THE UN CONVENTION AGAINST CORRUPTION
A summary of discussion at the International Law Programme Discussion Group at
Chatham House on 27th September 2005; participants included lawyers, diplomats,
academics and representatives of NGOs.
This summary is issued on the understanding that if any extract is used, Chatham
House should be credited, preferably with the date of the meeting.
The Convention
The first speaker complimented Chatham House on its foresight in arranging a
discussion group on the UN Convention Against Corruption (UNCAC). The timing
was perfect in that, recently, Ecuador had become the thirtieth state to ratify the
Convention thus triggering the procedure for its entry into force. The Convention
currently has 133 signatories, 32 of which have ratified; it will enter into force on 14
December 2005.
The Convention is the first truly global instrument designed to combat corruption and,
as such, gives a powerful signal that there is now a global consensus that corruption
must be stopped. It is the culmination and natural extension of numerous regional
instruments, most notably the OECD Anti-Bribery Convention, similar conventions
within the Organisation of American States (OAS) and the African Union, and other
initiatives within the Council of Europe (GRECO), the EU, the 10th Principle of the
UN Global Compact, and the Extractive Industries Transparency Initiative (EITI)
Code of Conduct etc. There is inevitably much overlap between the Convention and
these other initiatives as all are intended to create greater transparency and increase
international cooperation in combating corruption.
However, the Convention contains some additional features, most notably on the
tracing and return of stolen assets to the country of origin.The speed with which the
Convention was negotiated reflects states’ increased political will to deal with
corruption issues and the growing realisation of the damage caused to development
by corruption. It disrupts democracy, facilitates organised crime and provides a toxic
environment for legitimate business. Above all, it hits the poorest members of society
the hardest. The World Bank has estimated that corruption costs 0.5 % of global gdp
per annum.
Another speaker commented that the Convention was, without doubt, an
extraordinary achievement which demonstrated states’ overall commitment to the
problem. Its scope was enormous. The speaker paid tribute in particular to the
contribution made by the Department for International Development to the first part of
the Convention which deals with prevention. It was an instrument full of hope and
aspiration but, inevitably compromises had had to be made. Some of the provisions
of the Convention appear to leave much to the discretion of States Parties with words
such as “should”(discretionary) rather than “shall”(mandatory) and phrases such as
“shall where appropriate”, “may consider”, “endeavour to” or “to the extent that such a
requirement is consistent with the fundamental principles of their domestic law” etc.
Such wording suggests that the Convention could be the subject of varying levels of
compliance and its effectiveness will depend, in practice, on the detailed rules for
implementation and monitoring established at the first Conference of States Parties.
In this context, another speaker added that the Convention provisions on jurisdiction
(Article 42) and extradition (Article 44) appear rather weak when compared with
similar provisions in instruments dealing with terrorist offences. States are not even
required to take jurisdiction over their own nationals. On extradition, States Parties
may, on ratification, choose whether or not they wish to take the Convention as the
legal basis for cooperation on extradition with other parties; there is no requirement
to treat the Convention as an extradition agreement in itself.
UK Ratification
One speaker said it was hoped that the UK would ratify by the end of 2005. Many
different government departments and agencies had been involved in the necessary
preparations and such ratification will be dependent on the successful passage of
some secondary legislation, although the necessary primary legislation is already in
place. The Anti-Terrorism Crime and Security Act (2001) extended UK jurisdiction to
corruption offences committed abroad by UK nationals and companies whilst the
Proceeds of Crime Act(2002) strengthened the law on money-laundering and set up
an Asset Recovery Agency to trace and recover assets obtained as a result of
unlawful activity.
Any delay in ratification would jeopardise UK participation in the forthcoming
Conference of States Parties. This Conference has been established to review
implementation and facilitate activities required by the Convention. It will play a vital
role in establishing the ground rules for implementation and monitoring of the
Convention and it is important that the UK plays a full role.
France and Hungary are the only EU states to ratify so far and Mexico the only
OECD state. By contrast numerous developing countries, some of which have very
poor records on corruption, have ratified. In one case ratification took place on the
day of signature. One speaker said that early ratification probably did represent a
genuine commitment on the part of such countries but that such a commitment was
sometimes not accompanied by a full understanding of the detailed implementation
required. For this reason it was essential that a good balance of developed and
developing countries attended the Conference of States Parties. One speaker asked
why certain developed countries, including the UK, were taking so long to ratify. In
response, there was some speculation that uncertainty as to the content of recent EU
anti money laundering legislation had, in some cases, delayed preparations.
Implementation
There was a general recognition amongst speakers that agreement on the
Convention was only the first step; the real test would be whether or not parties were
prepared to follow up the provisions of the Convention in their own domestic legal
systems so as to provide for its effective implementation. In this connection, one
speaker criticised the UK record on implementation of the OECD Anti-Bribery
Convention. This Convention is much narrower in its scope than UNCAC but the UK
had seemed to lack an overall strategy for its implementation. There had been a
number of good initiatives but procedures for enforcement were fragmented and,
ultimately, unsuccessful. The Convention came into force on 15 February 1999 but,
so far, there had been no prosecutions in the UK. Evidence had proved difficult to
obtain and the high standards of evidence required had deterred prosecutors.
