[Senate Executive Report 106-15]
[From the U.S. Government Publishing Office]



106th Congress                                               Exec. Rpt.
                                 SENATE
 2d Session                                                      106-15

======================================================================



 
              INTER-AMERICAN CONVENTION AGAINST CORRUPTION

                                _______
                                

                 June 30, 2000.--Ordered to be printed

                                _______
                                

          Mr. Helms, from the Committee on Foreign Relations,
                        submitted the following

                              R E P O R T

                   [To accompany Treaty Doc. 105-39]

    The Committee on Foreign Relations, to which was referred 
the Inter-American Convention Against Corruption (``The 
Convention''), adopted and opened for signature at the 
Specialized Conference of the Organization of American States 
(OAS) at Caracas, Venezuela, on March 29, 1996, signed by the 
United States on June 27, 1996, at the Twenty-Seventh Regular 
Session of the OAS General Assembly meeting in Panama City, 
Panama, having considered the same, reports favorably thereon 
with six understandings, one declaration and three provisos, 
and recommends that the Senate give its advice and consent to 
ratification thereof as set forth in this report and the 
accompanying resolution of ratification.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Background.......................................................2
III. Summary..........................................................2
 IV. Entry Into Force and Denunciation................................6
  V. Committee Action.................................................7
 VI. Committee Recommendation and Comments............................7
VII. Explanation of Proposed Convention...............................8
VIII.Text of the Resolution of Ratification...........................8

 IX. Annex...........................................................11

                               I. Purpose

    The purpose of the Inter-American Convention Against 
Corruption (``the Convention'') is to require Parties to the 
Convention to criminalize solicitation or acceptance of bribes 
and other corrupt acts, to criminalize transnational bribery in 
commerce, and to eliminate bank secrecy or political grounds as 
the bases to refuse

cooperation with other Parties in criminal investigations under 
the Convention.

                             II. Background

    On March 29, 1996, a Specialized Inter-American Conference 
met in Caracas, Venezuela, and negotiators from twenty-one OAS 
member states signed the Convention. The United States signed 
the Convention on June 2, 1996, at the twenty-seventh regular 
session of the OAS General Assembly in Panama City, Panama. On 
March 6, 1997, the Convention entered into force following 
deposit of the second instrument of ratification. The President 
submitted the Convention to the Senate for advice and consent 
on April 1, 1998. As of the date of this report, twenty-six OAS 
member states had signed the Convention, and twenty had 
deposited their instruments of ratification.

                              III. Summary


                               A. GENERAL

    The Convention was the first multilateral instrument of its 
kind. It is hoped that the Convention will be an effective tool 
to assist in the hemispheric effort to combat corruption. It 
may also enhance the law enforcement efforts of the Parties in 
other areas, given the links that often exist between 
corruption and organized criminal activity such as drug 
trafficking.
    The United States has long been concerned about bribery of 
foreign officials. In 1977, the United States enacted the 
Foreign Corrupt Practices Act to criminalize the bribery of 
foreign officials, and has urged other nations to adopt similar 
statutes. The Convention is intended to ensure that Parties 
enact statutes to criminalize bribery and other kinds of public 
corruption. It establishes a treaty-based regime of obligations 
among OAS member states to fight corruption. Within the 
Convention are limited requirements similar to the U.S. Foreign 
Corrupt Practices Act and other U.S. laws relative to bribery 
of public officials.
    In 1998 the United States became Party to the Organization 
for Economic Cooperation and Development (OECD) Convention on 
Bribery in International Business Practices. Like the OAS 
Convention, the OECD agreement requires parties to enact 
statutes similar to the Foreign Corrupt Practices Act. The OECD 
Convention criminalizes payment, or the ``supply side'' of 
bribes. While the OAS Convention, too, addresses the supply 
side, it also addresses the ``demand side'' by committing its 
parties to outlaw solicitation or acceptance of bribes and 
other corrupt acts.
    In submitting the Convention to the Senate, the Executive 
Branch stated that the Convention will not require implementing 
legislation for the United States.

                           B. KEY PROVISIONS

    The Convention has a preamble and twenty-eight articles. 
Key provisions are summarized below.
    Federalism. Article I of the Convention sets forth the 
scope of the Convention's operation. The United States 
understands the Convention to impose obligations on the Federal 
Government. The Convention does not impose obligations on the 
conduct of state, local or other non-Federal officials.
    Anti-Corruption Measures. In Article III of the Convention, 
Parties undertake a broad obligation to consider--with a view 
to creating, maintaining and strengthening institutional 
capacity--a variety of domestic measures. These measures 
include: (1) standards of conduct and implementation of the 
standards for the correct, honorable, and proper fulfillment of 
public functions; (2) instruction to government personnel to 
ensure proper understanding of their responsibilities; (3) 
systems for financial disclosure of persons who perform public 
functions; (4) open and transparent government procurement 
systems; (5) government revenue collection and control systems 
that deter corruption; (6) laws that deny favorable tax 
treatment for expenditures made in violation of the anti-
corruption laws; (7) systems for protecting individuals who 
report acts of corruption; (8) oversight bodies to implement 
anti-corruption laws; (9) deterrents to the bribery of 
government officials, such as the requirement that businesses 
keep accurate books and records; (10) mechanisms to encourage 
participation by civil society in anti-corruption activities; 
and (11) further study of preventative measures.
    Jurisdiction. Article V of the Convention obliges the 
Parties to establish jurisdiction over covered offenses. 
Parties must establish jurisdiction over acts committed in 
their territory, and over the acts of persons present in their 
territory whose extradition to a second country they deny on 
the basis of nationality.
    Covered Offenses. Article VI of the Convention specifies 
the acts of corruption to which the Convention applies: (1) the 
solicitation or acceptance by a government official or by a 
person who performs public functions of any article of monetary 
value or other benefit in exchange for any act or omission in 
the performance of his public functions; (2) the offering or 
granting to a government official or a person who performs 
public functions of any article of monetary value or other 
benefit in exchange for any act or omission in the performance 
of his public functions; (3) any act or omission in the 
discharge of his duties by a government official or a person 
who performs public functions for the purpose of illicitly 
obtaining benefits; (4) the fraudulent use or concealment of 
property derived from any acts referred to in this article; and 
(5) the participation in any manner in the commission or 
attempted commission of any of these acts. In addition, two or 
more Parties to the Convention may agree to cover additional 
offenses.
    Criminalization. Article VII obligates Parties to establish 
as criminal offenses the acts of corruption described in 
Article VI. Parties must also facilitate cooperation among 
themselves pursuant to the Convention. There are statutes 
already in effect in the United States that criminalize a wide 
range of corrupt acts. Although these statutes may not in all 
cases be defined in terms or elements identical to those used 
in the Convention, the conduct intended under the Convention to 
be criminalized would in fact be criminal conduct under U.S. 
law. Although there is no general ``attempt'' statute in U.S. 
federal criminal law, federal statutes criminalize ``attempts'' 
in connection with specific crimes. Moreover, significant acts 
of corruption involving ``attempts'' would be generally subject

to prosecution in the context of one or more other crimes. 
Accordingly, the United States will enact no new legislation to 
implement Article VII.
    Transnational Bribery. Pursuant to Article VIII, each 
Party, subject to its Constitution and fundamental legal 
principles, must prohibit and punish transnational bribery. 
This offense is defined as the offering or granting by Party 
nationals, persons having habitual residence in a Party, and 
Party-domiciled businesses, to a government official of another 
state any article of monetary value or any other benefit in 
connection with any economic or commercial transaction in 
exchange for any act or omission in the performance of that 
official's public functions. However, because of the 
constitutional proviso mentioned above, the Article does not 
assume that every state will criminalize such activity. In the 
event a country has not criminalized transnational bribery it 
is obligated to provide assistance and cooperation to the 
extent possible to other states. Current United States law 
provides criminal sanctions for transnational bribery. No 
additional legislation is needed for the United States to 
comply with the obligation imposed in Article VIII of the 
Convention.
    Illicit Enrichment. Subject to its Constitution and 
fundamental legal principles, each Party is required by Article 
IX of the Convention to establish as an offense the significant 
increase in the assets of a government official that cannot 
reasonably be explained by lawful earnings during the 
performance of public functions. If a nation does not establish 
such a criminal offense, it is nonetheless obligated to provide 
assistance and cooperation to the extent possible. In the 
United States such a statute would be unconstitutional because 
it would place the burden of proof on the individual, rather 
than the government. Consequently, the Executive Branch 
proposed an understanding stating that in the United States the 
establishment of such an offense would be inconsistent with the 
U.S. Constitution and the fundamental principles of the U.S. 
legal system, and that the United States is not obligated to 
establish a new criminal offense of illicit enrichment under 
Article IX of the Convention.
    Progressive Development. Article XI sets out a list 
describing conduct that is not covered by the Convention, but 
which negotiators view as desirable areas for the enactment of 
domestic laws in order to criminalize and deter corruption. For 
Parties with statutes already in place which criminalize the 
conduct described in Article XI, the relevant conduct will be 
deemed to fall within the Convention's coverage. Article XI 
covers (1) the improper use by a government official or a 
person who performs public functions of any kind of classified 
information which that person has obtained because of or in the 
performance of his functions; (2) the improper use by a 
government official or a person who performs public functions 
of any kind of property belonging to the state to which that 
person has access because of or in the performance of his 
functions; (3) any act or omission by any person who seeks to 
obtain a decision from a public authority whereby he illicitly 
obtains any benefit or gain, whether or not the act or omission 
harms state property; and (4) the diversion by a government 
official of any movable or immovable property, monies, or 
securities belonging to the state, to an independent agency, or 
to an individual that the official has obtained because of his 
position for purposes of administration, custody, or other 
reasons.
    Extradition. Article XIII provides that the Convention may 
serve as the legal basis for extradition with respect to any 
offense to which the Convention applies. However, the United 
States shall not consider the Convention to be the legal basis 
for extradition to any country with which the United States has 
no bilateral extradition treaty in force. Where the United 
States does have a bilateral extradition treaty in force, that 
bilateral extradition treaty shall serve as the legal basis for 
extradition for offenses that are extraditable in accordance 
with this Convention.
    Mutual Legal Assistance. Article XIV of the Convention 
requires broad mutual legal and technical assistance among the 
Parties. In no case may United States assistance be provided to 
the International Criminal Court, unless the treaty 
establishing the Court has entered into force for the United 
States by and with the advice and consent of the Senate, as 
required by Article II, section 2 of the United States 
Constitution.
    Property/Proceeds of Offenses. Article XV sets out 
assistance requirements regarding proceeds and property. 
Parties must provide to each other the broadest possible 
measure of assistance, in the identification, tracing, 
freezing, seizure, and forfeiture of property or proceeds 
obtained, derived from, or used in the commission of corruption 
offenses. However, in no case may United States assistance be 
provided to the International Criminal Court, unless the treaty 
establishing the Court has entered into force for the United 
States by and with the advice and consent of the Senate, as 
required by Article II, section 2 of the United States 
Constitution.
    Bank Secrecy. Under Article XVI of the Convention, Parties 
may not invoke bank secrecy as a basis to refuse to provide 
assistance sought by a requesting state. In applying this 
Article, Parties may take into account their domestic law, 
procedural provisions, or bilateral or multilateral agreements. 
The Article also permits a requested Party to limit use by the 
requesting state of information provided under this Article.
    Political Exception. Article XVII provides that a political 
purpose, in and of itself, may not be a grounds for refusing a 
request for assistance from a Party under Articles XIII 
(Extradition), XIV (Assistance and Cooperation), XV (Measures 
Regarding Property) and/or XVI (Bank Secrecy).
    Central Authorities. Under Article XVIII, each Party must 
designate a central authority to make and receive requests for 
assistance and cooperation.
    Final Clauses. Articles XXI (Signature), XXII 
(Ratification), XXIII (Accession) and XXIV (Reservations) 
provide that the Convention is open for signature by OAS Member 
States. The Convention is subject to ratification, and shall 
remain open for accession by states which are not OAS members. 
Instruments of ratification and accession must be deposited 
with the OAS General Secretariat, currently located in 
Washington, D.C. Reservations that are not incompatible with 
the object and purpose of the Convention are permitted.

               C. THE U.S. FOREIGN CORRUPT PRACTICES ACT

    During the mid-1970s, investigations and legal actions 
against numerous domestic corporations revealed the practice by 
some U.S. corporations of making questionable or illegal 
payments to foreign government officials. The legal and 
regulatory mechanisms for dealing with these payments had 
involved actions by the Securities and Exchange Commission 
(SEC) against public corporations for concealing from required 
public disclosure substantial payments made by the firm and the 
potential for an antitrust action for restraint of trade or 
fraud prosecutions by the Justice Department.
    Government officials and administrators contended that more 
direct prohibitions on foreign bribery and more detailed 
requirements concerning corporate record-keeping and 
accountability were needed to deal effectively with the 
problem. The revelations of slush funds and secret payments by 
American corporations were stated to have affected adversely 
American foreign policy, damaged the image of American 
democracy, and impaired public confidence in the financial 
integrity of American corporations. Congress responded with the 
passage of the Foreign Corrupt Practices Act of 1977.
    After enactment, Congress for a number of years considered 
amending the Foreign Corrupt Practices Act. After a great deal 
of debate through at least three Congresses, the Foreign 
Corrupt Practices Act Amendments were signed into law as Title 
V of the Omnibus Trade and Competitiveness Act of 1988 on 
August 23, 1988. One provision of the 1988 Amendments 
encouraged the Administration to negotiate a treaty at the OECD 
that would require other countries to enact similar laws 
prohibiting bribery of foreign government officials.
    The OAS Convention is another step forward in the effort to 
multinationalize the fight against corruption in transnational 
business. Although there are differences in detail, the 
Committee believes that the OAS Convention's provisions on 
transnational bribery (Article VIII) are consistent with the 
Foreign Corrupt Practices Act. Both are concerned with payments 
made to obtain business, or the giving of something for value 
for an official act, omission or exercise of influence.

                 IV. Entry Into Force and Denunciation


                          A. ENTRY INTO FORCE

    The Convention entered into force on March 6, 1997. For 
each State ratifying or acceding to the Convention after its 
entry into force, the Convention shall enter into force on the 
thirtieth day after deposit by such State of its instrument of 
ratification or accession.

                            B. DENUNCIATION

    The Convention shall remain in force indefinitely, but any 
of the States Parties may denounce it. A denouncing state 
party's instrument of denunciation must be deposited with the 
General Secretariat of the Organization of American States. One 
year from the date of deposit of the instrument of 
denunciation, the Convention shall cease to be in force for the 
denouncing State.

                          V. Committee Action

    The Committee on Foreign Relations held a public hearing on 
the Convention on May 2, 2000 (a transcript of the hearing and 
questions for the record can be found in the annex to this 
report). The Committee considered the Convention on June 7, 
2000, and ordered it favorably reported by voice vote, with the 
recommendation that the Senate give its advice and consent to 
the ratification of the proposed Convention subject to six 
understandings, one declaration and three provisos.

               VI. Committee Recommendation and Comments

    The Committee on Foreign Relations recommends favorably the 
proposed Convention. On balance, the Committee believes that 
the proposed Convention is in the interest of the United States 
and urges the Senate to act promptly to give its advice and 
consent to ratification.

                EXTRADITION AND MUTUAL LEGAL ASSISTANCE

    Ratification of a bilateral extradition treaty granting the 
authority to extradite individuals in the United States to 
other nations generally reflects an endorsement of the judicial 
system, and the level of respect for human rights in the nation 
with which the United States enters into an extradition 
relationship. Although the proposed Convention provides the 
authority for extradition and legal assistance (should Parties 
choose to use the Convention for such authority), the Committee 
is concerned that nations may seek extradition of individuals 
in the United States under the Convention even in situations 
where there is no bilateral extradition treaty with the United 
States authorizing extradition.
    In order to ensure that this possibility does not arise, 
the Committee's recommended resolution of ratification includes 
an understanding that the United States will not use the 
proposed Convention as the legal basis for extradition to any 
country with which the United States has no bilateral 
extradition treaty in force. In addition, the understanding 
makes clear that when the United States has a bilateral 
extradition treaty in force, that bilateral extradition treaty, 
not the Convention, will serve as the legal basis for 
extradition of individuals for offenses covered under the 
Convention.
    In addition, the Committee's recommended resolution of 
ratification includes an understanding that no assistance may 
be provided to the International Criminal Court in connection 
with United States activities under this Convention unless the 
International Criminal Court's organic statute, the Rome 
Statute, enters into force for the United States pursuant to 
constitutional procedures.
    Finally, the Committee understands that lawful intelligence 
activities of the United States Government are not covered by 
this Convention, and therefore it is unnecessary to provide any 
exemptions for such activities.

