[Senate Executive Report 109-18]
[From the U.S. Government Publishing Office]



109th Congress                                              Exec. Rept.
                                 SENATE
 2d Session                                                      109-18

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



 
    UNITED NATIONS CONVENTION AGAINST CORRUPTION (TREATY DOC. 109-6)

                                _______
                                

                August 30, 2006.--Ordered to be printed

  Filed under authority of the order of the Senate of August 3, 2006.

                                _______
                                

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

                              R E P O R T

                    [To accompany Treaty Doc. 109-6]

    The Committee on Foreign Relations, to which was referred 
the United Nations Convention Against Corruption (Treaty Doc. 
109-6), signed at Merida, Mexico on December 9, 2003, having 
considered the same, reports favorably thereon and recommends 
that the Senate give its advice and consent to ratification 
thereof with two reservations, and three declarations, as set 
forth in this report and the accompanying resolution of advice 
and consent to ratification.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Background.......................................................2
III. Summary of Key Provisions........................................2
 IV. Implementing Legislation.........................................6
  V. Committee Action.................................................6
 VI. Committee Recommendation and Comments............................6
VII. Resolution of Advice and Consent to Ratification.................9
VIII.Appendix: Hearing--United Nations Convention Against Corruption.11


                               I. Purpose

    The United Nations Convention Against Corruption (the 
``Corruption Convention'' or ``Convention'') is designed to 
prevent and suppress corruption, promote integrity and 
accountability, and facilitate international cooperation and 
technical assistance to prevent and combat corruption and to 
recover assets. It is the first multilateral treaty to target 
corruption on a global basis and is also the most comprehensive 
international legally-binding anti-corruption instrument in 
terms of the scope of activities covered.

                             II. Background

    The Corruption Convention was adopted by the United Nations 
General Assembly on October 31, 2003, and was signed by the 
United States on December 9, 2003, at Merida, Mexico. The 
Convention, which entered into force on December 15, 2005, now 
has 60 parties. The first Conference of States Parties for the 
Convention will take place in Amman, Jordan in December 2006.
    The Convention builds on the anti-corruption measures 
contained in Articles 8 and 9 of the U.N. Convention Against 
Transnational Organized Crime, which was approved by the Senate 
in 2005. The Convention also expands on the provisions and 
geographical breadth of the Organization for Economic Co-
operation and Development Convention on Combating Bribery of 
Foreign Public Officials in International Business 
Transactions, and the Organization of American States Inter-
American Convention Against Corruption, to which the Senate 
gave advice and consent in 1998 and 2000, respectively. As 
compared to these existing treaties, the Convention adopts more 
expansive provisions to prevent and criminalize corruption and 
affords procedures for governments to recover assets that were 
illicitly obtained by corrupt officials.
    The Convention creates a regime for mutual legal assistance 
that is equivalent to those embodied in other law enforcement 
treaties to which the United States is a party. It would level 
the playing field for U.S. companies, which are already 
prohibited by U.S. law from bribing foreign officials. The 
Convention would improve the tools available to U.S. law 
enforcement by enhancing its ability to obtain assistance 
internationally in its efforts to investigate and prosecute 
corruption and to recover illicitly acquired assets from 
corrupt government officials. Further, it would support broader 
U.S. efforts within the United Nations, the G-8, and elsewhere 
to promote transparency, accountability and anti-corruption 
measures.

                     III. Summary of Key Provisions

    A detailed article-by-article discussion of the Convention 
may be found in the Letter of Submittal from the Secretary of 
State to the President, which is reprinted in full in Treaty 
Document 109-6. A summary of key provisions of the Convention 
is set forth below.
    The Convention is divided into eight chapters containing 
(1) general provisions; (2) preventive measures; (3) 
criminalization and law enforcement; (4) international co-
operation; (5) asset recovery; (6) technical assistance and 
information exchange; (7) mechanisms for implementation; and 
(8) final provisions. Some measures are mandatory, while others 
are discretionary. With the reservations recommended by the 
committee, no new legislation will be required for the United 
States to comply with the Convention upon ratification.
    General Provisions. Chapter I sets forth the Convention's 
objectives, as described above, and provides definitions of 
terms used throughout the Convention. The definition of 
``public official'' may vary according to the domestic law of a 
State Party, and need not necessarily include state or local 
officials, but the definition of ``foreign public official'' 
remains uniform, and includes ``any person holding a 
legislative, administrative or judicial office of a foreign 
country . . . [or] exercising a public function for a foreign 
country, including for a public agency or public enterprise.''
    Preventive Measures. Chapter II contains measures Parties 
are to take to minimize the potential for corruption. Many of 
the articles in this chapter specify that the obligations are 
undertaken ``in accordance with the fundamental principles'' of 
each Party's domestic legal system. Parties are required to 
develop and implement or maintain effective anti-corruption 
policies, to collaborate with other States Parties and relevant 
international organizations to promote and develop measures to 
prevent corruption (article 5), and to create bodies to carry 
out these functions that are free from undue influence and have 
the independence and resources necessary to function 
effectively (article 6). Other articles address, among other 
subjects, the hiring and conduct of civil servants (articles 7 
and 8), public procurement (article 9), and accounting 
standards in the private sector (article 12), as well as anti-
money laundering regulatory measures (article 14). Parties are 
specifically required to disallow the tax deductibility of 
bribes of public officials, which Parties must criminalize 
under articles 15 and 16(a) (article 12).
    Criminal Prohibitions. Chapter III obligates Parties to 
outlaw certain forms of corruption-related misconduct: bribery 
of national public officials, bribery of foreign public 
officials or officials of public international organizations, 
embezzlement by public officials, and certain offenses related 
to money laundering and obstruction of justice (Articles 15, 
16, 17, 23, and 25, respectively). U.S. federal law already 
criminalizes these offenses. As explained in Section VI below, 
at the suggestion of the executive branch the committee has 
recommended that the United States reserve against these 
obligations with regard to the limited scope of conduct that is 
not within U.S. federal jurisdiction and would not be 
adequately covered by existing U.S. state laws.
    Other articles in Chapter III call on Parties to consider 
establishing further offenses under their domestic law. U.S. 
law already criminalizes several of these other offenses, such 
as private sector embezzlement. There is no obligation to adopt 
these offenses, however, and the executive branch has affirmed 
that it does not intend to seek any changes to existing U.S. 
law in this respect.
    Article 31 obligates Parties to adopt measures, to the 
greatest extent possible within their legal systems, to enable 
confiscation of proceeds of (or property of equivalent value to 
the proceeds), or property used in or destined for use in, 
offenses established in accordance with the Convention.
    Article 35 requires Parties to take measures, in accordance 
with the principles of their domestic law, to ensure that 
persons who have suffered damage as a result of an act of 
corruption have the right to initiate legal proceedings against 
those responsible to obtain compensation. The United States, 
through an existing body of laws, already provides legal 
avenues for claimants who have been wronged by those who commit 
corrupt acts in certain transactions. The Convention does not 
create a new cause of action in U.S. courts. As the Secretary 
of State explained in transmitting the Convention to the 
President:

          [T]he travaux preparatoires clarify that Article 35 
        was intended to address only legal proceedings against 
        those who commit acts of corruption, rather than those 
        who may be associated with others who commit acts of 
        corruption. The article intentionally provides the 
        States Parties significant flexibility in its 
        implementation. The article does not restrict the right 
        of a State Party to decide the precise circumstances 
        under which it will make its courts available, nor does 
        it require or endorse a particular choice made by a 
        State Party in determining how it will meet its 
        obligations under this article.
          Article 35 would not have any direct effect on the 
        potential exposure of U.S. companies or others in 
        private litigation in the United States. The current 
        laws and practices of the United States are in 
        compliance with Article 35, and the United States does 
        not construe Article 35 to require broadening or 
        enhancing current U.S. law and practice in any way. 
        U.S. jurisprudence permits persons who have suffered 
        from criminal acts such as bribery to seek damages from 
        the offenders under various theories. These remedies 
        are sufficient to comply with this article. It should 
        be noted that nothing in this article should be 
        interpreted as requiring the United States to create a 
        private right of action under the Foreign Corrupt 
        Practices Act or as expanding the scope of the Alien 
        Tort Statute to permit foreigners to litigate 
        corruption claims in U.S. courts.\1\
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    \1\ Treaty Doc. 109-6, at 10.

    The committee agrees with this interpretation of Article 
35. As explained in Section VI below, at the suggestion of the 
executive branch the committee has recommended that a 
declaration be included in the resolution of advice and consent 
clarifying that the provisions of the Convention (with the 
exception of articles 44 and 46) are non-self-executing, and 
that none of the provisions of the Convention creates a private 
right of action.
    International Cooperation. Chapter IV of the Convention 
addresses international cooperation, including extradition and 
mutual legal assistance among the parties. Article 44 of the 
Convention adds the crimes established in accordance with the 
Convention to those offenses for which extradition may be 
sought under extradition treaties in force among parties to the 
Convention, and permits, but does not require, Parties to use 
the Convention as a basis for extradition in the absence of 
such treaties. For the United States, the Convention will not 
provide an independent legal basis for extradition, which will 
continue to be based on U.S. domestic law and applicable 
bilateral treaties.\2\ In accordance with paragraph 6 of this 
Article, the executive branch will provide notification of this 
fact to the depositary at the time of ratification. The 
Convention will, however, effectively expand the scope of 
offenses covered under certain existing U.S. bilateral 
extradition treaties (those that specifically list the offenses 
for which extradition may be granted).
---------------------------------------------------------------------------
    \2\ Id. at 12.
---------------------------------------------------------------------------
    Article 46 addresses mutual legal assistance between the 
Parties. Paragraph 1 requires Parties to provide each other the 
widest measure of mutual legal assistance in investigations, 
prosecutions and judicial proceedings in relation to the 
offenses covered by the Convention. The article provides that 
existing mutual legal assistance treaties (``MLATs'') between 
the Parties will not be affected, and will continue to be 
applied by the Parties where they exist. Where no such 
agreement exists, the Parties will make and receive requests 
for mutual legal assistance under the provisions of Article 46, 
paragraphs 9 through 29. The procedures in paragraphs 9-29 of 
this article are analogous to those contained in U.S. bilateral 
and multilateral treaties approved by the Senate in recent 
years, but contain somewhat broader grounds for refusal of 
assistance.
    Paragraph 9(b) of article 46 gives Parties the ability to 
decline to provide assistance with regard to a request for 
coercive measures, such as search and seizure, if the offense 
being investigated does not also constitute a crime under its 
laws (``dual criminality''). A Party must provide assistance 
with regard to requests for non-coercive measures in the 
absence of dual criminality where the assistance requested is 
``consistent with the basic concepts of its legal system,'' but 
can refuse such requests of a de minimis nature or if the 
cooperation requested is available under other provisions of 
the Convention. In addition, paragraph 21 of this article 
provides four specific grounds upon which any request for 
assistance may be refused: (a) if the request does not conform 
to the requirements of article 46; (b) if the requested Party 
considers that compliance is likely to prejudice its 
sovereignty, security, ordre public, or other essential 
interests; (c) if the Party would be prohibited by its own law 
from taking the action requested with regard to any similar 
offense under its own jurisdiction; or (d) if granting the 
request would be contrary to the legal system of the requested 
Party relating to mutual legal assistance. In this regard, the 
executive branch has testified that these grounds for refusal 
authorize the United States to refuse assistance where it 
considers that a request is politically motivated or that 
execution of a request would impinge on U.S. Constitutional 
protections, such as the freedom of speech.
    Asset Recovery. Chapter V of the Convention provides 
procedures for the Parties to cooperate in the recovery of 
assets that have been illicitly acquired by corrupt officials.
    Article 52 obligates Parties to adopt preventive measures 
to detect corrupt transactions involving public officials, 
including requiring their financial institutions to verify 
customer identity and apply enhanced scrutiny to accounts held 
by current or former prominent public officials.
    Article 53 requires each Party to allow other Parties to 
bring civil actions in its courts to recover property and to 
enable courts to award damages and evaluate Parties' claims 
over property confiscated for offenses established in 
accordance with the Convention.
    Article 54 requires Parties to put in place a legal 
framework for providing assistance to other Parties with regard 
to recovery of assets acquired through or involved in the 
commission of offenses established in accordance with the 
Convention. This framework must include mechanisms enabling 
their competent authorities to execute confiscation orders 
issued by the courts of another Party, and to order 
confiscation of such foreign origin property through 
adjudication of money laundering or other offenses that may be 
within its jurisdiction. In addition, Parties must be able to 
freeze or seize property based on a freezing or seizure order 
issue by a court or competent authority of another Party or 
upon a request by another Party, where sufficient grounds are 
provided for taking such actions.
    Under article 55, Parties receiving requests for assistance 
in asset recovery must use the mechanisms established in 
accordance with articles 31 and 54. Paragraph 3 of this article 
states that the provisions of article 46 apply to such 
requests, which includes the grounds for denial of mutual legal 
assistance requests. Paragraph 7 provides an additional 
safeguard, authorizing refusal of cooperation where the 
requesting Party does not provide sufficient and timely 
evidence or the property at issue is of a de minimis value. 
Paragraph 9 clarifies that nothing in this article shall be 
construed to prejudice the rights of bona fide third parties.
    Article 57 provides a detailed framework for the return and 
disposal of assets confiscated by one Party at the request of 
another.

                      IV. Implementing Legislation

    No implementing legislation is required for the Convention. 
An existing body of federal and state laws will suffice to 
implement the obligations of the Convention, although two 
narrow reservations are needed, as explained below in section 
VI.

