Cracking Down on Rich-World Bribe Payers

At the tenth anniversary celebration of the Anti-Bribery Convention of the Organization for Economic Co-operation and Development (OECD), Angel Gurria, the OECD's Secretary-General, summed up the state of play in today's fight against international corruption by saying, "Now, I do not want to spoil the birthday party, but I do have to say that what we have achieved is still not good enough….There will be big risks that countries will go back to doing 'business as usual,' including corruption."

For some U.S. companies, "business as usual" has included setting up complicated partnerships in which prominent U.S., European, and Japanese investors give equity stakes in investments to family members and business associates of leaders in developing countries in order to obtain favorable treatment. Several of the companies, after vetting the partnership arrangements with independent counsel and auditing firms, informed the U.S. Ex-Im Bank, OPIC, and the SEC about the details, and encountered no objections.

This report, authored by CGD non-resident fellow Theodore Moran, describes these partnerships in detail and investigates how the Foreign Corrupt Practices Act (FCPA) and its international counterpart, the OECD Convention on Combating Bribery, might be changed in order to prevent them. The report makes two key points.

• The language of both the OECD Convention and the FCPA need tightening.
• Even with a redrafting of these laws and conventions, the world needs other tools in the fight against international corruption, including an improved international arbitration process and an extension of the Extractive Industries Transparency Initiative (EITI) to other sectors and industries.

The author has provided specific suggestions as to the language which might be used to amend the FCPA and OECD Convention, as well as an encouraging look at how the international arbitration process and the EITI might be used to further strengthen the international anti-bribery regime.