                VII. Explanation of Proposed Convention

    For a detailed article-by-article analysis of the proposed 
Convention, see the corresponding Letter of Submittal from the 
Secretary of State, which is set forth at pages V-XIV of Senate 
Treaty Document 105-39.

              VIII. Text of the Resolution of Ratification

      Resolved, (two-thirds of the Senators present concurring 
therein), That the Senate advise and consent to the 
ratification of the Inter-American Convention Against 
Corruption, adopted and opened for signature at the Specialized 
Conference of the Organization of American States (OAS) at 
Caracas, Venezuela, on March 29, 1996, (Treaty Doc. 105-39); 
referred to in this resolution of ratification as ``The 
Convention,'' subject to the understandings of subsection (a), 
the declaration of subsection (b), and the provisos of 
subsection (c).
          (a) Understandings.--The advice and consent of the 
        Senate is subject to the following understandings, 
        which shall be included in the instrument of 
        ratification of the Convention and shall be binding on 
        the President:
                  (1) Application of article i.--The United 
                States of America understands that the phrase 
                ``at any level of its hierarchy'' in the first 
                and second subparagraphs of Article I of the 
                Convention refers, in the case of the United 
                States, to all levels of the hierarchy of the 
                Federal Government of the United States, and 
                that the Convention does not impose obligations 
                with respect to the conduct of officials other 
                than Federal officials.
                  (2) Article vii (``domestic law'').--
                          (A) Article VII of the Convention 
                        sets forth an obligation to adopt 
                        legislative measures to establish as 
                        criminal offenses the acts of 
                        corruption described in Article VI(1). 
                        There is an extensive network of laws 
                        already in place in the United States 
                        that criminalize a wide range of 
                        corrupt acts. Although United States 
                        laws may not in all cases be defined in 
                        terms or elements identical to those 
                        used in the Convention, it is the 
                        understanding of the United States, 
                        with the caveat set forth in 
                        subparagraph (B), that the kinds of 
                        official corruption which are intended 
                        under the Convention to be criminalized 
                        would in fact be criminal offenses 
                        under U.S. law. Accordingly, the United 
                        States does not intend to enact new 
                        legislation to implement Article VII of 
                        the Convention.
                          (B) There is no general ``attempt'' 
                        statute in U.S. federal criminal law. 
                        Nevertheless, federal statutes make 
                        ``attempts'' criminal in connection 
                        with specific crimes. This is of 
                        particular relevance with respect to 
                        Article VI(1)(c) of the Convention, 
                        which by its literal terms would 
                        embrace a single preparatory act done 
                        with the requisite ``purpose'' of 
                        profiting illicitly at some future 
                        time, even though the course of conduct 
                        is neither pursued, nor in any sense 
                        consummated. The United States will not 
                        criminalize such conduct per se, 
                        although significant acts of corruption 
                        in this regard would be generally 
                        subject to prosecution in the context 
                        of one or more other crimes.
                  (3) Transnational bribery.--Current United 
                States law provides criminal sanctions for 
                transnational bribery. Therefore, it is the 
                understanding of the United States of America 
                that no additional legislation is needed for 
                the United States to comply with the obligation 
                imposed in Article VIII of the Convention.
                  (4) Illicit enrichment.--The United States of 
                America intends to assist and cooperate with 
                other States Parties pursuant to paragraph 3 of 
                Article IX of the Convention to the extent 
                permitted by its domestic law. The United 
                States recognizes the importance of combating 
                improper financial gains by public officials, 
                and has criminal statutes to deter or punish 
                such conduct. These statutes obligate senior-
                level officials in the federal government to 
                file truthful financial disclosure statements, 
                subject to criminal penalties. They also permit 
                prosecution of federal public officials who 
                evade taxes on wealth that is acquired 
                illicitly. The offense of illicit enrichment as 
                set forth in Article IX of the Convention, 
                however, places the burden of proof on the 
                defendant, which is inconsistent with the 
                United States Constitution and fundamental 
                principles of the United States legal system. 
                Therefore, the United States understands that 
                it is not obligated to establish a new criminal 
                offense of illicit enrichment under Article IX 
                of the Convention.
                  (5) Extradition.--The United States of 
                America shall not consider this Convention as 
                the legal basis for extradition to any country 
                with which the United States has no bilateral 
                extradition treaty in force. In such cases 
                where the United States does have a bilateral 
                extradition treaty in force, that bilateral 
                extradition treaty shall serve as the legal 
                basis for extradition for offenses that are 
                extraditable in accordance with this 
                Convention.
                  (6) Prohibition on assistance to the 
                international criminal court.--The United 
                States of America shall exercise its rights to 
                limit the use of assistance it provides under 
                the Convention so that any assistance provided 
                by the Government of the United States shall 
                not be transferred to or otherwise used to 
                assist the International Criminal Court agreed 
                to in Rome, Italy, on July 17, 1998, unless the 
                treaty establishing the Court has entered into 
                force for the United States by and with the 
                advice and consent of the Senate, as required 
                by Article II, section 2 of the United States 
                Constitution.
      (b) Declaration.--The advice and consent of the Senate is 
subject to the following declaration:
          Treaty interpretation.--The Senate affirms the 
        applicability to all treaties of the constitutionally 
        based principles of treaty interpretation set forth in 
        Condition (1) of the resolution of ratification of the 
        INF Treaty, approved by the Senate on May 27, 1988, and 
        Condition (8) of the resolution of ratification of the 
        Document Agreed Among the State Parties to the Treaty 
        on Conventional Armed Forces in Europe, approved by the 
        Senate on May 14, 1997.
      (c) Provisos.--The advice and consent of the Senate is 
subject to the following provisos:
          (1) Enforcement and monitoring.--Not later than April 
        1, 2001, and annually thereafter for five years, unless 
        extended by an Act of Congress, the President shall 
        submit to the Committee on Foreign Relations of the 
        Senate, and the Speaker of the House of 
        Representatives, a report that sets out:
                  (A) Ratification.--A list of the countries 
                that have ratified the Convention, the dates of 
                ratification and entry into force for each 
                country, and a detailed account of U.S. efforts 
                to encourage other nations that are signatories 
                to the Convention to ratify and implement it.
                  (B) Domestic legislation implementing the 
                convention and actions to advance its object 
                and purpose.-- A description of the domestic 
                laws enacted by each Party to the Convention 
                that implement commitments under the Convention 
                and actions taken by each Party during the 
                previous year, including domestic law 
                enforcement measures, to advance the object and 
                purpose of the Convention.
                  (C) Progress at the organization of american 
                states on a monitoring process.--An assessment 
                of progress in the Organization of American 
                States (OAS) toward creation of an effective, 
                transparent, and viable Convention compliance 
                monitoring process which includes input from 
                the private sector and non-governmental 
                organizations.
                  (D) Future negotiations.-- A description of 
                the anticipated future work of the Parties to 
                the Convention to expand its scope and assess 
                other areas where the Convention could be 
                amended to decrease corrupt activities.
          (2) Mutual legal assistance.--When the United States 
        receives a request for assistance under Article XIV of 
        the Convention from a country with which it has in 
        force a bilateral treaty for mutual legal assistance in 
        criminal matters, the bilateral treaty will provide the 
        legal basis for responding to that request. In any case 
        of assistance sought from the United States under 
        Article XIV of the Convention, the United States shall, 
        consistent with U.S. laws, relevant treaties and 
        arrangements, deny assistance where granting the 
        assistance sought would prejudice its essential public 
        policy interest, including cases where the Central 
        Authority, after consultation with all appropriate 
        intelligence, anti-narcotic, and foreign policy 
        agencies, has specific information that a senior 
        government official who will have access to information 
        to be provided under this Convention is engaged in a 
        felony, including the facilitation of the production or 
        distribution of illegal drugs.
          (3) Supremacy of the constitution.--Nothing in the 
        Convention requires or authorizes legislation or other 
        action by the United States of America that is 
        prohibited by the Constitution of the United States as 
        interpreted by the United States.


                              IX. A N N E X

                              ----------                              




   INTER-AMERICAN CONVENTION AGAINST CORRUPTION (Treaty Doc. 105-39)

                              ----------                              


                          TUESDAY, MAY 2, 2000

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:03 p.m., in 
room SD-419, Dirksen Senate Office Building, the Hon. Lincoln 
D. Chafee, presiding.
    Present: Senator Chafee.
    Senator Chafee. This afternoon we are having a hearing to 
consider the Inter-American Convention Against Corruption, and 
the United States signed the Convention on June 27, 1996. And 
it was transmitted to the Senate on April 1, 1998. To date, 18 
of the Convention's 26 signatories have ratified.
    Today's hearing will give this committee an opportunity to 
explore the many facets of the Convention, including how the 
United States becoming a party to it will affect U.S. 
interests.
    As long as history has been recorded, corruption has been 
an unfortunate fact of life in the administration of 
government. For a variety of reasons, cultural, economic and 
moral, public officials have been lured by and often succumb to 
the temptation to put the common good aside for personal gain.
    Corruption is antithetical to successful democracy, as it 
severs the trust that links public servants with the people 
they represent.
    As the world's leader in the promotion of democratic 
values, the United States has a unique obligation to confront 
the many challenges to these cherished values. Public 
corruption ranks among those challenges.
    Corruption not only wastes public resources, but it also 
discourages investment from overseas. Indeed when conducting 
operations abroad, an international businessperson seeks, among 
other things, a sound and honest host government that upholds 
the rule of law.
    If a government is known or suspected to be corrupt, the 
willingness of the business community to invest is diminished. 
Corruption thus deters international trade and consequently 
hinders economic growth.
    The United States has been in the forefront of the fight 
against international corruption. In 1977, Congress enacted the 
Foreign Corrupt Practices Act which, among other things, 
criminalizes the bribing of foreign officials.
    More recently, in 1998, the United States became party to 
the Organization for Economic Cooperation and Development 
Convention on Bribery in International Business Practices, a 
treaty aimed at combating corruption in the private sector.
    The next major step in fighting international corruption is 
the Inter-American Convention Against Corruption. The 
Convention commits our trading partners in the Americas to 
criminalize a wide range of corrupt acts, increase enforcement, 
enhance legal and judicial cooperation and strengthen 
preventive measures such as disclosures of assets.
    The administration has indicated that no implementing 
legislation will be needed for U.S. compliance with the 
Convention.
    Other nations, however, will have to enact substantial 
reform measures. I believe that ratification of this Convention 
is very much in our national interest, and hope this hearing 
can illuminate its many attributes.
    As an elected official, I surely recognize that foreign aid 
is one of the least popular expenditures of the Federal 
Government. Skeptics often liken providing foreign assistance 
to pouring money down the drain of corrupt governments.
    Perhaps, this Convention will, among other things, help 
begin to erase that perception and enhance the confidence of 
American taxpayers in continued U.S. international engagement.
    I would like to thank all of today's witnesses for sharing 
with the committee their informed views on these important 
issues. I look forward to a useful and informative discussion.
    I am very honored to have as our first witness, the 
Honorable Alan P. Larson, the Under Secretary of State for 
Economic, Business and Agricultural Affairs.
    And I am very honored that you took your valuable time to 
present your views on this important subject. Welcome.
    [Prepared statement and news release by Senator Chafee 
follow:]

            Prepared Statement of Senator Lincoln D. Chafee

    This afternoon the Foreign Relations Committee holds a hearing on 
an important international agreement, the Inter-American Convention 
Against Corruption. The United States signed the Convention on June 27, 
1996 and it was transmitted to the Senate on April 1, 1998. To date, 
eighteen of the Convention's twenty-six signatories have ratified. 
Today's hearing will give this committee an opportunity to explore the 
many facets of the Convention, including how the U.S. becoming a party 
to it will affect U.S. interests.
    As long as history has been recorded, corruption has been an 
unfortunate fact of life in the administration of government. For a 
variety of reasons--cultural, economic and moral--public officials have 
been lured by, and often succumb to, the temptation to put the common 
good aside for personal gain. Corruption is antithetical to successful 
democracy, as it severs the trust that links public servants with the 
people they represent. As the world's leader in the promotion of 
democratic values, the United States has a unique obligation to 
confront the many challenges to these cherished values. Public 
corruption ranks among those challenges.
    Corruption not only wastes public resources, but it also 
discourages investment from overseas. Indeed, when conducting 
operations abroad, an international businessperson seeks, among other 
things, a sound and honest host government that upholds the rule of 
law. If a government is known or suspected to be corrupt, the 
willingness of the business community to invest is diminished. 
Corruption thus deters international trade and, consequently, hinders 
economic growth.
    The United States has been in the forefront of the fight against 
international corruption. In 1977, Congress enacted the Foreign Corrupt 
Practices Act, which, among other things, criminalizes the bribing of 
foreign officials. More recently, in 1998 the United States became 
party to the Organization for Economic Cooperation and Development 
(OECD) Convention on Bribery in International Business Practices, a 
treaty aimed at combating corruption in the private sector.
    The next major step in fighting international corruption is the 
Inter-American Convention Against Corruption. The Convention commits 
our trading partners in the Americas to criminalize a wide range of 
corrupt acts, increase enforcement, enhance legal and judicial 
cooperation, and strengthen preventive measures such as disclosure of 
assets. The Administration has indicated that no implementing 
legislation will be needed for U.S. compliance with the Convention. 
Other nations, however, will have to enact substantial reform measures. 
I believe that ratification of this Convention is very much in our 
national interest, and hope this hearing can illuminate its many 
attributes.
    As an elected official, I surely recognize that foreign aid is one 
of the least popular expenditures of the federal government. Skeptics 
often liken providing foreign assistance to ``pouring money down the 
drain of corrupt governments.'' Perhaps this Convention will, among 
other things, help begin to erase that perception and enhance the 
confidence of American taxpayers in continued U.S. international 
engagement.
    I would like to thank all of today's witnesses for sharing with the 
committee their informed views on these important issues. I look 
forward to a useful and informative discussion.

                                 ______
                                 

             [For Immediate Release--Tuesday, May 2, 2000]

Chafee Signals Approval of Inter-American Convention Against Corruption

    Washington, DC.--U.S. Senator Lincoln D. Chafee (R-RI)--Chairman of 
the Senate Foreign Relations Subcommittee on the Western Hemisphere, 
Peace Corps, Narcotics and Terrorism--today signalled his support for 
the Inter-American Convention Against Corruption.
    At a Foreign Relations Committee hearing to examine the merits of 
the convention, Chafee noted that the treaty would require many of its 
signatory nations to take substantial legislative steps to eliminate 
public corruption, while the United States is already in full 
compliance. He also noted that anti-corruption campaigns were critical 
for many developing nations which hope to attract foreign direct 
investment.
    ``As long as history has been recorded, corruption has been an 
unfortunate fact of life in the administration of government,'' Chafee 
said at the hearing. ``For a variety of reasons--cultural, economic and 
moral--public officials have been lured by, and often succumb to, the 
temptation to put the common good aside for personal gain.''
    Chafee continued. ``Corruption not only wastes public resources, 
but it also discourages investment from overseas. Moreover, corruption 
is antithetical to successful democracy, as it severs the trust that 
links public servants with the people they represent. As the world's 
leader in the promotion of democratic values, the United States has a 
unique obligation to confront the many challenges to these cherished 
values. Public corruption ranks among those challenges.''
    In 1996, President Clinton signed the Inter-American Convention 
Against Corruption. The terms of the treaty require parties to 
criminalize the solicitation or acceptance of bribes; strengthen 
cooperation in criminal investigations, and; enact preventative 
measures, including asset disclosure and conflict of interest standards 
for public officials, as well as strong procurement rules.
    Since the Western Hemisphere accounted for 44 percent of U.S. 
exports in 1999, the adoption of anti-corruption measures will 
significantly aid U.S. businesses with international ties. U.S. 
businesses, already bound by the Convention Against Bribery of Foreign 
Public Officials to avoid offering bribes to foreign officials, often 
find themselves competing on an uneven playing field against foreign 
domestic competition. Domestic businesses often feel free--or even 
required--to provide bribes and kickbacks to public officials as the 
cost of doing business. The Inter-American Convention would require 
signatories to outlaw and aggressively prosecute these practices.

