.) UGOLOVNYI KODEKS ROSSIISKOI FEDERATSII [UK RF] [Criminal Code] art. 290-91 (Russ.); see also Abbott & Snidal, supra note 49, at 427 (stating that a country implementing international agreement(s) through domestic law creates a "credible commitment").
(115.) See Chester, supra note 15 (stating that the law was "intended to fight corruption in Russia ... and to support Russia's bid to accede to the OECD Convention").
(116.) Russia-OECD Anti-Bribery Convention, ORG. FOR ECON. CO-OPERATION & DEV., http://www.oecd.org/daf/briberyininternationalbusiness/russia-oecdanti-briberyconvention.htm (last visited Mar. 31, 2013).
(117.) Chester, supra note 15; UGOLOVNYI KODEKS ROSSIISKOI FEDERATSII [UK RF] [Criminal Code] art. 290-91 (Russ.).
(118.) UGOLOVNYI KODEKS ROSSIISKOI FEDERATSII [UK RF] [Criminal Code] art. 25 (Russ.); see ORG. FOR ECON. CO-OPERATION & DEV., PHASE 1 REPORT ON IMPLEMENTING THE OECD ANTI-BRIBERY CONVENTION IN THE RUSSIAN FEDERATION 5 (2012) [hereinafter PHASE 1 RUSSIA REPORT], available at http://www.oecd.org/ daf/briberyininternationalbusiness/anti-briberyconvention/49937838.pdf (translating Article 24 into English).
(119.) UGOLOVNYI KODEKS ROSSIISKOI FEDERATSII [UK RF] [Criminal Code] art. 25 (Russ.).
(120.) PHASE 1 RUSSIA REPORT, supra note 118, at 5.
(121.) See Chester, supra note 15 (discussing the penalties for violating the law).
(122.) See PHASE 1 RUSSIA REPORT, supra note 118, at 15 ("Fines for bribery are calculated in relation to the size of the bribe and can be up to 100 times the amount of the briber, but not more than 500 million [rubles] (approximately EUR 12 million).").
(123.) Id. at 16.
(124.) Id. at 9.
(125.) Compare UGOLOVNYI KODEKS ROSSIISKOI FEDERATSII [UK RF] [Criminal Code] art. 291 pt.1 (Russ.), with id. art. 291 pt.2 (showing that part 2 pertains to bribery of a "significant amount" whereas part 1 simply pertains to bribery). See also PHASE 1 RUSSIA REPORT, supra note 118, at 4 nn.2-3 (showing the difference between the two parts).
(126.) See UGOLOVNYI KODEKS ROSSIISKOI FEDERATSII [UK RF] [Criminal Code] art. 291 (Russ.) ("The person who has given a bribe shall be relieved from criminal responsibility if this occurred by extortion of the bribe on the part of the official or if the person voluntarily communicated the giving of the bribe to an agency having the right to initiate a criminal case."); see also PHASE 1 RUSSIA REPORT, supra note 118, at 4 (translating the Russian statute into English).
(127.) See PHASE 1 RUSSIA REPORT, supra note 118, at 4 (stating that both the Russian Constitution and federal laws create a "broad scope of immunities from criminal investigation and proceedings which might prevent investigating or prosecuting persons who may be protected by those immunities ... [which] [m]ay be an obstacle under Articles 1 and 5 and should be further reviewed in the context of Phase 2").
(128.) Id. at 33.
(130.) Infra Part III.A.2 (discussing Russia's obligation to combat bribery by being party to the Partnership and Cooperation Agreement).
(131.) Id.; see supra Part III.A.1 (describing Russia's new anti-bribery law).
(132.) The Partnership and Co-operation Agreement, 1997 O.J. (L 327) 3 [hereinafter PCA], available at http://trade.ec.europa.eu/doclib/docs/2003/november/tradoc_114138.pdf.
(133.) See Russia, EUROPEAN COMMISSION, http://ec.europa.eu/trade/creating-opportunities/bilateralrelations/countries/russia/ (last visited Mar. 31, 2013) [hereinafter Russia-EU PCA Trade] ("The Partnership and Cooperation Agreement between the EU and Russia has been the framework of the EU-Russia relations since 1997 and regulates the political and economic relations between the two parties.").
(134.) See PCA, supra note 132, at 28 (stating that the countries "establish cooperation aimed at preventing illegal activities such as ... corruption").
(135.) See EUROPEAN COMMISSION, RUSSIA: EU BILATERAL TRADE AND TRADE WITH THE WORLD 9 (2012), available at http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113440.pdf [hereinafter RUSSIA-EU TRADE] (showing trade statistics between Russia and the European Union).
(136.) Id. at 10.
(137.) Id. at 31-32 (stating "each of the Parties may refer to the Cooperation Council any dispute relating to the application or interpretation of this Agreement" and "the Cooperation Council may settle the dispute by means of a recommendation"). If the parties cannot settle the dispute in accordance with the recommendation, then either party must notify the other and appoint a second conciliator. Id. at 32. If the parties still cannot reach an agreement, then the Cooperation Council will appoint a third conciliator. PCA, supra note 132, at 32. The third conciliators' recommendation will be taken by a majority vote, but the recommendation is not binding. Id.
