Memorandum Submitted by OECD (BB 31)
INTRODUCTION
1. The OECD would like to thank the Joint
Committee for the opportunity to give oral evidence on the draft
Bribery Bill, as well as this invitation to provide these additional
written submissions to the Committee. These submissions supplement
and elaborate on our oral evidence. They also address specific
questions that the Committee put to us in writing after the oral
evidence session. The OECD Secretariat cannot speak for the OECD
Working Group on Bribery in International Business Transactions.
Nevertheless, we hope that our comments will be useful to the
Committee.
2. The Working Group has not had an opportunity
to study the draft Bribery Bill; its precise views on the Bill
are therefore unknown. However, experts from several Working Group
member countries commented on the Law Commission's proposals in
its November 2008 report Reforming Bribery (see letter
of Prof. Mark Pieth dated 21 January 2009). Many of these
comments apply to the draft Bill because of the similarity between
the draft Bill and the Commission's proposals.
3. On this basis, the Working Group will
likely find that the draft Bill addresses many of its concerns
about UK foreign bribery law. This conclusion, however, is premised
on the assumption that the UK enacts, without further delay and
with no substantial changes, all elements of the draft Bill, including
the provisions on foreign bribery and corporate liability for
failure to prevent foreign bribery.
QUESTIONS PROVIDED
PRIOR TO
EVIDENCE SESSION
Q8. To explore what changes, if any, should
be made to the jurisdictional reach of the draft Bill; and to
ascertain whether the fact that the new corporate offence catches
bribes made on behalf of any company that carries on a part of
its business within the jurisdiction gives cause for any concern.
4. As in other areas, the draft Bill addresses
many of the Working Group's concerns on the issue of jurisdiction.
Additional issues have been raised, such as the absence of nationality
jurisdiction over legal persons incorporated in the Crown Dependencies
(CDs) and Overseas Territories (OTs),[173]
and the application of the draft Bill to Scotland, CDs and OTs.[174]
Other countries may also have jurisdiction over a company incorporated
abroad but has its seat of operations or principal place of business
in the country.[175]
Nevertheless, these additional issues should not preclude the
UK from enacting the draft Bill in its present form. Once enacted,
the effectiveness in practice of the draft Bill's jurisdictional
reach would of course be assessed by the Working Group on Bribery
in the regular course of its continued monitoring of Parties'
implementation of the Convention.
5. There are no concerns if the new corporate
offence catches bribes made on behalf of any company that carries
on only a part of its business within the jurisdiction. Indeed,
such coverage is necessary, since foreign bribery is often committed
by multinational enterprises that operate in multiple jurisdictions
around the world.
6. It should be further noted, however,
that the offence in Clause 5 only catches bribes made "in
connection with" the legal person's business. This could
be interpreted to mean that a company is only liable if the bribe
was intended to benefit the company directly or indirectly. As
well, this provision might be too restrictive because a "relevant
commercial organisation" is limited to companies incorporated,
organised under the laws of, or carries on business in the UK
(sub-clause (7)). The Convention does not limit territorial jurisdiction
in this way.
Q11. Whether there are any remaining issues
that were raised in correspondence by the Chair (Mark Pieth) which
would prevent the OECD offering its unqualified support for the
draft Bill
7. The Annex to the letter of Prof. Pieth
suggests further improvements to the Law Commission's proposals
which are not reflected in the draft Bill. Nevertheless, as noted
at the outset, the draft Bill addresses many of the Working Group's
concerns about UK foreign bribery law. The Group accordingly fully
supports the UK's efforts to pass the draft Bribery Bill in its
current form.
ADDITIONAL QUESTIONS
RECEIVED AFTER
EVIDENCE SESSION
Question 2: Whether Draft Bill makes Adequate
Provision for Facilitation Payments
8. Commentary 9 on the Convention states
that "small facilitation payments" do not constitute
an offence under Article 1 of the Convention.[176]
As currently worded, the draft Bill does not provide an exception
for small facilitation payments and the OECD Secretariat believes
that this approach would be fully supported by the Working Group
on Bribery. Indeed, Parties to the Convention are under no obligation
to provide such an exception, and the majority of Parties have
not implemented Commentary 9. Out of 38 Parties, only the
following five provide an express exception or defence in the
law for small facilitation payments: Australia, Canada, Korea,
New Zealand and the United States.