                          V. Committee Action

    The Convention was transmitted to the Senate for advice and 
consent to ratification on October 27, 2005 (see Treaty Doc. 
109-6). The Committee on Foreign Relations held a public 
hearing on this instrument on June 21, 2006, at which it heard 
testimony from representatives of the Departments of State and 
Justice, as well as the National Foreign Trade Council and 
Transparency International.\3\ On August 1, 2006, the committee 
considered the Convention and ordered it favorably reported by 
voice vote, with a quorum present and without objection, with 
the recommendation that the Senate give advice and consent to 
ratification of the Convention, subject to the reservations and 
declarations contained in the resolution of advice and consent.
---------------------------------------------------------------------------
    \3\ The edited transcript of the hearing is attached to this report 
(page 11).
---------------------------------------------------------------------------

               VI. Committee Recommendation and Comments

    The Committee on Foreign Relations believes that the 
Convention is in the interest of the United States and urges 
the Senate to act promptly to give advice and consent to 
ratification, subject to the two reservations and three 
declarations contained in the resolution of advice and consent. 
U.S. ratification of the Corruption Convention is supported by 
the executive branch, the U.S. business community, the American 
Bar Association, and anti-corruption organizations. The United 
States already conducts itself in a manner consistent with the 
Convention through an existing body of law as well as federal 
and state policies, and therefore no implementing legislation 
is required.
    The Convention supports the international fight against 
corruption, an important foreign and economic policy priority 
for the United States. By becoming a party to the Convention, 
the United States will enhance its leadership role in the 
global anti-corruption effort, help ensure that the Convention 
is implemented properly by other countries, and cooperate with 
treaty partners in the investigation and prosecution of 
corruption-related offenses.
    With 60 parties and 140 signatories, the Convention has 
already become a global instrument and reference point for the 
international community. Widespread ratification of the 
Convention by other countries would benefit U.S. businesses by 
helping to level the playing field for U.S. companies, which 
are already prohibited by U.S. law from bribing foreign 
officials. In addition to putting U.S. businesses at a 
disadvantage, corruption can impede business transactions and 
negatively affect their financial results. Implementation of 
the anti-corruption measures required by the Convention would 
promote the integrity of foreign markets, creating 
opportunities for U.S. investment.
    The Convention strengthens the ability of U.S. law 
enforcement to combat corruption. It requires other Parties to 
criminalize corruption-related offenses consistent with U.S. 
law, and includes provisions to facilitate the ability of U.S. 
prosecutors to obtain assistance from other countries in U.S. 
criminal investigations and prosecutions of such offenses.
    U.S. ratification of the Convention would also support 
broader U.S. efforts, within the United Nations, the G-8, and 
elsewhere to promote transparency, accountability, and anti-
corruption measures. The United States has a strong national 
security interest in opposing corruption and bribery worldwide. 
Bribery of public officials is one of the most plausible means 
through which a terrorist might gain access to weapons of mass 
destruction.
    Full realization of all of the benefits of the Convention 
will require not only widespread ratification of the 
Convention, but also full implementation of its provisions by 
the Parties. Therefore, the committee urges the executive 
branch, with input from the private sector and non-governmental 
organizations, to promote widespread adherence and to work with 
other treaty partners to create an effective, transparent, and 
viable system to monitor implementation of the Convention. The 
executive branch should also keep the committee informed of its 
progress in this regard.
    The committee has included a number of reservations and 
declarations in the resolution of advice and consent. Section 
two of the resolution contains two reservations. The first 
relates to the federal system in the United States and concerns 
the preventive measures and criminalization obligations of the 
Convention (Chapters II and III). With regard to the 
criminalization obligations, although U.S. federal law 
prohibits the conduct proscribed by the Convention, federal 
criminal law generally covers conduct involving interstate or 
foreign commerce or another important federal interest. U.S. 
state, not federal law, would therefore apply to a narrow 
category of conduct that does not implicate a foreign, 
interstate, or other federal interest. Not all forms of conduct 
proscribed by the Convention, however, are criminalized by all 
U.S. states in the manner required by the Convention. 
Similarly, the obligations undertaken with regard to preventive 
measures relating to state and local officials generally would 
be addressed in the United States at the state and local level. 
State and local governments may in some cases regulate these 
issues differently than the Convention. Therefore, the 
executive branch recommended that the United States reserve 
against these obligations in these narrow circumstances. The 
committee agrees with this recommendation.
    The second reservation concerns the scope of the 
Convention. Article 42 of the Convention requires each Party to 
establish jurisdiction in respect of the offenses established 
under the Convention when committed in its territory or on 
board a vessel flying its flag or an aircraft registered under 
its laws. U.S. law does not expressly extend U.S. jurisdiction 
over these particular crimes when committed on board U.S. 
vessels and aircraft outside of U.S. territory, although in 
certain cases U.S. jurisdiction may exist on other 
jurisdictional bases. Because the United States cannot ensure 
its ability to exercise jurisdiction in all such cases, the 
committee concurs with an executive branch recommendation that 
the United States enter a reservation limiting the obligation 
of the United States consistent with the reach of U.S. law.
    Section three of the resolution contains three 
declarations. The first declaration relates to U.S. 
implementation of the Convention under existing U.S. law. The 
executive branch recommended that the United States include an 
understanding to clarify that the United States intends to 
comply with the Convention based on existing law. The committee 
has included such a statement in the resolution, formulated as 
a declaration in accordance with recent committee practice.
    The second declaration relates to dispute settlement. 
Article 66 of the Convention establishes a mechanism for the 
Parties to settle disputes concerning the interpretation or 
application of the Convention. Paragraph 2 of the article 
provides that if such a dispute cannot be settled within a 
reasonable time through negotiation, a Party may submit it to 
arbitration and, if the disputing Parties are unable to agree 
on the organization of the arbitration within six months, a 
Party may submit the dispute to the International Court of 
Justice. Paragraph 3 permits each Party to declare, at the time 
of its ratification, that it does not consider itself bound by 
paragraph 2 of this article. The executive branch recommended 
that the United States make such a declaration, and the 
committee concurs with this recommendation.
    The third declaration, consistent with an executive branch 
recommendation, clarifies that the provisions of the Convention 
(with the exception of articles 44 and 46) are non-self-
executing, and that none of the provisions of the Convention 
creates a private right of action. The committee notes that 
Articles 44 and 46 of the Convention on extradition and mutual 
legal assistance are intended to operate in the same way as 
similar provisions contained in bilateral extradition and 
mutual legal assistance treaties. As with such provisions in 
bilateral treaties, these provisions are self-executing. They 
will be implemented by the United States in conjunction with 
applicable federal statutes. The lack of a private right of 
action does not affect the ability of a person whose 
extradition is sought to raise any available defense in the 
context of the extradition proceeding.

         VII. Resolution of Advice and Consent to Ratification

    Resolved (two-thirds of the Senators present concurring 
therein),

SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO RESERVATIONS AND 
                    DECLARATIONS

    The Senate advises and consents to the ratification of the 
United Nations Convention Against Corruption (hereinafter in 
this resolution referred to as the ``Convention''), adopted by 
the United Nations General Assembly on October 31, 2003, and 
signed by the United States on December 9, 2003, at Merida, 
Mexico (T. Doc. 109-6), subject to the reservations in section 
2 and the declarations in section 3.

SECTION 2. RESERVATIONS

    The advice and consent of the Senate under section 1 is 
subject to the following reservations, which shall be included 
in the United States instrument of ratification:

          (1) The United States of America reserves the right 
        to assume obligations under the Convention in a manner 
        consistent with its fundamental principles of 
        federalism, pursuant to which both federal and state 
        criminal laws must be considered in relation to the 
        conduct addressed in the Convention. U.S. federal 
        criminal law, which regulates conduct based on its 
        effect on interstate or foreign commerce, or another 
        federal interest, serves as an important component of 
        the legal regime within the United States for combating 
        corruption and is broadly effective for this purpose. 
        Federal criminal law does not apply where such criminal 
        conduct does not so involve interstate or foreign 
        commerce, or another federal interest. There are 
        conceivable situations involving offenses of a purely 
        local character where U.S. federal and state criminal 
        law may not be entirely adequate to satisfy an 
        obligation under the Convention. Similarly, in the U.S. 
        system, the states are responsible for preventive 
        measures governing their own officials. While the 
        states generally regulate their own affairs in a manner 
        consistent with the obligations set forth in the 
        chapter on preventive measures in the Convention, in 
        some cases they may do so in a different manner. 
        Accordingly, there may be situations where state and 
        federal law will not be entirely adequate to satisfy an 
        obligation in Chapters II and III of the Convention. 
        The United States of America therefore reserves to the 
        obligations set forth in the Convention to the extent 
        they (1) address conduct that would fall within this 
        narrow category of highly localized activity or (2) 
        involve preventive measures not covered by federal law 
        governing state and local officials. This reservation 
        does not affect in any respect the ability of the 
        United States to provide international cooperation to 
        other States Parties in accordance with the provisions 
        of the Convention.

          (2) The United States of America reserves the right 
        not to apply in part the obligation set forth in 
        Article 42, paragraph 1(b) with respect to the offenses 
        established in accordance with the Convention. The 
        United States does not provide for plenary jurisdiction 
        over offenses that are committed on board ships flying 
        its flag or aircraft registered under its laws. 
        However, in many circumstances, U.S. law provides for 
        jurisdiction over such offenses committed on board 
        U.S.-flagged ships or aircraft registered under U.S. 
        law. Accordingly, the United States shall implement 
        paragraph 1(b) to the extent provided for under its 
        federal law.

SECTION 3. DECLARATIONS

    (a) The advice and consent of the Senate under section 1 is 
subject to the following declaration:

          The United States of America declares that, in view 
        of its reservations, current United States law, 
        including the laws of the States of United States, 
        fulfills the obligations of the Convention for the 
        United States. Accordingly, the United States of 
        America does not intend to enact new legislation to 
        fulfill its obligations under the Convention.

    (b) The advice and consent of the Senate under section 1 is 
subject to the following declarations, which shall be included 
in the United States instrument of ratification:

          (1) In accordance with Article 66, paragraph 3, the 
        United States of America declares that it does not 
        consider itself bound by the obligation set forth in 
        Article 66, paragraph 2.

          (2) The United States declares that the provisions of 
        the Convention (with the exception of Articles 44 and 
        46) are non-self-executing. None of the provisions of 
        the Convention creates a private right of action.

 VIII. Appendix: Hearing--United Nations Convention Against Corruption

                              ----------                              




              UNITED NATIONS CONVENTION AGAINST CORRUPTION

                              ----------                              


                        WEDNESDAY, JUNE 21, 2006

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:32 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Richard Lugar 
(chairman of the committee) presiding.
    Present: Senator Lugar.

