Functional Equivalence at the OECD- Anti-corruption Conferences – Compliance in Russia & NIS
Has the OECD Anti-corruption Convention changed the way companies do business?
Yes, even if, in many countries, corruption remains endemic and even if many newly exporting companies from emerging economies do not abide by its anti-bribery requirements. What is new today is that no major OECD based company would consider it “normal” to bribe a foreign public official to obtain business. Corruption has not disappeared but it is no longer “business as usual”.
On the fifteen anniversary of the 17 December 1997 OECD Convention, let’s look at the long path that has been traveled, from the tax deductibility of foreign bribery to its effective incrimination. When in the early 1990s, the US representative, Ambassador Alan Larson, suggested a declaration against corruption to the OECD Council, he received polite attention, but I remember that the following silence was revealing. And when, eventually, a Working Group was established first under the Chairmanship of Christian Schricke, then OECD Director for legal affairs, followed by Mark Pieth, Professor of Criminal Law at the University of Basel, most delegations thought discussions would lead nowhere.
But this widespread belief did not take into account Mark Pieth’s genius stroke in the form of the idea of “functional equivalence”. In a nutshell, this new legal concept meant that signatory countries would prosecute bribery of foreign public officials in the way they were already prosecuting bribery of their national officials. The concept acknowledges that national, legal contexts differ but – as Mark put it in this Newsletter – Functional equivalence allows harmonization without actually having to work on the basis of a single legal format. The major consequence of functional equivalence has been the establishment of the OECD Working Group as a permanent entity to monitor continuously legal harmonization among 41 countries. The quarterly meetings of the Group, fifteen years after the signing of the Convention, are the most obvious sign that the Convention is being implemented effectively.
With 90 companies sanctioned, 216 individuals convicted (including 83 to prison terms) and 320 investigations ongoing in 24 countries, the incrimination of transnational bribery is now a reality. It should be noted, however, that the vast majority of countries signatory to the Convention are not enthusiastic about prosecuting their multinationals/champions who may have paid a bribe abroad but who are also securing contracts resulting in revenue, jobs and taxes for their home country. However, every country has an interest in seeing other countries prosecuting their national – and competing – champions. One should not therefore underestimate the political arm wrestling that took place over the last 15 years and the numerous obstacles that were created to undermine the efficiency of the Convention. Now that Mark Pieth has handed over the Chairmanship of the OECD Anti-corruption Working Group to Drago Kos, special tribute should be paid to Mark’s determination to raise, quarter after quarter, the barriers that were regularly put into place. If the OECD Convention has changed the way companies do business, it is primarily due to Mark’s recognized intellectual integrity, personal strength and sense of fairness. He should be commended for having devoted so much of his time and energy to paving the way for a more equitable world. It should also be noted that he has been extraordinarily well supported by the OECD Secretariat; Enery Quinones, Patrick Moulette and Nicola Bonucci among others. Supported ted by the personal commitment of its successive Secretaries General, Don Johnston and Angel Gurria. At age 15, the Convention is still a teenager but no longer a child. Thank you, Mark, for having taken care of this fragile international instrument and for having transformed a political ideal into legal reality.
-Philippe Montigny is the President of Ethic Intelligence
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