INBU 4200
INTERNATIONAL
FINANCIAL
MANAGEMENT
Lecture 13
Foreign Direct Investment (FDI)
Cross Border Merges and Acquisitions and
Greenfield Site Investment
Entering a Foreign Market

Any firm considering entering the foreign
market must examine four basic issues:
 Which foreign markets/countries to enter?
 When to enter them (timing)?
 What scale (financial commitment)?
 What entry mode strategy should it use
(organizational structure)?
Three Categories of Entry Modes

Exporting and Importing



Exporting: The act of sending goods from one country to
other nations. Manufacture at home; ship product
overseas.
Importing: The act of bringing goods into a country from
other countries.
Contractual entry

Using contracts which permit foreign partners to
manufacture and/or sell your products in another country.


Franchising and licensing.
Investment entry

Direct investment by your company in another country for
the purpose of producing and/or selling your product
overseas.
Investment Entry: FDI

Foreign Direct Investment refers to business
investment which acquires a long term and
controlling interest in an enterprise operating
in a country other than that of the investor.

The percentage for classifying FDI control
varies from country to country, however:


The U.S., Japan, the UN, and the OECD use 10% stake
in the voting stock of a foreign enterprise as constituting
FDI.
If it is less than 10% it is defined as portfolio investment.
Quick History of FDI

In the years after the Second World War global
FDI was dominated by the United States.


The US accounted for around three-quarters of new
FDI between 1945 and 1960.
FDI rose dramatically during the decade of the
1990s due in large measure to cross border
merger and acquisitions activity.



From 1990 to 2000, the stock of outstanding stock of
foreign direct investment increased from $1.7 trillion to $6.1
trillion.
Countries other than the US became major players.
But FDI flows peaked at $1.4 trillion in the year 2000.
FDI Since 2003

Since 2003, FDI has increased again spurred
by a renewal in cross border mergers and
acquisition activity.


For 2005, FDI flows were estimated at just under
$916 billion and the outstanding stock totaled $10
trillion.
Preliminary data for 2006 suggests further growth
in FDI.


FDI flows for 2006 are estimated at $1.2 trillion, the
second highest level since 2000.
Visit:
http://www.unctad.org/Templates/webflyer.asp?do
cid=7993&intItemID=1634&lang=1
FDI: 1980 – 2005; Billions of US$
Notes to Previous Chart

The previous chart segregates World FDI into three
major categories. They, along with their definitions,
are as follows:



Developed Countries: World Bank definition based on
Gross National Income per capita of $9,266 and above.
About 40 countries.
Developing Countries: World Bank definition based on
Gross National Income per capita less than $9,266. About
125 countries.
Commonwealth of Independent States (CIS): Refers to 11
former Soviet Republics: Armenia, Azerbaijan, Belarus,
Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia,
Tajikistan, Ukraine, and Uzbekistan.
FDI 2005 by Region and Country,
Billions of US$ and % of Total



World
Developed Countries




UK
US
France
Emerging Countries


Amount
$916
$542
$164
$ 99
$ 64
$374
China (with Hong Kong)
China excluding Hong Kong
Percent
100%
59%
18%
11%
7%
41%
$108
$ 72
12%
8%
Where does FDI go and where does it
come from?

Inward FDI: Foreign direct investment coming into a
particular country. Historically, the developed
countries have captured the majority of this inward
investment.



In recent years, however, an increasing percentage has
gone to the developing countries (especially China and
India).
See Appendix 1 for a discussion of FDI impacts on
developing countries.
Outward FDI: Foreign direct investment leaving a
particular country. Historically, developed countries
have been the major FDI investors overseas.


The United States is the single largest investor, followed by
the UK and France.
See Appendix 2 for data on US FDI
Distribution of FDI by Region and
Selected Countries; (Per cent)
Average Annual FDI (Billions US$)
1999-2004
Basic Forms of FDI: Joint Ventures and
Wholly Owned Subsidiaries
FOREIGN DIRECT INVESTMENT
JOINT VENTURES WITH A
FOEIGN PARTNER
MERGER TO
FORM A THIRD
COMPANY
WHOLLY OWNED
SUBSIDIARIES
GREENFIELD
INVESTMENT
ACQUISITIONS
OF EXISTING
COMPANIES
Wholly Owned Subsidiary and Joint Ventures

Wholly Owned Subsidiaries
 The foreign facility is entirely owned and controlled by
a “single” parent.