Working Group on Bribery recommendations to specific
Parties
9. The Parties that provide an express exception
or defence for small facilitation payments follow a similar approach.
However, there are some important differences, such as the description
of the type of advantage to which the exception or defence applies
(eg the size and whether it is limited to monetary payments).
Important differences also exist concerning the description of
the benefit that is sought by the payment (in particular what
is considered a routine government action or an act of a routine
nature).
10. The Phase 2 Report on Australia
describes confusion in the private sector on the limits of the
exception for small facilitation payments. It also explains that
somewhat confusing information on such payments in a government
publication was corrected following the Phase 2 on-site visit.
The Working Group recommended a similar correction to information
available on the Internet, and follow-up of the application of
the defence as practice develops.
11. In the Phase 2 Report on Canada,
the Working Group notes a high level of dissatisfaction with the
exception for facilitation payments on the part of corporate and
criminal defence lawyers, and that it was the opinion of some
lawyers that the defence creates a large area of uncertainty.
The Working Group recommended that the Canadian authorities should
consider issuing some form of guidance to assist in interpreting
the offence.
12. In Phase 2 the Working Group recommended
follow-up of the application of the exception in Korea's law.
In the case of New Zealand, in order to achieve compliance with
the Convention the Working Group recommended clarification of
the exception to ensure that the foreign bribery offence applies
to any bribe for the purpose of obtaining: (1) discretionary or
illegal acts by a foreign public official; or (2) the granting
of any improper advantage in the conduct of international business,
including advantages such as tax breaks that may be unrelated
to the specific terms of benefits. New Zealand was also recommended
to clarify that the exception applies only to "small"
payments.
13. The Phase 2 Report on the United
States comments that a similar exception is not provided in relation
to the offence of bribing a domestic public official. It also
points out that the exception has not been interpreted by any
US court, and there are not any relevant Opinion Releases from
the Department of Justice. The Working Group recommended that
the United States consider developing specific guidance on the
exception.
Recent developments
14. In the 2006 Mid-Term Study of
Phase 2 Reports, the Working Group concluded that it
might undertake a mid—to long-term analysis about whether
the exception for small facilitation payments in Commentary 9 on
the Convention is too vague to implement in practice. It also
concluded that it might be prudent to canvass whether Parties
that do not provide such an exception under their laws nevertheless
provide one in practice, through, for instance, the exercise of
prosecutorial discretion.
15. In January 2008, the Working Group published
its Consultation Paper on the Review of the OECD Anti-Bribery
Instruments for the purpose of obtaining input from external
stakeholders on the review of the OECD anti-bribery instruments.
The Consultation Paper summarizes the situation in the Parties
to the Convention as follows:
Some Parties to the Convention have expressly
established an exception for facilitation payments that is intended
to implement Commentary 9. A few Parties have not expressly established
such an exception, but apply one in practice. The rest of the
Parties have chosen to not implement Commentary 9.
16. The Consultation Paper also states that
"the Working Group has consistently asked Parties that provide
an exception for small facilitation payments to ensure that the
exception is clear and does not exceed the limits of Commentary
9".
17. Seven respondents to the Consultation
Paper provided written input on small facilitation payments. These
respondents represented the external and internal auditing professions,
civil society, private sector and trade unions. Respondents from
the external auditing profession recommended that an exception
for such payments in a Party's legislation should be clear and
not exceed the limits of Commentary 9. The internal auditing profession
also called for clarity, and stated that serious consideration
should be given to allowing no exceptions for facilitation payments.
18. Transparency International recommended
elimination of the exception in Commentary 9, and pointed out
that attitudes regarding these payments have changed since the
Convention was negotiated due to factors including the following:
(1) they are often part of a widespread extortion scheme, and
not isolated acts by low-level officials; and (2) it is very difficult
to draw the line between facilitation payments and other bribes.
Trade union representatives also recommended removal of this exception.
