OECD Bribery Convention

George Monkhouse Kleuser
March 25, 2010
The OECD Anti-Bribery Convention:
Implementation, Approaches and Interests of Arms Exporting States
Introduction:
The following paper analyzes the adoption and the application of the Convention on
Combating Bribery of Foreign Public Officials in International Business Transactions of 1997
(the Convention), an initiative by the Organization for Economic Cooperation and
Development, by key arms-exporting states. Of particular interest are the disparities of
implementation performance among several key OECD member-states and also the reasons
certain non-member states have ratified or expressed the desire to ratify the Convention. The
following paper will discuss the Convention’s development from American domestic law to
its implementation through the OECD at the international level. The application and
performance of the United States, France and the United Kingdom, all OECD member-states,
will then be analyzed as will the performance and reasons for accession to the Convention by
non-OECD states Russia and Israel. Finally, we will conclude in examining the reasons for
accession and differing levels of implementation by use of various theoretical frameworks.
In the exportation of armaments corruption is of particular interest due to the facility
of the practice from both the supply and demand side. Moreover, a year 2000 Gallup poll
among emerging countries’ business executives showed that construction and arms industries
were viewed as the most corrupt by far, and that low salaries of public servants and little risk
of punishment for bribery the facilitating factors.1 This interest in corruption within the
domain of arms exports dictates the choice of the aforementioned countries for case study.
On the supply side, foreign suppliers may manipulate tax codes in order to bribe foreign
officials, a practice that is all the more attractive as huge R&D costs compel producers to
actively seek export opportunities.2 From a demand side perspective, the fact that
governments are typically the sole providers of defense services means that regulations
typically confer power to officials in charge of authorizing contracts. Coupled with the fact
that defense outlays are often under secrecy, and often excluded from freedom of information
legislation, undermines transparency and creates an environment open to corruption.3
Among OECD member-State parties to the Convention, the United States, as the
initiator of the Convention and with the most to gain from it, is unsurprisingly the most
1 McNamus, Jenny. “Builders and Arms Dealers Lead World Corruption Index.” Independent Business Weekly,
February 2, 2010.
2 Gupta, Sanjeev, Luiz de Mello, Raju Sharan. "Corruption and Military Spending." European Journal of
Political Economy, Vol. 17 (2001), p. 751-752.
3 Ibid. p. 752-753.

committed to and has implemented the Convention the most effectively. France has done
quite well in this arena and the implementation of the Convention has its roots in domestic
political considerations. The United Kingdom is certainly the laggard among state signatories
and has seemed until recently to make every effort possible to undermine or weaken the
Convention in its domestic sphere. Israel and Russia, as non-State members, would seem to
have little interest in applying the Convention in a simple rational choice model. However,
Israel has applied the Convention and Russia has begun the process which the OECD will
subsequently review.
Development from American Domestic Law to the OECD:
The Foreign Corrupt Practices Act
According to Robert Leiken, America’s efforts in combating corruption can be
partially traced to the “progressive movement” where a growing middle class feeling
alienated by the old patrimonial order pushed for transparency in government.4 In other
words, a class based interpretation of American anti-corruption and bribery efforts
necessitates the need for an organized middle class with growing influence, a component
lacking in many countries. The United States’ Foreign Corrupt Practices Act of 1977 (FCPA)
grew out of such concerns as a response to scandals revealed by the Watergate investigations,
including bribery of foreign officials by the Lockheed corporation in 1975 and 1976.5 A sub-
Committee of the United States senate discovered in 1976 that the corporation had paid
millions in bribes to friendly governments to assure sales of fighter aircraft. Sections 103 and
104 of the second provision expressly prohibited payment of bribes to foreign officials. Thus
the domestic climate in the United States and the disgust over the Watergate scandals would
lead the government to unilaterally enact legislation against corruption, a unilateral mover not
in the baseline economic interest of the United States as far as exports are concerned.
Among others, the main goal of the legislation was to assure investor confidence and
to assure free competition, two important aspects in a capitalist system. The drawback for the
United States was that to unilaterally oblige its companies to abstain from bribery of foreign
officials, a noble undertaking, distorted competition by putting American firms at a
disadvantage vis-à-vis foreign firms who had not adopted the same type of legislation. This
negative effect of FCPA on American defense firms was perhaps lessened by the massive
American military budget of the Cold War where domestic firms were assured adequate
spending on their materials by the United States government. However, with the Cold War’s
end, cuts in military budgets worldwide led defense firms to seek greater exports and the
economies of scale which go with them. In such an environment the difficulty of American
firms to bribe foreign officials, while other arms-exporting states had no legislation against
the practice, put them in a disadvantaged position.
4 Leiken, Robert S. "Controlling the Global Corruption Epidemic." Foreign Policy, No. 105 (Winter, 1996-
1997), p. 66.
5 Carson, Thomas L. "Bribery, Extortion, and '"The Foreign Corrupt Practices Act."' Philosophy and Public
Affairs, Vol. 14, No. 1 (Winter, 1985), pp. 67.