Honda U.S.A.; 100% owned by Honda (Japan)
Apple Retail Japan; 100% owned by Apple USA (see
Appendix 3)
Joint Ventures
 Shared ownership arrangement and the creation of a
new company.



A separate company is created and jointly owned by two or
more companies (or entities).
Hong Kong Disneyland: Hong Kong Government (53%) and
Walt Disney Co (47%).
Starbucks Japan: Starbucks (50%) and Sazaby League (50%)
(see Appendix 4)
Mergers, Acquisitions, and Greenfield



Mergers (two companies forming a new company):
 Sony Corporation and Bertelsmann AG completed a
merger on August 5, 2004 of Sony Music
Entertainment and Bertelsmann's BMG. The new
music company, called Sony BMG, is equally owned
(50/50) by Sony and Bertelsmann.
Acquisition (one company acquiring another):
 Ford Motor Company bought 100% of Jaguar Cars
Limited for $2.8 billion in 1990.
Greenfield site investment (one company building a
new facility):
 Haier Corporation built a $40 million refrigerator
manufacturing facility in South Carolina in 2000.
Cross Border M&A, the 1990s





During the 1990s, cross border mergers and
acquisitions increased dramatically.
In 1991, the value of cross border M&A was
estimated at just under $200 billion.
By 2000, the value had grown to $1.2 trillion.
This increase was fueled by global economic growth
and increasing stock prices, especially the dot.com
run-up.
The relative importance of FDI was also shown in its
percent of global GDP, increasing from 0.5% in 1991
to around 4% by 2000.
Cross Border M&A 1991 - 2000
Cross Border M&A, 2001



The global economic slowdown in 2001 and
falling stock prices contributed to a decline in
cross border mergers and acquisitions.
In 2001, the total value of cross border M&A
at $594 billion was only half that of 2000.
The number of cross-border M&A also
declined from 7,800 in 2000 to 6,000 in 2001.
Cross Border M&A, the Present



Cross border M&A activity has recently accelerated.
In 2005, the number of cross border M&A totaled
6,134 (20% increase over 2004) with a combined
value of $716 billion (88% increase over 2004).
The recent high level of M&A activity is accounted
for by:
Increasing economic growth,
 Rising stock prices.
 Growing involvement of private equity funds and
hedge funds in M&A activity (see Appendix 5 for data).
 Ongoing liberalizations of country investment policies
by individual governments (see Appendix 6).
For a comparison of 2000 with 2005 and data on specific
M&As see Appendix 7.


Cross Border A&A by Private Equity
and Hedge Funds, Number of Deals
Regulatory Changes, 1992-2005
Barriers to Cross Border Acquisitions


Even though governments have tended to
liberalize their investment climate, barriers to
cross border acquisitions still exist:
These barriers can be classified as:

Cultural


Associated with potential investment in a different
culture
Domestic business arrangements

Business arrangements which hamper acquisitions:


Keiretsu in Japan
Specific government restrictions or requirements
Examples of Current Government
Imposed Barriers







Mexico: Prohibits foreign ownership of oil companies.
Japan: Prohibits foreign ownership of mining
companies.
Canada: Requires a review of all acquisitions of
Canadian companies.
US: Foreign ownership of US airlines is limited to 25%.
China: Foreign ownership of Chinese banks is limited to
25%.
Australia: Foreign ownership of national newspapers is
limited to 30%.
India: Prohibits foreign ownership of retail business such
as supermarkets and convenience stores.
Trends in Cross Border M&A, % of
Targets
Greenfield Site Investment (GSI)

Since there is little data regarding the value of
GSI, we are forced to examine the actual
number of projects. This data shows the
following for 2005:

Total: 9,488
by investor by destination
Developed Countries: 8,057 (85%) 3,981 (42%)
Developing Countries: 1,431 (15%) 5,507 (58%)
Thus, most GSI originates from developed
countries and takes place in developing countries.