19. The International Chamber of Commerce
stated that the perception of the business community on such payments
is changing. In addition, since 2005 the ICC has been saying
that "enterprises should not make facilitation payments"
and that "the need for the continued use of facilitation
payments should be reviewed periodically with the objective of
eliminating them as soon as possible".
Question 3: What does UK need to do differently
in future to address the OECD's concerns regarding the BAE case
20. The Working Group's concerns regarding
the BAE case are fully set out in the Phase 2 bis Report.
The draft Bribery Bill, if enacted, would address some of these
concerns, eg deficiencies in the UK's foreign bribery offence
that were cited as reasons in part for discontinuing the BAE case.
Other concerns were briefly discussed during the oral evidence
session, eg the role of the Attorney General, and the status
of Article 5 of the OECD Convention under UK domestic law.
Additional issues dealing specifically with the BAE Al Yamamah
case are at paragraphs 130-169 of the Report. Also relevant
are paragraphs 226-229 concerning access to tax and other
government information.
21. One important way to address the concerns
expressed by the Working Group in this case is to clarify the
status of Article 5 of the Convention in domestic law and
to ensure that it applies effectively to all investigators and
prosecutors at all stages of a foreign bribery case (see Phase
2 bis report paragraphs 94-108).
Question 4: Comments on Exception to "Not
Legitimately Due" Requirement in relation to Foreign Law
Whether exception exceeds Commentary 8 on
Convention
22. The OECD Anti-Bribery Convention provides
for two exceptions to the offence of bribing a foreign public
official under Article 1 of the Convention. Commentary 8 on
the Convention states that an offence is not committed "if
the advantage was permitted or required by the written law or
regulation of the foreign public official's country, including
case law". Commentary 9 states that "'small facilitation
payments' do not constitute payments made 'to obtain or retain
business or other improper advantage'" within the meaning
of Article 1 of the Convention and therefore are not an offence.
23. Since both exceptions are carefully
delineated in the Commentaries, when a Party chooses to implement
one (or both), the Working Group routinely assesses whether it
has been implemented in conformity with the Convention. As a result,
the Working Group has accumulated a body of interpretive material
(Phase 1 and Phase 2 Reports, and 2006 Mid-Term
Study of Phase 2 Reports) on the limits of the Commentaries.
The discussion in this part of the submission focuses on the Working
Group's assessments of compliance with Commentary 8 since
the monitoring process began in 1999.
Question 4(d): Meaning of "written law"
exception in Commentary 8
24. Commentary 8 is commonly understood
by the Working Group on Bribery to require the following elements:
(i) the advantage must be permitted or required
(ii) the permission or requirement must be expressly
provided (ie stated in writing under the law)
(iii) written law refers to legislation, regulations
or case law
25. Since the advantage must have been required
or permitted in writing, Commentary 8 does not provide an
exception to the case when the law of the foreign public official's
country does not prohibit offering, promising or giving the advantage
in question (ie the law of the foreign public official's country
is silent on the matter).
26. It is important to keep in mind, that
the exception under Commentary 8 has nothing to do with the
application of jurisdiction to foreign bribery offences. Thus
it does not provide a rule on the application of dual criminality
for offences committed abroad. Issues of jurisdiction are governed
by Article 4 of the Convention, and jurisdiction over offences
that take place abroad is specifically governed by Article 4.2.
It is therefore submitted that any possible concerns of the Joint
Committee regarding dual criminality requirements need to be addressed
through an assessment of Clause 7 of the Draft Bill, including
whether it complies with Article 4.2 of the Convention and
related Commentary 26 on Article 4.2, which states that for
the purpose of applying "nationality jurisdiction",
"dual criminality should be deemed to be met if the act is
unlawful where it occurred, even if under a different criminal
statute".
Summary of treatment of Commentary 8 by other
Parties and resulting Working Group comments and recommendations
27. Given that Commentary 8 is very
restrictive, it is perhaps not surprising that the vast majority
of Parties to the OECD Anti-Bribery Convention have chosen not
to implement it, with only the following five out of 38 Parties
choosing to provide an exception: Australia, Canada, Korea, New
Zealand and the United States. The Canadian offence of bribing
a foreign public official states that no person is guilty of bribing
a foreign public official if the loan, reward, advantage or benefit
"is permitted or required under the laws of the foreign state
or public international organization for which the foreign public
official performs duties or functions". The Working Group
did not comment on this language in its Phase 2 Report on
Canada, choosing to focus on the absence of nationality jurisdiction
for the foreign bribery offence in Canada.