All FCO posts abroad are now obliged to report any information they receive
concerning involvement of UK nationals in corruption abroad. Information of this kind
is passed to the Serious Fraud Office (SFO) but, if the case in question does not fit
within its criteria for further investigation, it is simply passed on to the police who
often do not have the resources available to deal with it. One speaker referred to the
Lesotho Highlands Water Project case where a Canadian engineering consultancy
firm was convicted of bribery by the High Court of Lesotho. There were other
companies involved, from other OECD countries, including Britain, but there had
been no prosecutions in those countries. Other speakers suggested that , in practice,
prosecution in the country where the offence is committed is often the best solution
and the one most likely to lead to a successful conviction. Unfortunately, the Lesotho
case was very much a one off and the challenge will be to persuade and assist
developing countries to put in place the necessary systems and procedures to enable
such prosecutions to take place.
Another speaker stressed that UK legislation and practice is in conformity with the
Convention and noted that the OECD had commended the UK for its participation in
the peer review process; an important tool for encouraging effective implementation.
The UK had followed up many of the OECD’s points of criticism and was confident
that OECD observers would be satisfied with its response. The UK remained active
in its attempts to improve implementation and increase transparency and, to this end,
had made anti –corruption issues a central part of its recent G8 Presidency platform.
In its forthcoming response to the Africa All Party Parliamentary Group’s request for
evidence, it would set out a general strategy on corruption. Another speaker looked
forward to reading this response and expressed the hope that it would herald the
beginning of a new unified strategy for implementation of UNCAC and related
instruments. The same speaker pointed out three more practical issues on which
there would need to be specific improvement:
Crown Dependencies and Overseas Territories
The UK Government will need to consult the above to see whether their governments
wish UNCAC to be extended to them. However, it is notable that many of the
territories concerned have not opted for the OECD Anti-bribery Convention to apply
to them and have not passed relevant legislation. This is of particular concern as
some are so- called haven jurisdictions. Their participation in UNCAC will be
important and the UK will need to do more to encourage that participation;
Tax Deductibility
Many countries and some UK overseas territories still allow bribes to be tax
deductible legal expenses. This is not acceptable and should be discontinued;
Mutual Legal Assistance
States must look at ways of simplifying the procedures applicable for exchanging
information, evidence and tracing assets. All too often, the term mutual legal
assistance seems to describe a series of obstacles to efficient cooperation rather
than a mechanism for delivering such cooperation.
Asset Recovery
There was some discussion of the asset recovery provisions of the Convention. The
provisions were described by one speaker as “bold” and “cutting edge”. It was
recognised, however, that the ultimate proof of the Convention’s worth would be
whether it did in fact lead to the successful return of stolen assets. Some of the
provisions of the Convention on this matter were a little obscure and the role of the
Conference of States Parties in establishing more detailed procedures and guidelines
will be crucial in this regard. One of the controversial issues during negotiation had
been whether or not some sort of conditionality should be attached to the return of
assets eg that they be used for approved developmental purposes. The idea of some
sort of UN trust fund had been floated. The UK had favoured the inclusion of some
form of conditionality but many developing countries were strongly opposed to such
conditionality and it had proved impossible to include any express provision to this
effect. One speaker criticised the UK record on asset recovery in corruption cases,
referring to the Abacha case. In this respect, the UK appeared to be more obstructive
than Switzerland . Another speaker pointed out that new secondary legislation will
permit the UK authorities to take action to freeze assets pursuant to foreign
confiscation orders but confirmed that actual seizure and recovery will continue to
operate on an administrative basis. At that stage it was to be hoped that there might
be a possibility of reaching agreements with the countries concerned on the use of
the money to be returned.
One speaker praised the UK’s plan to establish
accelerated response teams tasked with negotiating and arranging the return of
stolen assets. This was an excellent, practical idea.
Private Sector Attitude
One speaker said that criminalisation was only part of the necessary response to
corruption. Another vital response was making an awareness of and hostility to
corruption part of private sector culture. In this context, transparency was a key
factor. It was important that everyone knew what the costs of doing business in a
particular country were; how much was being paid and received. The EITI initiative
was important in this regard. There was some discussion of firms’ use of foreign
agents to facilitate their business abroad. Such use is traditional and widespread In
practice, any bribes etc are often paid by agents rather than directly by officials of the
foreign company concerned and described as necessary expenses. There was
general agreement that the wording of the Convention was certainly broad enough to
cover use of an agent in this way and that the acceptance of the Convention by so
many developing and developed countries had weakened any defensive argument
that corrupt payments and practices were just a traditional way of doing business in
the countries concerned. One speaker commented that UK business had been
generally supportive of the Convention, recognising that it could reduce the burdens
on business but continued support would, again, depend on effective implementation.
Monitoring
It was recognised that good monitoring procedures would be important in securing
effective implementation. States are often responsive to criticism and efficient
procedures will encourage prosecutions and help to ensure compliance. It was
suggested that OECD monitoring procedures could provide a good model in this
regard and the UK and other OECD countries should take the lead at the forthcoming
Conference of States Parties in securing similar procedures. Another speaker
sounded a note of warning, reminding the Group that the OECD was a club of likeminded states. UNCAC was more universal and ambitious in its aims and there could
be more difficulty in reaching agreement on appropriate monitoring mechanisms.
Some NGOs had already begun to develop some ideas in this regard.
It was remarked in conclusion that it was important that the Government take early
steps to prepare proposals for monitoring to be discussed at the first meeting of
States Parties ; lobbying of other countries would also be needed. This is an area in
which it is highly desirable that the Government work closely with organisations such
as Transparency International.