FCPA: an American Disadvantage
For American firms the FCPA distorted competition for American firms due to the
potential criminal penalties on corporate officers who paid bribes and also through indirect
costs by paying ‘commissions’ to third-party intermediaries.6 In other words, American firms
were faced with three choices: to remain at a sizable disadvantage by not paying bribes; to
pay bribes and risk financial punishment; or to incur significant costs, while remaining
exposed to some risks of sanctions, through the use of third-party ‘agents.’ The FCPA, while
rather restrictive on the activities of American firms, does allow some payments to foreign
officials. ‘Facilitating payments,’ those intended to pay a foreign official for what he is
intended to do, and ‘reasonable expenses,’ waivers or payment for travel and accommodation
for example, are allowed under the FCPA.7 Indeed, these allowances are often pointed out by
foreign firms as ways of legitimizing, hiding or creating American forms of corruption.
However, the fact remains that these payments are monitored and may be found unacceptable
under American legislation while in many countries they are simply a part of business as
usual.
The Clinton Years and the OECD Project
In the 1990s, during the Clinton administration in the United States, industrial lobbies
pushed for legislation that would effectively put the same constraints faced domestically by
American firms at an international level. This followed a 1999 report alleging that between
1994 and 1998, 239 international contracts totaling more than $108 billion bribes were used;
around half of the contracts involved military procurement.8 This push by industrial lobbies
came in the wake of the ‘Al Yamamah’ scandal implicating BAE Systems, the government of
the United Kingdom and Saudi Arabian officials in corrupt practices surrounding the sale of
fighter aircraft in exchange for oil. The work of Paul Beck et al. has shown that despite
FCPA regulatory costs American firms maintained market dominance in Latin American
countries due to regional dominance and geographic proximity but lost large market-shares in
the Middle East, among other regions.9 Indeed, lost opportunities for American arms exports
to the wealthy, oil reach Middle Eastern states led to questioning of the viability and logic of
unilateral American anti-corruption legislation.
Effective lobbying would lead the Americans to push for the Convention on
Combating Bribery of Foreign Public Officials in International Business Transactions of 1997
6 Beck, Paul J., Michael W. Maher, Adrian E. Tschoegl."The Impact of the Foreign Corrupt Practices Act on US
Exports." Managerial and Decision Economics, Vol. 12, No. 4 (Aug., 1991), p. 296.
7 Dugan, Christopher F. and Vladimir Lechtman. "The FCPA in Russia and Other Former Communist
Countries." The American Journal of International Law, Vol. 91, No. 2 (Apr., 1997), p. 380/
8 Simpson, Glenn R. “Bribes Influenced the Outcome of Many Foreign Deals, U.S. Contends.” Dow Jones
Business News, February 23, 1999.
9 Beck, Paul J., Michael W. Maher, Adrian E. Tschoegl."The Impact of the Foreign Corrupt Practices Act on US
Exports." Managerial and Decision Economics, Vol. 12, No. 4 (Aug., 1991), pp. 297-301.

(Convention of 1997) within the Organization for Economic Cooperation and Development
(OECD). Previous efforts by the first Bush administration in this field were unsuccessful as
only American business interests were presented as rational for a convention. Clinton,
however, would play the role of an ‘aggregator’ by creating a coalition of American business
interests and also presenting a role for Transparency International.10 This effectively brought
both rational choice interests of capitalist enterprises and normative values of civil society. In
other words, it is possible to be both an interest based actor and a value activist at the same
time when values and interests are aligned.11 The interaction of the values and interests,
through the interaction states, may be modified or reinforced. In this case, the Clinton was
able to respond to business interests and while also appealing to the near universal value or
norm that bribery and corruption are wrong.
The Convention took the form of a treaty whereby all OECD states signatories would
agree to implement domestic laws defining bribery, criminalizing bribery of foreign officials,
creating the measures for control and outlining sanctions in the case of violations. Article 1 of
the Convention expressly defines the offence of bribing foreign officials and requires State
parties to enact domestic legislation criminalizing bribery while Article 5 states that required
enforcement of anti-bribery legislation must not be influenced by consideration of economic
or foreign policy interests.12 When an interest leads to the creation of a law, that interest
changes values through its legislated status but also changes interests as non-adherence may
be costly.
The United Nations and the Fight against Corruption
A similar initiative has been undertaken within the United Nations. While wider in
scope than the OECD Convention, the United Nations Convention against Corruption
(UNCAC) lacks concrete means to substantially address the issue of corruption. This is
unsurprising given the importance the United Nations, as a forum for international dialogue,
places on sovereignty and the creation of norms.13 Much of the success of the OECD
Convention is due to the efforts of civil society, most notably the progress reports of
Transparency International, placing an independent, external form of leverage on
governments. The UNCAC advises states to undertake self-reviews or reviews by “partners”
thus truly independent monitoring and review cannot be assured. Moreover, while the OECD
Convention which obliges State members to undertake a review process, the United Nations
10 Abbott,Kenneth W. and Duncan Snidal. "Values and Interests:International Legalization in the Fight against
Corruption." The Journal of Legal Studies, Vol. 31, No. 1, Part 2: Rational Choice and International Law (Jan.,
2002), p. S154
11 Abbott,Kenneth W. and Duncan Snidal. "Values and Interests:International Legalization in the Fight against
Corruption." The Journal of Legal Studies, Vol. 31, No. 1, Part 2: Rational Choice and International Law (Jan.,
2002), pp. S155-156.
12 Organization for Economic Cooperation and Development. Convention on Combatting Bribery of Foreign
Public Officials in International Business Transactions.10 April 1998. DAFFE/IME/BR(97)20.
13 See : Argandoña,Antonio.“The United Nations Convention Against Corruption and its Impact on
International Companies.” IESE Business School (2006).