28. The Korean offence provides a defence
where a payment to a foreign public official "is permitted
or required by the law of the foreign public official's country".
The Phase 2 Report on Korea points out that this exception
is not entirely consistent with Commentary 8, because it is not
limited in application to "written" law. However, the
Working Group was persuaded that the exception would be restricted
in practice to the "written" law because the Explanatory
Manual on the offence published by the Ministry of Justice clarified
that it would only apply where the payment was permitted or required
by the "written law of regulation of the foreign public official's
country".
29. The United States provides an affirmative
defence to the foreign bribery offence where "the payment,
gift, offer or promise of anything of value that was made, was
lawful under the written laws and regulations of the foreign official's,
political party's, party official's, or candidate's country".
The Phase 2 Report on the United States points out that the
term "unlawful" leaves open the issue of what is lawful
under the written laws of a country. A Department of Justice publication
(Fighting Global Corruption—Business Risk Management)
stated that "whether a payment was lawful under the written
laws of a foreign country may be difficult to determine. You should
consider seeking the advice of counsel or utilizing the Department
of Justice's Foreign Corrupt Practices Act Opinion Procedure when
faced with an issue of the legality of such a payment". Prosecutors
from the Department of Justice were not aware of any prosecutions
where this defence was raised.
30. Australia's foreign bribery offence
provided an exception where the briber "would not have been
guilty of an offence against a law in force" in the place
where the central administration is located for which the official
performs his or her duties. The risk of creating a loophole in
the foreign bribery offence when legislation is not fully in line
with Commentary 8 is illustrated in the findings of the 2006 Report
of the Inquiry into certain Australian companies in relation to
the UN Oil-for-Food Programme (Cole Inquiry Report). Regarding
alleged payments of inland transportation or after-sales-service
fees to the Iraqi Government by the Australian Wheat Board (AWB)
in order to sell "humanitarian goods" (in this case
wheat) to Iraq, the Cole Inquiry Report states the following:
There is evidence that points to the likelihood
that if AWB's conduct in promising to make the payment to the
Iraqis had occurred in Baghdad, AWB would not have been guilty
of an offence against a law in force in that place. That is because
the requirement to pay inland transport or after-sales-service
fees to Iraqi entities was the result of directives or orders
by Iraqi government Ministers or officials. The available inference
is, therefore, that it was not unlawful in Iraq to make such payments.
The fact that the payment may have been contrary to the United
Nations sanctions would not have affected the lawfulness of the
payments as a matter of Iraqi law.
It follows that, at least in relation to the
payment of inland transport and after-sales-service fees, there
is no reasonable basis for concluding that an offence may have
been committed against subsection 70.2(1) of the Criminal Code.
31. It should be noted that the Working
Group felt that the exception in the Australian legislation provided
a rule of dual criminality which would apply even if the offence
were committed in Australia, and felt that Australia had exceeded
the limits of Commentary 8. Following Phase 2, Australia amended
the legislation in 2007 to clarify that it is only available
where the advantage given or offered to the foreign public official
is "expressly permitted or required by written law".
32. Perhaps the most in-depth discussion
on this issue to date by the Working Group on Bribery takes place
in the Phase 2 Report on New Zealand. Pursuant to the offence
of bribing a foreign public official in New Zealand, an offence
is not committed if (1) the act took place outside New Zealand;
and (2) was not, at the time of its commission, an offence under
the laws of the foreign country in which the principal office
of the person, organization, or other body for whom the foreign
pubic official is employed or otherwise provides services, is
situated. The Working Group comments in the Report on Commentary
8 on the Convention as follows:
The requirement that the advantage be permitted
or required by the written law of the foreign jurisdiction appears
to have three main purposes. First, the reference to "permi[tting]
or requiring" by written law requires that the foreign law-maker
must have adverted with some specificity to the practice at issue.