Popular Targets for GSI, 2005
Total by Destination: 9,488 (100%)
European Union:
2,928 (30.9%)
U.K.
514 (5.4%)
France
358 (3.8%)
United States:
527 (6%)
Developing Asia:
3,323 (35%)
China
1,196 (13%)
India
564 (5.6%)
Viet Nam
169 (1.8%)
South East Europe and CIS 1,121 (11.8%)
Russia
479 (5.1%)
Latin America
543 (5.8%)
Mexico
134 (1.4%)
Africa
428 (4.5%)
South Africa
59 (0.6%)
FDI Theories


Theory: The purpose is to “explain” or “predict” the
behavior of a particular phenomena.
 For example, why do firms engage in FDI?
The theoretical development of FDI began in the
1960s when models were advanced to explain the
motives behind outward investments by U.S.
multinationals (see Appendix 8).

Prior to this time, theoretical modeling was concerned
primarily with explaining international trade:


Adam Smith: Theory of Absolute Advantage (1776)
Heckscher-Ohlin: Theory of Factor Endowments (early
20th century).
Early FDI Theory: 1960s

Monopolistic Advantage Theory of FDI:


Proposed by Stephen Hymer (1960, Ph.D. thesis,
MIT).
Hymer suggested specific firm monopolistic
advantages over their competition in foreign
markets provided firms with the incentive
engage in FDI.


Monopolistic advantage would allow firms to generate
above average profits.
Monopolistic advantages resulted from:

superior production skills, patents, marketing abilities,
capital size, management skills, or consumer goodwill
on brand names.
International Product Life Cycle


Proposed by Raymond Vernon (1966)
Vernon’s theory explains the “timing and location” of FDI
 Initially, firms undertake production in their home markets
which are generally the highest income countries.



During the next stage, the firm will begin to export, first to
other high income countries and eventually to others.
As the product matures and becomes standardized, the
firm’s competitive strategy shifts from product advantage
to securing a cost advantage.



Control and risk avoidance are important here.
In this stage the company is forced to seek lower cost
production sites to remain competitive.
This involves establishing manufacturing facilities overseas
(FDI).
Thus, Vernon suggest that firms undertake FDI at a
particular stage in the life cycle of their production.
International Product Life Cycle
Quantity
The U.S. and
other
developed
countries
New product
Quantity
Developing
countries
exports
imports
Maturing product
Standardized product
exports
imports
New product
Maturing product
Standardized product
Eclectic Explanation of FDI


The eclectic approach attempts to identify possible
motivating factors affecting a firm’s decision to
engage in FDI.
Some of these factors focus on various market
imperfection and include:



Trade barriers
Imperfect labor markets
Other motivating factors include:


Existence of Intangible assets (referred to as the
internalization theory of FDI)
Vertical integration
Trade Barriers

Trade barriers are factors which discourage the
physical movement of goods and services from one
country to another.


Trade barriers arise from:



Thus they have a potential negative impact on exporting
and importing.
Government policies, such as:
 Tariffs and quotas
Natural factors, such as:
 Distance and ensuing transportation costs
FDI is seen as a strategy for circumventing these trade
barriers.
Trade Barriers and FDI: Examples

1977: In response to U.S. import quotas on
Japanese televisions, Japanese TV manufacturers
opened production facilities in the U.S.


1980s: In response to the 1981 voluntary restraint
agreement between the U.S. and Japan Japanese
automobile manufacturers established production
facilities in the U.S.


Matsushita, Sony Corporation, Hitachi, and Sanyo Electric
Company
Honda and Nissan in 1982 and 1983. Toyota, Mazda, and
Mitsubishi in the mid-1980s.
2000: In response to high transportation costs,
Haier Corporation (China) established a $40 million
refrigerator manufacturing facility in South Carolina.
Imperfect Labor Markets


Refers to firms locating in foreign countries because
of under-priced labor costs (relative to its
productivity) in those foreign countries.
 Why is labor under-priced in certain countries?
 Because labor cannot move freely across national
borders to take advantage of higher wages
elsewhere.
Imperfect Labor Markets explains FDI investment in:
 Manufacturing (China, Mexico, Eastern Europe)


Nike in China.
Services (India; call centers).

United Airlines in India.
Labor Market Costs Around the World
(2003)
Country
Hourly Cost
Persistent wage
differentials across
countries is often
noted as one of the
major reasons MNCs
invest in FDI in
developing nations.
Germany
U.S.
Japan
Korea
Taiwan
China about 1/4 the Mexico
China
cost of labor in
Mexico.
Indonesia
$31.25
$21.98
$20.09
$10.28
$5.84
$2.48
$0.60
$0.22
Internalization Theory of FDI

Suggests that firms possessing valuable intangible
assets (e.g., technology, managerial talent, brand
loyalty) will use their own subsidiaries, rather than
“local” host country firms to capture returns.

