Clamping Down On Commercial Bribery

In the short time I have been US commerce secretary, the world has moved towards dealing with the scourge of international corruption, and may now be moving away. In May, the worlds biggest industrialised countries promised to make illegal the practice of bribing foreign officials.

Recently, however, there have been signs that they are backsliding. It is imperative that countries recover the determination that fuelled their action in May. They do not have much time.

Since mid-1994, the commerce department has learned of allegations of bribery by foreign companies in some 180 international commercial contracts valued at nearly $80 billion. A British newspaper recently quoted a board member of a big German multinational as saying it would take 10 years to replace the overseas staff and networks that currently expect to operate on the basis of necessary bribery.

As commerce secretary, I am incensed when I see business diverted from companies that play fairly to those that play fast and loose. But I am even more disheartened by the damage that corruption inflicts on the economic development of less-developed countries.

Last May, trade, finance and foreign ministers of the Organisation for Economic Co-operation and Development (OECD), agreed to make a concerted attack on transnational bribery. As OECD ministers, we agreed to complete a convention by the end of this year obliging member states to make the bribery of foreign public officials a criminal offence, as it already is in the US under the Foreign Corrupt Practices Act. The convention is to come into force by the end of 1998 and the OECD will establish a monitoring procedure to enforce this decision.

After the first round of talks in July, the conclusion of an effective convention by the end of 1997 appeared to be attainable. But I am distressed by the backsliding on some critical issues at the October meeting.

The OECD ministers agreed in May that the bribery of legislators would be covered. But German and Austrian negotiators now insist that only a small category of bribes to legislators should be illegal. They argue that the convention must either mirror their domestic laws, which generally prohibit only those bribes paid to legislators to buy their votes, or that their companies be exempt from more stringent convention prohibitions against the bribery of foreign legislators.

Equally disturbing, most OECD member countries have taken the position that the convention should not cover the bribery of political parties and party officials. Imagine the effectiveness of a convention that failed to prohibit bribes to the political machines of Zaires Mobutu Sense Seko or the Philippines Ferdinand Marcos.

We must also cover the full range of enterprises owned or controlled by governments given the large number of such enterprises in developing countries. If we dont, this loophole alone could seriously weaken the convention.

The lack of progress on these issues should be deeply disturbing to ministers who agreed to criminalise bribery last May. Is it conceivable, after the bribery scandals that have caused so much damage to OECD nations in recent years, that any OECD member country could publicly insist that this convention fail to prohibit the bribery of public enterprises, foreign legislators, political parties and party officials? Instead of having a convention to outlaw bribery, we would run the risk of pointing the way to legal bribery.

Another vital issue is when to bring the convention into effect. Several OECD members, including France, Germany and Japan, insist the convention come into force only after a critical mass of large nations signs on, citing concerns about undercutting their companies competitiveness.

But surely these countries, with the US, would constitute a critical mass. Those who delay will come under pressure from their trading partners to ratify the convention.

I remain committed to the goal we set in May. A number of other member countries are equally committed. I ask those that are failing to fulfil their pledges and that are insisting on unwise limitations on the scope of the convention to do what they know is right.

We have only one negotiating session left before the December deadline. Lets renew our resolve to meet that deadline; lets settle the outstanding issues this month and form a tough agreement, without loopholes, that will effectively criminalise bribery of foreign public officials through all possible channels.

William Daley US commerce secretary I ask those that are failing to fulfil their pledges and are insisting on limitations on the scope of the convention to do what they know is right