The words "permit" and "require", particularly
when associated with a requirement of a writing, connote a conscious
act in which the act in question is identified and then accepted
or mandated. Second, by requiring that the act be permitted or
required by "written law or regulation"—and not
merely by administrative practice that may be relatively opaque—Commentary
8 requires that a law-making authority in the foreign jurisdiction
must have publicly endorsed the practice in question. Conduct
that would fall within the scope of Art. 1 of the Convention
is unlikely to constitute publicly acceptable behaviour in many
jurisdictions. Third, as New Zealand has noted, Commentary 8 creates
an exception to the autonomy of the foreign bribery offence by
contemplating the consideration of foreign law. In this context,
the requirement of written and relatively specific foreign law
permitting or requiring the practice facilitates issues of proof
because it is comparatively easy to determine whether the strict
conditions for application of the Commentary are satisfied.
33. The Working Group concluded that the
exception in New Zealand's legislation was inconsistent with Article
1, Article 4.2 (on nationality jurisdiction) and Commentary
8 on the Convention, and recommended that New Zealand repeal
or amend the exception to achieve full compliance with the Convention.
Approach of Parties that do not expressly provide
for an exception in line with Commentary 8
34. In the 2006 Mid-Term Study,
the Working Group on Bribery recognized that some Parties that
do not implement Commentary 8 by codifying it in their law
might still provide an exception in practice. The Working Group
therefore concluded that "it might be prudent to canvass
whether Parties that do not provide such a defence under their
laws will nevertheless apply it in practice through, for instance,
the exercise of prosecutorial discretion".
35. It should be noted in this respect that
no Party has ever reported that a defendant raised this exception
in the course of foreign bribery proceedings.
Question 4(b): The importance of including
a test of whether an advantage was "improper" or "undue"
if the foreign law exception is removed
36. Article 1 of the Convention establishes
an offence in relation to offering, promising or giving "any
undue pecuniary or other advantage" to a foreign public official.
The United Kingdom Draft Law uses the term "advantage is
not legitimately due" in sub-clause (3) (b) of Clause 4.
37. The Convention does not define what
is covered by the term "undue". Although the Commentaries
do not define "undue", they clarify that the offering,
promising or giving of an advantage to a foreign public official
in certain situations is an offence under Article 1. In particular,
Commentary 4 confirms that it is an offence to "bribe
to obtain or retain business or other improper advantage whether
or not the company concerned was the best qualified bidder or
was otherwise a company which could properly have been awarded
the business". Commentary 7 confirms that it is an offence
"irrespective, inter alia, the value of the advantage,
its results, perceptions of local custom, the tolerance of such
payments by the local authorities, or the alleged necessity of
the payment in order to obtain or retain business or other improper
advantage".
38. Moreover, the Commentaries provide only
two possible exceptions to the foreign bribery offence——under
Commentary 8, as already discussed, and Commentary 9 on "small
facilitation payments". Otherwise, they do not provide for
any situations in which an advantage might be due to a foreign
public official.
39. In sum, the important point for the
Convention is not whether a foreign bribery offence contains an
"improper" or "undue" test, but whether the
offence meets all of the elements of Article 1 and the relevant
Commentaries.
Question 4(c): Parties that do not include
the qualification that an "advantage" must be "improper"
or "undue" or an equivalent term
40. Examples of how the term "undue"
(or other terms adopted by Parties for the same purpose) has been
interpreted by five Parties—Australia, France, Luxembourg,
Norway and Switzerland—might be of assistance to the Joint
Committee. Otherwise, Parties have not interpreted this term or
equivalent term used in their legislation, and the Working Group
has not recommended that they do so. It has also not commented
on the use of prosecutorial discretion to determine whether a
particular offer, promise or gift is "undue".
41. Australia uses the term "not legitimately
due" and clarifies that an advantage is not legitimately
due in some of the circumstances listed in Commentary 7. However,
since Australia did not include all the prohibited circumstances
in Commentary 7, the Working Group recommended that Australia
take appropriate measures to clarify and ensure that the foreign
bribery offence apply to such cases.
42. Under the French offence, the offer,
promise or giving of advantages must be made "without right".