Why?
Avoids misuse of assets by local partners
 Avoids sharing technology.
 Insures full control.
These firms “internalize” their foreign activities.




Through strategies involving either wholly owned
subsidiaries or controlling interest in joint ventures.
This is Apple Retail’s strategy (see Appendix 3).
Vertical Integration Theory of FDI

Some firms engage in FDI to stabilize a critical
supply chain (of inputs).



Provides these firms with the potential for a low-cost
competitive advantage.
E.g., In 1996, Dole Food Company purchased Pascual
Hermanos, the largest grower of fruit and vegetables in
Spain.
Referred to as backward (or downstream) integration.


Majority of FDI involve backward integration
Firms may also engage in FDI to promote
distribution, product sales and service to final
buyers.


E.g., Automobile manufacturing companies establishing car
dealerships in other countries (over 1,000 Honda
dealerships in the United States).
Referred to as forward (or upstream) integration.
Political Risk and FDI


Defined: Refers to the potential losses to a
foreign firm resulting from adverse political
actions taken by host governments.
These adverse political actions include:


Changes in operating regulations affecting foreign
firms (see Appendix 9; Coca-Cola in India).
Expropriation (confiscation) of the foreign firm’s
assets by the host government.
 Cuba expropriated $1 billion worth of US
businesses in 1960 (US oil refineries, including
Texaco and all US banks including, First
National Bank of New York)
Three Political Risk Components

Transfer Risk


Operational Risk


Uncertainty regarding cross-border flows of capital (i.e., the
repatriation of profits).
 Imposition of capital controls, changes in withholding
taxes on dividends.
Uncertainty regarding host countries policies and behavior
with regard to firm’s operations.
 Changes in environmental regulations, local content
requirements, minimum wage laws, and corruption.
 See Appendix 10 for a discussion of bribery
Control Risk

Uncertainty regarding control or ownership of assets

Changes in restrictions on maximum ownership by non-resident
firms, nationalization of foreign assets.
Assessing Political Risk

Political risk is potentially one of the biggest risks
that global firms face.
Firms must constantly assess and manage
political risk. What are some external sources for
doing so?
Corruption Indexes


http://www.transparency.org/ (no fee)
Country Analysis
 http://www.state.gov/countries/
 http://library.uncc.edu/display/?dept=reference&format
=open&page=68
Political Risk Indexes
 http://www.countrydata.com/ (fee based)



Managing (Hedging) Political Risk

Geographic diversification


Simply put, don’t put all of your eggs in one
basket.
Minimize exposure

Form joint ventures with local companies.


Join a consortium of international companies to
undertake FDI.


Local government may be less inclined to expropriate
assets from their own citizens.
Local government may be less inclined to expropriate
assets from a variety of countries all at once.
Finance projects with local borrowing.
Insuring Against Political Risk
Political risk insurance provided by:



The Overseas Private Investment Corporation (OPIC), a
U.S. government organization.
OPIC offers insurance against:






The inconvertibility of foreign currencies.
Expropriation of U.S.-owned assets.
Destruction of U.S.-owned physical properties due to war,
revolution, and other violent political events in foreign
countries.
Loss of business income due to political violence
Political risk insurance is available for investments in new
ventures and expansions of existing enterprises
Visit: http://www.opic.gov/
Appendix 1: Impact and
Importance of FDI on
Developing Countries
FDI Dominates Developing Countries’
Capital Inflows
FDI is also More Stable than Equity
and Short-Term Debt
Appendix 2: Data on US
Inward FDI by Year and
Country
Inward FDI: To the United States
Foreign Direct Investment in the United States,
1997-2006 (p)
(in billions
of U.S. dollars)
$321.3 B
$350
$289.4 B
$300
$250
$179.0 B
$183.6 B
$167.0 B
$200
$133.2 B
$109.8 B
$150 $105.6 B
$84.4 B
$64.0 B
$100
$50
$0
1997
1998
1999
2000
2001
2002
2003
Source: Bureau of Economic Analysis, International Transactions Account Data
2004
2005
2006
(p)
FDI Investment in the US by Country
Foreign Direct Investment in the United States by Leading
Countries, 2005- 2006 (p)
$29.0 B $29.7 B
$29.7 B
$30,000
$27.0 B
$25,000
$18.1 B
$20,000
$14.1 B
$18.0 B
$16.2 B
$15,000
$7.1 B
$10,000
$4.4 B
$5,000
$0
United
Kingdom
France
Netherlands
2005
Japan
2006 (p)
Source: Bureau of Econom ic Anlaysis, International Transactions Accounts
Germany
Appendix 3: Apple Retail
Apple Retail has used a wholly owned
subsidiary arrangement when engaging
in FDI. The following slides discuss
this.
Wholly Owned: Apple Retail