Office on Drugs and Crime’s Global Program against Corruption is intended to help states
voluntary satisfy the provisions on the UNCAC.
In other words, while the OECD Convention obliges members to undertake reviews of
their actions in regards to foreign bribery the UNCAC is better seen as an attempt to create
norms in international society. The UNCAC aims to create norms which establish standards
or conduct which delegitimize and stigmatize corrupt practices by pointing out that such
practices are wrong.14 The vast majority of State members of the United Nations are party to
the treaty. It is also assumed that countries which are more integrated into international
society are more influenced by international norms of behavior.15 This being the case, while
so many corrupt countries and countries who are isolated internationally are parties to the
treaty, it remains to be seen whether their behavior will actually be influenced or whether the
UNCAC will serve as a vehicle to greater international legitimacy for regimes that have no
intention of changing their practices.
Implementation and Application of the Convention:
The United States: Continuity
In order to implement the Convention’s requirements in the United States, the FCPA
was amended on October 21, 1998. The amendments entered into force on November 10,
1998 kept the same structure of the 1977 FCPA but extends it to include:
any person who engages in any act while in the territory of the U.S. and to any U.S. national and
company engaged in an act outside the U.S. in furtherance of a proscribed purpose; adds “securing any
improper advantage” to the list of improper purposes for payments to foreign officials; expands the term
“a foreign official” to include any person acting for or on behalf of “public international organisation”;
and allows the U.S. Attorney General to seek injunctive relief against foreign citizens or residents and
entities other than “issuers” or “domestic concerns” that have engaged in or are about to engage in a
violation of the FCPA.16
This amendment therefore extended the reach of the FCPA to foreign entities operating within
the United States as well as American persons operating outside the country.
The United States, along with Germany, Norway and Switzerland, has reached the
‘active enforcement’ level, meaning that with its share of at least two percent of world exports
it has at least ten major cases in process, of which at least three initiated in the last three years,
and at least three have been concluded with substantial sanctions.17 In fact, in 2009, the
United States had 120 prosecutions/cases along with 110 investigations. From the beginning
of Transparency International’s “Progress Reports” in 2005, the United States has had at least
14 Sandholtz, Wayne and Mark M. Gray. "International Integration and National Corruption." International
Organization,Vol. 57, No. 4 (Autumn, 2003), p. 764.
15 Ibid., p. 762.
16 Organization for Economic Cooperation and Development. Phase I Country Report. “United States:Review
of Implementation of the Convention and 1997 Recommendation.” October 2002. Available:
http://www.oecd.org/document/24/0,3343,en_2649_34859_1933144_1_1_1_1,00.html
17 Transparency International. “Progress Report 2009: OECD Anti-Bribery Convention.” pp. 7-8.

50 prosecutions/cases, 55 investigations and had satisfactory performance in all evaluation
criteria,18 in addition to independent, centralized agencies for OECD Convention application.
France: la Bonne Élève
Previous to France’s ratification of the Convention on July 31, 2000 and its entry into
force on September 29, 2000, anti-bribery legislation in the country did not cover the bribery
of foreign officials involved in commercial transactions. Act No. 2000-595 of 30 June 2000
amended the criminal code and procedure to make bribery of foreign officials a criminal
offence.19 Territorial jurisdiction in the amended criminal code includes metropolitan France
as well as all overseas territories and also extended territoriality so that “French criminal law
shall be applicable to offences committed in whole abroad if they are connected with, or
inseparable from, offences committed in France.”20
As of 2009 France is considered to have a level of “moderate enforcement” by
Transparency International assumedly due to the fact that of the five prosecutions out of
seventeen cases four were dismissed. With the exceptions of protection for “whistleblowers”
in the public sphere and level of access to enforcement information, France currently enjoys
an overall satisfactory rating from Transparency International. In regards to
“whistleblowers,” legal protection in the private sector reached a satisfactory level in 2008 yet
legal protections for civil servants, while in place, is of uncertain effectiveness and possibility
of implementation.21
The United Kingdom: the Laggard
The United Kingdom is undoubtedly the country of most concern for proponents of
the OECD Convention. Convention ratification took place on December 14, 1998 and
parliamentary review of domestic legislation concluded that the Prevention of Corruption Act
of 1906 (Act of 1906) was already sufficient enough to implement the provisions of the
Convention. In December 1998, Brian Wilson, Britain’s trade minister, would even state that
“Whilst the UK's existing anti-corruption legislation is sufficient to meet the obligations
arising from the Convention, an independent review of that legislation is currently being
18 Evaluation criteria as identified by Transparency International : Number of Prosecutions/Cases,Number of
Investigations,level of enforcement centralization, sufficient resources, presence of complaint procedures,
whistleblower protection for the public and private spheres,public awareness programs, accounting and auditing
requirements, corporate compliance procedures, statutory and legal inadequacies,and public access to
enforcement information.
19 Organization for Economic Cooperation and Development. Phase I Country Report. “France: Review of
Implementation of the Convention and 1997 Recommendation.” January 2004. Available:
20 Ibid.
21 Transparency International. “Progress Report 2008: OECD Anti-Bribery Convention.” pp. 19-20.