This term is not defined, but the Ministry of Justice believes
that the advantage is neither based on nor justified by a current
legal text or court ruling. There was also some discrepancy between
the Public Prosecutor's Office and a trial judge on the onus of
proving whether a foreign public official is entitled to receive
an advantage. The Working Group recommended follow-up of this
issue as case law evolves.
43. The offence in Luxembourg also incorporates
the notion of "without right", which the Luxembourg
authorities stated excludes the offering, promising or giving
any salary or advantage to a foreign public official that is formally
provided by statute. The Working Group recommended follow-up of
this issue in light of evolving jurisprudence.
44. The offence in Norway employs the term
"improper advantage". The Preparatory Works to the offence
state that criteria for determining whether an advantage is improper
include its purpose, and whether the employee's principal was
aware of it. They also state that the determination of whether
an advantage is improper must be made on a case-by-case basis.
Again the Working Group recommended follow-up of how the term
is applied in practice.
Question submitted by Joint Committee on 17 June
2009 regarding comments of Corner House
45. On 17 June, the Joint Committee
asked the OECD to address the recommendation by Corner House that
the "legitimately due" test in Clause 4 of the
Draft Bill be replaced by an "improper" advantage test,
and that what is "improper" be qualified in the same
way that Clause 2 is qualified by conditions 1, 2 and
3 in Clause 3.
46. The UK is encouraged to stick to as
closely as possible to the language of the Convention. Article
1 of the Convention in respect to this element of the foreign
bribery offence is "undue pecuniary or other advantage … in
order that the official act or refrain from acting in relation
to the performance of official duties". There is no further
requirement in the Convention that the official acts "in
breach of an expectation of good faith, impartiality or trust".
Adding these elements to the UK foreign bribery offence could
therefore render the UK offence narrower than Article 1 of
the Convention.
47. Regarding conditions 1, 2, and 3 under
Clause 3 (ie expectation of good faith, impartiality and
trust), there may be concerns that they might not comply with
Article 1 of the Convention. In particular, Commentary 3 states
that a statute that defines the offence in terms of a breach of
the official's duty "could meet the standard provided that
it was understood that every public official had a duty to exercise
judgement or discretion impartially and this was an autonomous
definition not requiring proof of the law of the particular official's
country". Under Conditions 1 and 2, it would not necessarily
be "understood" that a foreign public official has a
duty to perform the function or activity in good faith, or exercise
judgement or discretion impartially. Thus it appears that it would
be necessary to prove the law of the particular official's country.
Condition 3, which requires that the person performing the function
or activity is in a position of trust, could appear to reintroduce
the agency principle—ie that it must be proven that the
person who was bribed breached the duty of trust between agent
and principle. The Working Group stated already in its Phase 2 report
on the United Kingdom that the "agency/principal basis of
the foreign bribery offence could lead to interpretations of the
offence that are not in compliance with the Convention".
In Phase 2bis the Working Group recommended that the United Kingdom
"ensure, in particular, that such legislation does not permit
principal consent as a defence to foreign bribery".
48. For these reasons, the UK is encouraged
to follow the language of Article 1 of the Convention instead
of using a test of breach of an expectation of good faith, impartiality
or trust" for the foreign bribery offence.
Question 4(a): What types of advantages might
be legitimately conferred on an official
49. In Switzerland, the foreign bribery
offence does not apply where the advantage is "of minor value
in conformity with socially accepted practices". The Swiss
authorities explained that the purpose of this provision is to
exclude from the offence insignificant advantages that present
no risk of inciting foreign public officials to act in a manner
inconsistent with their duties or likely to influence them in
the exercise of their discretion". The Working Group recommended
follow-up of this issue in light of evolving practice.
Corporate hospitality
50. Regarding the specific example of "corporate
hospitality" provided by the Joint Committee, two Parties
to the Convention—Canada and the United States—have
provided a defence for these kinds of expenses. In the Canadian
legislation, it is stated that no person is guilty of bribing
a foreign public official if "the loan, reward, advantage
or benefit" "was made to pay the reasonable expenses
incurred in good faith by or on behalf of the foreign public official
that are directly related to (i) the promotion, demonstration
or explanation of the person's products and services, or (ii)
the execution or performance of a contract between the person
and the foreign state for which the official performs duties or
functions". In Canada the prosecution has the burden of proving
beyond a reasonable doubt that the defence does not apply. The
Working Group recommended follow-up of how Canada applies this
defence in practice.