STATEMENT OF HON. ALAN P. LARSON, UNDER SECRETARY OF STATE FOR 
  ECONOMIC, BUSINESS AND AGRICULTURAL AFFAIRS, DEPARTMENT OF 
                             STATE

    Mr. Larson. Mr. Chairman, thank you. And I am very honored 
to be here today to testify in support, enthusiastically, of 
the Inter-American Convention Against Corruption.
    With your permission, Mr. Chairman, I would like to submit 
my written statement for the record----
    Senator Chafee. Yes.
    Mr. Larson [continuing]. And make, very quickly, a few main 
points about this Convention.
    The first is that it is very strongly in our interest. The 
second is that it is part of a global strategy. Third, it 
advances our interest in several important discreet ways. It 
has significant substantive provisions. And as you indicated, 
Mr. Chairman, it requires no change in U.S. law.
    Mr. Chairman, in the Americas, corruption is a major 
obstacle to development, and it is a threat to democracy. 
Corruption also deprives our businesses of the opportunity to 
operate in a transparent, honest and predictable environment. 
And this Convention is a very important regional instrument to 
help us combat these problems.
    It is part of a global strategy, and you outlined some of 
the most important features of that: Our leadership in passing 
the Foreign Corrupt Practices Act in 1977; our leadership in 
pushing for the multi-lateralization of many of the key 
attributes of the Foreign Corrupt Practices Act in the OECD 
Convention Against Bribery.
    We are also working in other fora. We have made anti-
corruption efforts a major part of the stability pact for the 
countries of Southeast Europe. And we are working very hard 
with the international financial institutions, the IMF and the 
regional development banks to incorporate anti-corruption 
principles in their programs.
    Mr. Chairman, I believe that ratification of the Inter-
American Convention would advance four important U.S. 
objectives.
    First of all, it would strengthen the ability of the United 
States to continue to play a leadership role on these issues. 
The willingness of the countries in this hemisphere to sign and 
ratify this treaty is one indication of their seriousness.
    And I have noticed in my travels throughout the region and 
in my meetings with senior officials from this part of the 
world that they genuinely believe that it is in their interest 
to attack this problem.
    That said, signing and ratifying a treaty is not enough. As 
you indicated, many of them will have to implement new laws, 
and they will have to make sure that those laws are adequately 
enforced.
    And to do that, I think we will need, as the United States, 
to play a leadership role in promoting effective 
implementation. U.S. businesses will benefit from the legal 
regimes that this Convention is designed to promote.
    The Convention will also provide and strengthen--it will 
strengthen and augment the existing mechanisms that we have for 
international cooperation on law enforcement matters.
    In addition the ratification of this treaty will bolster 
our efforts to support democratic institutions in this 
country--in this hemisphere, institutions that really are 
debilitated by corruption.
    Now, the specific provisions of the Inter-American 
Convention are spelled out in more detail in my written 
testimony.
    I would just like to highlight that the Convention does 
require states to take specific steps to combat corruption. It 
imposes an obligation on each state to enact legislation that 
will criminalize acts of corruption that are specified in the 
Convention, and that these include the solicitation or 
acceptance of bribes; the offering or granting of bribes; any 
act or omission by a government official to obtain illicit 
benefits for himself or others; the fraudulent use or 
concealment of property derived from the above mentioned acts; 
and participation in or association or a conspiracy to commit 
such acts.
    Second, the Convention also includes provisions on 
international cooperation and assistance such as extradition, 
mutual legal assistance, asset seizure and forfeiture. This 
cooperation will be subject to the limits of applicable 
existing treaties including bilateral treaties and the domestic 
laws of each country. It also envisions technical cooperation 
and exchange of experience, which can help in the 
implementation.
    Third, subject to each country's constitution and 
fundamental legal principles, the Convention establishes an 
obligation to criminalize the bribery of foreign government 
officials. In this way, it deals with the same type of core 
issue that the OECD Convention deals with.
    To sum up, Mr. Chairman, I believe it is critical to the 
international strategy of the United States in combating 
corruption, for the United States to become a party to the 
Inter-American Convention Against Corruption. It gives us 
credibility in our international efforts. It helps us ensure 
that the obligations of the treaty are implemented faithfully.
    It responds to the desire of our business community for the 
United States to be involved in this first-ever legal framework 
for cooperation among the governments of this hemisphere to 
address the problem.
    We really appreciate the opportunity that this hearing 
provides for consideration of the treaty, and I would be 
pleased to answer any questions you may have.
    I did want to mention that the Deputy Legal Advisor of the 
State Department, Jamie Borek, is with me, if there turns out 
to be highly technical or highly legal questions that arise.
    Thank you.
    Senator Chafee. Thank you, Mr. Larson.
    [The prepared statement of Mr. Larson follows:]

               Prepared Statement of Hon. Alan P. Larson

    Mr. Chairman and members of the Committee:
    I am pleased to appear before you today to testify in support of 
the Inter-American Convention Against Corruption (``the Convention''), 
and to address generally the issue of corruption in the Americas.
     a political commitment to combat corruption in this hemisphere
    The problem of corruption is a major obstacle to development in the 
Americas, and we believe every effort must be made to address it. 
Corruption slows and impedes the consolidation of democratic 
institutions, and weakens the rule of law. It undermines the confidence 
of people in their government. It is all too often linked with trans-
border criminal activity, including drug trafficking, organized crime, 
and money laundering. In sum, its effects are wide-ranging and 
pernicious.
    Corruption also undermines the ability of businesses of the United 
States and other countries to operate in a transparent, honest and 
predictable environment. In 1996, an IMF study found that corruption 
lowers investment and economic growth. The reason is simple: investors 
are wary of investing in countries where corruption is prevalent, and 
low levels of investment lead to low growth. The Finance Ministers of 
the Western Hemisphere, at their meeting in Mexico in February 2000, 
noted that ``corruption has been recognized as a serious problem that 
adversely affects investment, public revenue, growth, and development 
in much of the Western Hemisphere'' and that corruption is ``a threat 
to investor and taxpayer confidence.''
    A shared recognition of the importance of this issue prompted the 
nations of the Hemisphere to agree to develop an unprecedented regional 
instrument to help combat that scourge of corruption. During the early 
1990s, the democratic governments of Latin America became increasingly 
aware that corruption threatened political stability and economic 
growth in their countries. When the 34 democratically elected heads of 
state met in Miami in 1994 for the first Summit of the Americas, there 
was widespread support for practical action to combat corruption. The 
President of Venezuela specifically recommended negotiation of an 
Inter-American Convention Against Corruption.
    The willingness of the Hemisphere's countries to take this step, 
and to follow it up--as a significant number have--by signing and 
ratifying the treaty promptly, reflects a commitment by the governments 
of the region to address the problem in a serious fashion. My travels 
in the region and contacts with regional leaders convince me that 
popular support for anti-corruption initiatives remain strong and that 
governments are committed to action. However, it is not enough for 
countries to sign and ratify the Convention and pass new criminal laws. 
U.S. leadership will be critical to ensuring the implementation of the 
obligations of the Convention. We will be working on an effective 
strategy to ensure that the countries of the Hemisphere fully implement 
this agreement. By becoming a Party to the Convention, the United 
States will be better placed to promote its effective implementation.
                    one element of a global approach
    The fight against corruption is a high priority in our foreign 
policy, particularly with regard to this Hemisphere. The United States 
has taken a leadership position in combating overseas commercial 
bribery ever since the enactment in 1977 of the Foreign Corrupt 
Practices Act (``FCPA''). Later, we led the effort to negotiate an 
international convention that would enshrine the basic provisions of 
the FCPA: the Organization for Economic Cooperation and Development 
Convention on Combating Bribery of Foreign Public Officials in 
International Business Transactions (``the OECD Anti-Bribery 
Convention''). The United States Senate voted its advice and consent to 
ratification of that Convention in 1998. In the same year, Congress 
passed implementing legislation that broadened the FCPA slightly to 
conform to our obligations under the Convention. Nineteen other states 
have ratified the OECD Convention, which entered into force in February 
1999. A vigorous review of implementation is under way; the domestic 
implementing laws of 21 countries have been scrutinized by the OECD 
Bribery Working Group. The success of the United States on the OECD 
Convention is a tribute to the strong bipartisan support from the 
members of this Committee, and from others in both the House and 
Senate.
    The Administration is combating corruption on many other fronts. In 
February of last year, Vice President Gore hosted the Global Forum on 
Fighting Corruption, which was attended by representatives from over 90 
countries. Among the attendees were twenty-one OAS member governments, 
five at the level of Vice-President, and one head of a national 
parliament; the Attorney General of Mexico; and several representatives 
from Latin American non-governmental organizations. At the Forum, the 
Vice President and the Secretary of State made clear the importance of 
the Inter-American Convention and the commitment of the Administration 
to its ratification. We are now making preparations for the Second 
Global Forum, which we are cohosting with the government of The 
Netherlands, and which will take place in The Hague in May of next 
year.
    The Administration has encouraged the IMF, the World Bank, and the 
Inter-American Development Bank to incorporate anti-corruption 
principles in their programs. All three of these major international 
financial organizations are involved in supporting and monitoring a 
wide variety of anti-corruption programs that include judicial reform, 
integrated financial systems, the development of public ethics offices, 
and public administration reform. These institutions, along with the 
U.S. Government, the United Nations and a number of foundations belong 
to an 18 member Donor Consultative Group on Accountability/Anti-
corruption in Latin America and the Caribbean. The Group meets 
regularly and shares information about anti-corruption activities in 
the hemisphere.
    We have also pushed for a strong Anti-Corruption Initiative for the 
Stability Pact for Southeast Europe. Countries of the region have made 
commitments to take priority measures against corruption, especially 
actions to: implement international anti-corruption instruments, 
promote good governance, strengthen legislation, promote transparency 
and integrity in business, and support public involvement. An anti-
corruption steering group under the Stability Pact will monitor 
progress in anti-corruption efforts. The United States, the European 
Commission, the OECD, and the Council of Europe, and the World Bank are 
working closely in support of this Initiative.
    Thus, our anti-corruption effort involves a set of integrated 
policies. Regional efforts such as the Inter-American Convention are an 
integral part of this framework.
              provisions of the inter-american convention
    The Inter-American Convention was adopted at the Specialized 
Conference on Corruption of the Organization of American States (OAS) 
in Caracas, Venezuela, on March 29, 1996. Twenty-one states signed the 
treaty on the date of its adoption. The United States participated 
actively in the Convention's negotiation, and signed it on June 27, 
1996. To date, 26 states have signed, and 18 states have deposited 
their instruments of ratification. The Convention entered into force on 
March 6, 1997.
    The Convention was the first instrument of its kind in the world to 
be negotiated, and was adopted and opened for signature on March 29, 
1996 at Caracas. In addition to requiring parties to criminalize acts 
of corruption, the Inter-American Convention will enhance cooperation 
among the nations in the Hemisphere in the battle against both domestic 
and transnational acts of corruption. I will describe the principal 
provisions of the Convention and then summarize some of the distinct 
advantages to the United States of becoming a party.
    The Convention requires that the States Party take specific steps 
to combat corruption. It imposes an obligation on each State Party to 
enact such legislation as is necessary to criminalize the acts of 
corruption specified in the Convention. Such acts include, the 
solicitation or acceptance of bribes; the offering or granting of 
bribes; any act or omission by a government official to obtain illicit 
benefits for himself or others; the fraudulent use or concealment of 
property derived from the above-mentioned acts; and participation in, 
or association or conspiracy to commit, such acts.
    Thus, the treaty requires criminalization not only of the ``supply 
side'' or ``active'' bribery (i.e., the offering of bribes) but also 
the ``demand side'' or ``passive'' bribery (i.e., the solicitation or 
acceptance of bribes). Although most nations in the Hemisphere already 
to some extent have enacted corruption legislation, such as anti-
bribery laws, the Convention seeks to ensure that such legislation is 
broad and comprehensive in key areas.
    The United States can become a party to the Convention without any 
additional legislation, because existing U.S. law is already sufficient 
to satisfy the Convention's provisions regarding requirements for 
legislation, and the other provisions in the Convention are self-
executing and will not require implementing legislation. However, to 
clarify our interpretation of certain provisions of the Convention, we 
recommend the submission with the U.S. instrument of ratification of 
certain Understandings, which I will describe further on in this 
statement.
    The Convention also includes provisions on certain forms of 
international cooperation and assistance. These include extradition, 
mutual legal assistance, and asset seizure and forfeiture. With respect 
to all of these forms of cooperation, the Convention expressly provides 
that cooperation will be subject to the limitations of applicable 
existing treaties, including bilateral ones, and to the domestic law of 
each country. The Convention also contemplates technical cooperation 
and exchanges of experiences. All of the foregoing are comparable to 
forms of cooperation already envisioned in various law enforcement 
treaties to which the United States is a party. Through such 
cooperation and assistance, the Convention will facilitate the 
prevention, investigation, and prosecution of acts of corruption.
    One especially noteworthy feature of the Convention is the 
obligation in Article VIII to criminalize the bribery of foreign 
officials. In recent years, the United States Government has sought in 
a number of multilateral fora to persuade other governments to adopt 
legislation akin to the U.S. Foreign Corrupt Practices Act. The 
Convention represented a breakthrough on that front, and lent impetus 
to similar measures pursued by the United States in other multilateral 
fora, such as the OECD, the Council of Europe, and the United Nations.
                     benefits of u.s. ratification
    The United States would benefit from becoming a Party to the Inter-
American Convention in many ways. First, becoming a Party would 
strengthen the ability of the United States to continue to assert a 
leadership role in this area. Most of the countries in this Hemisphere 
are at least signatories to the Convention, and a significant number 
either are or may soon become Parties. Given the strong position the 
United States has historically taken in opposition to corruption, and 
the fact that our laws and policies on this issue are at the forefront 
internationally, our absence from this treaty regime would be 
conspicuous, and would detract from our ability to exert pressure on 
the various states which are party to implement the Convention to the 
most vigorous extent possible.
    Second, U.S. business will benefit from a legal regime that is 
designed to address the problem of corruption in this Hemisphere. The 
corruption of governmental officials significantly hinders business 
transactions and yields economic inefficiencies. The Convention imposes 
requirements on other states to criminalize transnational bribery, 
which would help level the playing field for U.S. companies competing 
for business in the region. Some countries of the Hemisphere have 
significant capital-exporting multinational enterprises, so the further 
expansion of prohibitions on transnational bribery in those countries' 
legal systems would be a significant complement to the OECD Convention. 
Clearly, U.S. businesses see the benefits of this Convention, as 
manifested by the letter dated April 7, 2000 sent to Senator Helms by 
the leaders of 10 leading business associations to express support for 
the ratification this year of the Convention.
    A third advantage to the United States is that the Convention 
augments existing mechanisms for international cooperation in law 
enforcement matters. For example, most of our older extradition 
treaties with countries in the region render extraditable only certain 
offenses listed in the treaty. The Corruption Convention would 
supplement such treaties with the additional offenses contemplated by 
the Convention, thereby enabling the United States to more effectively 
obtain the extradition of offenders accused of corruption offenses.
    Fourth, ratification would further U.S. efforts to support 
democratic institutions in the region. Corruption debilitates and 
destabilizes government institutions. Democracy has made impressive 
strides in the Western Hemisphere; with the exception of Cuba, 
democratically elected governments are the norm. However, as recent 
events in Ecuador and Paraguay underline, democracies remain vulnerable 
and fragile. Public corruption further undermines the legitimacy of 
governments and weakens support for the often difficult steps that 
responsible governments must take. Corruption has become a rallying cry 
for citizens too long denied transparent, accountable government. A 
recent survey in the Hemisphere demonstrated that while the majority of 
citizens still support democracy as the preferred system of government, 
a majority are also deeply dissatisfied with the practice of democracy 
in their country. In many countries in the region, corruption by 
entrenched political parties and interests has become a major issue in 
electoral politics in recent years, bringing the issue front and center 
and demonstrating how corruption can bring down even democratically 
elected governments if it is not effectively addressed.
                          four understandings
    The Administration recommends that the United States include four 
Understandings when it deposits its instrument of ratification for the 
Convention. These Understandings, the proposed texts of which were 
included in the Administration's transmittal of the Convention to the 
Senate, would clarify views of the United States about certain 
provisions of the Convention. Our views as set forth in these 
Understandings are consistent with the text and history of the 
Convention.
    First, regarding Article I (on definitions), we recommend an 
Understanding that the Treaty imposes obligations only with respect to 
the conduct of U.S. federal officials. We believe this needs to be an 
Understanding, rather than a Reservation, because it simply reaffirms a 
point that was already addressed without dissent during the treaty 
negotiations. At the conclusion of the negotiations, the United States 
delegate read a statement into the record, asserting that we understood 
the Convention would not impose obligations with respect to officials 
other than federal officials for countries with a federal system of 
government. This statement was seconded by the delegation from Canada 
and from other States with federal systems, and was not challenged by 
any of the other delegations.
    Second, regarding Article VII (on legislation), we recommend an 
Understanding to the effect that existing U.S. laws already criminalize 
the conduct that the Convention requires be criminalized, even though 
such laws may not necessarily be defined in terms or elements identical 
to those used in the Convention. This should be an Understanding rather 
than a Reservation because the requirement in Article VII refers to 
criminalization by the Parties of certain acts of corruption described 
in Article VI, but does not call for each State Party to incorporate 
into its domestic law each specific element of the acts specified in 
Article VI.
    Third, concerning Article VIII (on transnational bribery), we 
recommend an Understanding to indicate that the Foreign Corrupt 
Practices Act (FCPA), a law already in effect for the United States, 
satisfies the requirement of this Article. Such an Understanding would 
be consistent with the negotiating history, as this Article was 
included at the behest of the United States for the very purpose of 
requiring other States to enact legislation comparable to the FCPA. We 
believe an Understanding of this nature is necessary simply because the 
elements of the FCPA are not identical in every minute respect to the 
elements of the offense described in Article VIII, and there was no 
expectation by any of the negotiating delegations that the United 
States would need to modify the FCPA to comply with the Treaty.
    Finally, regarding Article IX (on illicit enrichment), we recommend 
an Understanding that establishment of such an offense would be 
inconsistent with the U.S. Constitution and fundamental principles of 
our legal system, and that therefore--in accordance with the terms of 
the Article--the U.S. will not establish a new criminal offense of that 
nature. By its terms, Article IX renders the obligation to criminalize 
illicit enrichment subject to each State Party's ``Constitution and the 
fundamental principles of its legal system.'' To the extent that 
Article IX contemplates establishment of an offense of ``illicit 
enrichment'' which would entail shifting the burden of proof to the 
defendant in a criminal prosecution, it would be inconsistent with the 
U.S. Constitution and fundamental principles of our legal system. Since 
the text of Article IX expressly contemplates opt-out in such 
circumstances, there would be no need to style this statement as a 
Reservation rather than as an Understanding.
                               conclusion
    In conclusion, Mr. Chairman, we believe that to support democracy 
and sound economic development, we need to take strong action against 
corruption. This has been a top priority of this Administration, and 
with strong bipartisan and private sector support, we have made 
significant progress. The Inter-American Convention Against Corruption 
will be an important step to advance this cause in our own Hemisphere. 
It addresses for the first time certain forms of corruption and 
encourages international cooperation and assistance. U.S. ratification 
will ensure that we remain a leader in anti-corruption efforts and help 
create an environment which will promote long-term growth and 
opportunities for U.S. firms. The Convention is very much in the 
interest of the United States and our partners in the Hemisphere. The 
Administration strongly supports and urges the United States Senate to 
give its advise and consent to the Convention.
    I will be pleased to answer any questions the Committee may have.