 OPENING STATEMENT OF HON. RICHARD G. LUGAR, U.S. SENATOR FROM 
                            INDIANA

    The Chairman. This hearing of the Senate Foreign Relations 
Committee is called to order. The committee meets today to 
review the United Nations Convention Against Corruption, which 
was signed by the United States in December 2003 and 
transmitted to the Senate for advice and consent last October. 
This treaty targets corruption on a global basis. It obliges 
parties to take measures designed to prevent corruption, to 
criminalize bribery and other corruption-related offenses, to 
cooperate in the investigation and prosecution of such 
offenses, and to adopt procedures to recover assets stolen by 
corrupt officials. The Convention also improves the tools 
through which our law enforcement agencies can investigate and 
prosecute money laundering, which can and has been used to fund 
terrorism.
    By requiring parties to strengthen their anticorruption 
efforts, the Convention would help level the playing field for 
U.S. companies, which are already prohibited by U.S. law from 
bribing foreign officials. The Convention would also provide 
mechanisms to assist U.S. law enforcement in obtaining overseas 
evidence and suspects in domestic corruption-related cases. The 
administration has indicated that U.S. law already complies 
with the obligations of this treaty, with no need for further 
legislation.
    The Convention entered into force on December 15, 2005, and 
currently has 55 parties. The United States is among 88 
countries that have signed, but not yet ratified the 
Convention. The first conference of the parties is scheduled 
for December 2006.
    The Convention builds on other treaties to which the United 
States is a party, namely the OECD's Convention on Combating 
Bribery of Foreign Public Officials in International Business 
Transactions and the Inter-American Convention Against 
Corruption. The Convention is also consistent with the Bush 
administration's efforts within the G-8 to promote 
transparency, accountability, and anticorruption measures.
    Corruption has been a major concern of this committee. The 
World Bank has identified corruption as ``the single greatest 
obstacle to economic and social development.'' We have held 
five hearings over the past 2 years to consider how to thwart 
corruption related to multilateral development bank financing, 
and we will hold a sixth hearing in the coming weeks. My MDB 
reform bill, S. 1129, which was passed unanimously by the 
Senate Foreign Relations Committee, became law in November 
2005. This law contains many reforms aimed at achieving more 
transparency and accountability in the banks' operations.
    The United States has a strong national security interest 
in opposing corruption and bribery worldwide. For example, we 
want to prevent foreign officials from accepting bribes that 
might lead to a dangerous container being allowed onto a ship 
bound for our shores. We want to prevent bribes that might help 
a criminal or terrorist gain access to our country. And we want 
to prevent bribes that might provide terrorists with access to 
nuclear material, chemical and biological weapons, MANPADS, or 
other dangerous items.
    For almost 15 years, I have traveled through the former 
Soviet Union and beyond in support of the Nunn-Lugar 
Cooperative Threat Reduction program. On many occasions, I have 
seen WMD storage facilities that were imperfectly secured. At 
the Shchuchye chemical weapons facility in Russia, for example, 
1.9 million chemical weapons shells, many small enough to fit 
in a briefcase, were stacked like wine bottles on racks in 
ordinary wood frame buildings. The facility was lightly guarded 
by U.S. standards and was surrounded by an unimpressive fence 
which had several holes in it. Through the work of dedicated 
Russians and Americans, security at this facility and many 
others has been improved immeasurably. But safeguarding weapons 
continues to depend on the actions of those who are entrusted 
to operate and guard such facilities, and bribery is one of the 
most plausible means through which a terrorist might gain 
access to a weapon of mass destruction.
    Last year I surveyed 85 top nonproliferation experts on 
proliferation threats and responses. And among my many 
questions, I asked their opinion of the most likely method 
through which terrorists might acquire nuclear weapons or 
weapons-grade material. By an overwhelming margin, they 
responded that black market activity was the most likely 
method. They judged such a corruption-driven transfer to be far 
more plausible than other scenarios, including the outright 
theft of a weapon by a terrorist group or the deliberate 
transfer of a weapon from nuclear weapon states to a terrorist 
group.
    The ratification of this Corruption Convention might not 
prevent a specific foreign official from taking a particular 
bribe. But fundamental U.S. national security interests demand 
the United States work hard to establish a global climate of 
intolerance for corruption and bribery. Ratifying this 
Convention is an essential element in that campaign. If we fail 
to ratify, not only will the chances of a national security 
disaster increase, our advocacy on numerous anticorruption 
issues, including those involving U.N. reform, MDB reform, the 
transparency of international development assistance, and the 
dispensation of huge profits flowing into the hands of oil-rich 
regimes around the world, would be diluted.
    Failure to ratify would also be a loss to U.S. businesses 
and workers. We do not want to give global economic competitors 
any excuse to fail to adopt the strong anticorruption laws that 
already prevail in our country. We want nations that are in 
direct competition with us to ratify this Convention so that 
their legal framework addresses corruption with the same vigor 
that ours does. We do not want to lose contracts, markets, and 
jobs to corrupt activities overseas. If we fail to promptly 
ratify this Convention, it will keep us from fully influencing 
the monitoring mechanisms for the Convention, which will be 
considered at the conference of parties in December 2006.
    Today, we are pleased to be joined by two distinguished 
panels. First, Samuel Witten, Deputy Legal Adviser at the 
Department of State, and Bruce Swartz, Deputy Assistant 
Attorney General in the Criminal Division of the Department of 
Justice, will share the Bush administration's views with regard 
to the Convention Against Corruption. On our second panel, we 
will have the benefit of the expert testimony of Alan Larson, 
chairman of Transparency International-USA, and William 
Reinsch, president of the National Foreign Trade Council.
    We welcome all of our witnesses, and we look forward to 
their testimony.
    I will ask you to testify in the order that I introduced 
you, which would be Mr. Witten and then Mr. Swartz. Your full 
statements will be made a part of the record. You may proceed 
with summaries or as you wish. I thank you for coming, and 
would you please proceed, Mr. Witten.

   STATEMENT OF SAMUEL M. WITTEN, DEPUTY LEGAL ADVISER, U.S. 
              DEPARTMENT OF STATE, WASHINGTON, DC

    Mr. Witten. Thank you very much, Mr. Chairman. I am very 
pleased to appear before the committee today to testify in 
support of Senate approval of the United Nations Convention 
Against Corruption. The Department of State greatly appreciates 
this opportunity to address this important international 
instrument, and we appreciate the committee's deciding to hold 
a hearing at this time.
    The international fight against corruption is an important 
foreign policy priority for the United States. As President 
Bush stated in his submission of the treaty to the Senate, 
corruption ``hinders the sustainable development, erodes 
confidence in democratic institutions, and facilitates 
transnational crime and terrorism.'' Corruption debilitates and 
destabilizes government institutions. Its effect on 
impoverished nations is especially devastating. Corruption also 
undermines the ability of businesses of the United States and 
other countries to operate in a transparent, honest, and 
predictable environment. Fighting corruption must be an 
integral component of U.S. diplomacy and our international 
efforts to work with other countries to combat crime.
    This morning I will just summarize briefly the importance 
of the U.N. Convention Against Corruption, amplifying several 
key points from my more detailed written testimony.
    Mr. Chairman, there are three primary reasons why 
ratification of this Convention is so important for the United 
States. First, the Convention represents international 
anticorruption commitments undertaken by the international 
community, the first such commitments undertaken on such a 
global scale. Over 130 countries were involved in the 
negotiation of the Convention, and as of this month, 140 
countries have signed the Convention and 55 have already become 
parties. This is a remarkable result given that 11 years ago 
there were no existing international corruption instruments at 
all.
    Second, the commitments in this Convention are 
comprehensive, recognizing that the fight against corruption 
requires simultaneous action on a number of fronts. The parties 
commit themselves to institute effective measures to 
criminalize corruption, to take appropriate measures to prevent 
corruption from happening, and to deny safe haven to corrupt 
actors through international cooperation and asset recovery. 
The Convention wisely avoids several other more complex 
substantive areas that are less appropriate for multilateral 
solutions.
    Third, the Convention will begin the process of bringing a 
good portion of the world community up to the anticorruption 
standards already in place in the United States. For example, 
the Convention in effect globalizes commitments made by the 
United States and other countries in the OECD Convention on 
Combating Bribery of Foreign Public Officials in International 
Business Transactions. The Convention before the Senate 
requires governments to criminalize matters already covered 
under U.S. law, such as bribery of foreign officials, and 
pushes countries to institute procedures for enhanced scrutiny 
and to establish effective asset-forfeiture mechanisms.
    Making laws around the world as tough as our own benefits 
the world community as well as the United States by 
establishing a common framework for international 
anticorruption cooperation and expanding existing law 
enforcement and other relationships. As a party, our ability to 
continue to assert the leadership role we have held since the 
1977 enactment of the Foreign Corrupt Practices Act, the FCPA, 
would be strengthened.
    In contrast, as you mentioned, Mr. Chairman, our absence 
from this treaty regime would be conspicuous and could detract 
from our ability to exert influence on the various states that 
are a party to implement the Convention and take effective 
action against corruption.
    U.S. business will benefit in a global economy from legal 
regimes that are designed to address the problem of corruption. 
Many of the Nation's major business groups, in addition to 
anticorruption groups, have already urged rapid Senate approval 
of this agreement.
    As my colleague, Mr. Swartz, will explain, this Convention 
has many helpful provisions to assist in the extradition of 
fugitives to and from the United States and to facilitate the 
ability of U.S. prosecutors to obtain assistance from other 
countries in U.S. criminal investigations and prosecutions.
    For the United States, the Convention will not create new 
extradition relationships, but it will broaden some of our 
older existing treaties by expanding their scope to include the 
offenses described in the Convention.
    By contrast, we will be able to use the Convention as a 
basis for legal assistance requests to countries with which we 
lack bilateral mutual legal assistance treaties, particularly 
in parts of Asia, Africa, and the Middle East. In this 
connection, the Convention fully incorporates safeguards the 
United States insists on in our bilateral MLATs, and thereby 
ensures that we may deny requests that are contrary to our 
essential interests or are improperly motivated.
    Mr. Chairman, the Convention would not require implementing 
legislation for the United States, and in this connection, the 
administration recommends that the Senate include in its 
resolution of advice and consent to ratification two 
reservations, an understanding, and two declarations. If the 
United States makes the proposed reservations, the existing 
body of Federal and State law and regulations will be adequate 
to satisfy the Convention's requirements for legislation, and 
further legislation will not be required for the United States 
to implement this Convention.
    U.S. law already incorporates the measures found in the 
Convention, and our interests will be well-served by wide 
implementation of the Convention throughout the world. As a 
governmental leader in the international anticorruption 
movement, the United States has been actively promoting the 
Convention, already, as the cornerstone for regional 
multilateral anticorruption action, including, most recently, 
within the Group of 8, the Asia-Pacific Economic Cooperation 
forum, the Organization of American States, and in the United 
Nations Development Programme-OECD's Initiative on Good 
Governance for Development in the Middle East and North Africa.
    As you mentioned, Mr. Chairman, a Conference of the States 
Parties will convene in December of this year, the 1-year 
anniversary of the Convention's entering into force, to discuss 
what governments can do to promote implementation, and we're 
working with other governments to develop some realistic 
options. Our ability to play a leading role at that Conference 
in December will be enhanced if the United States ratifies the 
Convention prior to the conference.
    Mr. Chairman, with that I'll conclude my remarks. We very 
much appreciate the committee's decision to consider this 
important treaty. As you know, Mr. Chairman, the United States 
helped develop many of the treaty's provisions, and we 
consulted extensively with the private sector, including the 
business and legal communities, and are confident that the 
Convention enjoys widespread support.
    I'll be happy to answer any questions the committee may 
have.
    [The prepared statement of Mr. Witten follows:]

  Prepared Statement of Samuel M. Witten, Deputy Legal Adviser, U.S. 
                  Department of State, Washington, DC

    Mr. Chairman and members of the committee, I am pleased to appear 
before you today to testify in support of the United Nations Convention 
against Corruption. The Department of State greatly appreciates this 
opportunity to address this international instrument.

       THE FIGHT AGAINST CORRUPTION AS A FOREIGN POLICY PRIORITY

    As noted by President Bush in his message transmitting the 
Convention to the Senate for its advice and consent to ratification, 
the international fight against corruption is an important foreign 
policy priority for the United States. In the President's words, 
corruption ``hinders sustainable development, erodes confidence in 
democratic institutions, and facilitates transnational crime and 
terrorism.'' Corruption debilitates and destabilizes government 
institutions. The toll on impoverished nations is especially 
devastating and real. Money that could have been spent to improve the 
lives of the underprivileged and improve health, energy, or other 
infrastructure is frittered away for personal enrichment. Corruption 
also undermines the ability of businesses of the United States and 
other countries to operate in a transparent, honest, and predictable 
environment. Because corruption's effects are wide-ranging and 
pernicious, fighting corruption must be an integral component of U.S. 
diplomacy and our international efforts to work with other countries to 
combat crime.

        THE IMPORTANCE OF THE U.N. CONVENTION AGAINST CORRUPTION

    I will first focus on the importance of the U.N. Convention against 
Corruption to the U.S. Government's international anticorruption 
efforts.
    First, the Convention represents the first set of international 
anticorruption commitments undertaken by the international community, 
with the leadership of the United States, on a truly global scale. The 
sheer size of the group of nations involved in negotiating the 
instrument in 2002 and 2003--over 130 countries--was a good sign that 
this Convention would be applied widely throughout the globe. However, 
interest in the Convention has even gone beyond expectations--as of 
this month, 140 countries had signed the Convention and 55 had already 
become parties. The Convention's support is all the more remarkable 
considering that 11 years ago there were no existing international 
anticorruption instruments and the development of a global instrument 
on the subject was not viewed as a realistic option.
    Second, the Convention is by far the most comprehensive set of 
international commitments relating to corruption. Previous 
international anticorruption agreements are relatively limited in their 
geographic scope and substantive coverage. The Convention recognizes 
that the fight against corruption requires simultaneous action on a 
number of fronts. Parties are obligated to ensure that law enforcement 
against corruption is effective and active, and they are also obligated 
to take appropriate measures to prevent corruption from happening in 
the first place and to deny safe haven to corrupt actors through 
international cooperation and asset recovery. The Convention avoids 
obligations regarding complex substantive areas that are less 
appropriate or unripe for multilateral solutions, such as political 
party financing and criminalization of purely private sector 
corruption, that are currently handled by individual nations under 
their domestic laws.
    The breadth of the chapter of the Convention addressing the 
prevention of corruption is a good example of the broad yet flexible 
nature of this instrument. Under this set of articles, which contains 
both mandatory and discretionary provisions, parties to the Convention 
commit themselves to build a more ethical public service, work toward 
effective transparency and controls in public procurement and spending, 
increase civil society access to government, and promote integrity in 
the private sector without burdening the private sector with new laws 
or regulations. The goal of all these and other measures in the 
Convention is to make the risk of corruption greater than any reward it 
may bring.
    Third, and very importantly, the Convention will begin the process 
of bringing a good portion of the world community up to the 
anticorruption standards already in place for the United States. For 
example, the Convention, in effect, globalizes commitments made by the 
United States and other countries in the Organization for Economic 
Cooperation and Development (OECD) Convention on Combating Bribery of 
Foreign Public Officials in International Business Transactions, which 
has now been in force for more than 7 years. The Convention before the 
Senate requires governments to criminalize bribery of foreign officials 
and officials of public international organization in the course of 
international business and also requires governments to establish 
minimal ``books and records'' requirements for the private sector--
matters already covered under U.S. law. The asset recovery chapter, as 
another example, pushes countries to institute procedures for enhanced 
scrutiny and to establish effective asset forfeiture mechanisms. All of 
these are common tools already used and well-established in the United 
States.
    The United States already conducts itself consistently with the 
Convention's provisions, so our work related to implementation will 
largely involve ensuring that the Convention is implemented properly by 
others and cooperating in appropriate cases that are covered under the 
Convention. A Conference of the States Parties will convene in December 
2006 to discuss what governments can do to promote implementation, and 
because of our central role in the drafting of the Convention and our 
leadership in this area, we are working with other governments to 
develop some realistic options. The United States delegation can and 
should play a leading role at that conference, and of course our 
ability to do so will be enhanced if we have already ratified the 
Convention prior to the conference.
    The United Nations Convention against Corruption is quickly 
becoming a focal point for U.S. and international anticorruption 
action. The U.S. Government is a leader in the international 
anticorruption movement, and the Convention represents an extremely 
useful tool to help us further our goals in this area. We have been 
actively promoting the Convention as the cornerstone for regional 
multilateral anticorruption action, including, most recently, within 
the G-8, the Asia-Pacific Economic Cooperation forum, the Organization 
of American States, and in the United Nations Development Programme-
OECD's Initiative on Good Governance for Development in Arab Countries. 
Using the Convention as an internationally created and accepted 
guideline for taking action against corruption will bolster our current 
efforts--using the Millennium Challenge Account, the various regional 
initiatives just mentioned, and our foreign assistance programs--to 
encourage and help other governments build effective anticorruption 
regimes. By becoming a party to the Convention, the United States will 
be even better placed to encourage and promote its effective 
implementation.

