Major Nations Agree To Ban Trade Bribery

WASHINGTON — The world’s richest nations have reached an agreement to outlaw foreign commercial bribery by their corporations, according to Clinton administration officials, who said the pact could end an important competitive advantage that European and Japanese companies enjoy over their American rivals.

The United States is the only major nation that makes it a criminal offense to bribe a foreign official while conducting business overseas. So the accord, struck Friday by the 29 member nations of the Organization for Economic Cooperation and Development (OECD), would essentially force companies from other advanced countries to follow rules similar to those that bind U.S. firms.

That is a result long sought by the administration and by anti-corruption activists, who hailed the pact as a significant move toward stemming the spread of payoffs and kickbacks in the fast-growing markets of the developing world.

“We’re very pleased,” said Fritz Heiman, chairman of the U.S. chapter of Transparency International, an organization that monitors global corruption and presses for anti-bribery measures. “The 29 OECD member states are the home bases of practically every major international company around the world. So OECD action on foreign bribery is really the key step in addressing the whole supply side to international bribery.”

Commerce Secretary William M. Daley, in a statement, called the agreement “a major step forward” toward curbing a practice that “is a major distortion of international trade and has a corrosive effect on economic and political development.”

Under the accord, members of the OECD, a Paris-based club of industrialized nations, would sign an anti-bribery convention by the end of this year. They would introduce laws in their national legislatures by April that would subject their companies to criminal penalties for bribing foreign officials while soliciting business.

The accord, slated to be formally approved by economic and trade ministers from the 29 countries at a meeting in Paris next week, represents a compromise that Washington struck with France and Germany after a long and sometimes bitter dispute. In France and Germany, bribes paid to foreign officials are not only legal, they are also tax-deductible.

Until this week, Paris and Bonn were staunchly holding out against a U.S. proposal, backed by most other OECD countries, to collectively pledge to pass anti-bribery laws next year.

Backed by Japan and Spain, France and Germany were asserting that the only way to ensure fairness was to negotiate a binding convention. Their position was denounced by U.S. officials and by Transparency International, which feared a convention would delay action for years.

The impasse was broken by combining the convention proposal with the collective pledge to legislate--and adding deadlines. “What’s particularly important here is that these are finite time periods and short time periods,” said a Commerce official who spoke on condition of anonymity.

In his statement, Daley praised the efforts of German Economics Minister Guenter Rexrodt and French Finance Minister Jean Arthuis, saying, “They deserve a great deal of credit for this agreement.”

The agreement does not guarantee that bribery will disappear in international transactions. European officials and business executives have long contended that even U.S. firms, banned from making payoffs under the Foreign Corrupt Practice Act of 1977, sometimes use agents and subterfuge to pay bribes on big contracts.

But many U.S. business executives maintain they often lose deals because of foreign rivals greasing palms, and even when they don’t, they are burdened with costly requirements for ensuring that disbursements are legitimate and properly accounted for. The prospect that European and Japanese companies will labor under the same restrictions should make the U.S. business community “very pleased,” said Transparency International’s Heiman, an executive at General Electric Co.

A major challenge, Heiman said, will be monitoring the agreement to make sure OECD countries follow through on the convention with legislation and enforcement.