                                 ______
                                 

Responses of Hon. Alan P. Larson to Additional Questions Submitted for 
                               the Record

    Question 1. The letter of submittal to the President by the 
Secretary of State recommends an understanding relating to Article VII. 
The proposed understanding indicates that there is an ``extensive 
network of laws already in place in the United States that criminalize 
a wide range of corrupt acts.''
    Please elaborate on the network of such laws.

    Answer. The following is a summary of the U.S. federal laws in 
place that satisfy the requirements of Article VII of the Convention, 
which requires the States Parties to criminalize the offenses set forth 
in Article VI.
    While no single federal statute uses precisely the terms of Article 
VI of the Convention, Article VI(1)(a) (solicitation or acceptance of 
bribes) and VI(1)(b) (offering or granting bribes) were patterned on 
U.S. law (18 U.S.C. Sec. 201 (b) and (c)), and various federal anti-
corruption laws are so comprehensive that no further legislation would 
be needed to prosecute the conduct described in Article VI. The 
following U.S. statutes cover the conduct described in Article 
VI(1)(a), VI(1)(b), and VI(1)(c):

        18 U.S.C. Sec. 201(b) (bribery of public officials)
        18 U.S.C. Sec. 201(c) (making or receiving illegal gratuities)
        18 U.S.C. Sec. 208 (acts affecting a personal financial 
        interest)
        18 U.S.C. Sec. 641 (theft or misuse of Government property)
        18 U.S.C. Sec. 666 (theft or bribery involving Federal 
        programs)
        18 U.S.C. Sec. 1951 (bribery or extortion affecting commerce)
        18 U.S.C. Sec. 371 (conspiracy to defraud the Government)
        18 U.S.C. Sec. 1341 (mail fraud)
        18 U.S.C. Sec. 1343 (wire fraud)
        18 U.S.C. Sec. 1346 (honest services fraud)
         2 U.S.C. Sec. Sec. 437g(d), 441a-441h (Federal campaign 
        financing)

    The offense of fraudulent use of property described in Article 
VI(1)(d) (fraudulently using or concealing property derived from 
bribery) would be covered under 18 U.S.C. Sec. Sec. 1341, 1343, and 
1346, the same Federal fraud statutes that are used to cover 
corruption-related acts. The fraudulent concealment of bribe proceeds 
could be prosecuted under 18 U.S.C. Sec. Sec. 1956 and 1961(1), as a 
specified unlawful act for the purposes of money laundering.
    Participation in any of the above acts of corruption, as described 
in Article VI(1)(e), is punishable pursuant to 18 U.S.C. Sec. 2 (aiding 
and abetting) and 18 U.S.C. Sec. 3 (accessory after the fact). 
Conspiracy is punishable under 18 U.S.C. Sec. 371. As noted in the 
recommended understanding to Article VII, although there is no general 
``attempt'' statute under federal law, the attempt to bribe or engage 
in other significant acts of corruption will generally be subject to 
prosecution under one of the substantive offenses described above.

    Question 2. Article XIII(2) of the treaty provides that ``[e]ach of 
the offenses to which this article applies shall be deemed to be 
included as an extraditable offense in any extradition treaty in force 
between the States Parties.'' Article XIII(3) provides that the 
Convention may be used as the ``legal basis for extradition with 
respect to any offense to which this article applies.''
    --Will the United States require the existence of a bilateral 
treaty in order to extradite for offenses under this Convention?
    --Given that the United States does not have in effect an offense 
of illicit enrichment, and doing so would be inconsistent with the U.S. 
Constitution and fundamental principles of the U.S. legal system, will 
the United States regard offenses under Article IX as extraditable 
offenses under any treaty?

    Answer. Consistent with past U.S. practice with respect to 
multilateral law enforcement conventions, the United States will not 
rely on the Convention alone as the basis for extradition, but rather 
will extradite only to countries with which it has a bilateral 
extradition treaty in force.
    The crime of illicit enrichment, as it is defined in Article IX of 
the Convention, would not be an extraditable offense for the United 
States. United States extradition law and practice under our 
extradition treaties require ``dual criminality,'' i.e., the conduct 
for which extradition is sought must be considered criminal in both the 
Requesting and Requested State. The offense of ``illicit enrichment'' 
as it is defined in Article IX is not criminal under current U.S. law 
and therefore would not be extraditable under U.S. practice. However, 
if the underlying conduct that was the basis for the foreign charges 
was criminal under applicable U.S. criminal statutes (e.g., false 
statements, fraud, criminal tax violations, embezzlement) extradition 
would be possible, assuming all other conditions for extradition under 
the relevant bilateral treaty are satisfied. This is consistent with 
Article XIII(5) of the Convention, which provides that ``[e]xtradition 
shall be subject to the conditions provided for by the law of the 
Requested State or by applicable extradition treaties, including the 
grounds on which the Requested State may refuse extradition.''

    Senator Chafee. I am a big believer in when you have a 
hearing, you actually hear, and I welcome you. And I have no 
further questions. Thank you for your testimony.
    Mr. Larson. OK.
    Senator Chafee. And we will convene the next panel.
    Mr. Larson. Great. Thank you very much.
    Senator Chafee. Welcome.
    For the next panel, we have Ms. Nancy Zucker Boswell, the 
Honorable William T. Pryce and Ms. Lucinda Low.
    And we will start in the middle with the Honorable William 
T. Pryce. Welcome.

STATEMENT OF HON. WILLIAM T. PRYCE, VICE PRESIDENT, COUNCIL OF 
                  THE AMERICAS, WASHINGTON, DC

    Mr. Pryce. Thank you very much, Mr. Chairman. Good 
afternoon and I am Bill Pryce, the vice president of the 
Council of the Americas, in charge of our Washington 
operations. And I appreciate the opportunity to testify before 
you today.
    I would like permission to submit my testimony for the 
record. And I will try to make it much briefer here.
    First of all, I wanted to say that we certainly would 
associate ourselves with your very fine statement about the 
problems of corruption. And I would also associate our business 
organization with the words of Mr. Larson.
    I want to applaud your efforts, Mr. Chairman, and those of 
Chairman Helms, for scheduling this hearing on the issue of 
corruption in the Americas. This once taboo subject can have 
such far-reaching negative consequences that addressing it is 
critical to continuing economic and political and social 
progress in development in Latin America.
    Corruption and this Convention, of course, are also of 
concern to our member companies who suffer the consequences of 
missed opportunities and the uncertainty of investments.
    The practice of corruption in the conduct of international 
business operations represents an inefficient use of resources 
that leads to economic, political and social costs.
    Corruption is costly, inefficient; and it results in a poor 
quality product or service. It penalizes the best and most 
efficient producers and rewards the least efficient. The new 
interrelated economy of the 21st century warrants a new way of 
doing business.
    There are also damaging political costs to corruption. 
Corruption is secretive and behind the scenes. Therefore, the 
public does not know what is going on and is left out of the 
process. The result is a loss of accountability and a weakening 
of institutions from the inside.
    It is almost like a house that is getting rotted by 
termites and you do not see it, but all of sudden it falls 
down. The rule of law is weakened and democracy is undermined. 
Corruption, since it is hidden, is by its very nature 
undemocratic.
    Socially, corruption is destructive of morality and public 
decency. It undermines and weakens the strong social values 
that are necessary for a true and modern democratic system to 
function.
    It also reduces a sense of crime and guilt, because if 
corrupt acts can be done with impunity, then other types of 
theft and criminal activity will be more likely to occur.
    Mr. Chairman, it was not long ago that businessmen would 
brag privately about their illicit business practices. 
Corruption was part of the business of doing business. Now, 
there are conferences on corruption, and there is a growing 
recognition that the topic must be addressed.
    Although corrupt practices have certainly not been 
eliminated, there is a much greater sense that corruption is 
wrong and it needs to be minimized. In fact, although some 
industrialized countries continue to offer tax deductions for 
bribes, this practice is generally being phased out.
    The changing climate of opinion is largely due to U.S. 
leadership and to recent multilateral developments.
    As we all know, the passage of the Foreign Corrupt 
Practices Act in 1977 was a historic first step. And it was a 
courageous bold move that made it a crime for U.S. citizens and 
companies to bribe U.S. officials.
    This initiative in the beginning cost U.S. companies 
billions of dollars in lost business. And it was criticized in 
some circles. But it was a bold demonstration of leadership, 
and now most U.S. businessmen praise the legislation.
    And although other countries did not follow suit for many 
years, we confronted the fact that over 400 U.S. companies 
admitted making questionable illegal payments to foreign 
governments and politicians. We took the high road and gained 
increased respect for the U.S. throughout the world.
    We now have another opportunity following the OECD 
Convention, which I will not speak about, because I know it has 
already been covered--but we have another opportunity to 
continue the U.S. leadership in the fight against corruption.
    The Inter-American Convention Against Corruption is the 
next logical step in the effort to combat unfair business 
practices.
    Negotiated under the auspices of the Organization of 
American States, the Convention criminalizes the solicitation 
and acceptance of bribes, providing a comprehensive legal 
framework to combat public corruption in the hemisphere.
    It identifies acts of corruption and creates binding 
obligations for enforcement of anti-corruption measures.
    It is important both because it addresses the solicitation 
of bribes and because it broadens the reach of anti-corruption 
oversight by covering most of the countries of Latin America.
    An important instrument in efforts to combat corruption is 
the establishment of transparency measures. The transparency 
laws and regulations go hand-in-hand with anti-corruption 
efforts and can serve to stop corruption before it happens.
    They can shine a bright light into the dark and secret 
corners where corruption is practiced and bring it to an end. 
That which is not stopped then is attacked by the anti-
corruption laws that have teeth.
    The Inter-American Convention Against Corruption provides 
transparency measures in its provisions, requiring the 
registration of income, and assets and liabilities of persons 
who perform public functions in certain posts and making such 
registrations public.
    The Convention also has a mechanism to ensure that publicly 
held companies and other types of associations maintain books 
and records which accurately reflect the acquisition and 
disposition of assets and have sufficient internal accounting 
controls to enable their officers to detect corrupt acts. 
Again, these measures can work to preempt corruption and are 
part of the Convention.
    It is--in a colloquialism, it is a great help in keeping 
the honest people honest. It is a great, great help.
    Although, it was U.S. leadership that helped bring about 
the Inter-American Convention, we are now in a position where 
other countries are moving ahead on this agreement, while we 
have not yet given our full support.
    Mr. Chairman, each year, the Council of the Americas 
assists its member companies in addressing disputes over 
questionable contracts and business practices with governments 
and business leaders throughout the Americas.
    Corruption remains one of the most pressing problems for 
conducting international business. The costs of corruption for 
companies are very difficult to measure. And information on 
these missed opportunities is not quantifiable, but there is no 
doubt that corruption negatively impacts our companies.
    This Convention is not a panacea, but what we are talking 
about is adopting an international agreement that promotes 
accountability and transparency, and it will lead to more 
predictable rules for U.S. companies doing business overseas. 
In effect, it will help level the playing field for U.S. 
business.
    The corrosive influence of corruption hinders the full 
development of the countries of the hemisphere and limits 
opportunities for U.S. companies.
    The U.S. must do all it can to address this critical issue. 
The U.S. has been a leader in combating corruption and taking 
bold stands and enacting landmark legislation.
    And the Inter-American Convention is in U.S. interests, 
because it forbids what is already against U.S. law. U.S. 
corporations and investors are bound by the FCPA, and 
therefore, U.S. industry will lose a unilateral disadvantage 
that is otherwise applied to them, if this Convention is 
adopted. It will level the playing field, as I said, and remove 
our self-imposed unilateral sanction of ethical business 
practices.
    As of now, the Inter-American Convention has been ratified 
by 18 of the 26 countries that have signed the document. The 
United States has yet to ratify it.
    And to advance that Convention and to maintain our 
leadership role in the hemisphere, it is essential that we do 
ratify and do so soon.
    This Convention will not solve all the problems of 
corruption in the hemisphere, but it is an excellent beginning. 
And if we do not ratify, we will be sending a message that we 
believe the Convention lacks merit.
    Mr. Chairman, in conclusion, I would note that this 
Convention is a great start and gives the hemisphere a solid 
benchmark to work from. However, to fully realize the benefits 
of this Convention, we need to focus on implementation and the 
establishment of consistent rules.
    Multilateral followup is required to ensure that the 
damaging effects of corruption of and by public officials are 
eliminated. But the U.S. cannot lead in these efforts to 
implement the Convention if we ourselves have not ratified it.
    On behalf of the Council of the Americas, I strongly urge 
the committee to recommend that the Senate ratify this 
Convention as soon as possible.
    Thank you, sir. And I would be happy to answer any 
questions.
    Senator Chafee. Well, thank you, Mr. Pryce. It is exciting 
our hemisphere is leading the way in this area.
    [The prepared statement of Mr. Pryce follows:]

