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REPORT

TITHE AN OIREACHTAIS

An Comhchoiste um Airgeadas agus an tSeirbhís Phoiblí

TUARASCÁIL MAIDIR LE TOGRAÍ I dTAOBH BILLE UM ÉILLIÚ A CHOSC

HOUSES OF THE OIREACHTAS

Joint Committee on Finance and the Public Service

Report on Proposals for a prevention of corruption bill

Eanáir, 2000

January, 2000

REPORT

TITHE AN OIREACHTAIS

An Comhchoiste um Airgeadas agus an tSeirbhís Phoiblí

TUARASCÁIL MAIDIR LE TOGRAÍ I dTAOBH BILLE UM ÉILLIÚ A CHOSC

HOUSES OF THE OIREACHTAS

Joint Committee on Finance and the Public Service

Report on Proposals for a prevention of corruption bill

Eanáir, 2000

January, 2000

TABLE OF CONTENTS

JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE REPORT PROPOSALS FOR A PREVENTION OF CORRUPTION BILL

1INTRODUCTION

1.1On the 3 March and the 11 March 1999 respectively, Dáil Éireann and Seanad Éireann agreed the following Orders:

That proposals for a Prevention of Corruption Bill, copies of which were laid before Dáil/Seanad Éireann on 24th February, 1999, be referred to the Joint Committee on Finance and the Public Service pursuant to paragraph 2(a)(iv) of that Committee’s Orders of Reference.

1.2The purpose of the proposals for a Prevention of Corruption Bill is to bring Irish law into compliance with three international agreements, namely;

i)The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,

ii)the EU Convention on Corruption involving Officials of the EU or of Member States of the EU,

iii)Council of Europe Criminal Law Convention on Corruption.

1.3As part of its consideration of the proposals, the Minister for Justice, Equality, and Law Reform, Mr John O’Donoghue, T.D. appeared before the Committee to discuss the proposals and members of the Committee examined the U.S. experience in relation to the implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This convention neatly summarises its purpose in its title and is more far reaching than might appear because it gives an extended meaning to the term, foreign public officials. The term includes any person holding a legislative, administrative or judicial office in a foreign country.

1.4The Committee agrees in principle with the approach taken by the Minister for Justice, Equality and Law Reform, Mr. John O’Donoghue T.D. in the proposals. It believes that the Minister may wish, in drafting the bill, to take into account the issues of concern outlined below which arose out of the examination of the U.S. experience.

2OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions - The U.S. Perspective

2.1Background.

In 1977, the Congress of the United States of America enacted the Foreign Corrupt Practices Act (FCPA).

The focus of the FCPA was two-fold;

1)Accounting provisions, which concerned the obligation to keep and maintain accurate books and records - which referred to publicly held companies only and

2)Prohibition of the bribery of foreign officials.

The FCPA applied to US companies, US citizens, foreign aliens who are directors of companies in the US and foreign aliens with a green card.

2.2Once the FCPA had been enacted, the Justice Department looked for suitable cases to prosecute under the Act. In 1998, there were five prosecutions under the FCPA, which included officials of a corporation charged with bribing a Panamanian official and the bribing of civilian and army personnel involved in purchasing at an airforce base.

2.3In 1988, some minor amendments were made in the Act and in 1998, the International Anti-Bribery and Fair Competition Act (IABFCA) amended the FCPA to implement the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

2.4Issues arising out of FCPA

In looking back at the history of the FCPA, a number of important issues came through

i)The importance of prosecuting enough cases to show that the legislation was an efficient tool, so that business would foster an internal system of compliance and

ii)The importance of helping business understand what was required through advisory counsels.

2.5OECD Treaty

On the 21 November 1997, OECD Member Countries and five non-member countries adopted a Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

2.6While initially the original motivation for the Treaty was to level the playing field in relation to companies doing business, the importance of its role in improving democratic accountability and in cutting down on loss in development effort was given more emphasis. In countries that may have had a tradition of the payment of small bribes, the inflow of large amounts of money in bribery payments could inflate the size of all bribes, which in turn would significantly effect company profits.

2.7Issues of Concern

Among the issues of concern in relation to overall implementation of the OECD convention by signatory countries from the U.S. perspective were

i)that the fines to be imposed in relation to the offences concerned would be substantial,

ii)The importance of countries helping each other, using peer review, to look at how effectively the convention was being implemented,

iii)The issues of tax deductability, it was important that business should not be able to use tax deductions on something that was a criminal offence,

iv)The importance of prosecuting enough cases to show that the legislation was an efficient tool, so that business would foster an internal system of compliance,

v)The importance of helping business understand what was required through advisory counsels,

vi)The use in some countries of a ‘grandfather clause’ when implementing legislation, where offences relate to contracts rather than dates, which would mean that prosecutions could not be brought in relation to contracts signed before ratification of the Treaty by the country involved,

Other issues;

i)reporting requirements in the implementing legislation and monitoring of compliance with the Treaty. In the U.S.A., there is a reporting requirement to Congress once a year for five years, to which the Department of Commerce, the State Department and the Justice Department contribute.

2.8Among the issues which arose during the consideration of the Treaty by the Senate Foreign Relations Committee were

i)the existence of gaps concerning payments to the families of foreign officials and

ii)that payments to politicians would be covered by the Treaty. They did not want to stop contributions to political parties, but did want to ensure that payments made to political parties could not be passed to Corporations.