(138.) See EGMONT INST., ASSESSMENT OF THE COOPERATION BETWEEN THE EU AND RUSSIA 1 (2006), available at http://www.egmontinstitute.be/papers/06/eu/Russia-EU.pdf ("In 2004, the EU and Russia signed a protocol to the PCA ensuring the application of all of its provisions.").
(139.) Christina E. Humphreys, The Current State of India's Anti-Corruption Reform: The RTI and PCA 7 (Univ. of Iowa Ctr. for Int'l Fin. & Dev., Briefing Paper No. 7, Jan. 19, 2010), available at http://blogs.law .uiowa.edu/ebook/sites/default/files/India%27s%20Anti-Corruption%20Reform.pdf.
(140.) Spalding, supra note 10, at 361.
(141.) The World's Largest Economies 2011, ECONOMY WATCH (June 30, 2011), http://www.economywatch.com/economies-in-top/.
(142.) India, WORLD TRADE ORG., http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx? Language=E&Country=IN (last visited Mar. 31, 2013).
(143.) See Krista Nadakavukaren Schefer, Corruption and the WTO Legal System 8 (Swiss Nat'l Ctr. of Competence in Research, Working Paper No. 2008/15, 2008), available at http://phase1.nccr-trade.org/images/ stories/publications/IP4/sk.corruption%20and%20trade%203.pdf (stating that the provisions "are either intended as instruments to control corruption or that at least could be used to reduce corruption despite the refusal to deeply engage in fighting corruption explicitly").
(144.) See Evdokia Moise, Trade Rules for Fair Play, OECD OBSERVER, Apr. 2000, http://www.oecdobserver.org/news/fullstory.php/aid/304 (stating that these provisions "fight [bribery] by reducing bureaucratic arbitrariness and improving transparency and accountability").
(146.) Id.; see also General Agreement on Tariffs and Trade, Apr. 15, 1994, 1867 U.N.T.S. 187, Art. X, Sec. 1 [hereinafter GATT], available at http://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#articleX.
(147.) See GATT, supra note 146 (stating that the Agreement "requires that if fees are charged for assessing the conformity of products coming into a country, they should be no different to fees charged for assessing similar products of national origin or goods coming from any other country").
(148.) Agreement on Government Procurement, Apr. 15, 1994, 1915 U.N.T.S. 103 [hereinafter GPA], available at http://treaties.un.org/doc/Publication/UNTS/Volume%201915/volume-1915-I-31874-English.pdf.
(149.) Schefer, supra note 143, at 11.
(150.) Parties and Observers to the GPA, WORLD TRADE ORG., http://www.wto.org/english/tratop_e/gproc_ e/memobs_e.htm#memobs (last visited Mar. 31, 2013).
(151.) See Schefer, supra note 143, at 12 (quoting GPA, supra note 148) (stating that the main goals of the GPA are to "enhance the 'transparency of laws, regulations, procedures and practices regarding government procurement' and to provide for 'fair' procedures to ensure that the rules on procurement are effective").
(153.) TRANSPARENCY INT'L, supra note 111, at 7 (stating that China ranked 27th and Russia ranked 28th out of 28 countries).
(155.) The World's Largest Economies 2011, supra note 141.
(156.) China, WORLD TRADE ORG. (Sept. 2012), http://stat.wto.org/CountryProfile/WSDBCountryPFView .aspx?Language=E&Country=CN.
(157.) TRANSPARENCY INT'L, supra note 111, at 12.
(158.) John M. Hynes, China Beefs up Its Anti-Bribery Law with Its Very Own Version of the FCPA, Gov't CONTRACTS L. BLOG (Mar. 16, 2011), http://www.governmentcontractslawblog.com/2011/03/articles/fcpa/ china-beefs-up-its-antibribery-law-with-its-very-own-version-of-the-fcpa.
(160.) Lester Ross et al., China's Own FCPA, WILMERHALE (Aug. 1, 2011), http://www.wilmerhale.com/ publications/whPubsDetail.aspx?publication=9903 ("The scope of the phrase 'to obtain an improper commercial benefit' under Article 164 appears to be as broad as similar terms contained in Article 16.1 of the UN Convention....").
(161.) TRANSPARENCY INT'L, supra note 111, at 12 (commenting that the law states that "individuals may face criminal detention of between three and 10 years, while companies may receive fines, and managers directly responsible for an offence may also face criminal detention of up to 10 years").
(162.) Hynes, supra note 158.
(163.) Id. "'Foreign public official' shall mean any person holding a legislative, executive, administrative or judicial office of a foreign country, whether appointed or elected; and any person exercising a public function for a foreign country, including for a public agency or public enterprise." Id.
(165.) See Abbott & Snidal, supra note 49, at 427 (explaining how legal commitments enhance capacity for enforcements).
(166.) See supra Part III.B (discussing provisions of WTO agreements that aim to combat bribery).
(168.) Parties and Observers to the GPA, supra note 150.
(169.) See supra Part II.C (discussing the FCPA and U.K. Bribery Act).