undertaken by the Home Office.” 22 Thus an arguably outdated law was considered sufficient,
as would a review of the said law undertaken internally.
The Act of 1906 does not clearly define the crime of bribing foreign officials and
allows the Attorney-General the power to withhold consent for prosecution of the offenses.23
In other words, the Act of 1906 lacks proper terminology to pursue violators and is subject to
political interference. Exemplary of this failure is the fact that 2009 was the only year to
witness any cases and in that year only four were brought before the court.
Aside from the United Kingdom’s failure, or refusal, to implement proper legislation
to apply the Convention, Transparency International identifies serious problems in the
country’s enforcement organization. In 2005, it was discovered that most cases of foreign
bribery were to be investigated by local police forces that lack the resources and international
experience required for such investigations.24 The United Kingdom’s Serious Fraud Office
(SFO) is the body intended to investigate complex fraud and corruption cases and is more
competent to investigate foreign bribery than local police forces. In 2007 the Overseas Anti-
Corruption Unit (OACU) was created to support the SFO. A welcome development, however
the OACU is understaffed and underfunded.25 Transparency International has further raised
concerns that the SFO is prone to political pressure and cannot be considered independent.26
Such concerns came following the announcement by the SFO that investigations into the ‘Al
Yamamah’ case would be terminated after “representations that [were] made both to the
Attorney General and the Director of the SFO concerning the need to safeguard national and
international security.”27 While the SFO maintains that the decision was taken by its Director,
the potential for political interference is undeniable. Most importantly, terminating the
investigation based on reasons of “national and international security” is debatable. The more
likely reason is the hostility of the Saudi government to the investigation, in which case the
SFO’s decision represents a blatant violation of Article 5 of the Convention.
At the current time the British Parliament is in the process of passing a bribery bill
which has been welcomed by the OECD as appropriate to implement the provisions of the
Convention. This being said, the fact that legislation is still being debated 12 years after
appropriate measures should have been implemented is reason for concern. When
amendments to the Act of 1906 were declared insufficient by the OECD working group, a
bribery bill was drafted in March 2003. A Joint Committee of the House of Commons and
House of Lords criticized the format of the bill and its continued use of the “agent/principal”
22 “Brian Wilson Welcomes UK Ratification of OECD Bribery Convention.” COI’s Hermes – Government
Press Release. December 11, 1998.
23 Organization for Economic Cooperation and Development. Phase I Country Report. “The United Kingdom:
Review of Implementation of the Convention and 1997 Recommendation.” March 2005. Available:
24 Transparency International. “Progress Report 2005: OECD Anti-Bribery Convention.” pp. 10.
25 Transparency International. “Progress Report 2007: OECD Anti-Bribery Convention.” P. 14.
26 Transparency International. “Progress Report 2009: OECD Anti-Bribery Convention.” P. 52.
27 BBC News. “Saudi Defence Deal Probe Ditched.” December 15, 2006. Accessed:March 22, 2010.
Available: http://news.bbc.co.uk/2/hi/business/6180945.stm

construct28, which allows individuals to accept bribes if their employers permit it.29 The
government considered some of the Committee’s recommendations but refused to abandon
the agent/principal construct and no revised bill would be produced.30 From 2005 until 2009
revised bills were effectively stalled by repeated calls upon the British Law Commission for
consultation papers, the first in December 2005 with a follow-up in March 2007 and a second
consultation paper which ended in March 2008, seeking to provide consensus on the terms of
a new draft bill. Following each consultation paper there followed a comment period which
furthered delays for drafting a revised bill.31 Although the bill is now being reviewed in the
House of Commons there is now concern that the Conservative party may cede to pressure of
the Confederation of British Industry (CBI) to block the bill once again.32 This would be
despite the fact that the bribery bill is a Law Commission bill and thus bi-partisan, however
resending the bill would be in continuity with previous British approaches to avoiding the
OECD Convention provisions.
Israel: An Individual Initiative?
Israel, a non-OECD country, has ratified the Convention and its application of the
document is now under scrutiny. This case also presents an interesting step as non-OECD
countries have been increasing their exports without the constraints of the Convention.
Although not yet an OECD country, Israel wishes to join the organization by May 2010, thus
ratifying the Convention is a necessary step, outlined in the “roadmap” towards ascension, as
it must put in place the legal substantive instruments of the OECD before full accession to the
organization.33 At the same time Israel has been plagued by corruption scandals and
accusations in its defense exports sector up to the point where Europe and American defense
firms have threatened to derail its bid to join the OECD.
On July 14, 2008 Israel amended its 1977 Penal Law, to include the offence of bribery
of foreign officials, which entered into force one week later. The OECD concluded during
Phase 1 evaluations that the amended Article 291A of the Israeli Penal Law 1977 is largely
capable of conforming to the provisions of the Convention but raised some issues concerning
bribes given to third parties, a relatively low level of sanctions, the application of Article 291
A in the occupied Palestinian territories, and ambiguity of the role of the Attorney General in
28 Organization for Economic Cooperation and Development. “United Kingdom: Phase II bis Country Report.”
October 20089. Available:
29 Heinman, Benjamin W. and Fritz Heinman. “Arrested Development: The Fight Against International and
Corporate Bribery.” The National Interest (Nov/Dec 2007), p. 82.
30 See : Organization for Economic Cooperation and Development. “United Kingdom: Phase II bis Country
Report.” October 2008. Available:
http://www.oecd.org/document/24/0,3343,en_2649_34859_1933144_1_1_1_1,00.html p. 9-12.
31 Ibid.
32 Wiontour, Patrick.The “CBI and Tories Play Games with Bribery Bill.” The Guardian. March 17, 2010.
Accessed:March 23, 2010. Available: http://www.guardian.co.uk/politics/wintour-and-watt/2010/mar/17/cbi
33 OECD. “Roadmap for the Accession of Israel to the OECD Convention.” 3 Dec. 2007. Available:
http://www.olis.oecd.org/olis/2007doc.nsf/LinkTo/NT00004872/$FILE/JT03237381.PDF

