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Background information for editors: OECD Convention update: Ratification process enters crucial phase

National legislation must be tabled by 1 April

The OECD convention against foreign bribery is now entering a critical stage with most of the 34 signatory countries still having to table legislation in their parliaments to ratify and implement the convention before the April 1 deadline.

This date was agreed upon when the convention was signed by ministers of the 29 OECD member countries plus five further countries (Argentina, Brazil, Bulgaria, Chile, Slovakia) in Paris in December. The convention seeking to criminalise bribery of a foreign public official.

The first paragraph of the "Convention on Combating Bribery of Foreign Public Officials in International Business Transactions" states that each party "shall take such measures as may be necessary to establish that it is a criminal offence under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage,... to a foreign public official,... in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business."

Ministers also agreed that the convention will enter into force by the end of this year. Formal requirement for its entry into force is ratification by five of the ten countries which have the ten largest export shares of OECD countries, and which represent by themselves at least sixty per cent of the combined total exports of those tencountries.

Failing this minimal requirement, the convention will become legally binding after 31 December 1998, as soon as at least one signatory has ratified it.

However, such a limited endorsement would be tantamount to a major failure of the entire process. For the convention to achieve its purpose, it is crucial that it be ratified by the maximum number of countries. As no country is ready to be the first one to have its exporters bound by the conven-tion it is vital that all 34 countries act swiftly and simultaneously in ratifying the convention.

Despite the existence of the Foreign Corrupt Practices Act (FCPA) of 1977, the con-vention will also have to be ratified and implemented by the United States Congress, as the convention goes beyond certain provisions of the FCPA. For example, the convention will also cover foreign subsidiaries of companies based in the home country of one of the 34 convention parties.

The convention includes no provisions on the issue of tax-deductibility of bribes paid abroad, a benefit still granted by several OECD countries, includ-ing Germany. However, all OECD countries have repeatedly committed them-selves to fully abolish tax-deductibility. While Germany has to date taken no steps to comply with that commitment, the French parliament has recently decided, that tax-deductibility will automatically be ended as soon as the con-vention becomes effective.

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Mr. Frank Vogl, Vice Chairman of TI at tel. +1-202-331 8183

or the TI Secretariat at tel. +49-30-343 8200, fax +49-30-3470 3912
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For the full text of the convention in English or French contact the OECD at fax 33-1-4524 8500 or on the Internet