51. The defence in the United States legislation
is similar to the Canadian one except in the following two main
respects: (1) it provides an affirmative defence, which means
that the defendant has the burden of raising and proving that
it applies beyond a reasonable doubt; and (2) it expressly clarifies
that "travel and lodging expenses" are of the nature
of expenditures covered by the defence. In the Phase 2 Report
on the United States, the Working Group states that some companies
were not sure of the scope of the defence. This observation was
based on the level of corporate resources that had been used to
seek counsel's clarification of the issue. The Working Group questioned
the need for this defence in the US legislation, and recommended
that if the defence is to be maintained, appropriate guidance
be provided.
52. In addition, in the 2006 Mid-Term
Study of Phase 2 Reports, the Working Group states that
in the absence of an express defence for reasonable expenses incurred
in good faith, a Party could apply the defence implicitly in the
exercise of prosecutorial discretion, and recommended canvassing
this issue systematically in all Phase 2 examinations. The
Phase 2 evaluations have not revealed that Parties that did
not provide such a defence in their laws are applying one in practice,
through, for instance, prosecutorial discretion. In addition,
no Party has reported that a defendant raised this defence in
the course of foreign bribery proceedings.
Commissions
53. The Joint Commission asks whether "commissions"
paid to a foreign public official would constitute an "undue"
advantage pursuant to Article 1 of the Convention. The Anti-Corruption
Division cannot think of a situation where paying a foreign public
official a commission in return for obtaining or retaining business
or other improper advantage in the conduct of international business
would not violate Article 1 of the Convention. In all the
cases that we can think of, the payment of a commission would
amount to a form of a kick-back to the foreign public official.
On the other hand if the commission were permitted or required
by the written law of the foreign public official's country, this
would appear to satisfy the exception under Commentary 8.
Additional services to community such as building
a school
When oral evidence was given by the OECD on
11 June 2009, the Joint Committee asked whether the following
situation would constitute an offence under Article 1 of
the OECD Anti-Bribery Convention: In order to obtain a large construction
contract from a foreign government, a company from the United
Kingdom must agree to provide additional services to the foreign
community, such as building a school.
54. The Working Group has done significant
horizontal analysis on the coverage of the offence under Article
1 of the Convention where the advantage benefits a third
party (even when it is transferred directly to a third party with
the agreement of the foreign public official). We can confirm
that the Working Group interprets a third party to include a charity
in certain circumstances, political party, spouse of the foreign
public official, or company in which the foreign public official
holds a beneficial interest. However, the Working Group has not
yet addressed the case where the third party beneficiary is the
general public or a segment of the population; although it is
possible that some Parties have experience in these kinds of transactions.
55. In the absence of a clear finding from
the Working Group, the OECD Secretariat can only confirm that
if constructing the school in return for the large contract sought
by the company was permitted or required by the written law of
the foreign public official's country, this would appear to satisfy
the exception under Commentary 8. Entering into "planning
agreements" in order to obtain construction contracts from
a government might be permitted or required under a statute such
as a local planning act.
56. To our knowledge, the only Party to
the Convention that has explicitly dealt with the issue in the
context of an actual case was the United States We invite the
Joint Committee to address any further questions to the U.S. authorities
as the Committee deems appropriate.
June 2009
173 Phase 2bis Report paras. 261-262; Annex of Prof.
Pieth letter dated 21 January 2009; Law Commission Report
paras. 8.47-8.52; Phase 2 Report paras. 226-227. Back
174
Annex of Prof. Pieth letter dated 21 January 2009. Back
175
For example, France, Greece, Italy and US. Back
176
Commentary 9 describes "small facilitation payments"
as follows: "Such payments, which, in some countries, are
made to induce public officials to perform their functions, such
as issuing licenses or permits, are generally illegal in the foreign
country concerned". Back
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