           Prepared Statement of Ambassador William T. Pryce

    Good afternoon, Mr. Chairman and Members of the Committee. I am 
Bill Pryce, Vice President of the Council of the Americas in charge of 
our Washington operations, and I appreciate the opportunity to testify 
before you today.
    The Council is the leading business organization dedicated to 
promoting hemispheric economic integration, free trade and investment, 
open markets, and the rule of law throughout the Western Hemisphere. 
The Council's membership includes major U.S. multinational companies 
with interests in Latin America. Members represent a variety of 
sectors: manufacturing, energy, transportation, technology, 
communications, banking, financial services, and natural resources, 
among others.
    I want to applaud your efforts Mr. Chairman and those of Chairman 
Helms for scheduling this hearing on the issue of corruption in the 
Americas. This once taboo subject can have such far-reaching negative 
consequences that addressing it is critical to continuing economic and 
political progress and development in Latin America. Corruption and 
this convention are of course also of concern to our member companies 
who suffer the consequences of missed contract opportunities and the 
uncertainty of investments.
    The practice of corruption in the conduct of international business 
operations represents an inefficient use of resources that leads to 
economic, political and social costs. From an economic standpoint 
corruption is costly, inefficient and results in a poor quality product 
or service. It penalizes the best and most efficient producers and 
rewards the least efficient. The new interrelated economy of the 21st 
century warrants a new way of doing business.
    There are also damaging political costs to corruption. Corruption 
is secretive and behind the scenes; therefore, the public does not know 
what is going on and is left out of the process. The result is a loss 
of accountability and a weakening of institutions from the inside. The 
rule of law is weakened and democracy is undermined. Corruption, since 
it is hidden, is by its very nature undemocratic.
    Socially, corruption is destructive of morality and public decency. 
It undermines and weakens strong social values that are necessary for a 
true modern democratic system to function. It also reduces a sense of 
crime and guilt because if corrupt acts can be done with impunity, 
other types of theft and criminal activity will be more likely to 
occur.
    These costs of corruption add up and must be addressed. Old habits 
are hard to break but there is a changing environment concerning 
corruption. We need to embrace this change in attitude and lead the 
effort to reduce corruption and its debilitating costs.
    Mr. Chairman, it wasn't long ago that businessmen would brag 
privately about their illicit business practices. Corruption was part 
of the business of doing business. Now, there are conferences on 
corruption and there is a growing recognition that the topic must be 
addressed. Although corrupt practices have certainly not been 
eliminated, there is a much greater sense that corruption is wrong and 
needs to be minimized. In fact, although some industrialized countries 
continue to offer tax deductions for bribes, this practice is generally 
being phased out.
    The changing climate of opinion is largely due to U.S. leadership 
and to recent multilateral developments. The passage of the Foreign 
Corrupt Practices Act (FCPA) in 1977 was a historic first step, where 
our country confronted corruption. This courageous move made it a crime 
for U.S. citizens and companies to bribe officials of another country. 
This initiative cost U.S. businesses billions in lost business and was 
criticized in some circles, but it was a bold demonstration of 
leadership and now most U.S. businessmen praise the legislation. 
Although other countries did not follow suit for many years, we 
confronted the fact that over 400 U.S. companies admitted making 
questionable or illegal payments to foreign government officials and 
politicians. We took the high road and gained increased respect for the 
U.S. throughout the world.
    In 1988, the Congress called upon the Executive Branch to negotiate 
with our trading partners at the Organization for Economic Cooperation 
and Development (OECD) an international agreement that would require 
our trading partners to enact laws similar to our FCPA. Due to 
committed U.S. leadership and years of hard work, the OECD Convention 
to Combat Bribery of Foreign Public Officials was signed and ratified 
and came into force on February 15, 1999. This convention works to 
eliminate corruption in transactions involving companies and public-
sector bodies. Under the convention it is illegal for any citizen of an 
OECD member country to bribe or attempt to bribe a foreign government 
official. This Convention would not have been adopted without U.S. 
leadership.
    We now have another opportunity to continue U.S. leadership in the 
fight against corruption. The Inter-American Convention Against 
Corruption is the next logical step in the effort to combat unfair 
business practices. Negotiated under the auspices of the Organization 
of American States, the Convention criminalizes the solicitation and 
acceptance of bribes, providing a comprehensive legal framework to 
combat public corruption in the hemisphere. The Convention identifies 
acts of corruption and creates binding obligations and enforcement of 
anti-corruption measures. The Inter-American Convention is important 
both because it addresses the solicitation of bribes and because it 
broadens the reach of anti-corruption oversight by covering the 
countries of Latin America.
    An important instrument in efforts to combat corruption is the 
establishment of transparency measures. Transparency laws and 
regulations go hand in hand with anti-corruption efforts and can serve 
to stop corruption before it happens. They can shine a bright light 
into the dark and secret corners where the corruption is practiced and 
bring it to an end. That which is not stopped is then attacked by the 
anti-corruption laws that have teeth. The Inter-American Convention 
Against Corruption provides transparency measures in its provisions 
requiring the registration of income, assets and liabilities of persons 
who perform public functions in certain posts and making such 
registrations public. The Convention also has a mechanism to ensure 
that publicly held companies and other types of associations maintain 
books and records which accurately reflect the acquisition and 
disposition of assets, and have sufficient internal accounting controls 
to enable their officers to detect corrupt acts. Again, these measures 
can work to preempt corruption and are part of the Convention.
    Although it was U.S. leadership that helped bring about the Inter-
American Convention, we are now in a position where other countries are 
moving ahead on this agreement while we have not yet offered our full 
support.
    Mr. Chairman, each year, the Council assists its member companies 
in addressing disputes over questionable contracts and business 
practices with governments and business leaders throughout the 
Americas. Corruption remains one of the most pressing problems for 
conducting international business. The costs of corruption for 
companies are very difficult to measure. Information on missed 
opportunities is not quantifiable. But there is no doubt that 
corruption negatively impacts companies. This Convention is not a 
panacea, but what we are talking about is adopting an international 
agreement that promotes accountability and transparency and will lead 
to more predictable rules for U.S. companies doing business abroad. It 
will help level the playing field for U.S. business.
    There is no question that corruption has a harmful effect on 
developing countries. Corruption discourages foreign investment and 
disrupts normal business practices. It undermines respect for 
governmental institutions and fosters organized crime. Examples of the 
tremendous costs of corruption on governments and citizens reveal how 
expensive this problem is. In a speech last year, Vice President Gore 
spoke of the case of Guatemala where third-party procurement monitoring 
has helped reduce corruption in the Ministry of Health. This has gained 
savings of 43 percent for the Ministry and lowered the price of its 
medicine by an average of 20 percent.
    The corrosive influence of corruption hinders the full development 
of the countries of the hemisphere and limits opportunities for U.S. 
companies. The United States must do all it can to address this 
critical issue. The U.S. has been a leader in combating corruption, 
taking bold stands and enacting landmark legislation. The Inter-
American Convention is in U.S. interests because it forbids what is 
already against U.S. law; U.S. corporations and investors are bound by 
the FCPA. Therefore, U.S. industry would lose a unilateral disadvantage 
that is otherwise applied to them. The Convention would level the 
playing field for U.S. business interests and remove our self-imposed, 
unilateral sanction of ethical business practices.
    As of now, the Inter-American Convention Against Corruption has 
been ratified by 18 of the 26 countries that have signed the document. 
The United States has yet to ratify it. To advance the convention and 
to maintain our leadership role in the hemisphere it is absolutely 
essential that we do so and soon. The convention will not solve all the 
problems of corruption in the hemisphere but it is an excellent 
beginning, If we don't ratify we would be sending a message that we 
believe the convention lacks merit.
    Mr. Chairman, in conclusion I would note that this convention is a 
great start and gives the hemisphere a solid benchmark to work from. 
However, to fully realize the benefits of this convention we need to 
focus on implementation and the establishment of consistent rules. 
Multilateral follow-up is required to ensure that the damaging effects 
of corruption of and by public officials are eliminated. But the U.S. 
cannot effectively lead in efforts to implement this convention if we 
ourselves have not ratified it. On behalf of the Council of the 
Americas I strongly urge the committee to recommend that the Senate 
ratify the convention as soon as possible.

    Senator Chafee. I would now like to hear from Ms. Nancy 
Zucker Boswell. Welcome, Nancy.

     STATEMENT OF NANCY ZUCKER BOSWELL, MANAGING DIRECTOR, 
         TRANSPARENCY INTERNATIONAL USA, WASHINGTON, DC

    Ms. Boswell. Thank you, Mr. Chairman. I am honored to be 
here today to testify on behalf of Transparency International.
    We are a non-governmental organization dedicated to 
combating international corruption. We have grass roots 
national chapters in over 70 countries worldwide; 20 of them 
here in the Americas, including in Argentina, Brazil, Canada, 
Chile, Colombia, Peru, Mexico, and Venezuela.
    The U.S. chapter, of which I am the managing director, is 
supported by a broad coalition of more than 30 American multi-
nationals and leading lawyers, accountants, judges, academics 
and other distinguished individuals.
    Our chapters in Latin America have found that corruption 
undermines development, distorts income distribution and 
corrodes public trust in democratic institutions. As has been 
pointed out, it also adds to the cost of business.
    Latin America is a particularly important growth market, 
but corruption has undermined its potential for growth. We 
believe the Inter-American Convention Against Corruption can 
make a major contribution to addressing these problems.
    As you noted in your opening remarks, Mr. Chairman, the 
Convention will directly benefit U.S. interests. Ratification 
is broadly supported by major business organizations. Many of 
them have signed a letter of support. We would like to ask, Mr. 
Chairman, that this letter be submitted into the record of this 
hearing.
    [The letter referred to follows Ms. Boswell's prepared 
statement.]
    Let me suggest three primary reasons for Senate action. 
First, there is now a window of opportunity for reform in the 
Americas. Second, the Convention can make a major contribution 
to the broader anti-corruption efforts in this hemisphere. And 
third, U.S. leadership is essential to securing these 
objectives.
    A window of opportunity for reform finally opened for the 
first time since Congress took the historic step to end 
widespread bibery in international business.
    As my colleague Bill Pryce noted, when Congress enacted the 
Foreign Corrupt Practices Act, it expected others to follow. 
But for almost two decades, no one did. Recently, however, 
there has been a profound change in attitude; and the issue is 
now high on the international agenda.
    This is in part due to the mounting evidence, both to the 
private sector, civil society, the government and development 
assistance communities that corruption has severe economic, 
social and political costs.
    The interests of these various sectors in reducing these 
costs has fueled the growth of the anti-corruption movement and 
opened an opportunity for reform.
    By 1994, massive bribery scandals had led to the removal of 
several Latin Presidents from office, and there was a new 
willingness to confront the issue. There was also a strong 
public demand for change that brought new leadership to the 
fore.
    They agreed with the U.S. initiative to place the issue on 
the 1994 Summit of the Americas. The leaders committed then to 
negotiate a hemispheric agreement. And within 15 months, the 
Inter-American Convention was concluded. Its rapid conclusion 
is striking testimony, both to U.S. leadership and to the 
regional consensus, for action.
    The Convention is also one part of a broader anti-
corruption reform program. If we are truly to have an impact, 
that program must also include economic and legal reforms, such 
as deregulation and privatization, creating a more independent 
judicial system, private sector action, greater freedom of the 
press and more meaningful public participation.
    The Convention thus is an important addition to this 
broader reform program. Under Secretary Larson has described 
some of the provisions, and my colleague from the American Bar 
Association will provide greater detail.
    I would like to simply underscore that in addition to being 
one element of a broad reform program, the Convention makes a 
very valuable addition to the start made by the OECD Anti-
Bribery Convention.
    That Convention will have a marked impact limiting the 
actions of major U.S. competitors, because they are virtually 
all based in OECD member countries.
    But it addresses only the supply side; in other words, the 
companies that pay the bribes. As we indicated when we 
testified before this committee in 1998, the demand side also 
has to be addressed, and the Inter-American Convention does 
that. It focuses primarily on the public officials.
    It is far broader in scope than the OECD, reflecting the 
complex nature of corruption and the comprehensive approach 
that is needed to confront it. Together, these two landmark 
Conventions provide a pincer attack on corruption.
    This brings me to the third reason for U.S. ratification. 
And that is: U.S. leadership is essential to securing the full 
potential of these two Conventions. They will only be realized 
if there is effective implementation and enforcement.
    At this committee's hearings on the OECD Convention, 
Chairman Helms expressed his skepticism about the will of the 
OECD signatories to fully enforce their commitments. In 
ratifying the Convention, the Senate recognized the importance 
of a followup process.
    Since the OECD Convention entered into force in 1999, a 
vigorous process has made encouraging progress moving 
signatories to fulfill their commitments. Many countries have 
already been found to be in compliance. And those that are not 
have been told to address their deficiencies.
    Peer pressure is moving them to take the remedial steps 
necessary and warning others not to submit inadequate measures.
    We believe that a peer review process will be even more 
important for the Inter-American Convention because its 
implementation will be complex, time-consuming and costly. 
Countries will need to enact considerable new legislation and 
regulations in order to come into compliance. And experience 
demonstrates that peer review will ensure that high standards 
are met.
    However, the Inter-American Convention does not provide for 
such a process, and the current program involves only country 
workshops and technical assistance. We have worked to encourage 
parties to move forward to create a peer process and are 
finding some resistance to creating it.
    A key stumbling block is that the U.S. has not yet ratified 
the Convention. And it is difficult for us to press for strong 
followup until it has.
    Senate ratification is clearly a prerequisite not only to 
creating the process but to enabling the U.S. to fully 
participate in it. We are concerned that unless the U.S. 
participates, regional progress may stall, and our ability to 
stimulate action in other countries may be handicapped.
    On the other hand, ratification will demonstrate the 
importance the U.S. places on the Convention as a key element 
of its anti-corruption strategy. It will send a strong message 
of support to reformers and remove any pretext others might 
have for not moving forward.
    As others have noted, this is a non-controversial agreement 
that embodies U.S. values. It enjoys bipartisan support and 
requires no implementing legislation. Therefore, we think the 
Convention should be ratified unanimously.
    We would respectfully suggest that the committee maintain 
its important oversight function by requiring that progress 
reports on implementation be provided.
    In 1998, Chairman Helms placed such stringent reporting 
requirements on the resolution of ratification for the OECD 
Convention. That resolution calls for an assessment of the 
effectiveness, transparency and viability of the OECD 
monitoring process, including its inclusion of input from the 
private sector and non-governmental organizations. Transparency 
International fully supported the chairman's action then and 
does so again today.
    In conclusion, we believe that this Convention can make a 
real difference in reducing corruption and promoting the rule 
of law across the hemisphere.
    Reform will significantly improve market opportunities, 
promote equitable development and make democratic institutions 
more effective. For over 20 years, this country has taken the 
lead in promoting anti-corruption reform here at home and 
around the world.
    Ratification of this Convention will send a strong signal 
that we continue to place the utmost importance on good 
governance and we expect others to do the same.
    We appreciate the committee's holding this hearing and your 
consideration of this important instrument.
    Thank you.
    Senator Chafee. Thank you, and also for the good work 
Transparency International does on this subject.
    Ms. Boswell. Thank you.
    [The prepared statement of Ms. Boswell follows:]