                     BENEFITS OF U.S. RATIFICATION

    With this, I return to where I began--the benefits to the United 
States from becoming a party to the Convention. First, becoming a party 
would strengthen the ability of the United States to continue to assert 
a leadership role in this area, which it has held ever since the 
enactment in 1977 of the Foreign Corrupt Practices Act (FCPA). 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 could detract from our ability 
to exert pressure on the various states that are party to implement the 
Convention and take effective action against corruption.
    Second, U.S. business will benefit in the global economy from legal 
regimes that are designed to address the problem of corruption. The 
corruption of governmental officials significantly hinders business 
transactions and yields economic inefficiencies. Corruption causes 
investors either to flee or never show up in the first place. We 
understand that many of the Nation's major business groups, in addition 
to anticorruption groups, have already contacted this committee to urge 
rapid Senate approval of this agreement.
    Third, the Convention augments existing mechanisms for 
international cooperation in law enforcement matters. Corruption 
facilitates terrorism, drug trafficking, organized crime, money 
laundering, and illicit international money transfers, which can be 
used to support mechanisms for international terrorists. As my 
colleague from the Justice Department will explain, this Convention has 
many helpful provisions to assist in the extradition of fugitives to 
and from the United States and to facilitate the ability of U.S 
prosecutors to obtain assistance from other countries in U.S. criminal 
investigations and prosecutions. indeed, many countries, particularly 
in the developing world, lack existing bilateral extradition or mutual 
legal assistance treaty relationships with one another, but now will be 
able to rely on this Convention to fill that legal gap for many 
corruption crimes.
    For the United States, the Convention will not create new 
extradition relationships, as we will continue to rely on our extensive 
web of bilateral treaties for that purpose, but it will broaden some of 
our older existing treaties by expanding their scope to include the 
offenses described in the Convention. By contrast, we will be able to 
use the Convention as a basis for legal assistance requests to 
countries with which we lack bilateral mutual legal assistance treaties 
(MLATs), primarily those in parts of Asia, Africa, and the Middle East. 
In this connection, the Convention fully incorporates all the safeguard 
provisions the United States insists upon in our bilateral MLATs and 
thereby ensures that we may deny requests that are contrary to our 
essential interests or are improperly motivated.

                          U.S. IMPLEMENTATION

    The Convention would not require implementing legislation for the 
United States. As discussed at length in the Department of State's 
Detailed Analysis of the Provisions of the Convention, the 
administration recommends that the Senate include in its resolution of 
advice and consent to ratification two reservations, an understanding, 
and two declarations. If the United States makes the proposed 
reservations, the existing body of Federal and State law and 
regulations will be adequate to satisfy the Convention's requirements 
for legislation, and, thus, further legislation will not be required 
for the United States to implement the Convention.
    Mr. Chairman, we very much appreciate the committee's decision to 
consider this important treaty. The United States is proud to have 
actively participated in the negotiation of the Convention and to have 
helped develop many of its provisions. We have consulted extensively 
with the private sector, including the business and legal communities, 
and we are confident that the Convention enjoys widespread support.
    I will be happy to answer any questions the committee may have.

    The Chairman. We thank you very much, Mr. Witten for your 
testimony. I'd like to call now on Mr. Swartz, if you would 
proceed.

    STATEMENT OF BRUCE C. SWARTZ, DEPUTY ASSISTANT ATTORNEY 
    GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Mr. Swartz. Thank you, Mr. Chairman. Mr. Chairman, I am 
pleased to appear before you here today on behalf of the U.S. 
Department of Justice to testify in favor of the United Nations 
Convention Against Corruption.
    Mr. Chairman, as you noted, the United States has a strong 
national security interest in fighting corruption, and this 
Convention will directly advance our national security and law 
enforcement interests in that regard. As former Attorney 
General Ashcroft said at the signing ceremony in Merida, 
Mexico: ``The fight against corruption is critical to realizing 
our shared and essential interests. Corruption . . . undermines 
the legitimacy of democratic governments, and can, in its 
extreme forms, even threaten democracy itself.''
    This morning I would like to take the opportunity to 
discuss briefly the importance of this treaty from a Federal 
criminal law enforcement perspective. Specifically, I would 
like to discuss the core criminalization provisions set forth 
in chapter III, the provisions related to international law 
enforcement cooperation set forth in chapter IV, the provisions 
related to asset recovery in chapter V, and the technical 
assistance provisions in chapter VI.
    Turning first, briefly, to the core criminalization 
provisions, as the committee is aware, the Convention requires 
that five offenses be criminalized by every State Party to this 
Convention. First, it requires criminalization of bribery of 
public officials domestically. Second, it requires countries to 
criminalize bribery of foreign public officials. Third, it 
requires criminalization of embezzlement by public officials. 
Fourth, it requires criminalization of money laundering and 
requires countries to expand the reach of their money-
laundering statutes to make certain that the predicate offenses 
associated with this Convention are predicate offenses for the 
purposes of their money-laundering offenses. Finally, the 
Convention requires criminalization of obstruction of justice 
related to the offenses set forth in the Convention.
    As Mr. Witten has noted, the United States does not need to 
enact any new legislation to implement these or any other 
provisions of this Convention. Rather than placing a burden on 
the United States to change its laws, this Convention, in 
essence, puts the burden on other countries around the world to 
enact anticorruption provisions like those that the United 
States already has in place.
    This will directly benefit U.S. economic, law enforcement, 
and security interests. First, it will benefit U.S. businesses 
operating abroad by ensuring that everyone is playing by the 
same rules. Under the United States Foreign Corrupt Practices 
Act, for instance, it is illegal for U.S. companies to bribe 
foreign government officials. The Convention effectively 
requires all States Parties to adopt a foreign corrupt 
practices act of their own.
    Second, the Convention will directly advance U.S. law 
enforcement interests in this regard by helping to ensure that 
we have stable, noncorrupt law enforcement partners in other 
parts of the world.
    Finally, the Convention will help advance U.S. security 
interests by helping to prevent destabilization of foreign 
democracies through corruption, as well as cutting off funding 
that flows from corruption to domestic criminal and terrorist 
groups, and to international terrorist groups as well. And, 
finally, it will help ensure that the kind of corruption that 
exposes us to the danger of weapons of mass destruction, as 
noted by the chairman, is directly addressed by the countries 
themselves in the first instance.
    The second set of provisions that will be of direct 
assistance to law enforcement in the United States are the 
international cooperation provisions of chapter IV of the 
Convention. This chapter provides critical new tools to Federal 
law enforcement by creating mechanisms for extradition and 
mutual legal assistance. At the same time, the provisions 
contain safeguards found in all of our modern extradition and 
mutual legal assistance treaties that we have on a bilateral 
basis and that we have put in place in our more recent 
multilateral treaties.
    With regard to extradition, the United States will continue 
to make extradition contingent upon the existence of a 
bilateral treaty, as the Convention permits. But the Convention 
does update, as Mr. Witten noted, all of our older list 
treaties by providing that the five mandatory offenses required 
by the Convention shall be deemed to be extraditable offenses 
in any existing treaty. Thus, the practical effect of this 
Convention is to expand the substantive scope of our existing, 
older bilateral treaties to include money laundering, 
obstruction of justice, foreign and domestic bribery, and 
embezzlement.
    The treaty also creates a framework for mutual legal 
assistance in corruption-related cases where the States Parties 
do not otherwise have an existing bilateral mutual legal 
assistance relationship. Where there is no existing mutual 
legal assistance treaty, the United States may now use the 
Convention as an independent legal basis for requesting and 
providing assistance. Article 46 of the treaty is thus a treaty 
within a treaty. Significantly, however, the Convention also 
provides, as Mr. Witten noted, all of the safeguards that we 
would expect to see in such a convention, including the 
possibility of denying a request for mutual legal assistance 
whenever the United States essential interests would be 
jeopardized.
    Turning to the asset recovery provisions of this 
Convention, here, too, we find important developments for U.S. 
law enforcement. These provisions make possible for law 
enforcement to provide assistance from the detection to the 
seizure to the disposition of illicitly obtained assets, assets 
that have been obtained through corruption. They will help 
foreign officials be assured that any corruption that they 
undertake will not result in their ultimate gain, and it will 
help ensure that property is returned to the states from which 
it may have been corruptly taken.
    Article 52, for example, requires States Parties to have 
adequate procedures in place to detect suspicious transactions. 
Article 53 provides that a State Party that has been harmed by 
corruption may participate as a private litigant to recover the 
proceeds of embezzlement. And in article 54, the Convention 
requires State Parties to establish a legal framework for 
providing assistance and recovery of assets acquired through 
one of the core criminalized offenses. Under this provision, 
countries must enact legislation to enable them either to 
freeze or seize illicit property or to recognize a foreign 
judgement against the property. And article 57 sets forth a 
framework for the disposition of property confiscated by one 
State Party at the request of another.
    Finally, Mr. Chairman, I would like to say a brief word 
about the technical assistance provisions of the Convention. 
The Convention in chapter 6 calls for States Parties to provide 
each other with technical assistance in implementing the 
various provisions of the Convention.
    As the committee knows, the Department of Justice, with 
funding from the Department of State, provides technical law 
enforcement assistance by posting experienced Federal 
prosecutors abroad as resident legal advisors. We have found 
time and again that our assistance is most effective when we 
can point out that the law enforcement standards that we are 
suggesting be implemented are not simply those of the United 
States, but are universal standards.
    By creating a universal law enforcement standard regarding 
the fight against corruption, the Convention will directly 
advance the interests of the United States in this regard as 
well.
    In conclusion, Mr. Chairman, by combating global 
corruption, we restore confidence in democracy and the rule of 
law, we bolster the global economy by encouraging open trade 
and investment, and we strengthen the stability and integrity 
of government and economic systems worldwide.
    The United Nations Convention Against Corruption helps us 
to do all of these things, but perhaps most significantly, Mr. 
Chairman, as you noted at the outset, the Convention 
significantly and directly advances the national security and 
law enforcement interests of the United States of America.
    On behalf of the Department of Justice then, we 
respectfully urge the U.S. Senate to provide its advice and 
consent to ratification of this important treaty. And I look 
forward to answering any questions that the committee may have.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Swartz follows:]

   Prepared Statement of Bruce C. Swartz, Deputy Assistant Attorney 
 General, Criminal Division, U.S. Department of Justice, Washington, DC

                            I. INTRODUCTION

    Mr. Chairman and members of the committee, I am pleased to appear 
before you today on behalf of the U.S. Department of Justice to testify 
in favor of the United Nations Convention Against Corruption. This new 
treaty will significantly and directly advance the national security 
and law enforcement interests of the United States. As former Attorney 
General Ashcroft stated at the treaty signing in Merida, Mexico: ``The 
fight against corruption is critical to realizing our shared and 
essential interests. Corruption undermines the goals of peace loving 
and democratic nations. It jeopardizes free markets and sustainable 
development. It provides sanctuary to the forces of global terror, and 
facilitates the illicit activities of international and domestic 
criminals. It undermines the legitimacy of democratic governments and 
can, in its extreme forms, even threaten democracy itself.''
    The U.N. Convention Against Corruption is the culmination of a 
worldwide movement against corruption that has resulted in smaller 
scale corruption conventions, such as the Organization of American 
States Inter-American Convention Against Corruption and the 
Organization for Economic Cooperation and Development Convention on 
Combating Bribery of Foreign Public Officials in International Business 
Transactions. Although those other conventions have addressed 
corruption on a more limited basis, none has attacked corruption with 
the same substantive or geographical breadth as the U.N. Convention.
    Mr. Chairman, I understand that the President and the Secretary of 
State have already submitted to this committee substantial information 
detailing the various provisions of the Convention. You have also heard 
this morning from my State Department colleague, Mr. Witten. I do not 
intend to duplicate the information you have received from those 
sources. I would, however, like to take this opportunity to more fully 
explain exactly why this treaty is so important from a Federal criminal 
law enforcement perspective. Specifically, I would like to discuss the 
Convention's core criminalization provisions under chapter III; the 
provisions related to international law enforcement cooperation under 
chapter IV; and the provisions related to asset recovery under chapter 
V. I would also like to briefly discuss the technical assistance and 
implementation provisions of chapters VI and VII.
    The Attorney General has made fighting corruption one of his top 
priorities. And as Deputy Assistant Attorney General of the Justice 
Department's Criminal Division, I can tell you firsthand that the 
Department's anticorruption efforts do not stop at our borders. Under 
the Attorney General's leadership, as well as the leadership of 
Assistant Attorney General Alice Fisher, the Criminal Division's 
prosecutors are working tirelessly every day to root out global 
corruption and to prosecute bribery of foreign officials.
    For example, we are aggressively investigating violations of our 
Foreign Corrupt Practices Act, which as you know makes it illegal for 
U.S. companies and individuals doing business overseas to bribe foreign 
officials. We are also working extremely hard to root out bribery in 
the Iraq reconstruction process. And in partnership with the Department 
of State, we are working with our international partners to build and 
strengthen the ability of prosecutors around the world to fight 
corruption through our Overseas Prosecutorial Development and Training 
Assistance Program.
    The U.N. Corruption Convention would create new opportunities for 
international law enforcement cooperation to combat corruption around 
the world. It would give the Department new tools to more effectively 
prosecute companies and individuals who bribe foreign governments. And 
it would make it easier for the Department to recover the ill-gotten 
assets of corrupt government officials.