Apple’s retail store strategy has been to enter a
foreign country under a wholly owned structure.





All Apple Retail stores are company owned (Apple
leases the space).
Apple currently has 21 foreign retail stores (9 in the UK,
7 in Japan, 4 in Canada, and 1 in Italy).
Apple used this wholly owned strategy because it feels it
“is able to better control the customer retail experience
and attract new customers.”
Apparently Apple has no plans to change this strategy
(see email message from Apple next slide).
Visit: http://www.apple.com/retail/storelist/
Apple’s Attitude Towards Partnering!
April 18, 2007
Hello Michael:
“We own all of our Apple retail stores and have no plans for
franchises or partnering.”
We have 21 stores outside the U.S. (7 in Japan, 9 in UK and 4
in Canada and we opened our first store in Italy) out of a total
of 177 stores open today.
Best regards,
Joan Hoover
Director, Investor Relations
Apple
Appendix 4: Starbucks
Starbucks use of a joint venture in
Japan is discussed in the following
slide.
Joint Venture:
Starbucks in Japan


Starbucks entered Japan under a joint venture
arrangement in 1995.
The joint venture was with Sazaby League, a Japanbased retailer and restaurant operator.
 The two formed a new company: Starbucks Coffee
Japan
 The joint venture issued stock in Japan and raised
about $120 million for financing its stores in Japan.
 Stock now trades on the Osaka Stock Exchange.
 First Starbucks opened in Japan in 1996.
 As of January 2007, there were 666 Starbucks
locations in Japan
 Visit: http://www.starbucks.co.jp/en
Appendix 5: Involvement of
Private Equity and Hedge
Funds in Cross Border M&A
Cross Border A&A by Private Equity
and Hedge Funds
Appendix 6: A review of
Investment Policies Affecting
FDI
As the following slides reveal, governments
have liberalized their investment policies in
recent years. This liberalization has allowed
FDI to acccelerate.
Regulatory Changes, 1992-2005
Regulatory Changes, 2005, by Nature
and Region, %
Appendix 7: Cross Border
M&A Activity: 2005
Compared to 2002 and the
Ten Largest M&As from 1998
to 2003
Cross Border M&A: Now and Previous Peak
Top 10 Cross-Border M&A Deals
1998-2003
Year ($ b) Acquirer
2000
202.8 Vodafone AirTouch
PLC
Home Target
Host
U.K.
Mannesmann AG
Germany
1999
60.3 Vodafone Group PLC
U.K.
AirTouch
U.S.
1998
48.2 British Petroleum Co.
U.K.
Amoco
U.S.
2000
46 France Telecom SA
France
Orange PLC
U.K.
1998
40.5 Daimler-Benz AG
Germany Chrysler Corp.
U.S.
2000
40.4 Vivendi SA
France
Seagram Co. LTD
Canada
1999
34.6 Zeneca Group PLC
U.K.
Astra AB
Sweden
1999
32.6 Mannesmann AG
Germany Orange PLC
U.K.
2001
29.4 VoiceStream Wireless
Corp
U.S.
Deutsche Telekom
AG
Germany
2000
27.2 BP Amoco PLC
U.K.
ARCO
U.S.
Appendix 8: Motivation for
FDI from the Standpoint of
US and Japanese Firms
The models used to explain the reason
behind US and Japanese FDI differ.
The following slides discuss this.
Impact of FDI on US Firms

Early FDI studies concentrated on the impact of
FDI on the value of American firms.




