THE HILL BY JAMES COOPER AND FERNANDO GARIBAY, OPINION CONTRIBUTORS - 02/14/24 11:00 AM ET
On Feb. 15, 2024, it will be 25 years since the Anti-Bribery Convention went into force among members of the Organization for Economic Co-operation and Development (OECD), a leading multilateral institution dedicated to the development of policies and the setting of international standards that bring prosperity, equality, opportunity and well-being for all members of society in all countries. One of the scourges that prevent the attainment of these goals is bribery, the corruption of public authorities for private gain.
There is much data that proves corruption sucks resources, lessens efficiencies, creates distrust in public institutions, diminishes the tax base, and tears at the fabric of the social contract in general. While estimates vary, according to the World Bank Group, corruption around the world is estimated to cost more than $2.6 billion — 5 percent of the global gross domestic product — annually. It is no wonder that corruption breeds conflict and abets political dysfunction.
In short, bribery and corruption are a cancer and place impediments in front of sustainable development and economic growth. In the face of this, a quarter-century ago countries, large and small, worked together to hammer out a treaty that criminalizes corruption and ensures that those involved in these illicit activities are investigated, prosecuted and sentenced to prison.
The Anti-Bribery Convention builds on the pioneering work of the United States in this area of rule of law. Long before Europe legislatively recognized that there was a bribery problem among its multinational corporations, the U.S. Congress passed the Foreign Corrupt Practices Act. It was signed into law by President Jimmy Carter in 1977, outlawing payoffs and other advantages provided to foreign public officials by U.S. persons and listed companies. It took almost 25 years for the rest of the developed, northern-industrialized world to get on board, to develop transnational rules that proscribe this abhorrent behavior.
Finally, the OECD treaty provided for a level playing field in the international business environment. Until then, payoffs, bribes and other rent-seeking behavior were actually used as business expenses in many countries, deducted from taxes owing. This was, to say the least, an unfair business practice and acted as a competitive advantage in international procurement processes for European countries; it put U.S. businesses at a disadvantage, because only they could not bribe foreign officials to win contracts.
Officially called the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the OECD treaty required signatory countries to criminalize bribery of foreign public officials. By criminalizing acts of offering or providing bribes to foreign public officials by companies or individuals, this international agreement focused on the supply side of bribery. The Anti-Bribery Convention also provided an open-ended monitoring system to make sure that the international obligations that all countries agreed to are actually implemented in their respective domestic legislation.
While the treaty was signed in December 1997 by members of the OECD (fundamentally by developed countries with modern economies), over the years all 38 member countries have signed and implemented the treaty. Another seven non-member countries, including Argentina, Brazil, Bulgaria, Peru, Romania, Russia and South Africa, have ratified or attorned to the OECD Anti-Bribery Convention. Yes, even Russia and South Africa — neither paragons of probity, fiscal exactitude or good corporate governance — have signed on.
Corruption disrupts international trade benefits, creates a culture of lawlessness, and undermines trust in public authorities. It is also economically inefficient as it adds transactions costs that get passed along supply chains, injuring consumer welfare and putting at risk product safety and public security. There is a reason why 190 parties signed on to the United Nations Convention against Corruption in 2003.
These last 25 years have been important to stem corruption, but as we have seen in so many cases — from Japan’s military procurement graft case in the 1970s, to “Operation Car Wash” in Brazil a decade ago, and to the “Fat Leonard” scandal in the U.S. just a few years ago, to name a few — this is an ongoing problem that is not going away any time soon.
All members of the international community should sign, ratify, deposit and implement the OECD Anti-Bribery Convention in their respective domestic legislation regimes. Only by snuffing out corruption can the benefits of free trade, sustainable development and economic growth be enjoyed across all societies. Trust in government officials and confidence in public institutions help build a system for accessing remedies and sanctions for bad behavior. It is the backbone of the rule of law. And bribery and corruption corrode the rule of law.
James Cooper is professor of Law at California Western School of Law in San Diego, where he serves as director of International Legal Studies. Fernando Garibay is an award-winning record producer, polymath, and founder of the Garibay Institute.