                          II. CRIMINALIZATION

    Let me begin by describing the Convention's core criminalization 
provisions, which can be found in chapter III of the Convention. 
Articles 15, 16, 17, 23, and 25 require all signatory nations to enact 
laws criminalizing bribery and associated conduct. Article 15, for 
example, requires countries to criminalize bribery of domestic public 
officials. Article 16, in part, requires countries to criminalize 
bribery of foreign public officials. Article 17 requires 
criminalization of embezzlement by public officials. Article 23 
requires criminalization of money laundering and requires countries to 
expand the reach of their money laundering laws to predicate offenses 
associated with corruption. Finally, article 25 requires 
criminalization of obstruction of justice related to offenses set forth 
in the Convention.
    As this committee may know, all of the foregoing offenses are 
already illegal under U.S. law. For that reason, and because the other 
criminalization provisions in chapter III are discretionary, the United 
States does not need to enact any new legislation to implement chapter 
III (or any other components) of this Convention. Rather than placing a 
burden on the United States to change its laws, this Convention puts 
the burden on countries around the world to enact antibribery laws that 
the United States already has in place.
    The effect on U.S. economic and security interests of criminalizing 
bribery and related offenses on a global scale cannot be overstated. 
Let me give you an example. Under the U.S. Foreign Corrupt Practices 
Act, or FCPA, it is illegal for U.S. companies to bribe foreign 
government officials for the purpose of retaining or obtaining business 
or securing any unfair advantage. Because corruption is rampant in 
certain parts of the world in which our companies do business, U.S. 
companies seeking to play by the rules often have been at a competitive 
disadvantage.
    The core criminalization provisions of this Convention will level 
the playing field by requiring everyone to play by the same set of 
rules. The Convention effectively requires all States Parties to adopt 
a ``Foreign Corrupt Practices Act'' of their own. Now all companies 
based in countries that are parties to the Convention will have an 
obligation to comply with the same antibribery laws in competing for 
business overseas. That is good for U.S. businesses. It is also good 
for Federal law enforcement, because the less financial incentive 
companies have to bribe foreign government officials, the less likely 
they will be to ignore or subvert the requirements of the FCPA.
    The Convention's core criminalization provisions are also good for 
the U.S. economy. As this committee knows, public corruption weakens 
the integrity, stability, and transparency of market systems. By 
criminalizing domestic and foreign public corruption and related 
offenses, this Convention helps to promote the integrity, stability, 
and transparency of foreign markets, thereby creating opportunities for 
U.S. investment in those markets.
    Finally, the core criminalization provisions of the Convention are 
good for U.S. national security. For example, as President Bush stated 
in his transmittal message, corruption facilitates transnational crime 
and terrorism by funding--directly or indirectly--criminal and 
terrorist organizations. By criminalizing domestic and foreign bribery 
and related offenses, this Convention will reduce or cut off a critical 
funding source for terrorists, drug traffickers, money launderers, and 
other criminals.
    At this point, Mr. Chairman, I would like to briefly note that the 
Secretary of State has recommended two reservations and one declaration 
relevant to the core criminalization provisions. Principally, the 
Secretary of State has recommended that the United States take a 
reservation to the Convention to accommodate federalism concerns. As 
the committee may know, Federal criminal law does not apply where the 
criminal conduct does not implicate interstate or foreign commerce or 
another Federal interest. There are conceivable situations involving 
offenses of a purely local character where U.S. Federal and State 
criminal law may not be entirely adequate to satisfy an obligation 
under the Convention. Accordingly, the Secretary of State has 
recommended that the U.S. reserve to the obligations set forth in the 
Convention ``to the extent they address conduct that would fall within 
this narrow category of highly localized activity.'' In light of this 
reservation, as noted by the accompanying understanding, the Convention 
does not require any legislative or other measures. The Justice 
Department supports this reservation.
    Additionally, the Secretary of State has recommended that the 
Senate include a declaration in its resolution of advice and consent 
that makes clear that the provisions of the Convention, with the 
exception of articles 44 and 46 regarding extradition and mutual legal 
assistance, are not self-executing. This is particularly relevant to 
article 35 of the criminalization chapter, which requires that ``each 
State Party shall take such measures as may be necessary . . . to 
ensure that entities or persons who have suffered damage as a result of 
an act of corruption have the right to initiate legal proceedings 
against those responsible for that damage . . .''.
    Under U.S. law, private parties damaged by corruption already have 
private rights of action under various theories, e.g., fraud claims, 
tort claims, contract claims, antitrust theories, shareholder class 
actions or derivative suits. The United States is therefore already in 
compliance with article 35. The Secretary of State recommends this 
declaration, however, to clarify that none of the provisions, including 
article 35, creates an independent private right of action that could 
open U.S. courts to civil lawsuits that would not otherwise lie under 
U.S. law. The Justice Department fully supports such a declaration.

                     III. INTERNATIONAL COOPERATION

    I would now like to briefly describe chapter IV of the Convention, 
which governs international law enforcement cooperation. Mr. Chairman, 
the provisions of this chapter provide critical new tools to Federal 
law enforcement by creating new mechanisms for extradition and mutual 
legal assistance. At the same time, these provisions provide the U.S. 
Government with all of the safeguards found in modem bilateral mutual 
legal assistance treaties, including options for noncompliance where 
assistance would offend the ``essential interests'' of the United 
States.
    These provisions are closely modeled after similar provisions in 
the United Nations Convention Against Transnational Organized Crime, to 
which, as you know, the U.S. Senate gave its advice and consent. 
Article 44, for example, creates an extradition regime for offenses 
established pursuant to this Convention where dual criminality exists 
(i.e., where the offense is criminalized under the laws of both the 
requesting and the requested State). Article 44 provides that States 
Parties may make extradition conditional upon the existence of a 
bilateral extradition treaty (which is the practice in the United 
States). It also provides that ``each of the offenses to which this 
article applies shall be deemed to be included as an extraditable 
offenses'' in any existing treaty. Thus, the practical effect of this 
article is to expand the substantive scope of existing bilateral 
extradition treaties to new offenses such as money laundering, 
obstruction of justice, foreign and domestic bribery, and embezzlement. 
This article does not create obligations with countries with which we 
do not already have bilateral extradition treaties (nor does it alter 
the requirement of dual criminality under those treaties).
    Additionally, article 46 creates a framework for mutual legal 
assistance in corruption-related cases where the States Parties do not 
otherwise have mutual legal assistance obligations. Parties with 
bilateral mutual legal assistance treaties can continue to use those 
existing agreements. Parties that do not have existing bilateral mutual 
legal assistance treaties can use article 46 as an independent legal 
basis for requesting or providing assistance. Article 46 is effectively 
a ``treaty within a treaty'' governing in great detail cooperation 
between the States Parties for offenses covered by the Convention.
    Specifically, article 46 sets forth various types of assistance 
that States Parties may request under the Convention (including taking 
evidence or statements from persons, effecting service of judicial 
documents, executing searches and seizures, and other activities). 
Paragraphs 9 and 21, however, list various grounds upon which 
assistance may be refused, providing strong safeguards for the United 
States. For example, a State Party can deny assistance when the request 
is not made in conformity with the provisions of the article; if the 
requested State Party considers that execution of the request is likely 
to prejudice the sovereignty, security, or other essential interest; if 
the authorities of the requested party would be prohibited by its 
domestic law from carrying out the action; and if it would be contrary 
to the legal system of the requested party relating to mutual legal 
assistance. In addition, a State may deny assistance based on lack of 
dual criminality where the assistance would involve a coercive measure 
such as a search warrant or subpoena. Even where noncoercive measures 
are at issue, a State may deny assistance on dual criminality grounds 
if granting the assistance is inconsistent with its basic legal 
principles or the request involves de minimus matters.
    I would also briefly note that article 46 requires on a global 
scale measures that have long been a standard aspect of U.S. mutual 
legal assistance practice but that are not always applicable in other 
countries, such as the prohibition on invoking bank secrecy to bar 
cooperation in paragraph 8.
    Finally, chapter IV contains several other nonmandatory but helpful 
cooperation provisions, including article 48 (encouraging States 
Parties to cooperate closely to enhance the effectiveness of law 
enforcement action) and article 49 (whereby States Parties shall 
consider concluding bilateral or multilateral joint investigation 
agreements).
    We believe that all of these provisions provide important new tools 
to U.S. law enforcement. Let me give you a practical example. As I 
stated earlier, enforcing the Foreign Corrupt Practices Act is a major 
priority for the Justice Department's Criminal Division. The very 
nature of FCPA investigations, however, is that many of the relevant 
witnesses and evidence often are located in foreign countries. The 
Justice Department believes that the international cooperation 
provisions in this Convention will increase our ability to obtain 
evidence from foreign countries, leading to more effective enforcement 
of the FCPA and other offenses. And by providing us with the tools to 
more effectively investigate and prosecute the FCPA, the Convention 
helps us to preserve the integrity, stability, and transparency of our 
political and economic systems.

                           IV. ASSET RECOVERY

    I would now like to discuss a few of the key asset recovery 
provisions of the Convention, which can be found at articles 51-59. The 
asset recovery provisions establish new mechanisms for the recovery of 
illicitly acquired assets and for international cooperation regarding 
asset forfeiture. These provisions are important from a law enforcement 
perspective because they will help to deprive corrupt officials of 
their ill-gotten gains and may, in some cases, require the property to 
be returned to the nation from which it was taken.
    Article 52, for example, requires States Parties to have adequate 
procedures in place to detect suspicious transactions. Article 53 
provides that a State Party that has been harmed by corruption can 
participate as a private litigant to recover the proceeds of 
embezzlement and other crimes in a forfeiture proceeding, or as a 
victim for purposes of court ordered restitution. And in article 54, 
the Convention requires States Parties to establish a legal framework 
for providing assistance in the recovery of assets acquired through one 
of the core criminalized offenses. Under this provision, countries must 
enact legislation to enable them either to freeze or seize the illicit 
property or to recognize a foreign judgment against the property. The 
Department currently anticipates that in the event the United States 
requests assistance from another party under article 54, the United 
States would seek to have both in rem civil forfeiture and post-
conviction criminal forfeiture judgments enforced.
    Finally, article 57 sets forth a framework for the disposition of 
property confiscated by one State Party at the request of another. 
Although article 57 is a powerful new tool for returning ill-gotten 
gains to victim States, it is narrow in scope and thus will not burden 
the U.S. judicial system. First, article 57 applies only in cases in 
which one country has successfully recovered the proceeds of foreign 
corruption through enforcement of a foreign forfeiture order (i.e., 
pursuant to article 55(1)(b)). Second, article 57 reaffirms the 
principle that repatriation of forfeited assets is subject to the 
requirements and procedures of domestic law. Third, the obligation is 
subject to the same safeguards as provided in article 46. The U.S. 
Government could, therefore, refuse a request to repatriate funds under 
this article where assistance would offend the ``essential interests'' 
of the United States. The United States has ample authority through its 
asset sharing and remission statutes to execute the obligations under 
article 57.

               V. TECHNICAL ASSISTANCE AND IMPLEMENTATION

    Finally, Mr. Chairman, I would like to say a brief word about the 
technical assistance and implementation provisions of the Convention. 
The Convention, in chapter VI, calls for States Parties to provide each 
other with technical assistance in implementing the various provisions 
of the Convention. In chapter VII, the Convention creates a Conference 
of the States Parties to the Convention, the purpose of which is to 
``improve the capacity of and cooperation between States Parties to 
achieve the objectives set forth in this Convention and to promote and 
review its implementation.''
    The first meeting of the Conference of the States Parties, or COSP, 
is tentatively scheduled to occur in December of this year. The COSP 
will determine the substance and scope of any technical assistance and 
implementation programs, including any mechanism for ``peer review'' or 
``monitoring.'' In the months leading up to the COSP, States will be 
working informally to develop an agenda for the COSP and to begin to 
discuss the substantive issues that the COSP will address. For example, 
the Criminal Division and other U.S. Government components have already 
been assisting the United Nations Office on Drugs and Crime with the 
drafting of legislative and technical guides for the Convention.
    Critically, the United States will have more influence as a 
participant in the COSP as a State Party than a mere signatory. 
Participating in the COSP as a State Party will benefit the United 
States. Among other things, as a State Party we will be in a better 
position to influence the scope of any peer review mechanism that may 
emerge from the COSP to ensure that it is not unduly burdensome or 
otherwise unreasonable.
    Accordingly, I respectfully urge the committee to report the 
Convention favorably and the Senate to provide its advice and consent 
to ratification as soon as practicable, but in any event prior to 
November 2006.

                             VI. CONCLUSION

    Mr. Chairman, by combating global corruption, we restore confidence 
in democracy and the rule of law. We bolster the global economy by 
encouraging open trade and investment. We strengthen the stability, 
integrity, and transparency of government and economic systems 
worldwide. The United Nations Convention Against Corruption helps us do 
all of those things.
    But above all, Mr. Chairman, the Convention significantly and 
directly advances the national security and law enforcement interests 
of the United States of America. On behalf of the Department of 
Justice, I, therefore, urge the U.S. Senate to provide its advice and 
consent to ratification to this important treaty. I would be pleased to 
respond to any questions the committee may have.