Rugman (1980) postulated a firm could maximize its
value by internally employing its intangible assets
through FDI, rather than licensing the technology to
foreign producers.
Fatemi (1984) used event study methodology and found
positive cumulative abnormal returns of multinational
firms around the date of international expansion.
Doukas and Travlos (1988), using event study
methodology, showed that shares of U.S. firms
expanding into a new country experience significant
positive abnormal returns at the announcement of FDI.
Thus, booth studies concluded that U.S. firms engaged
in FDI because of the positive impact on shareholder
wealth.
Japanese Firm FDI


As multinational corporations in other industrialized nations
also participated in global FDI, the important question
became whether the shareholder wealth American FDI
theory was applicable to their companies.
The Japanese have long contended that the Japanese
model of FDI is different from the American model.



Kojima (1973) argued that Japanese firms invest abroad not to
maximize shareholder wealth because of because of
monopolistic advantages, but instead to seek low-cost labor or
other production factors such as natural resources.
Ozawa (1979) expanded this argument by suggesting that the
main driving forces of Japanese FDI were macro-economic in
nature, because Japan had poor natural resources and the
Japanese economy relied heavily on exports.
Recent empirical evidence (Yamada, 1996; Blonigen,1997 and
Lee, 1999) has tended to support the argument that Japanese
MNCs behave differently from their counterparts in the
Western world when engaging in FDI.
Appendix 9: Case Study of
Political Risk
The following political risk case study is of
Coca-Cola in India. It shows how sudden
changes in the political environment can
adversely affect a foreign firm
Coca-Cola and India: Background

From the 1950s into the
early 1970s, Coca-Cola had
operated successfully in
India as the country’s
leading soft drink company.

However, by the mid-1970s,
the political environment in
India towards non-resident
firms had changed
dramatically.
Coca-Cola in India: 1974-1977


From 1974 to 1977, India’s socialist government
(lead by the Janata Party) engaged in a four-year
campaign against multinational firms in general and
Coca-Cola in particular.
In the case of Coca-Cola, the Indian government
claimed that the company was taking more money
out of the country then putting in and was adversely
affecting its domestic soft-drink industry.
Coca-Cola and India: 1978 



In 1977 the government demanded that Coca-Cola turn over its
secret drink formula and sell 60% of its operations to Indian
investors or face expulsion.
 Under India’s Foreign Exchange Regulation Act, foreign
companies were required to reduce their equity stake in India to
40% if they wished to remain in India.
A year later, after unsuccessful negotiations with the India
Government, Coca-Cola left India.
In 1989, Pepsi entered the Indian market under an arrangement
whereby the Indian Government held 100% of the shares of
Pepsi India.
 Pepsi also agreed to export $5 of locally-made products for every
$1 of materials it imported
In October, 1993, Coca-Cola returned to India, after the Foreign
Exchange Regulation Act was revised in its favor.
Appendix 10: Bribery and
Global Business
These slides discuss the issue of
bribery and global business, with focus
on the 1977 US Foreign Corrupt
Practices Act
Influencing Governments and Global
Business

Influencing government officials can take one
of two very opposite forms:

Legitimate (and legal) lobbying


Company (and spokespersons for companies) talking to
government policy makers for the purpose of presenting
their positions and having governments enact legislation
favorable to their company (or industry).
Bribery

Paying government officials for favors.
The U.S. Position on Bribery

In 1977, the United States Congress passed the
Foreign Corrupt Practices Act (FCPA).




Passage in part resulted from Lockheed Martin
Corporation’s bribery of Japanese Government in early
1970s.
FCPA makes it illegal for U.S. companies to bribe
government officials or political candidates in other
countries.
A corrupt payment is defined as one made to influence an
official's decision.
Guilty U.S. firms are subject to fines of up to US$2 million
per incident. Officers, directors, employees, and agents are
subject to fines of up to US$100,000 and/or imprisonment
for up to five years.
Other Countries’ Position on Bribery

The Organization for Economic Cooperation and
Development (OECD) was created in 1960 for the
purpose of promoting market economies and
democratic governments.


One assumed condition of an efficient market economy is
that the “playing field” is fair and open.
Bribery is not consistent with this.


http://www.oecd.org/home/
In 1999, OECD member countries agreed to a
Convention Against Bribery of Foreign Public
Officials in International Business Transactions.

This OECD Convention would make it a crime to offer,
promise or give a bribe to a foreign public official in order to
obtain or retain international business deals.