closing cases which may conflict with Article 5 of the Convention.34 Israel’s Phase 2 report,
evaluating its current implementation of the Convention, was available in December 2009
following Israel’s ratification of the Convention in March of that year. Among OECD
recommendations following the Phase 2 evaluation were the need to raise awareness in the
public sector, improve “whistleblower” protection, make aware that payments to foreign
officials are not tax-deductable, provide adequate resources for investigative bodies, and in
the clause regarding jurisdiction in ‘foreign states,’ include the phrase “a political entity that is
not a state, including the Palestinian territory.”35
Of particular interest in the Phase 2 report is the direct addressing of Israel’s state
export credit and insurance agency, Israel Export Insurance Corp. Ltd. (ASHRA), and defense
industry in the recommendations chapter.
5. Regarding officially supported export credits, the Working Group recommends that the Israel Export
Insurance Corporate Ltd (Ashr’a): (i) continue to undertake training on the detection of bribery and how
to deal with clients who use foreign agents; and (ii) consider requiring clients to incorporate anti-bribery
clauses when engaging sub-contractors (Revised Recommendation I and VI(ii)).
6. Regarding detection within the defence industry, the Working Group recommends that Israel: (i)
encourage the defence industry in Israel to develop strong anti-corruption measures and engage in
international anti-corruption initiatives concerning the defence sector; (ii) ensure that, when providing
licenses for exporting military equipment and dual-use goods, the Defense Export Controls Directorate
of the Ministry of Defense considers whether applicants have been involved in bribery as well as the
level of risk of corruption in relation to arms procurement in the destination country; and (iii) consider
the temporary or permanent disqualification of enterprises convicted of bribing foreign public officials
from applying for export licenses (Revised Recommendation I and VI(ii)).36
Given the history of accusations of corruption in Israel’s armaments industry and exports, the
inclusion of these recommendations are a strong signal to the Israeli government that former
practices will no longer be tolerated and subsequent actions subject to monitoring.
Russia: A Sign of Good Faith?
In May 2007 the OECD Ministerial Council adopted a resolution to begin discussions
with Russia for OECD membership. This resolution was followed by a “roadmap” to
accession which included requirements for the Working Group on Bribery to investigate
Russia’s willingness to combat bribery of foreign officials. In February 2009 the country
formally applied to become a full participant in the Convention which means the Working
Group on Bribery will undertake Phase 1 and Phase 2 evaluations to determine legislative and
34 34 Organization for Economic Cooperation and Development. Phase I Country Report. “Israel: Review of
Implementation of the Convention and 1997 Recommendation.” March 19, 2009. Available:
35 Organization for Economic Cooperation and Development. Phase II Country Report. “Israel: Review of
Implementation of the Convention and 1997 Recommendation.” December 11, 2009. Available:
http://www.oecd.org/document/24/0,3343,en_2649_34859_ 1933144_1_1_1_1,00.html
36 Ibid., p. 68.

practical implementation of Russia’s anti-corruption commitment.37 Moreover, while
Russia’s anti-corruption legislation is seriously lacking, and while Russia ranks 147th out of
180 countries in Transparency International’s 2008 Corruption Perception Index, following
his election Russian President Dimitry Medvedev made it clear that combating corruption was
high on his list of priorities.38 While many experts consider corruption in Russia as so deeply
entrenched that combating it may be near impossible, the fact remains that the government
has at least demonstrated its intentions to begin to address the problem. It remains to be seen
the results following the Working Group on Bribery’s reports. What does immediately come
to the surface is the question of why Russia would decide to undertake efforts to legislate
against corruption, a practice that is seemingly to its advantage to foster exports.
State Approaches and Interest:
The United States: An Obvious Case
As discussed previously, the United States interest in the OECD Convention stems
from the fact that since 1977 it has de facto, and unilaterally, implemented anti-bribery
legislation through the FCPA. In order to be on equal ground with competitors for export
contracts the United States could not remain the sole country with restrictions on bribery.
Finally, domestic lobbying of the Clinton administration by industrial groups led the United
States to push for legislation at the international level in collaboration with value based non-
governmental Transparency International. The push for the Convention, in the interests of
businesses, was successful due to this combining of interests and norms.
France: Domestic Politics at Play
In the case of France, at the time of the 1997 Convention the government was in
‘cohabitation,’ a President from the right, Jacques Chirac, and a Prime Minister from the left,
Lionel Jospin. In late January 2000, Madeline Albright, then American Secretary of State,
issued a statement highly critical of France for having still not ratified the Convention.39 This
was not the first public reproach of France from the Americans. In 1999, American officials
expressed their approval that France had banned tax deductions for bribes, but lamented that
the country was taking too long to ratify the treaty and pointed out that the ban on tax
deductions would not enter force until ratification.40 These episodes were sources of
37 Organization for Economic Cooperation and Development. “Anti-corruption Activities in the Russian
Federation.” Accessed:March 23, 2010. Available:
38 Welu, Carol M. and Yevgenya Muchnik. “Corruption: Russia’s Economic Stumbling Block.” Business Week.
August 27, 2009. Accessed:March 23, 2010. Available:
http://www.businessweek.com/globalbiz/content/aug2009/gb20090827_771618.htm
39 « OCDE/Corruption – La France rejette les critiques d’Albright. » Reuters, February 1, 2000.
40 Simpson, Glenn R. “Bribes Influenced the Outcome of Many Foreign Deals, U.S. Contends.” Dow Jones
Business News, February 23, 1999.