    The Chairman. Well, thank you very much, Mr. Swartz, for 
your testimony. We appreciate both of you illuminating the 
treaty. You have provided excellent summaries of your broader 
statements.
    I have a series of questions that are not meant to 
challenge your testimony, but may offer you additional 
opportunities to once again cover the aspects, for the sake of 
a hearing record, that would be important to our members on the 
committee, and likewise to all Senators.
    Let me ask you these questions, and either one of you may 
respond. One or the other may have a specialty in the areas we 
are going to talk about here. First of all I would point out 
that the United States is already a party to two treaties 
relating to corruption--the OECD Convention on Combating 
Bribery of Foreign Public Officials in International Business 
Transactions, and the Inter-American Convention Against 
Corruption that I mentioned in my opening statement.
    What progress has been made against corruption as a result 
of these two earlier treaties, and how does this Convention 
build on these regional efforts? Why, therefore, is another 
convention needed, in your judgement?
    Mr. Swartz. Mr. Chairman, these two Conventions have been, 
as you note, extremely important to the international fight 
against corruption. And this Convention builds upon those two 
prior Conventions in ways that we believe will be very useful 
for the law enforcement and for the national security interests 
of the United States. The Inter-American Convention Against 
Corruption was the first multilateral international agreement 
specifically relating to corruption, and it established the 
principle that international cooperation and preventive 
measures were necessary to fight corruption.
    Now that that Convention is in force throughout the 
hemisphere, countries are more able and more willing to address 
problems relating to corruption, bilaterally and at the 
Organization of American States. And the Convention has been 
helpful in practical cases.
    One striking example, from the perspective of the U.S. 
Government, was when the United States invoked the Convention 
in 2001 to arrest and to extradite two fugitive associates of 
the former chief of intelligence of Peru, Vladimir Montesinos. 
Montesinos had been charged in Peru with an array of corruption 
and abuse of office offenses, and the fugitives were charged 
with aiding him in evading arrest and destroying evidence.
    Now, these offenses were not covered by the old 1899 treaty 
between the United States and Peru regarding extradition, but 
they were covered by the accessory after the fact provisions of 
the Convention, and thus extradition from the United States was 
possible.
    The OECD Convention has been equally important. It was the 
first international agreement to solely target bribery of 
foreign officials in international business transactions, and 
it was the first to create an active peer-review monitoring 
mechanism to ensure effective implementation. Prior to that 
Convention, as the Chair is aware, the United States was the 
only country to investigate and prosecute bribery of foreign 
officials, and the Convention is slowly, but surely, leading 
the way to action by other OECD governments in this area. For 
example, France, Germany, and the United Kingdom all have a 
very active number of investigations into foreign bribery by 
their companies. Work at the OECD also eliminated the tax 
deductibility of bribes, and has strengthened significantly 
antibribery disciplines on export credits.
    But even with such progress, there is a long way to go and 
the U.N. Convention will take the international fight against 
corruption to a new level. It is a far more comprehensive 
treaty than either the OECD or the Inter-American Conventions. 
The OECD Convention, as I noted, focuses on bribery of foreign 
officials; and the Inter-American Convention only requires 
action in the law enforcement area and is geographically based.
    Neither of those Conventions provides as well the approach 
of comprehensively addressing asset forfeiture that the U.N. 
Convention does. In short, the U.N. Convention addresses 
corruption on multiple fronts, by taking preventive measures, 
as Mr. Witten noted; criminalizing a wide range of corrupt 
conduct; and cooperating on asset recovery. It will apply to 
countries around the world, and it will provide a comprehensive 
framework that we believe will be essential to advancing our 
anticorruption goals.
    The Chairman. Thank you. One of the facets that you 
mentioned, and only one in that comprehensive list, but one 
which many Americans have found fascinating as well as 
repugnant, has been the deduction of bribes as people file tax 
returns in other countries; in other words, the perception that 
it's just simply a cost of doing business. And the 
internationalization of that principle in itself is really an 
important indicator of the seriousness of this activity.
    Let me ask now a second question of this panel. In a speech 
commemorating the entry into force of the Corruption Convention 
last December, Ambassador John Bolton, U.S. Representative to 
the United Nations stated, and I quote, ``The United States is 
proud to have actively participated in the negotiation of the 
Convention.'' And he encouraged the U.S. Senate to provide its 
advice and consent to ratification of this important convention 
at an early date. Ambassador Bolton is leading the U.S. efforts 
in the critical campaign to reform the United Nations in the 
wake of the oil-for-food scandal. What would be the impact on 
those efforts if the United States were to fail to ratify the 
Convention?
    Mr. Witten.
    Mr. Witten. Thank you, Mr. Chairman. The short answer, Mr. 
Chairman, is that becoming a party would help in this and all 
other efforts of the United States to address corruption as 
reflected in Ambassador Bolton's statements back in December 
which echoed the President's words when submitting the 
Convention to the Senate for its consideration. The 
administration strongly supports ratification of the Convention 
and requests rapid approval by the Senate.
    The United States has been a world leader at addressing 
corruption wherever it occurs, whether at the national level or 
in international organizations such as the United Nations.
    The United States is working on many fronts to further 
these anticorruption goals, for example, by pushing for 
governmental commitments to fight corruption through agreements 
such as the Corruption Convention, the OECD Convention, and the 
Inter-American Convention. Second, by pushing for government 
action against corruption through other means, for example, 
U.S. international diplomacy and foreign assistance. Third, by 
engaging governmental organizations and working with them in a 
partnership to address corruption issues throughout the world. 
And, finally, as you mentioned, Mr. Chairman, pushing for 
action by, and within, international organizations such as the 
United Nations.
    Becoming a party to this Convention and participating in 
its implementation will certainly enhance our anticorruption 
efforts in all of these fronts, of course including our posture 
advocating reform at the United Nations and other public 
international organizations.
    In addition, Mr. Chairman, I note that the Convention 
addresses bribery for commercial advantage not only of 
officials of foreign governments but also officials of public 
international organizations. This is one of the key 
criminalization requirements of the Convention. Parties, 
therefore, are required to criminalize bribes paid to officials 
of the United Nations and other public international 
organizations that are made for commercial advantage. Thank 
you.
    The Chairman. Let me ask, as we further examine our foreign 
policy goals, how does this Convention fit in with the broader 
U.S. anticorruption agenda? We've discussed already the U.S. 
reforms with regard to the United Nations, as you've just 
mentioned, Mr. Witten. But what other ramifications would 
result from a U.S. failure to ratify the Convention? For 
example, would it impair U.S. credibility in advancing other 
key anticorruption efforts, such as our own committee's efforts 
to combat corruption related to multilateral development bank 
financing?
    Mr. Witten.
    Mr. Witten. Thank you again, Mr. Chairman. Adherence to 
this Convention is part of a broader picture, as you've 
indicated in your opening statement, and as I've attempted to 
convey. The fight against corruption is a priority for the 
United States because it accomplishes so much. As we've 
discussed, it has national security implications; it affects 
U.S. businesses; it advances development; and it brings the 
world up to a higher standard of law enforcement cooperation 
and security cooperation.
    In our view, the Convention will be a critical tool for 
enhancing U.S. international anticorruption efforts, and this 
is because we learned from the earlier treaties, which are 
regional or more limited in their scope. It takes those 
provisions, it builds on them, and it effectively creates a 
framework that the entire world can use.
    In our view, if the United States does not become a party, 
it will make it much more difficult for us to continue what we 
have started by way of our international efforts to bring 
countries up to the higher standards of anticorruption in their 
domestic systems. We're currently, as you know, Mr. Chairman, 
going around the world, for example, at APEC, at the Group of 
8, in OECD fora, working with the United Nations, we are making 
every effort we can to remain a firm and resolute leader in the 
effort to combat international corruption. And, put simply, not 
becoming a party to this Convention at this stage would make 
our efforts much more difficult.
    In addition, as you mentioned, Mr. Chairman, with the 1-
year anniversary of the Convention entering into force almost 
upon us in December 2006, there will be the first Conference of 
State Parties. Although the United States will attend that 
Conference whether or not we're a party, our position will be 
strengthened materially if we are a party and are participating 
in that capacity. Thank you.
    The Chairman. Thank you, Mr. Witten. As I've observed 
before, after some of our hearings on the multilateral 
development bank situations, often the press in our country has 
not really gotten into this, but the press in other countries 
has, and I compliment, really, the vigorous press in countries 
that have worked to frame this issue in ways that citizens are 
able to understand.
    Mr. Witten. Mr. Chairman, could I add something?
    The Chairman. Yes.
    Mr. Witten. And I didn't----
    The Chairman. Yes.
    Mr. Witten. Your question particularly addressed the 
multilateral development bank issue, and I would note in the 
same way that in my comments about the United Nations, the same 
legal framework would apply. This Convention applies to bribery 
of officials of public international organizations. So I would 
just note for the record that this is yet another advantage of 
the Convention, and it's entirely consistent with this 
committee's excellent efforts in recent years to address this 
issue.
    The Chairman. Well, I thank you for that comment. We 
believe that we've been able to assist the banks in not 
necessarily reforming the cultures that were a part of their 
administration, but in indicating that this has a higher 
priority around the world. And the citizens suffer twice if a 
loan is made to a country and that money is misused. The people 
then don't have the road or the bridge or whatever the money 
might have brought, and they do have a debt and are double 
losers in the process. So the attempt here to bring about some 
confidence in multilateral institutions is, we believe, an 
important effect of what you're proposing today.
    Now, let me ask, although parties to the Convention are 
required to criminalize certain corruption related offenses, 
many of the other provisions contained in the Convention are 
not of a mandatory nature, or grant each party significant 
discretion in determining how and when to apply the provisions 
``in accordance with fundamental provisions of its legal 
system.'' In light of these so-called soft obligations, how 
does the administration envision the Convention will make 
significant headway against corruption, especially in countries 
where it is most endemic?
    Mr. Swartz.
    Mr. Swartz. Thank you, Mr. Chairman. This is an important 
issue. I believe that, as, of course, the chairman has pointed 
out, the five core criminalization provisions, the mandatory 
criminalization provisions, are important. But they are not the 
only mandatory provisions of the Convention. And it is 
important to recall in this regard, first, that the Convention 
carries with it, both in the prevention context and the 
international legal assistance context and with regard to asset 
recovery, mandatory provisions that themselves will be very 
important in fighting corruption. For instance, in the 
prevention context, the disallowance of the deductibility of 
tax deductions, as the chairman has pointed out, is a critical 
and mandatory feature of the Convention, as are the actions 
that are mandated in other areas of the Convention, such as the 
books and records requirements. The requirement that countries 
be able to provide international cooperation is also mandatory 
and will be very important in pushing forward the fight against 
corruption. Similarly, the mandatory provisions set forth in 
the asset recovery portion are also essential.
    But, as you point out, Mr. Chairman, there are only five 
mandatory core criminalization provisions, and there are 
various discretionary provisions put forward, particularly in 
the criminalization article of the Convention. But those 
discretionary provisions are there for two reasons. First, they 
provide some needed flexibility in how countries apply a 
certain principle for fighting corruption, as in the prevention 
chapter as well. And, second, they represent measures that were 
deemed important to various groups of countries during the 
negotiation of the Convention but did not enjoy wide enough 
support, the consensus of support, to be mandatory.
    During negotiations, certain delegations argued that it was 
important for their domestic anticorruption efforts to have 
certain tools included in the Convention, even if 
discretionary. In that regard we believe that having those 
discretionary provisions available will not weaken enforcement 
of the Convention, but will provide additional tools for those 
countries that choose to use those tools.
    Perhaps most importantly, the United States was successful 
in ensuring that all mandatory provisions in the U.N. 
Corruption Convention involved anticorruption measures that are 
deemed acceptable and already used by the United States. It is 
these provisions, we believe, that are most likely to lead to 
headway against corruption in many countries.
    I'd also like to note that applying a provision in 
accordance with the fundamental provisions of its legal 
systems, the term used in the Convention, was not intended by 
the negotiators to make a provision discretionary in and of 
itself. It simply calls upon parties to apply a provision in a 
way that best suits their domestic legal systems. For example, 
the United States, given its Federal legal structure, may want 
to apply a provision differently than a country that has only 
one national legal system. But that said, we believe that the 
Convention does have a combination of mandatory and 
discretionary provisions that will advance the fight against 
corruption.
    The Chairman. Thank you. The Convention encourages parties 
to adopt measures designed to prevent corruption, such as the 
application of codes of conduct for public officials and the 
transparent use of objective criteria in public procurement 
systems. Do you expect that many developing countries will have 
the resources to be able to implement such provisions? And is 
technical assistance envisioned to assist countries in their 
effort to implement these and other provisions of the 
Convention?
    Mr. Witten.
    Mr. Witten. Thank you, Mr. Chairman. The U.N. Corruption 
Convention not only encourages, but mandates, certain goals and 
actions to prevent corruption. I would draw the committee's 
attention to article IX. Designing transparent public 
procurement systems is one of the mandated preventive measures. 
And as your question reflects, Mr. Chairman, countries will, of 
course, have different resources to apply to implementing the 
Corruption Convention. Developing countries may have fewer 
resources. The United States will encourage countries to see 
that the return in investing resources in some of these areas, 
such as the transparent public procurement system, can outweigh 
the initial public cost. For example, taking the time and 