(170.) See supra Part I (discussing the ironic inequality the Convention causes in that it allows non-signatories to take advantage of its lack of implementation and enforcement of the Convention).
(171.) Supra Part III.
(172.) See OECD Convention on Bribery of Foreign Public Officials in International Business Transactions, Transparency Int'l, archive.transparency.org/global_priorities/international_conventions/conventions_ instruments/oecd_convention (last visited Mar. 31, 2013) (issuing a report on the OECD Convention and its strengths and weaknesses).
(173.) Russia-EU PCA Trade, supra note 133.
(174.) See Chester, supra note 15 (stating that "a big question still remains exactly how aggressively Russian authorities will enforce the law").
(175.) See supra Part I (discussing research that proves this inequality).
(176.) Kal Raustiala, The Role of NGOs in International Treaty-making 2 (UCLA Sch. of Law, Research Paper No. 11-31, 2011), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1928937.
(177.) Id. at 3.
(178.) See id. at 7 (stating that NGOs played a key role in many negotiations between countries within the United Nations); see also id. at 8 (describing the role NGOs played in negotiating the Ottawa Mine Ban Treaty).
(179.) Id. at 9.
(180.) Raustiala, supra note 176, at 9.
(181.) Id. at 10.
(182.) See id (discussing how NGOs' reports are rapidly distributed around the world).
(183.) See Kim D. Reimann, Up to No Good? Recent Critics and Critiques of NGOs, in SUBCONTRACTING PEACE: THE CHALLENGES OF NGO PEACEBUILDING 37, 41 (Oliver Richmond et al. eds., 2005) ("Although most of the criticisms of NGOs regarding effectiveness and performance have been directed towards service-providing NGOs, advocacy NGOs have not been immune to similar criticisms.").
(187.) See id. at 47 (citing Joseph Hanlon, An Ambitious Political and Extensive Political Agenda: The Role of NGOs and the AID Industry, in GLOBAL INSTITUTIONS AND LOCAL EMPOWERMENT: COMPETING THEORETICAL PERSPECTIVES (Kendal W. Stiles ed., 2000)) ("Others have similarly described how NGOs are part of a new Western approach to bilateral and multilateral aid that systemically weakens and 'decapitates' states.").
(188.) See Reimann, supra note 183, at 47 (stating that this school of thought says NGOs "replace state services and provide a social safety net and 'bottom-up' pressure valve, thereby allowing market forces to work their magic without causing excessive social disruption or resistance").
(189.) Id. at 48 ("Finally, right wing critics of NGOs also claim that the New Global Left NGOs are enemies of corporations and have an anti-market orientation that seeks to undermine capitalism and free markets.").
(191.) See Abbott & Snidal, supra note 49, at 428 (stating that "[s]o long as domestic actors understand legal agreements to be serious undertakings, they will modify their plans and actions in reliance on such commitments, increasing the audience costs of violations").
(192.) See supra Part II (discussing the articles of the Convention).
(193.) See supra Part I (discussing how corporations from non-party-countries have an advantage over corporations from party-countries because they are not bound to domestic law that is aimed at coinciding with the Convention).
(194.) Jide Nzelibe, The Case Against Reforming the WTO's Enforcement Mechanism 7 (Northwestern Univ. Sch. of Law, Pub. Law and Legal Theory Series, Working Paper No. 07-12, 2007), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=980102.
(195.) See Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Art. VI, Annex 2, 1869 U.N.T.S. 401, available at http://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm#6 (stating "if the complaining party so requests, a panel shall be established at the latest at the DSB meeting following that at which the request first appears as an item on the DSB's agenda, unless at that meeting the DSB decides by consensus not to establish a panel").
(196.) Mark L. Movsesian, Enforcement of WTO Rules: An Interest Group Analysis, 32 HOFSTRA L. REV. 1, 2 (2003).
(197.) See supra Part III (discussing the various international agreements Russia, India, and China are party to and how those agreements require RIC to combat bribery).
Abhay M. Nadipuram, J.D. Candidate, The University of Iowa College of Law, 2013; B.A., Wartburg College, 2010. Thank you to the student writers and editors of Volumes 37 and 38 of the Journal of Corporation Law for their assistance in completing this Note; specifically, Sylwia Dabrowska, my Note and Comment Editor, and Alexandra Hemenway, Senior Articles Editor for Volume 38. Additionally, I thank Professor Joseph Yockey for his guidance both throughout writing this Note and law school. Finally, a special thanks to my family: my cousins Naveen Nadipuram and Lavanya Srivatsan Ratnam--the first two lawyers in my family--for their mentorship, and my loving parents, Mukund and Nagarathna Nadipuram, and brother, Santhosh Nadipuram, for their continued love and support.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||Organization for Economic Co-operation and Development, anti-bribery measures|
|Author:||Nadipuram, Abhay M.|
|Publication:||The Journal of Corporation Law|
|Date:||Mar 22, 2013|
|Previous Article:||The NLRB and social media: does the NLRB "like" employee interests?|
|Next Article:||Contemplating corporate disclosure obligations arising from cybersecurity breaches.|