               Prepared Statement of Nancy Zucker Boswell

    Mr. Chairman and members of the committee on Foreign Relations, I 
am very pleased to be invited to testify before you today on behalf of 
Transparency International. TI is a non-governmental organization that 
is dedicated to combating international corruption. Since its founding 
in 1993, it has grown rapidly and now has grass roots national chapters 
in over 70 countries. Twenty of them are in the Americas, including in 
Argentina, Brazil, Canada, Chile, Colombia, Peru, Mexico, Venezuela and 
the U.S.
    The U.S. chapter, of which I am the Managing Director, is supported 
by a broad coalition, including more than thirty major American 
companies, lawyers, accountants, scholars, jurists, development 
experts, and other distinguished individuals.
    In Latin America, as in many other parts of the world where 
corruption is systemic and institutions are weak, corruption has 
undermined development, distorted income distribution, and corroded 
trust in democratic institutions, with profound consequences both 
within and beyond national borders. It has also added to the cost of 
business. Latin America is an important growth market, but corruption 
has undermined the potential for growth.
    The Inter-American Convention Against Corruption can make a major 
contribution to addressing these problems. It will strengthen the rule 
of law and transparency in Latin America. This will create a more 
hospitable environment for business, promote development, and build 
more accountable and democratic institutions.
    The Convention has already been ratified by 18 nations, including 
most every major Latin American country. In order to have a practical 
impact, the Convention must be implemented and effectively enforced. 
U.S. leadership is vital to achieving this objective, and prompt U.S. 
ratification is needed or this effort will falter. The Convention 
clearly embodies our values and ratification requires no implementing 
action on our part. Senate action will directly benefit U.S. interests 
and is broadly supported by leading business organizations.\1\ They 
have signed a letter in support of Senate ratification of the 
Convention, and we would like to ask the Chairman to submit it into the 
record of this hearing.
---------------------------------------------------------------------------
    \1\ These include the Association of American Chambers of Commerce 
of Latin America, the Brazil-U.S. Business Council, the Business 
Roundtable, the Council of the Americas, , the Mexico-U.S. Business 
Committee, the National Association of Manufacturers, the National 
Foreign Trade Council, PhRMA, the U.S. Chamber of Commerce, and the 
U.S. Council for International Business.
---------------------------------------------------------------------------
    I would like to highlight in my testimony three primary reasons for 
prompt Senate action:

   first, there is now a window of opportunity for reform in 
        the Americas;
   second, the Convention can make a major contribution to 
        broader anti-corruption efforts in the hemisphere;
   third, U.S. leadership is essential to securing its 
        objectives.
   i. there is now a window of opportunity for reform in the americas
    In 1977, when Congress enacted the Foreign Corrupt Practices 
Act,\2\ it took the first historic step on the path to end widespread 
bribery in international business. It was expected that others would 
also criminalize bribery of foreign officials.
---------------------------------------------------------------------------
    \2\ Pub. L. No. 95-213, 91 Stat. 1494 (1977).
---------------------------------------------------------------------------
    For almost two decades, no one followed. But, in recent years, 
there has been a profound change in attitude. Thanks in part to the 
work of Transparency International, the issue is now high on the 
international agenda. Mounting evidence has demonstrated that 
corruption has severe economic, social and political costs with adverse 
effects on the private sector, civil society, the government and the 
development assistance community. This coincidence of interests has 
fueled the growth of the anti-corruption movement and created a window 
of opportunity for reform.
    By 1994, following massive bribery scandals and the removal of 
several Latin presidents from office, there was a new willingness to 
confront the issue. There was strong public demand for change and new 
leadership elected to take action.
    The U.S. found support among the leaders for placing the issue of 
corruption on the agenda of the Miami Summit of the Americas. The 
Summit Declaration stated that ``effective democracy requires a 
comprehensive attack on corruption'' and that ``corruption in both 
public and private sectors weakens democracy and undermines the 
legitimacy of governments and institutions.'' \3\
---------------------------------------------------------------------------
    \3\ Summit of the Americas, Plan of Action, No. 5, Miami, Fla., 
Dec. 11, 1994.
---------------------------------------------------------------------------
    The leaders committed to negotiate a hemispheric agreement and to 
undertake the many necessary economic, legal and regulatory reforms 
that are part of an effective anti-corruption program.
    Fifteen months after the Summit, the Inter-American Convention 
Against Corruption was concluded and signed by 21 nations.\4\ The 
Convention's rapid conclusion is striking testimony both to U.S. 
leadership and to the regional consensus for action.
---------------------------------------------------------------------------
    \4\ Reprinted at 35 I.L.M. 724 (1996).
---------------------------------------------------------------------------
    Since its conclusion, it has been ratified by 18 countries, 
including Argentina, Chile, Colombia, Costa Rica, Panama, and 
Venezuela. Recent elections in many of these countries have brought to 
power a new set of leaders committed to intensify reform efforts.
    ii. the convention contributes to broader reform efforts in the 
                               hemisphere
    The Convention is an important part of the broader anti-corruption 
agenda that is needed to address corruption. That agenda was agreed to 
at the 1994 Summit and includes deregulation and privatization, 
simplification of administrative procedures and creating more 
independent judicial systems. It also includes private sector action; 
stricter auditing and accounting standards; and greater freedom of the 
press, wider publication of information and more meaningful public 
participation.
    The criminal and preventive measures of the Convention are 
important steps in this broad approach. The principal provisions of the 
Convention call on parties to:

   Criminalize solicitation or acceptance of bribes and other 
        corrupt acts by public officials;
   Strengthen cooperation in criminal investigations and 
        preclude the use of bank secrecy laws or political grounds as 
        the bases for refusing cooperation;
   Promote ``preventive'' measures, including disclosure of 
        assets and conflict of interest standards for public officials, 
        and strong procurement rules.

    The Convention is far broader in scope than the OECD Convention on 
Bribery of Foreign Public Officials,\5\ reflecting the complex nature 
of corruption and the comprehensive approach that is needed to confront 
it. The OECD Convention, which this body ratified unanimously on July 
31, 1999, requires the 34 signatory nations to enact legislation 
similar to the FCPA, prohibiting companies from bribing foreign public 
officials to obtain or retain business or other improper advantage. The 
OECD Convention will have a marked impact on the actions of major U.S. 
competitors because they are virtually all based in OECD member 
countries.
---------------------------------------------------------------------------
    \5\ Convention on Combating Bribery of Foreign Public Officials in 
International Business Transactions, reprinted at 37 I.L.M. (1998).
---------------------------------------------------------------------------
    The OECD Convention addresses only the ``supply'' side, e.g., the 
companies that pay bribes. As we indicated when TI testified before 
this committee on June 9, 1998, the ``demand'' side also has to be 
addressed and that is what the Inter-American Convention does. It 
focuses primarily on the public officials who demand or take bribes. 
Together, these two landmark conventions provide a pincer attack on 
corruption.
      iii. u.s. leadership is essential to securing its objectives
    However, their full potential will only be realized if there is 
effective implementation and enforcement. U.S. leadership is critical 
to accomplishing this objective.
    At this committee's hearings on the OECD Convention, Chairman Helms 
expressed his skepticism about the will of the OECD signatories to 
implement and fully enforce their commitments. In ratifying that 
convention, the Senate recognized the importance of a monitoring 
process.
    Since the OECD Convention entered into force on February 15, 1999, 
a vigorous peer review monitoring process has made encouraging progress 
moving signatories to fulfill their commitments. It has reviewed the 
implementing legislation of most of the 21 countries that have ratified 
to date. TI National Chapters have played an active part in the 
monitoring process and have submitted their analysis of implementing 
legislation.
    Many countries have been found to be in compliance. Those that are 
not have been told to address the deficiencies. Peer pressure is moving 
them to take remedial steps and warning others not to submit inadequate 
measures.
    A peer review process will be even more important for the Inter-
American Convention because its implementation will be more complex and 
time-consuming. Considerable new legislation and regulations will be 
required to bring countries into compliance. Technical expertise and 
best practices will be necessary to ensure high standards are met. Many 
government agencies will have to participate in the process and there 
will be competing demands for resources.
    Currently, the Inter-American Convention does not provide for a 
peer review monitoring process, and the OAS follow-up program involves 
only country workshops and technical assistance.
    Transparency International has been encouraging the OAS to 
establish such a process, and there has been some good progress in 
building consensus over the past six months. Last November, we brought 
together experts from across the hemisphere to consider how best to 
make progress. The experts concluded that a peer review process will be 
essential to secure effective implementation, especially in countries 
where laws are on the books but not always effectively enforced.
    The OAS is currently working to strengthen the follow-up process. 
In February, the Finance Ministers of the Western Hemisphere issued a 
statement calling for the establishment of a multilateral mutual review 
mechanism. In March, the OAS Secretary General opened a Special Session 
on the Convention by noting an emerging consensus for such mechanisms.
    Nonetheless, there is still strong resistance to creating such a 
mechanism. A key stumbling block is that the U.S. has not yet ratified 
the Convention. It will be difficult for the U.S. to press for a strong 
follow-up process until it has ratified.
    Prompt Senate ratification is clearly a prerequisite step to 
creating the process and to enabling the U.S. to fully participate in 
it. Unless the U.S. participates, progress may stall. Our ability to 
stimulate action in other countries will be handicapped if the U.S. is 
not at the table.
    Ratification will demonstrate the importance we place on the 
Convention as a key element of an effective anti-corruption strategy. 
It will send a strong message of support for reformers and remove any 
pretext others might use for not moving forward.
    This is a non-controversial agreement that embodies U.S. values. It 
enjoys the broad support of all sectors, including the leading business 
organizations. To our knowledge, no organization opposes it.
    The Administration has indicated that no implementing legislation 
is needed because existing U.S. laws and practices are already in 
compliance with the Convention. As with the OECD Convention, we think 
that the Inter-American Convention should be ratified unanimously.
    Chairman Helms placed stringent reporting requirements on the 
resolution of ratification for the OECD Convention. TI recommended that 
this committee ask the State Department to provide periodic progress 
reports on the OECD Convention. Today, we respectfully suggest again 
that the Committee continue to maintain its important oversight 
function by asking, as a condition for ratification, that it call for 
progress reports on the Inter-American Convention.
                               conclusion
    In conclusion, the Inter-American Convention can make a real 
difference in reducing corruption and promoting the rule of law and 
greater accountability across the hemisphere. These reforms will 
significantly raise standards, improving market opportunities, 
promoting equitable development, and making democratic institutions 
more accountable. For over twenty years, the U.S. has taken the lead in 
promoting anticorruption reform at home and around the world. 
Ratification of this Convention will send a strong signal that the U.S. 
continues to places the utmost importance on good governance and 
expects others to do the same.
    We would like to express our appreciation for the Committees's 
scheduling this hearing and for its consideration of this important 
instrument.

                                 ______
                                 

                                                     April 7, 2000.
The Honorable Jesse Helms
Chairman,
Senate Committee on Foreign Relations,
450 Dirksen Senate Office Building,
Washington, DC.

    Dear Mr. Chairman: We are writing to express our support for 
ratification this year of the Inter-American Convention Against 
Corruption that was transmitted to the Senate on April 1, 1998.
    The Inter-American Convention is the next important step in the 
fight against bribery and corruption in this hemisphere. Your prompt 
action helped criminalize the ``supply side'' of bribery with the 
entry-into-force of the OECD Anti-Bribery Convention on February 15, 
1999. Since then, the OECD Working Group has been making good progress 
in ensuring that our trading partners enact laws comparable to the 
FCPA. But, the OECD Convention only applies to those who pay the bribe.
    There is much to do on the ``demand side'' to secure laws and 
practices that provide a hospitable environment for U.S. business and 
trade, foster economic development, and promote democracy and 
accountable institutions. The Inter-American Convention is a strong 
beginning, committing our major trading partners in the hemisphere to 
criminalize a wide range of corrupt acts, step up enforcement, enhance 
legal and judicial cooperation, and strengthen preventive measures, 
such as codes of conduct for public officials, disclosure of assets, 
and whistle blower protection.
    Realizing the Convention's full potential will be a long and 
difficult process and will require U.S. political leadership. 
Ratification is absolutely imperative to demonstrate that the United 
States takes its obligations seriously and expects the same of others.
    The Administration has indicated that no implementing legislation 
is needed. For other countries, implementation will require substantial 
reform. To accelerate this process, the OAS has initiated a follow-up 
program, providing technical assistance and model laws, and has 
circulated a questionnaire that will reveal the extent of reform 
needed.
    When the Convention was negotiated, the parties did not consider a 
formal monitoring program. However, in light of the positive experience 
of the OECD and the Financial Action Task Force, the OAS Working Group 
is currently considering creating a peer review monitoring mechanism. 
U.S. ratification is essential if we are to promote this outcome and to 
participate in the important follow-on process.
    We look forward to the opportunity to address any issues of concern 
and appreciate your continued support for meaningful anti-corruption 
reform across the hemisphere.
            Sincerely,

                    Maston N. Cunningham, President, AACCLA
                    Robert C. Petterson, Chairman, U.S. Section, 
                            Brazil-U.S. Business Council
                    Thomas E. McNamara, President, Council of the 
                            Americas
                    James R. Jones, Chairman, U.S. Council, Mexico-U.S. 
                            Business Committee
                    Jerry Jasinowski, President, National Association 
                            of Manufacturers
                    Frank D. Kittredge, President, National Foreign 
                            Trade Council
                    Alan F. Holmer, President and CEO, Pharmaceutical 
                            Research and Manufacturers of America
                    Fritz Heimann, Chairman, Transparency 
                            International-USA
                    L. Craig Johnstone, Senior Vice President, 
                            International, Economic and National 
                            Security Affairs, U.S. Chamber of Commerce
                    Thomas M.T. Niles, President, U.S. Council for 
                            International Business

    Senator Chafee. I would just add that even with the 
ratification of the treaty, it is still going to be difficult 
back in my home State of Rhode Island. We still struggle with 
corruption.
    We are not above it. There is scandal going on in our 
capital city of Providence, bribery of elected officials and 
officials that work for the government.
    Ms. Boswell. You make a--that is an excellent point. That 
is indeed, I think, all the more reason why our partners down 
in the Americas need this Convention, to help them make the 
kind of progress we would all like to see them make.
    Senator Chafee. Yes, sometimes it is ingrained so deeply in 
the culture, it takes awhile, but you have to start somewhere. 
And we are doing that here hopefully.
    Ms. Boswell. Exactly. Thank you so much.
    Senator Chafee. Thank you.
    Ms. Lucinda Low, welcome.