effort to design more transparent procurement systems may 
ultimately save the government millions of dollars in lower 
procurement costs.
    We also expect that technical assistance will be needed by 
some countries to implement certain of the U.N. Corruption 
Convention provisions. The Corruption Convention will provide a 
basis for a political commitment on the part of the parties to 
take action in those areas, and also relevant to your question, 
will provide a basis for the United States and other donor 
countries to work cooperatively and closely with countries on 
fighting corruption. In fact, although the entire agenda of the 
Conference of State Parties has not been set, we expect that 
conference in December 2006 to focus heavily on the issue of 
what technical assistance could be useful to more effectively 
promote implementation of the provisions of this Convention.
    The Chairman. I appreciate your mention of that agenda for 
the December 2006 conference. And I think that's important for 
public understanding and for the record that this is an 
opportunity, really, to try to fill in such things as technical 
assistance, recognizing that there are provisions here. But the 
practical effect will only be realized if countries have the 
resources to do this sort of thing, and that may require some 
international cooperation.
    The Convention contains a framework for parties to provide 
legal assistance to each other in corruption-related cases in 
the absence of a bilateral mutual legal assistance treaty. What 
safeguards would be available to the United States to refuse to 
provide assistance if it should receive a mutual legal 
assistance request that it judges to be politically motivated 
or otherwise improper? How do these safeguards compare with 
those applicable under United States bilateral mutual legal 
assistance treaties?
    Mr. Swartz.
    Mr. Swartz. Mr. Chairman, thank you. The Convention 
provides broad safeguards for the United States to refuse 
politically motivated or otherwise improper requests for 
evidence. The mutual legal assistance article, article 46, 
unlike the extradition article, article 44, does not 
specifically reference improper political motivation as a basis 
for refusing the mutual legal assistance request. However, such 
a request would implicate each of the four bases for refusal 
set forth in article 46, paragraph 21.
    As an initial matter, a request motivated by a desire to 
punish a person for his political views would not be a request 
made ``in conformity with the mutual legal assistance 
provisions of article 46,'' because it would not be, in fact, 
for the article's required purpose of advancing legitimate 
investigation or prosecution of an offense under the 
Convention.
    Second, it would be contrary to our essential efforts to 
use our courts to assist a foreign government in persecution, 
including the repression of political speech or other 
activities we would view as protected by the first amendment.
    Finally, such action would constitute an abuse of process 
that would be both contrary to our legal system, the third 
basis for refusing a request, and an action that would be 
prohibited under our own laws if our agents and prosecutors 
sought to utilize their criminal investigative powers and the 
powers of our courts for such ends.
    Overall then, the bases for refusal in the Convention are 
somewhat broader than under our bilateral treaties. Most 
significantly, under the Convention a request for a coercive 
measure, for example, a search or seizure of property, may be 
declined on the basis of lack of dual criminality.
    While some bilateral mutual legal assistance treaties do 
have some limitations based on dual criminality considerations, 
the majority do not. Moreover, even as to noncoercive measures, 
we can decline under the Convention on the grounds that the 
request is de minimus or if the request could be channeled 
through informal channels such as police-to-police cooperation.
    Also, while all of our bilateral treaties permit us to 
decline assistance if contrary to our essential interests, and 
we consider adherence to the Constitution and other fundamental 
provisions of our law as being within those central interests, 
the Convention goes further, permitting us to refuse a request 
where it is simply contrary to our legal system. This should 
give us, we believe, greater latitude in declining and limiting 
assistance.
    The Chairman. Well, that's a very important response, 
because clearly as a commonsense matter, even as we're seeking 
to fight corruption worldwide, it would be very unfortunate if 
a country attempting to settle political scores within its own 
realm tried to utilize us as a method of prosecution. And I 
appreciate your illuminating that area, both in terms of our 
normal bilateral treaties, as well as its application in the 
one we're discussing this morning.
    While the Convention contains a chapter on asset recovery, 
an area not addressed in significant detail in earlier 
anticorruption instruments, as a practical matter, how would 
these provisions facilitate the identification and recovery of 
assets illicitly acquired by a corrupt official, and how would 
a government using this Convention seek the return of assets 
embezzled from its treasury?
    Mr. Swartz.
    Mr. Swartz. Thank you, Mr. Chairman. As you note, the asset 
recovery provisions of the Convention are important ones. They 
receive an entire chapter, and they are some of the provisions 
that make this such an important convention. The provisions 
regarding asset recovery cover the entire range from detection 
through restraint to recovery and to final disposition of the 
assets. As a practical matter it provides important new tools 
for law enforcement and will help ensure that we can deprive 
corrupt officials of their ill-gotten gains and return funds to 
victim states.
    Turning first to detection, article 52 requires States 
Parties to have adequate procedures in place to detect 
suspicious transactions and particularly to give heightened 
scrutiny to high-value accounts owned by foreign public 
officials. And the United States meets this obligation already 
under the Patriot Act as to foreign public officials.
    The Convention also gives several routes for recovery of 
such illegally obtained assets. First, article 53 provides that 
a State Party that has been harmed by corruption can 
participate as a private litigant to recover the proceeds of 
embezzlement and other crimes in the country in which those 
funds may have been deposited or otherwise transferred.
    In addition, article 54 provides that each State Party must 
provide a legal framework to provide assistance in the recovery 
of assets that were acquired under one of these mandated 
offenses under the Convention. Under this provision, countries 
must enact legislation to enable them to either freeze and 
seize the illicitly obtained property of foreign origin or to 
recognize a foreign judgement seizing or freezing the property, 
and to use that as a basis for recovery.
    Article 55 provides that requests by a foreign government 
in recovering assets shall be governed by the mutual legal 
assistance provision, article 46, which, therefore, puts in 
place all of the safeguards that I discussed in my prior 
answer.
    And then finally article 57 sets forth a framework for the 
disposition of property confiscated by a State Party at the 
request of another. These provisions are detailed. They are all 
in accordance with U.S. law, and we believe that they provide a 
framework that will be of tremendous value, not only for the 
United States, but for other countries trying to seek return of 
looted assets.
    The Chairman. The first Conference of States Parties to the 
Convention is scheduled to take place, as we have been 
mentioning, in December of this year. What issues do you expect 
this conference to address? You've already touched upon some, 
but be expansive, if you will. Some private sector 
organizations have urged the U.S. Government to provide 
leadership at the conference in the establishment of an 
effective monitoring mechanism for the Convention. What is the 
U.S. position on that issue, and to what extent will the United 
States be in a position to influence the outcome of the 
conference? Wouldn't U.S. influence be enhanced if the United 
States were to become a party prior to the conference?
    Mr. Witten.
    Mr. Witten. Thank you, Mr. Chairman. The issue of what will 
take place at the conference is something that we are beginning 
to look at and consult about extensively. I can give you the 
best picture that we have at this time of how we intend to 
approach this conference. We view this as the beginning of an 
effort that will go over a long stretch of time to consider how 
parties can best promote implementation of the Corruption 
Convention. The role of technical assistance, as we've 
discussed, will of course be a major focus of the Conference of 
State Parties. We note that this first meeting has been tasked 
by the U.N. General Assembly to consider also how the 
Corruption Convention may help further the anticorruption 
efforts of public international organizations such as the 
United Nations and other multilateral organizations. And I note 
that I believe two of your questions, Mr. Chairman, have 
addressed this issue.
    The Chairman. Yes.
    Mr. Witten. We're in the process of conducting internal 
discussions to determine what exactly we, the United States, 
would like to see happen at the Conference of State Parties. I 
can tell you our thinking as of this time. Initially, we will 
likely want to see a constructive process that will create a 
conduit for providing more effective technical assistance on 
issues of corruption. The Conference of State Parties will 
likely need to gather information on Corruption Convention 
implementation in order to inform donors and to help them 
determine which countries are committed to implementing the 
Corruption Convention and willing to take appropriate action to 
implement its terms.
    One challenge that's clear--this will be the first 
conference, the first of many--will be to develop an effective 
and efficient process for an envisioned conference of 130-plus 
parties. This will be a complicated enterprise, just like the 
negotiation of the Convention.
    The United States was active and very successful during 
those negotiations, and we hope to have a similarly active and 
influential role in the Conference of State Parties process. 
We've been able to secure a seat at the Conference of State 
Parties table, even as a signatory. However, as you've noted, 
Mr. Chairman, being a party to the Convention at the time the 
conference meets will definitely provide us more influence at 
the Conference of State Parties, and according to the rules of 
the conference, will guarantee us input on all substantive 
decisions. Thank you.
    The Chairman. Well, that's useful, but we will have a seat 
at the conference in any event. But, of course, to the extent 
that we're a party, as you say, our influence will be 
substantially increased. Just out of curiosity, where is it 
likely the conference will be held and what dates in December, 
or has this been defined?
    Mr. Witten. I'll consult. I believe Vienna, but I'll 
consult.
    [Consults with staff.]
    Mr. Witten. I'm sorry, Mr. Chairman. First, the dates are 
December 9-13, and I've just been reminded that Jordan has 
agreed to host this initial Conference of State Parties. The 
negotiations were in Vienna, hence my focus there.
    The Chairman. So it will be in Amman, Jordan?
    Mr. Witten. December 9 through 13.
    The Chairman. And with as many as 130 parties around the 
table.
    Mr. Witten. Well, we don't know at this time exactly how 
many will attend.
    The Chairman. I see.
    Mr. Witten. We know that there are a large number of 
signatories, and with 55 nations already having become parties, 
it's just June, I imagine there will be more and more. We'll 
see how many actually attend.
    The Chairman. Once again just out of curiosity, from your 
experience, when there are that many parties attending, do they 
all sit around a large, round table, or how do you accommodate 
all these people who have differing views?
    Mr. Witten. Well, I'm afraid I don't know the physical 
layout that will happen.
    The Chairman. I see. The Jordanians will have to work that 
out.
    Mr. Witten. The Jordanians will----
    Mr. Swartz. They're building the table now.
    The Chairman. I see.
    Mr. Witten. You're thinking back to the seventies, I know, 
trying to configure the table.
    The Chairman. Well, there are now, just to get into the 
details of this, over 55 parties to the Convention, including 
countries at all levels of economic development. Eighty-eight 
other countries, including the United States, have signed but 
not yet ratified the Convention. Thus, if we're doing the math, 
we've got up to the 130 range, actually, 143--55 plus 88, I 
guess. What is the U.S. Government doing to encourage wide 
ratification of the Convention among both our trade competitors 
and developing countries, and does the administration 
anticipate that this Convention will finally achieve truly 
global acceptance?
    Mr. Witten. Thank you, Mr. Chairman. The U.N. Corruption 
Convention is being recognized internationally as the new and 
comprehensive global standard for fighting corruption, and we 
do expect it to become globally accepted over time.
    With respect to your question, there is a lot of momentum 
already building. Just this week Spain added its name to the 
countries that are becoming parties. And with the 30-day notice 
requirement, Spain will become a party 30 days from this past 
Monday. So the momentum is building. Countries around the world 
have already signed, and a growing number are actually becoming 
parties.
    The United States is doing a number of things to encourage 
countries to become a party. As I noted in my opening 
statement, the United States has been actively promoting the 
Convention in regional fora such as the G-8, the Asia-Pacific 
Economic Cooperation Forum, the Organization of American 
States, and the U.N. Development Programme-OECD's Initiative on 
Good Governance in the Middle East and North Africa. We've also 
provided some funding so far, and may be providing more in the 
future, to the U.N. Office on Drugs and Crime, which is the 
forum within the United Nations that is at the heart of these 
efforts. Our funding, which I understand to be $1 million 
already, has included regional conferences to educate countries 
on the Convention and to promote acceptance and ratification, 
and the placement of mentors in several regions to help provide 
advice on implementing the Convention. And these efforts, 
together with our outreach at regional fora, will only be 
helped once we become a party as opposed to a country that 
played a big role in this negotiation.
    The Chairman. Well, I thank both of you for your detailed 
responses to these questions. We appreciate your initial 
testimony and look forward later to being in consultation with 
you as our committee proceeds and hopefully, on the Senate 
floor thereafter.
    Do either of you have any final comments that you would 
like to make for the record?
    Mr. Witten. Mr. Chairman, I would like to make one comment. 
It's a little unusual, but the head of our delegation is 
sitting behind us, and I know I'll get into trouble by 
recognizing just one person----
    The Chairman. Please go ahead.
    Mr. Witten. I think it would be appropriate. Elizabeth 
Verville has been with this Convention from day one, along with 
John Brandolino and Molly Warlow, and a number of folks from 
State and Justice. And obviously this is an enterprise that 
required many round trips, many days and weeks away from home. 
And the effort was worth it, as we know. But I just wanted to 
recognize the outstanding work of the team that negotiated this 
on behalf of the United States.
    The Chairman. Well, I thank you for recognizing these very, 
very able associates. We thank both of you, as well as all of 
the dedicated associates who have accompanied you to the 
hearing, for your testimony.
    We will now proceed to our second panel, and that will 
include the Honorable Alan P. Larson, chairman of Transparency 
International-USA in Washington, DC, and the Honorable William 
A. Reinsch, president of the National Foreign Trade Council, 
Washington, DC.
    Gentlemen, we welcome you both again to the committee 
witness table. We have appreciated your testimony in the past, 
frequently, Secretary Larson, in your other capacities at the 
State Department in addition to the new responsibilities that 
you have assumed.
    I would like for you to testify in the order that I have 
introduced you, and your full statements will be made a part of 
the record. You may summarize, if you wish. Please proceed, 
Secretary Larson.