embarrassment for a French government in the difficult position of explaining their seeming
tolerance of corruption and bribery.
Reprimands for being weak on corruption were especially sensitive at this time for
President Chirac. During the late 1990s and early 2000s Chirac was shrouded in controversy
in relation to scandals over building projects during his time as Mayor of Paris to allegedly
fund his Rassemblement pour la République (RPR) party and which involved large bribe
payments.41 Around the same time, Chirac’s center-right party was in good company with the
Socialists who had their own scandals including investigations into former Socialist Prime
Minister Ronald Dumas allegedly taking bribes from a state owned oil company,42 and later
allegations that Dominique Strauss-Kahn, one of the more popular members of the Socialist
Party, likewise accepted bribes from a student insurance agency.43
This combination of domestic bribery scandals and public criticisms for being slow to
address the phenomenon at the international level led both the French left and right to seek
means of damage control. This was all the more important given the upcoming 2002
presidential elections which Chirac and Jospin, among others, would both contend. Jospin,
seen as uncorrupted, would have no problem pushing for anti-corruption measures as Chirac
could benefit from similar measures in attempts to fix his tarnished reputation. Combating
corruption, along with decreasing unemployment, are referred to as “valence” politics by
Donald E. Stokes, meaning that no candidate in any circumstance would present themselves
as against.44 In this case, the Convention presented an opportunity for candidates to
demonstrate their commitments to an issue of uncontested value to voters and would result in
a push toward ratification of the Convention. Perhaps if the domestic political climate had
been different temptations to follow the “English model” would have been more salient in
France.
Thus, in the case of France, negative publicity creating disgust among the domestic
electorate would push rational policy to make decision based on self-interested calculations
leading to domestic implementation of the Convention provisions. This ‘bottom-up’ dynamic,
from electors to politicians preparing for elections, would reach the international level in the
form of OECD provisions become a part of French anti-foreign bribery law. In other words,
the valence values among the French population created an interest among French politicians
to address corruption and bribery. This interest transposed itself into law which confirms the
normative element to French anti-bribery efforts.
41 Humi, Peter. “Chirac dogged by corruption scandal.” December 7, 2000. Accessed:March 24, 2010.
Available: http://archives.cnn.com/2000/WORLD/europe/france/12/07/france.scandal/index.html
42 Sancton, Thomas. “France Today.” Time, June 15, 1998. Accessed:March 24, 2010. Available:
http://www.time.com/time/magazine/1998/int/980615/focus_on_france.france_t13.html
43 Schwarz, Peter. “France’s Minister of Finance Strauss-Kahn resigns.” World Socialist Web Site, November 5,
2010. Accessed:March 24, 2010. Available: http://www.wsws.org/articles/1999/nov1999/fran-n05.shtml
44 Stokes, Donald E. “Valence Politics.” in Electoral Politics, Dennis Kavanagh (ed.), 1997, Oxford University
Press, pp. 141-165.

The United Kingdom: Bottom-up and Inter-state Pressure
The United Kingdom’s reluctance to truly implement the Convention has its basis on
practical economic ends. The Al Yamamah arms deal with Saudi Arabia was founded on a
questionable basis and was to be followed by several follow-up agreements, the most recent in
2006. Interesting to note is the fact that a draft bribery bill was presented in 2003 but rejected
due to Parliamentary opposition to the abandonment of the “agent/principal” structure. Law
Commission draft bills, supposedly meeting bilateral parliamentary consensus, were
subsequently sent back and today, in March 2010, we are still awaiting approval of a bill that
should have been in place over a decade ago. Moreover, pressure from industrialist lobbies
means that the bill risks once again being amended or rejected.
The stalling of the drafting process corresponds neatly with the conclusion of the Al
Yamamah II deal with Saudi Arabia which was most likely conducted under similar practices
as the first. Thus drawing out the time frame for the bill allowed the deal to go forward.
Moreover, the insistence of keeping the “agent/principal” structure of Britain’s Act of 1906
meant that there could be no violation of bribing foreign officials in the Al-Yamamah case if
the employer of the agent was aware of payments and not in disagreement. Given the
specificities of this case, that those receiving bribes were members of the Saudi royal family,
this clause along with the very likely approval of the Saudi King would leave no grounds for
legal jurisdiction over British persons.
The cancellation of the SFOs investigation based on “national and international
security” represents not only a violation of Article 5 of the Convention but also Saudi Arabian
pressure and threats to violate agreements on intelligence sharing between the United
Kingdom and Saudi Arabia. Inter-state pressure from Saudi Arabia, combined with ‘bottom-
up’ pressure from non-state actors the CBI, an industrial lobby, and BAE Systems, Britain’s
prime defense contractor, has inclined the government of the United Kingdom toward a weak
response to corruption and bribery: from putting forth that legislation from 1906, with
obviously flawed clauses, was sufficient to stalling necessary legislation. In other words, the
government of the United Kingdom’s ability to put its international obligations into practice
was compromised by forces exterior to it.
Recently, on March 1, 2010, BAE Systems PLC plead guilty to conspiracy and was
fined $400 million for intentionally not complying with legal prohibitions on foreign bribery
and taking steps to conceal payments to foreign officials from the United States.45 In addition
to the fine BAE Systems will be subject to a 36 month probationary term, must install an
independent corporate monitor and implement an ethics compliance program.46 With such a
substantial fine and the imposition of a corporate monitor advantages of foreign bribery may
have their days numbered. As the United Kingdom’s prime contractor BAE Systems is now
45 Yost, Pete. “Defense company BAE Systems enters guilty plea.” Associated Press, March 1, 2010.
Accessed:March 23, 2010. Available:
http://www.google.com/hostednews/ap/article/ALeqM5g3QwWYx1uRKTNSFCEecsLVkgqyIgD9E6558G1
46 Matthews, Christopher M. “No Surprises as BAE pleads guilty to defrauding the U.S.” Main Justice, March 1,
2010. Accessed:March 23, 2010. Available: http://www.mainjustice.com/2010/03/01/no-surprises-as-bae-
pleads-guilty-to-defrauding-the-u-s/