   STATEMENT OF LUCINDA A. LOW, REPRESENTATIVE TO THE INTER-
AMERICAN BAR ASSOCIATION, AMERICAN BAR ASSOCIATION, WASHINGTON, 
                               DC

    Ms. Low. Thank you very much. I would like to thank the 
committee first for conducting this hearing and for the 
opportunity to testify.
    I am testifying today on behalf of the American Bar 
Association. I currently serve as the American Bar 
Association's representative to the Inter-American Bar 
Association.
    In 1997, when I had the privilege of chairing the ABA 
Section of International Law and Practice, the House of 
Delegates of the American Bar Association adopted a policy in 
support of ratification by the United States of the Inter-
American Convention Against Corruption with minimal 
reservations, understandings, and declarations. The House of 
Delegates' policy also called for prompt, full and consistent 
implementation of the Convention.
    With your permission, Mr. Chairman, I would like to submit 
our full statement for the record and summarize only some key 
points here today in my oral remarks.
    I would like to focus on the Convention, what it is, how it 
fits in the context both of U.S. measures to combat corruption, 
and the international architecture that is growing up in recent 
years around this issue.
    I would then like to address several reasons why we think 
now is an appropriate time for the United States to ratify the 
Convention, and then comment briefly on the issue of 
reservations, understandings and declarations.
    As you have noted, Mr. Chairman, the Inter-American 
Convention was, in fact, the first multilateral instrument to 
combat corruption agreed to. It came out of the Summit of the 
Americas, and its focus is on the issue of public sector 
corruption, and the problems that public sector corruption 
creates for economic development, political stability and 
hemispheric integration.
    The Inter-American Convention takes, what I like to call, a 
holistic view of the problem of corruption. It addresses 
corruption both from the supply side and from the demand side, 
as other speakers have indicated.
    It requires criminalization of a number of acts of 
corruption, including the crime of trans-national bribery, 
which we criminalized in our Foreign Corrupt Practices Act.
    It requires countries to consider a series of, what are 
called, preventive measures to promote the rule of law and to 
reform the states and state processes.
    And finally, it contains provisions for international 
cooperation in the investigation and enforcement of offenses.
    As such, it is a broader instrument than the OECD Anti-
Bribery Convention, which targets specifically the issue of the 
transnational bribery of foreign public officials and 
international cooperation in the investigation and enforcement 
of that specific offense.
    In a way, you can see the Inter-American Convention as the 
outline or the blueprint for the legal and institutional 
infrastructure that countries need to put into place to combat 
what Nancy has rightly indicated is the complex problem of 
public corruption.
    I like to see it as a kind of ``to do'' list for countries, 
steps they need to take to deal with this problem of 
corruption.
    Now, in the case of the United States, we have basically 
created this infrastructure over a period of years. We have 
enacted all of the elements on the ``to do'' list, not always 
precisely in the same form as the Convention calls for. But if 
you study this instrument, as I have, you will see that they 
are all there.
    And that means that the United States does not need to 
enact any implementing legislation upon ratification of the 
Convention, although there are several understandings that may 
be appropriate.
    Why then, if the United States has already enacted 
everything it needs to enact does the United States need to be 
part of this regime?
    There are several reasons why U.S. participation is, in our 
view, essential; and previous speakers have touched on these. 
But let me just highlight three that I think are particularly 
salient.
    First, it is important and useful for the United States to 
be part of the international cooperation provisions of this 
Convention, which Under Secretary Larson alluded to. This will 
help us enforce our own laws and will support other countries' 
efforts to make corruption not a crime of impunity, but a crime 
that can be enforced.
    And I would note that the Inter-American Convention's 
provisions in this regard are very similar to the provisions of 
the OECD Antibribery Convention, which the U.S. has supported.
    I would also note that if you look at recent enforcement of 
the U.S. Foreign Corrupt Practices Act, you will see that a 
number of recent cases come out of the Latin American region. 
So this is not an academic issue.
    The second reason why I think the United States needs to be 
part of this regime is to help shape the implementation and 
enforcement of the Convention, to help develop implementation 
priorities.
    For the most part, the Convention is what we would call a 
non-self-executing treaty. It requires the enactment of 
domestic laws. It requires the enforcement of those laws.
    And so the manner in which countries implement this 
Convention, the priorities they attach to issues of preventive 
measures, what should come first becomes a very, very important 
issue. And the United States should be at the table for that 
process.
    Third, but not least in this list of three of the reasons 
for U.S. ratification, is for the United States to show its 
long-term commitment to the problem of combating corruption in 
the Americas. The Convention, as has already been noted, was 
done with significant support from the United States.
    Certain provisions of the Convention such as the 
transnational bribery provision were done with the direct 
encouragement of the United States. And so it is especially 
important for the United States to follow through with 
ratification of the Convention.
    Now is arguably a critical time for the United States to 
act. The Convention has now been in force for 3 years. As you, 
yourself, noted, Mr. Chairman, it has widespread adherence in 
the region. And that is a very encouraging sign. That it could 
attract 26 signatories and 18 parties in such a short period of 
time is very good progress indeed.
    And there are many key countries in the hemisphere list. 
But there are still gaps in ratification. And I note that the 
momentum may be beginning to slow down. We had eight countries 
ratify in 1997; five in 1998; four in 1999; and only one to 
date in this year 2000. And when the issue comes to 
implementation, the gaps may be even larger.
    U.S. ratification, in our view, would help reinvigorate 
this process and would allow the United States, as I have 
indicated, to push for full implementation, consistent 
implementation and active enforcement, as we believe in the 
American Bar Association would be appropriate and desirable.
    So for these reasons, the American Bar Association supports 
ratification of this Convention by the United States this year.
    The last issue I would like to comment on is a more 
technical issue dealing with reservations, understandings and 
declarations. As noted earlier, the ABA believes in general 
that the RUD's to this Convention should be kept to a minimum.
    Reservations can undercut the effectiveness of a 
Convention. And we note that to date among the 18 countries 
that have ratified, the number of reservations has been quite 
minimal, only one that we are aware of.
    For the United States, we believe no reservations to the 
Convention are warranted.
    There are several understandings that have been proposed by 
the administration. These, in general, reflect differences 
between the U.S. approach to the problem of criminalization of 
acts of corruption and the Latin American approach, or 
differences between common law systems and civil law system, as 
well as the fact that we have a Federal system of government.
    The only real issue in our view with respect to the 
proposed understandings is what to do on the subject of illicit 
enrichment. Illicit enrichment is one of the Convention's 
provisions that calls for a criminalization when a public 
official has assets that cannot be explained in relation to the 
lawfully earned income of that official during his term in 
office.
    As this offense is written in the Inter-American 
Convention, to implement it by the United States would create a 
constitutional conflict, because it would violate the 
presumption of innocence set forth in our Constitution.
    However, the Inter-American Convention allows for an opt-
out right with respect to this offense of illicit enrichment, 
which means that the United States can ratify the Convention if 
it wishes without taking a reservation on this point.
    If the U.S. does exercise this opt-out right--and we 
understand that is what has been proposed by the 
administration--there is some risk that this opting out could 
encourage other countries to opt out, not so much of the 
illicit enrichment provision which is already a feature of the 
legal regimes of many Latin America countries, but possibly opt 
out of the transnational bribery criminalization obligation, 
which is structurally analogous to illicit enrichment.
    We would view this as an undesirable result and, therefore, 
suggest that the committee may want to consider another 
alternative, which would be rather than opting out, to declare 
that existing laws in the United States effectively implement 
this provision.
    And we are speaking here specifically of the combination of 
disclosure laws for senior Federal Government officials coupled 
with criminal tax enforcement provisions and specifically the 
net worth method of proof for criminal tax evasion. If the 
United States were to choose this approach, it should do so 
with the understanding that it would not be shifting the 
constitutional burden of proof.
    On that technical note, then, let me close my remarks by 
reiterating my thanks to the committee for its leadership in 
taking this issue up at this time.
    Let me also express the hope that the committee will move 
expeditiously to recommend advise and consent to this 
Convention so it can go to the floor. This will be an excellent 
year for the United States to ratify the Inter-American 
Convention and would confirm continued U.S. leadership in this 
critical area.
    I am available to answer any questions you may have. And 
let me also introduce my colleague from the American Bar 
Association, Stuart Demming, who heads the ABA's task force on 
corrupt practices, who is also available for any questions.
    Thank you very much.
    Senator Chafee. Thank you.
    [The prepared statement of Ms. Low follows:]

                  Prepared Statement of Lucinda A. Low

    Mr. Chairman and Members of the Committee:
    Thank you for the opportunity to testify before the Committee 
concerning U.S. ratification of the Inter-American Convention Against 
Corruption.
    My testimony today is submitted on behalf of the American Bar 
Association. I am a former chair of the ABA Section of International 
Law and Practice, and currently serve on the International Section's 
Council and as the ABA's representative to the Inter-American Bar 
Association. With me is Stuart Deming, an officer of the Section of 
International Law and Practice and current co-Chair of an ABA Task 
Force on Standards on Corrupt Practices.
    In 1997, during my chairmanship, the International Law Section of 
the ABA developed a report and recommendation on the Inter-American 
Convention Against Corruption. This report and recommendation, a copy 
of which is attached, calls on the United States and other OAS Member 
States to ratify the Inter-American Convention Against Corruption 
promptly, encourages ratification to be subject to minimal reservations 
and understandings, and urges prompt, full and consistent 
implementation by States Parties. Our recommendation was approved by 
the ABA House of Delegates in 1997 and thus constitutes official ABA 
policy. It is complemented by a 1998 ABA policy supporting U.S. 
ratification of the OECD Antibribery Convention, and an earlier policy 
urging the development of international standards to combat public 
corruption in international business transactions.
    In my testimony today, I would like to focus principally on how the 
Inter-American Convention Against Corruption, as a regional instrument 
for the Western Hemisphere, fits into the emerging international 
standards against public corruption, and, within that context, why it 
is in the U.S. interest to participate in the Convention's regime. I 
would also like to address certain technical issues regarding 
ratification and implementation, and to answer any questions the 
Committee members may have about the Convention, or how it compares to 
U.S. law or other international instruments.
    At the outset, I would like to commend the Committee for its 
support of U.S. ratification of the OECD Antibribery Convention in 
1998. The OECD Convention is a highly-targeted instrument that 
addresses one principal issue--transnational bribery of foreign public 
officials--from the ``supply,'' or bribe payers, side. Its focus is on 
disciplining business actors from major capital exporting countries and 
on establishing cooperation mechanisms for facilitating investigations 
and enforcing its provisions. Prompt U.S. ratification of the OECD 
Convention was a crucial step in putting its prohibitions into effect 
for a critical mass of countries in a record time frame. The OECD 
Convention furthered an important U.S. policy goal of establishing, in 
the countries that compete most strongly with the U.S. for major 
international projects, standards regarding the bribery of foreign 
public officials that parallel U.S. standards, as reflected in our 
Foreign Corrupt Practices Act (FCPA). The OECD Convention thus leveled 
the playing field for U.S. international business and set an 
international standard with which U.S. business could readily comply.
    Now that the OECD Convention has entered into force and is being 
implemented, it is an appropriate time to turn to ratification of the 
Inter-American Convention. For different reasons, U.S. ratification of 
this instrument is also strongly in the interests of the United States. 
And unlike the OECD Convention, which required amendments to the FCPA, 
the Inter-American Convention requires no changes to U.S. law.
    Why is it in the U.S. interest to ratify the Inter-American 
Convention? To answer this question requires an understanding of how 
the Inter-American Convention differs from its OECD counterpart. The 
Inter-American Convention was borne of the first Summit of the Americas 
in Miami in 1994. It was recognized by the Summit participants that 
hemispheric economic integration, made possible by the shift in the 
region towards democratic governments and the establishment of free-
market economies, required progress in the rule of law, transparency in 
administrative processes, and modernization of the state. Corruption--
especially public corruption--undermines the development of democratic 
institutions and effective market mechanisms. It leads to misallocation 
of resources, and threatens the rule of law and political stability, 
adversely affecting the ability of countries to attract capital and 
foster economic development.
    In many Latin American countries, public corruption is a ``demand 
side'' problem as much as a supply side problem. There is a need to 
strengthen civil service and the judiciary, reform laws and 
administrative processes (e.g., public procurement) to make them more 
modern, transparent and efficient, and to develop new systems of checks 
and balances, and watchdog institutions. Although some countries in the 
region are capital exporters, most are not. Thus, most of the OAS 
countries are not likely in the near to medium term to become parties 
to the OECD Antibribery Convention. More importantly, the OECD 
Convention approach, which focuses narrowly on the issue of 
transnational bribery and closely-related offenses, is not currently an 
approach--as the OAS Member States themselves have recognized--that 
adequately addresses the needs of the Latin American region. Rather, a 
broader-based effort, focusing on both the demand and the supply sides 
of public corruption, and on preventive measures as well as 
criminalization, is the more appropriate approach for the region as a 
whole at this time.
    The Inter-American Convention reflects this broader, systemic 
approach to the issue of public corruption. In addition to requiring 
criminalization of a range of offenses (referred to as ``acts of 
corruption'')--domestic bribery, transnational bribery, illicit 
enrichment, among others--and providing for cooperation among signatory 
countries in investigations and enforcement, it requires countries to 
undertake reforms on the ``demand'' (or official government) side, in 
tax and customs administration, procurement systems, civil service 
reform, and the like--the so-called preventive measures. In addition, 
like the OECD Convention, it requires parties to cooperate in the 
investigation and prosecution of offenses, including in the areas of 
mutual legal assistance, extradition, and asset tracing and seizure. 
The Inter-American Convention can thus be seen as representing a kind 
of ``to do'' list for countries to combat public corruption as well as 
providing tools for effective enforcement of the relevant laws. In our 
view, it is precisely this kind of approach that makes sense for the 
region at this time.
    Unlike some Inter-American treaties, the OAS Anticorruption 
Convention has garnered significant support from the countries of the 
region in a relatively short time. It has been signed by 26 OAS Member 
States, and went into effect in 1997. Currently 18 countries are 
parties, including two countries--Argentina and Mexico--that are also 
parties to the OECD Convention. Despite this strong start, however, 
significant gaps remain in ratification and implementation.
    Like the OECD Antibribery Convention, the Inter-American Corruption 
Convention's success depends on widespread ratification, implementation 
and enforcement by the relevant countries. And because the Inter-
American Convention is significantly broader in scope than the OECD 
Convention, implementation and enforcement poses even a greater 
challenge for States Parties than they do in the OECD Convention 
context. Priorities must be established, especially in the area of 
preventive measures, and resources must be allocated. Under the best of 
circumstances, full implementation cannot be expected to happen 
overnight, but will occur over a period of years. In fact, the history 
to date is that although important steps have been taken by a number of 
countries, overall implementation has been spotty.
    The United States, as the country most responsible for putting the 
issue of public corruption onto the hemispheric agenda and, among 
capital exporting countries, among the countries with the most at stake 
in the region in terms of promoting the rule of law and democratic 
institutions and developing market economies, needs to be a full 
participant in this implementation process. The United States does not 
need any implementing legislation of its own to participate in the 
Convention's regime; we have over the years enacted in some form all of 
the various items on the Convention's ``to do'' list. The United States 
does have an interest, however, in ensuring that the Convention is 
fully implemented and enforced by other countries of the region. in 
helping countries set priorities among the range of items on the ``to 
do'' list, in helping devise the best approach to a particular issue, 
and in keeping countries' feet to the fire if implementation and 
enforcement lag.
    Without having ratified the Convention, however, it is unlikely the 
United States will have the ability to influence the implementation and 
enforcement process as fully as it would like. For example, the OAS is 
exploring the establishment of a monitoring mechanism for the 
Convention that will be open only to countries that have ratified the 
Convention. Even without such a mechanism, however, the views of non-
ratifying countries on implementation and enforcement issues are 
unlikely to be accorded the same deference as ratifying countries. 
Moreover, for the United States, as one of the proponents of the 
Convention, to refuse to ratify the Inter-American Convention now would 
be taken as a sign by the other OAS Member States that the United 
States is not seriously committed to reform in this hemisphere.
    For these reasons, U.S. ratification of the Convention makes sense. 
Ratification sends a strong message to countries of the region of a 
sustained commitment of the United States to this issue. It positions 
the United States to play a continued leadership role within the 
hemisphere on this issue. It supports our national goals of promoting 
democratization and economic development, and is an important 
complement to hemispheric integration. It also promotes the goal of 
universal ratification in the region.
    Let me now turn to the questions of reservations, understandings 
and declarations (RUDs). As noted at the outset, the ABA's 1997 policy 
on the Inter-American Convention recommended that any ratifications be 
subject to minimal RUDs. Reservations, if excessive, can undercut the 
effectiveness of a treaty. The Inter-American Convention, Article XXIV, 
permits reservations to specific articles provided the reservations do 
not conflict with the purpose of the treaty. To date, the reservations 
taken by ratifying countries have been minimal.
    As we understand it, the Administration has proposed no 
reservations to the Convention, but has proposed several 
understandings, to Articles VII, VIII and IX. The proposed 
understanding with respect to Article VII would make clear that the 
United States does not intend to enact new laws to implement Article 
VII, since existing laws effectively reflect the ``acts of corruption'' 
required to be criminalized in that Article. The proposed understanding 
with respect to Article VIII similarly would clarify that the United 
States considers the Foreign Corrupt Practices Act to constitute 
adequate implementation of that Article's requirement to criminalize 
transnational bribery. We concur with both those understandings. We 
also note with respect to Article VIII that the Inter-American 
Juridical Committee of the OAS has clarified that facilitating payments 
may be excepted from a prohibition on transnational bribery consistent 
with the Convention.
    The final proposed understanding relates to Article IX, illicit 
enrichment. The Convention permits countries to ``opt out'' of the 
criminalization obligations of Articles VIII and IX both, without the 
need to take a reservation, if criminalization would conflict with 
their constitutions or fundamental legal principles. As the State 
Department report accompanying the transmittal of the Convention to the 
Senate points out, Article IX of the Convention raises such a conflict 
in light of the constitutional presumption of innocence in Article IV 
of the U.S. Constitution. The Administration therefore recommends that 
the United States ``opt out'' of the criminalization obligation under 
Article IX, but declare its willingness to provide assistance to other 
countries in the investigation and enforcement of illicit enrichment 
cases consistent with U.S. domestic law, as required by the Convention.
    The ABA policy does not explicitly address how the illicit 
enrichment issue should be handled. The accompanying report notes, 
however, that although the constitutional concern with our enacting a 
penal offense as specified in Article IX would be substantial, U.S. law 
currently contains measures that collectively function as the 
equivalent of such a provision for senior federal government officials. 
Specifically, when the financial disclosure obligations for senior 
federal officials under the Ethics in Government Act are coupled with 
the so-called ``net worth method of proof'' for criminal tax evasion 
under 26 U.S.C. Sec. 7201, the result is the effective criminalization 
of illicit enrichment of these officials, enforced through the tax 
code. A similar result follows in other contexts when state and local 
disclosure regimes are taken into consideration.
    Accordingly, one alternative to the U.S. exercising the ``opt out'' 
right built into the Convention (the exercise of which may prompt other 
countries to opt out of Article VIII or IX as well) might be for the 
United States to declare that the foregoing measures represent 
effective implementation of this obligation and that no further 
implementing legislation is contemplated. Were the United States to do 
so, care would need to be taken to ensure that such a step is not 
construed as shifting the burden of proof. For this reason, if the 
United States does not opt out of Article IX, its ratification should 
be subject to the understanding that the burden of proof under U.S. law 
would remain unchanged.
    Again, thank you for the opportunity to testify and for your 
consideration of the Convention at this timely juncture. I would be 
happy to answer any questions the Committee may have.