subject to greater restrictions as new monitoring mechanisms are in place. Therefore, the time
is right for the United Kingdom to end their embarrassment on the international stage and
finally pass a bribery bill with substantial provisions in accordance with its obligations as a
State party to the OECD Convention. British reluctance to apply the Convention can be
thought of as the rational pursuit of commercial interests in the absence of norm based appeals
to combat foreign bribery; the interests of BAE Systems and Saudi officials were more
successful than efforts of value actors.
Israel: Dependency and Opportunities
In 2000, Israel’s defense budget reached its all-time low. At the same time, fixed-
component costs such as R&D and operational expenditures have increased leaving less
available resources for procurement. Thus increasing defense aid packages to Israel from the
United States have eased the strain on the Israeli budget.47 Moreover, in 2007, the Israel-
United States Memorandum of Understanding on the American defense aid package to Israel
increased transfers for purchases of American military equipment to the country by 25% -
from $24 billion to $30 billion – from the previous decade. In the agreement Israel may also
convert 26.3% of the package into shekels thus allowing procurement from Israeli
contractors.48 This situation effectively means that the United States is supporting the budget
of the Israeli Ministry of Defense and at the same time subsidizing American firms as the
majority of the aid package must be spent on American-origin material. Such a situation is
met with criticism from groups within the United States but also from Israeli Industrialists
who desire that a greater portion of the aid packages can be spent on domestic procurement.
The same year that the American aid package was dramatically increased Israel also
created the Defense Export Controls Directorate (DECD) as a licensing authority for export of
defense equipment and technology. The DECD lists exporters on a registry maintained by the
Israeli Ministry of Defense (MoD). Given the Israeli MoD financial dependency vis-à-vis
Washington, its oversight of the DECD and exports gives the United States great influence.
The OECD’s Phase 2 evaluation of Israel’s application of the Convention states that while
DECD has taken no steps to raise awareness of the offence of foreign bribery the Israeli MoD
has acknowledged that such steps should be taken.49
On a purely political level, the OECD presents Israel with the opportunity to take part
in an international forum where its economic practices will be the objects of review and
questioning, rather than its internal affairs and regional conflicts as is the case in many other
47 Accessed:15 March 2010. Available: http://www.globalsecurity.org/military/world/israel/mod.htm
48 Ravid, Barak. “Israel, U.S. formally sign new defense aid agreement.” Haaretz. 16 August 2007. Available:
http://www.haaretz.com/hasen/spages/894255.html
49 OECD Directorate for Financial and Enterprise Affairs. Israel: Phase 2 REPORT ON THE APPLICATION
OF THE CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN
INTERNATIONAL BUSINESS TRANSACTIONS AND THE 1997 RECOMMENDATION ON
COMBATING BRIBERY IN INTERNATIONAL BUSINESS TRANSACTIONS. 11 December 2009

international forums.50 In addition, the information provided by Israel to the OECD includes
all Israeli citizens, including those who currently reside as settlers in the Palestinian
territories. This being the case, accession to OECD membership based on such statistics is a
means to legitimize an occupation which is the topic of much debate and condemnation.51
With the United States supporting the Israeli defense budget for material expenditures,
a greater amount of money in Israeli may be earmarked for R&D spending and improvement
of its military industrial complex and defense materials. Full membership in the OECD
creates economic opportunities and the Convention will legitimize an Israeli defense sector,
often accused of corruption, and present avenues for transparent exportation of higher quality
materials. In addition, given the United States support for the Convention and Israel’s
dependence on American aid, Israel would find difficulties in carrying on corrupt practices.
The risk of cuts in American aid, combined with perhaps greater shares of aid packages
earmarked for Israeli firms in the future should Israel apply the Convention, are effective push
and pull factors for Israeli compliance with the Convention.
The American-Israeli relationship is often explained in structural-realist terms, most
notably the work of Stephen Walt, as “bandwagoning.”52 Essentially, that Israel seeks to gain
ground in international politics through an alliance with the world superpower, the United
States. Generally, one would expect that Israel, as the weaker state, to be in a position of
dependency vis-à-vis the United States, however past Israeli policies have gone directly
against the wishes of Washington without calling the “special relationship” into question.53
Regardless of these instances, in terms of its military budget, Israel is in a position where its
defense budget cannot survive without American aid packages. Although it is unlikely that
this aid would be cut, even in the event of an Israeli refusal to implement the Convention,
Israel is under American pressure to conform to the OECD program in the hopes of perhaps
being allowed to spend a greater share of American aid on domestic procurement but also to
gain legitimacy for its defense export sector at the international level.
Russia: the Construction of Identities and Interests
Although Russia has not officially begun to undertake OECD reviews in regards to its
commitment to combat foreign bribery as one of the main international arms exporters not
required to implement the Convention due to its status as a non-OECD member, we must ask
why the country would express interest in a Convention that would a priori undercut its
advantage in offering bribes to foreign officials.
50 Chalamish, Efraim. "Comment / Can Israel have its OECD cake and eat it too?" Haaretz. 08/03/2010.
Accessed:11/03/10. Accessed:
http://www.haaretz.com/hasen/pages/ShArtVty.jhtml?sw=OECD&itemNo=1154918
51 Cook, Johnathan."Israel given one year to tell truth about settlers." The National. March 7, 2010. Accessed:
11/03/10. Available:
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100308/FOREIGN/703079958/1135/commentary
52 Walt, Stephen M. "Alliance Formation and the Balance of World Power." International Security, Vol. 9, No.
4 (Spring, 1985), pp. 7-8.
53 For a recent case, see : “Where did all the love go?” The Economist, March 20-26, 2010, p. 45.

Russia’s transition toward privatization in the 1990s was undertaken in a haphazard
manner allowing powerful individuals, the “oligarchs,” to amass massive private holdings and
fortunes. The oligarchs were largely outside of state control, paid little taxes and were able to
use their wealth to manipulate politics and representatives of the Duma in their favor.
Seeking to centralize power in the Kremlin, Vladimir Putin targeted oligarchs critical of him
or who attempted to influence politics in Russia, most notably Mikhail Khodorkovsky, and
became more popular among a general public resentful of the oligarchs.54 In addition, during
his presidency, Vladimir Putin made calls to address corruption in every State of the Nation
speech, yet did nothing concrete in this regard.55
In Putin’s attempts to eliminate opposition, discourses on corruption fit into the
thematic allowing him to garnish popular support and put the oligarchs on notice. Bernard
Black and Anna Tarassova explain that much of Russia’s economic woes of today stem from
the fact that corruption and bribery were out of control during the transition process from
public to private control resulting in gross concentrations of wealth, inequality and
unemployment and in turn gave the oligarchs the means to further corrupt the government.56
In fact, despite the 2008-2009 financial crisis a Russian Interior Ministry report found that the
average bribes in the country increased nearly 300%.57 While Putin perhaps never intended to
actually address corruption, President Dimitry Medvedev has made combating corruption and
bribery priorities in setting up anti-corruption units within the Ministry of the Interior and the
General Prosecutors Office. Should they prove effective, these bodies may later serve as
monitoring and investigative instruments of foreign bribery within the framework of the
OECD Convention. Already, in November 2007, Russian diplomat Alexandre Yakovenko
declared Russia’s intentions of adhering domestic laws to the international standards of the
Convention.58
In the realm of arms exports, India has begun to overshadow China as the principal
importer of Russian arms. While India has previously been considered highly corrupt due to
willingness of its firms to pay bribes, enormous progress has been made in recent years.
According to Transparency International’s “Bribe Payer’s Index,” India’s score improved
from 4.62 to 6.8, while Russia had a less substantial progression from 5.16 to 5.9.59 From this
we might deduce that an anti-corruption effort in India, Russia’s primary arms trade partner,
is a factor pushing Russia towards the Convention. Moreover, the world’s principal arms
exporters with the exception of China are State parties to the Convention and, at the same
time, China has seen its own arms exports numbers shrinking while it continues to import
from Russia.
54 Goldman, Marshall I. "Putin and the Oligarchs." Foreign Affairs, Vol. 83, No. 6 (2004), pp. 33-44.
55 Aris, Ben. “What’s Really Wrong with Russia.” Business News Europe, March 24, 2010. Available:
http://businessneweurope.eu/story2018/Whats_really_wrong_with_Russia
56 Black, Bernard S. and Anna S. Tarrassova. “InstitutionalReform in Transition: A Case Study of Russia.”
Supreme Court Economic Review, Vol. 10 (2003), pp. 211-278.
57 “Russian briber nearly tripled despite economic crisis – official report.” Rianovsti,March 25, 2010. Accessed:
March 25, 2010. Available: http://en.rian.ru/russia/20100325/158308541.html
58 « OSCE : la Russie souhaite adhérer à la Convention anti-corruption . » Rianovsti, November 21, 2007.
Accessed : March 25, 2010. Available : http://fr.rian.ru/russia/20071121/88999529.html
59 Transparency International. Available :
http://www.transparency.org/policy_research/surveys_indices/bpi/bpi_2006 Note : 10 is the highest score

A $1 billion Russian arms deals with Iran concluded in 2007 for the delivery of S-300
surface to air missile systems was stalled following the visits of Shimon Peres and Benjamin
Netenyahou to Moscow. Russia has still not completed the delivery, Israel promised to stop
military cooperation with Georgia and a $34.24 million deal was signed for Israel to provide
Russia with aerial drones.60 At the current time, Russia is also engaged in negotiations with
France for the sale of Mistral warships. Given France’s status as an arms exporter and State
member of the Convention, one must assume that pressure to implement anti-bribery
legislation in Russia will play a role in negotiations.
Over recent months, Medvedev has made many shows of goodwill including firing
Moscow’s police chief following instances of police brutality,61 placing a moratorium on the
death penalty in 2009,62 and negotiations for an arms control treaty with the United States.63
The fact that Russian-American negotiations on nuclear disarmament has taken place and
nearly reached conclusion shows that the United States has adopted a more respective stance
toward Russia allowing it to adopt more responsible and cooperative international posture.64
Paradoxically, Russia may have economic incentives in the military arena to
implement the Convention in order to facilitate procurement from State members and also to
continue its exportation with India, a country making significant progress in anti-corruption
measures. Moreover, domestically battling corruption and bribery in Russia is of priority to
keep the influence and power of the oligarch class in check, aims which can only be enhanced
by extending efforts to the international level. In constructivist terms, Russia’s domestic and
international interests have reached a point where anti-corruption and anti-bribery measures
serve an ever-growing importance. Therefore striving toward an identity of transparency
serves its interests which will, in turn, reinforce this positive image. Russia’s intentions to
implement the Convention, nuclear disarmament talks and addressing domestic social
grievances are witness to an ever-emerging value-based identity which is fostered by the
personality and approach of President Medvedev and aligns with the country’s interests.
In summary, the Convention presents an interesting study of the interplay between
interest based actors, operating in a rational choice framework, and normative activists whose
decisions are based, or at least presented to be based, on values. Among arms exporting states
we see differing approaches to the Convention, from the American initiation of legislation at
the OECD level, to the United Kingdom’s dismal record, to non-OECD states who either
calculate their interests in implementing the Convention or who see no other option. In the
end, it becomes evident that successful application of the Convention takes place in situations
60 Jégo, Marie. "Moscou demeure ambivalent vis-à-vis de l'Iran: pour ménager son partenaire, la Russie hésite à
renforcer les sanctions des Nations unies." Le Monde: Bilan Géostrategique 2010. p. 33
61 "Cops for hire." The Economist, March 20-26, 2010, pp. 30-31.
62 “Russia enshrines ban on death penalty.” BBC News, November 19, 2009, Accessed:March 25, 2009.
Available: http://news.bbc.co.uk/2/hi/8367831.stm
63 Fedyashin, Andrei. “Obama, Medvedev poised to sign arms treaty in Prague.” Rianovsti,March 25, 2010.
Accessed:March 25, 2010. Available: http://en.rian.ru/analysis/20100325/158309215.html
64 Dubien, Arnaud. « Etats-unis – Russie : un partenariat est-il possible ? » La Revue International et
Stratégique,Vol. 76 (Hiver 2009/2010), pp. 195-196.

where a state’s interests converge with valence norms against foreign bribery. International
law confirms values which modify interests; changing interests in the face of legislation
reconfirm norms and values.

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