                                 ______
                                 

                        AMERICAN BAR ASSOCIATION

            Policy Adopted at the ABA's 1997 Annual Meeting

    Resolved, That the American Bar Association supports the prompt 
ratification and implementation of the Inter-American Convention 
Against Corruption (Inter-American Convention) by the United States, by 
other members of the Organization of American States (OAS), and by 
other countries that are eligible to accede to the Inter-American 
Convention.
    Further Resolved, That the American Bar Association urges:

          (1) that such ratification be subject to minimal reservations 
        and under- standings; and
          (2) that such implementation be full, effective and 
        consistent.

    Further Resolved, That, to assure consistency and effectiveness, 
the American Bar Association supports the criminalization of the 
bribery of foreign officials through the Inter-American Convention and 
through other instruments and fora in a manner consistent with the 
agreed upon common elements set forth in the Annex to the Organization 
for Economic Cooperation and Development's (OECD) Revised 
Recommendation of the Council on Combating Bribery in International 
Business Transactions and with the basic principles of the Foreign 
Corrupt Practices Act of the United States.
    Further Resolved, That the American Bar Association supports 
efforts by the OECD and its member countries to promptly carry out, 
fully implement, and actively enforce the OECD's Revised Recommendation 
of the Council on Combating Bribery in International Business 
Transactions in a manner that effectively deters foreign corrupt 
practices in the conduct of international business.

    Senator Chafee. And as Nancy said earlier, this should not 
be controversial and hopefully we can move expeditiously 
forward. And before we adjourn, I would just like to ask if you 
would like to add anything extemporaneous on the subject.
    Mr. Pryce.
    Mr. Pryce. I would just say that there is real progress, 
but that one of the biggest impediments to new investment in 
Latin America among our countries is the lack of respect for 
the rule of the law, and not combating corruption undermines 
that respect. And it is one part of a greater whole that is 
very important to have it ratified for that reason also.
    Senator Chafee. Yes. We talk about a global economy. Well, 
we should start with a hemispheric economy, especially 
considering the broad range of first, second, and Third World 
economies in this hemisphere. And so this is an exciting move 
forward and hopefully we can ratify soon.
    Any other comments before we adjourn?
    Lucinda.
    Ms. Low. Just to endorse the comment about corruption being 
the flip side of the rule of law. I think that, in part, 
explains why the Bar has been so committed to this issue.
    Senator Chafee. Thank you.
    And the hearing record will be left open for 3 days to give 
members an opportunity, who were not able to be here this 
afternoon, to further ask questions for the record.
    So thank you once again for taking your valuable time and 
sharing your thoughts with us here.
    The meeting is adjourned.
    [Whereupon, at 2:45 p.m., the hearing was adjourned.]
    [The following letter was received subsequent to the 
hearing for inclusion in the record.]

                                 The Carter Center,
                      Latin American and Caribbean Program,
                                          Atlanta, GA, May 4, 2000.

The Honorable Jesse Helms
Chairman,
Senate Committee on Foreign Relations,
450 Dirksen Senate Office Building,
Washington, DC.

    To Senator Jesse Helms:

    I write to commend you for holding a hearing on the Inter-American 
Convention Against Corruption and to urge the Senate to ratify this 
convention. Since the Congress approved the Foreign Corrupt Practices 
Act during my administration, the U.S. has been a leader in the field 
of ending bribery and corruption. It is essential that we continue to 
demonstrate our commitment and leadership to encourage others to 
confront this vice that harms investment, development, and democracy.
    The OECD approval of its Convention Against the Bribery of Foreign 
Officials in 1997 and the subsequent Senate ratification of this 
convention was a crucial step forward in ending the supply side of 
foreign bribery. The OAS Convention provides the other side of the 
coin--focusing on the demand side within countries and the necessary 
implementation of legal and policy reforms to criminalize and to 
prevent corruption, as well as mutual assistance needed to combat 
international corruption.
    We have been working with governments in this hemisphere and with 
Transparency International and national NGOs in Latin America to 
encourage ratification and implementation of the OAS Convention. In May 
1999, we held a major conference at The Carter Center in Atlanta on 
Transparency for Growth, focusing on measures to combat and prevent 
corruption in our hemisphere. A number of current and former leaders 
signed our final declaration (attached) with recommendations that 
included not only the urgency to ratify and implement the OAS 
Convention, but also the need to establish a monitoring mechanism to 
help ensure that the new rules are actually enforced. I then wrote to 
all the leaders of this hemisphere, including President Clinton, to 
inform them of our findings and to urge ratification and implementation 
of the Convention.
    We would be in a much stronger position to work for change among 
our Latin American neighbors and to encourage the OAS to adopt 
monitoring mechanisms if the U.S. first ratifies the Convention. The 
United States would not have to implement any new legislation to come 
into compliance with the treaty. Continued United States leadership in 
this area is vital, and l hope that you will expedite the Convention's 
coming to the Senate floor and give it your full support.
            Sincerely,
                                              Jimmy Carter.

    [Attachment]

                            FINAL STATEMENT

``Transparency for Growth'' Conference, Council of Presidents and Prime 
           Ministers of the Americas, Wednesday, May 5, 1999

    Corruption is one of the principal threats to democracy, growth and 
equity in the hemisphere. It distorts public services, deters 
investment, discriminates against the poor, and destroys public 
confidence in democratic governments. This was the starting point of 
two days of discussion at The Carter Center by hemispheric leaders, 
members of the private sector, journalists, and NGOs. Representing the 
Council of Presidents and Prime Ministers, a group of 32 former and 
current heads of government from Latin America and the Caribbean, the 
leaders in this conference concluded that progress toward transparency 
can be achieved where civil society and governments work together to 
overcome opposition from vested interests. Indeed, important progress 
has been made already.
    Participants from two dozen countries discussed strategies, 
including implementation of international conventions against 
corruption, the role of civil society including media and the private 
sector in promoting transparency, and measures to increase 
accountability in government-business transactions. The group 
encountered a diversity of opinion, driven by the very different social 
and economic contexts in the region, and recognized that solutions will 
necessarily need to be tailored to each country. Furthermore, some 
sources of corruption are international, including multinational 
corporations and narco-trafficking, and small countries may be 
particularly vulnerable. Solutions must therefore reach across borders. 
We are also aware that corruption is systemic, affecting all aspects of 
society, and consequently there will be no quick fix. The solutions, 
too, will need to be systemic, engaging society broadly and tackling 
the problem from several directions at once.
    Rich discussions yielded creative ideas about practical first 
steps. Here are some of our conclusions:
    First, we recognize that although corruption is an ethical issue, 
it is also a policy problem, meaning it can be remedied by setting and 
enforcing rules that encourage people to do the right thing. It is a 
crime of calculation. Where the benefits outweigh the penalties for 
illicit behavior, systems can provide incentives for corruption. A 
shorthand description is Corruption = Monopoly + Discretion - 
Accountability. The task is to remove the opportunities provided by 
monopolies and discretionary decision-making power, and increase the 
costs of corruption through detection and enforcement of a nation's 
laws.
    The good news is that there are solutions, and improvements can 
begin immediately. But it takes civic courage and commitment from 
leaders, international lenders and other organizations, coalitions of 
businesses and NGOs in civil society, to illuminate previously dark 
corners of government transactions. The antidote to corruption is 
information, committed leadership, collective action and clear rules.
    Second, it is time to move from denunciations to diagnosis. Hard 
data is necessary to combat the problem, and it is now possible to get 
it. New diagnostic tools, including analyses and interviews of 
businesses, citizens and public officials, are now available from the 
World Bank and others to provide a map of the nature and location of 
corruption in public and private organizations. This information that 
can be used to devise national action plans for every segment of the 
society. We encourage governments to carry out these diagnoses and make 
them public, and then to challenge every branch of the government and 
civil society to create action plans to resolve their specific 
problems.
    Third, as democracy has begun to consolidate more broadly in the 
hemisphere, one dilemma it has introduced is how to finance campaigns 
and political parties without leaving elected leaders obligated to 
special interest groups, narco-traffickers, or tainted money, or 
without spending vast quantities of money that is desperately needed 
for development. The interdependence of the public and private sector 
is highlighted by businesses dependent on public contracts for their 
livelihood, and political parties dependent on private contributions. 
Opening up those transactions through specific disclosure mechanisms 
will begin to level the playing field. We recommend:

          a) Enforcing existing laws and strengthening regulation, 
        oversight institutions and audit capacity.
          b) Regulation and disclosure requirements for income and 
        expenditures of parties and candidates.
          c) Reducing campaign expenses by limiting the campaign 
        period, and fostering free media time on TV and radio under 
        equal conditions.
          d) Financial disclosure requirements for public officials, 
        elected or appointed, to avoid conflict of interest and illicit 
        enrichment, with periodic monitoring by a special office.
          e) National laws prohibiting bribery, which might be 
        developed via a model statute process.
          f) Business codes of conducts and compliance programs as a 
        prerequisite to bid on World Bank and IDB-financed projects, or 
        to appear on national registers of approved contractors.
          g) Streamlining of public procurement laws and broad 
        deregulation.

    Fourth, transparency is the first step in combating corruption, but 
it requires a media and civil society capable of accessing information 
and then using it to demand accountability from their governments. We 
recommend:

          a) Laws be enacted that require governments to open up and 
        provide documentation about their budgeting and spending 
        procedures so that citizens and journalists can have the 
        information they need to understand and evaluate what their 
        governments are doing.
          b) Training NGOs to use new technologies, including the 
        internet, and to monitor privatization and public contracting.
          c) Publication of public contract awards, dates of delivery 
        of goods, schedules of payments, and the bidding process in 
        privatizations.
          d) Quarterly report cards on the service delivery quality in 
        certain sectors, such as health, as well as on efforts to 
        reduce corruption via the national action plans.
          e) Databases about civil servant credentials in order to 
        prevent nepotism and patronage.
          f) Public hearings to provide opportunities for citizens to 
        give input on priorities for public works projects and bid 
        requirements within budgetary limitations.
          g) Formation of regional informational networks and databases 
        so that citizens can learn about access to information and 
        share successful strategies to combat corruption.

    Fifth, we wish to emphasize the importance of a free press in 
promoting transparency and democracy. The status of press freedom in 
the hemisphere is sometimes discouraging. The Inter-American Press 
Association recently found that fourteen countries have press laws that 
place regulations on freedom of the press. Seventeen countries have so-
called insult laws that can result in imprisonment for journalists 
convicted of criticizing government officials. Eight countries have 
laws requiring licensing of journalists or mandatory membership in 
associations. In the last decade, 203 journalists have been killed in 
the Americas, a human rights situation so deplorable that the region's 
presidents and prime ministers asked the OAS last year to establish a 
special office for preventing such incidents, which the OAS has done. 
Only six countries in the hemisphere have laws dealing with the right 
of access to information that are considered effective.
    To support professionalism in the media, and avoid unsupported 
denunciations that make headlines and sell papers but undercut the 
media's credibility, we recommend:

          a) Development of laws that will secure access to information 
        by making official documents open to public inspection without 
        undue delay or burdensome paperwork.
          b) Expansion of programs to train the press to conduct solid 
        investigations based on evidence.
          c) Strengthening of the judicial system's capacity to 
        investigate and prosecute corruption where the evidence 
        indicates it is merited, such that no one is tried in the press 
        and innocent citizens have an oppomtunity to defend their good 
        names in a just court.

    Sixth, we are convinced that recent treaties, including the OECD 
Convention Against Bribery and the Inter-American Convention Against 
Corruption are important steps in bringing a common approach to solving 
both the demand and supply side of bribery. But they will only be 
effective when fully implemented by signatory countries. We urge member 
states of the OAS at their June 1999 General Assembly to call for:

          a) Prompt ratification by all OAS member states as per their 
        commitments in the Plan of Action of the Santiago Summit of the 
        Americas;
          b) Creation of a peer review mechanism that will promote 
        consistent and effective implementation of criminal laws and 
        preventive measures, and which will share best practices and 
        model laws;
          c) Provision by the IDB and World Bank of all necessary 
        technical assistance for capacity building in order to enable 
        and support full implementation of the Inter-American 
        Convention.

    The corruption issue is one of concern to all nations, and should 
receive attention at the highest levels. Here we want to commend U.S. 
Vice President Al Gore for his global forum last February. In closing, 
we want to emphasize the need for ethical values not only in government 
but in businesses, journalism, banking and indeed every walk of life. 
Perhaps most important are the messages we convey to our children 
through education in schools and churches, as it is they who will pay 
the price if we fail to act now to stem this ill. We are committed to 
carrying our transparency work further, and we hope you will join us in 
this important endeavor.

                    Jamil Mahuad Witt, President of Ecuador
                    Said Musa, Prime Minister of Belize
                    Arthur Robinson, President of Trinidad and Tobago
                    Nicolas Ardito-Barletta, former president of Panama
                    Rodrigo Carazo, former president of Costa Rica
                    Jimmy Carter, former president of the United States
                    Osvaldo Hurtado, former president of Ecuador
                    Alfonso Lopez Michelsen, former president of 
                            Colombia
                    Gonzalo Sanchez de Lozada, former president of 
                            Bolivia
                    Juan Carlos Wasmosy, former president of Paraguay
                    Ambassador Richard Bernal, representative of 
                            Jamaican Prime Minister P.J. Patterson
                    Daniel Romero, representative of former Venezuelan 
                            president Carlos Andres Perez
                    Jose Miguel Villalobos, representative of Costa 
                            Rican president Miguel Angel Rodriguez

                                  
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