   STATEMENT OF HON. ALAN P. LARSON, CHAIRMAN, TRANSPARENCY 
               INTERNATIONAL-USA, WASHINGTON, DC

    Mr. Larson. Thank you very much, Mr. Chairman. On behalf of 
the U.S. Chapter of Transparency International, I want to 
congratulate you for holding this hearing. We appreciate the 
strong interest of this committee and particularly your 
leadership, Mr. Chairman, in making the issue of corruption in 
development assistance, at the World Bank and more broadly, a 
priority. It has stimulated significant progress, and we are 
honored by the interest you and committee staff have shown in 
our views.
    Corruption is not simply an unpleasant fact of life that we 
must reluctantly accept. It, rather, is a cancer that threatens 
core American values and interests.
    Corruption despoils democracy. It erodes development. It 
penalizes U.S. businesses. And, as you pointed out quite 
clearly in your statement, Mr. Chairman, it damages the very 
security of our country.
    The United States has a strong record of leadership in the 
global fight against corruption. Congress enacted the Foreign 
Corrupt Practices Act in the 1970s. In 1988 the Congress 
instructed the executive branch to try to extend those 
disciplines to other countries through negotiations in the 
OECD. This committee led the ratification of that OECD 
Convention Against Bribery. The committee and past 
administrations pushed forward the Inter-American Convention 
Against Corruption.
    As you pointed out in your statement, in the first term of 
the Bush administration there were many important initiatives 
against corruption that were pursued in our own policies and 
through the G-8.
    And then, finally, the United States through the last two 
administrations has devoted considerable effort to the 
negotiation of the United Nations Convention Against 
Corruption.
    This Convention Against Corruption significantly 
strengthens the international framework. It provides a global 
framework to combat what is a global phenomenon. It extends 
discipline, for example, of the bribery of foreign government 
officials to significant emerging market exporters such as 
China, which are not covered by the Foreign Corrupt Practices 
Act, of course, and are not parties to the OECD Convention 
either.
    The Convention prohibits domestic bribery of public 
officials, and it recommends measures to prevent bribery in the 
private sector and to enhance auditing and accounting 
standards. It provides for preventative measures to raise the 
levels of integrity in public service. Importantly, it requires 
specific steps to enhance procurement transparency, something 
the United States has fought hard for in-trade agreements, but 
we've achieved in substantial measure in this U.N. Convention. 
It expands mutual legal assistance on a global scale, and it 
breaks new ground in providing for the recovery of funds 
deposited in foreign banks by corrupt officials.
    As important as the Convention is, it will not implement 
itself. Monitoring is going to be very important to ensure 
effective implementation and enforcement. We've learned from 
past experience that an effective monitoring regime is 
necessary to secure timely and consistent implementation and 
enforcement. And we believe that it is important that the 
Congress encourage this and subsequent administrations to 
report to the Congress on progress that's being made in 
implementing an effective monitoring mechanism.
    Similarly, I underscore the comments, Mr. Chairman, that 
you and the previous witnesses made about the importance of 
technical assistance to the effective implementation of this 
Convention.
    I do believe that prompt U.S. ratification is necessary for 
continued U.S. leadership in this effort. As has been pointed 
out by Mr. Witten and others, ratification will strengthen the 
hand of the United States at the Conference of the Parties at 
the end of this year. And that meeting will be very important 
to set the framework for monitoring and for the use of 
technical assistance to make sure that this Convention is 
implemented in the way we all want and expect it to be.
    At a more political level, Mr. Chairman, I think it's 
important for the United States, which has been the global 
leader in this fight against corruption, to be waging it on all 
fronts. And you, sir, mentioned the importance of the efforts 
that our government is making to clean up the U.N. 
administration and specifically to address the oil-for-food 
program. That is very important work, and it's work that's been 
spearheaded by a well-respected American, Mr. Volker, and 
someone on his team, Mark Pieth, who has been a leader in the 
global anticorruption, antibribery fight. So this is one fight 
that has to be waged on different fronts. And for us to be 
effective in the work in cleaning up the oil-for-food program, 
we need to be pursuing just as vigorously ratification of the 
U.N. Convention and effective implementation of the U.N. 
Convention.
    I do believe that this Convention is an indication of the 
rising tide, globally, of attention to this issue. I believe it 
has strong support from business interests and from a wide 
array of nonprofit and international public organizations who 
are working to promote rule of law, good governance, and 
democracy. It, in particular, enjoys strong support from 
reformers in other countries who are struggling, sometimes in 
fairly lonely battles, to promote democracy, transparency, 
accountability, and economic development in their own 
countries.
    So, in conclusion, Mr. Chairman, as you indicated, I've had 
the honor to testify before this committee on many occasions as 
a spokesman for the administration. I'm very pleased today in 
my first appearance as a private citizen to be here and testify 
in support of the Convention and in support of a cause that's 
been championed by both parties. As you highlighted in your 
opening statement, it truly is a cause that's vital to American 
values and to American interests. Thank you.
    [The prepared statement of Mr. Larson follows:]

    Prepared Statement of Hon. Alan Larson, Chairman, Transparency 
                   International-USA, Washington, DC

    Chairman Lugar, Ranking Member Biden, and distinguished Senators, I 
congratulate the committee for organizing this hearing on the United 
Nations Convention Against Corruption (Convention).
    My name is Alan Larson and I am testifying in my capacity as 
chairman of the board of directors of the U.S. chapter of Transparency 
International. We appreciate the strong interest of this committee and 
particularly your leadership, Mr. Chairman, in making the issue of 
corruption in development assistance, at the World Bank and more 
broadly, a priority. It has stimulated significant progress. We are 
honored by the interest you and committee staff have shown in our 
views.
    At present, I am also a senior advisor at the law firm of Covington 
& Burling and I serve as a strategic advisor and director of the World 
Economic Forum. Formerly, I was a career ambassador in the Foreign 
Service of the United States, ending my government career in 2005, as 
Under Secretary of State for Economic, Business and Agricultural 
Affairs.
    I mention these past and present affiliations because each of them 
contributes to my conviction that prompt Senate ratification of the 
Convention must be among the highest priorities. Prompt ratification 
will advance America's leadership in the world, contribute to our 
efforts to promote democracy and development, and will help level the 
playing field for American business. Delay, on the other hand, would 
damage each of these objectives.
Corruption damages core America values and interests
    Corruption is not simply an unpleasant fact of life that we must 
reluctantly accept. Corruption, rather, is a cancer that threatens core 
American values and interests.
    Corruption despoils democracy. It is impossible to build and 
sustain representative institutions when corruption runs rampant. 
Promoting institutions with integrity and combating corruption is a 
central element of America's policy of empowering people and promoting 
democracy.
    Corruption erodes development. In country after country, corruption 
in the institutions of the marketplace has either prevented economic 
growth, perpetuated poverty, or has so distorted the distribution of 
the benefits of growth that public support for reform policies has been 
sapped.\1\
---------------------------------------------------------------------------
    \1\ According to the World Bank, over $1 trillion is lost to bribes 
annually. Embezzlement, fraud, and other corrupt acts raise these costs 
by diverting resources from poverty alleviation programs and essential 
public services such as education, nutrition, and health care.
---------------------------------------------------------------------------
    Corruption produces an unpredictable and unfair business playing 
field. It is a barrier to the trade and investment of American 
companies.
    For all these reasons and more, corruption must be tackled, not 
tolerated.

The United States has a strong record of leadership in the fight 
        against corruption
    The United States, the Congress, and this committee have reason to 
be proud of the leadership of the United States in the fight against 
corruption. That leadership has been bipartisan and sustained across 
changes in the leadership of the Congress and across changes of 
administration.
    The Congress enacted the Foreign Corrupt Practices Act (FCPA) in 
1977, to address the issue of overseas bribery of public officials to 
gain or retain business. In this way, the United States sought to 
ensure that American companies would be part of the solution, not part 
of the problem.
    In 1988, Congress encouraged the executive branch to negotiate, 
within the Organization for Economic Cooperation and Development 
(OECD), an arrangement that would commit other nations to disciplines 
similar to those in the FCPA.
    The task required persistent efforts over a decade by 
administrations of both political parties, and by 1997, the OECD 
Convention on Combating Bribery of Foreign Public Officials in 
International Business Transactions (OECD Convention) had been 
negotiated. This committee played a leading role in securing Senate 
ratification of the treaty and enactment of the necessary implementing 
legislation in 1998, and TI-USA was privileged to testify before this 
committee when Senator Helms was chairman. Widespread enforcement of 
the OECD Convention is still essential not only to level the playing 
field for U.S. business, but for the developed world so it has 
credibility when it urges governance reforms, such as those in the 
Convention, in the developing nations.
    The United States has played a leadership role in the negotiation 
of other anticorruption agreements, including the Inter-American 
Convention Against Corruption, which this committee reviewed and the 
full Senate ratified in 2000. Since then, it has encouraged other 
initiatives to address corruption in development, in the World Bank, in 
our own Millennium Challenge Corporation, and in initiatives of the 
Group of 8.
    In addition, the Bush administration rightly has stressed 
anticorruption initiatives as central planks of efforts to promote 
democracy and to strengthen free societies.
    Finally, the United States, throughout both the Clinton and Bush 
administrations, has devoted considerable effort to the negotiation of 
an effective universal arrangement, the United Nations Convention 
against Corruption, which entered into force on December 14, 2005.
    Prompt ratification of this Convention will sustain this record of 
leadership. Delays will damage the image of the United States. More 
specifically, delays in ratification will limit the leadership of the 
United States in the implementation of the Convention.

The United Nations Convention Against Corruption significantly 
        strengthens the international framework against corruption
    The basic provisions of the Convention have been fully summarized 
by the administration and committee staff, and the administration's 
October 27, 2005, transmittal package notes that no change in U.S. law 
is required to implement the Convention.
    I would simply highlight a few provisions that, in my opinion, 
represent significant advances over the status quo. First and foremost, 
the Convention provides a global framework to combat a global 
phenomenon. Corruption has global dimensions, and the Convention's 
universal reach, comprising developed and developing nations, makes it 
possible to tackle problems that cannot be addressed through existing 
regional regimes.
    For example, foreign bribery by significant emerging exporters, 
such as China, is not covered by the OECD Convention, but is covered 
under this Convention. This will help reduce the competitive 
disadvantage faced by U.S. companies, which have long operated under 
more stringent rules than their foreign competitors.
    In addition to prohibiting foreign bribery, the Convention 
prohibits domestic bribery of public officials and recommends measures 
to prevent bribery in the private sector and to enhance auditing and 
accounting standards. It requires parties to criminalize bribe 
solicitation, which is an important concern for businesses dealing with 
extortion.
    It provides for preventive measures to raise levels of integrity in 
public service, including laws that prevent conflicts of interest and 
promote asset disclosure, and it requires specific steps to enhance 
procurement transparency--an area rife with corruption.
    It expands mutual legal assistance on a global scale, requiring the 
widest possible cooperation in investigations, gathering and 
transferring evidence, and extradition. As a leading prosecutor of 
transnational crime, the United States stands to benefit greatly from 
this enhanced international cooperation.
    Finally, the Convention breaks new ground by providing for the 
recovery of funds deposited in foreign banks by corrupt officials. The 
asset recovery provisions are of prime importance to many developing 
nations whose wealth has been plundered and they are intended to create 
a disincentive for future illicit acts.
Monitoring is essential to effective implementation and enforcement
    The potential of this Convention is substantial, but we have 
learned from experience with other anticorruption conventions that an 
effective monitoring system is essential to secure timely, effective, 
and consistent implementation and enforcement.
    This is particularly true for this Convention, which involves 
numerous and diverse parties with different legal systems and levels of 
capacity. It requires governments to pass numerous laws, create 
agencies and take other actions. Monitoring will help identify 
problems, facilitate guidance and assistance, and promote reform.
    It will also provide important external impetus for action, 
particularly in countries lacking in political will.
    For companies doing business in multiple jurisdictions, monitoring 
will promote consistent implementation. It will also provide a forum 
where governments, the private sector, and others can raise concerns or 
bring complaints about actions inconsistent with the spirit and letter 
of the Convention.
    Given the importance of monitoring, TI convened experts with 
extensive experience to develop recommendations for an effective 
process. Last week, it presented its report to the U.N. Office of Drugs 
and Crime, which is expected to manage the process.\2\ We respectfully 
request that the committee enter this report into the record.
---------------------------------------------------------------------------
    \2\ TI's report on convention monitoring is entitled ``Report of TI 
Study on Follow-up Process for UN Convention Against Corruption.''

    [Editor's note.--This report was too large to print in this 
---------------------------------------------------------------------------
hearing. It will be maintained in the committee's permanent record.]

    To ensure sustained attention to the important issue of monitoring, 
the committee may want to request that the administration report back 
annually on progress in creating the monitoring mechanism. The Senate 
provided for such a report in its ratification of the Inter-American 
Convention.
Prompt U.S. ratification is necessary to continued U.S. leadership
    The Convention provides for a Conference of States Parties to 
promote and review Convention implementation, including by establishing 
an appropriate monitoring mechanism.
    The Conference of States Parties will discuss this issue when it 
meets this December in Amman, Jordan. United States leadership at this 
event will be vital to ensure that an effective and transparent 
monitoring mechanism is put in place. Our ability to influence the 
process will be significantly diminished if the United States has not 
ratified the Convention beforehand.

The Convention enjoys broad support and is part of a rising tide of 
        attention to the issue of corruption
    The Convention enjoys strong support from business interests in the 
United States and abroad, as well as from a wide array of nonprofit and 
international public organizations working to promote rule of law, good 
governance, and democracy. The committee will hear from representatives 
of some of these groups today and in written testimony.
    The Convention enjoys broad support from reformers in other 
countries who are struggling to promote democracy, transparency, 
accountability, and economic development. TI chapters in over 90 
countries firmly believe this agreement has great potential and, 
therefore, played a key role throughout the negotiations. Many TI 
national chapters are actively engaged in efforts to promote 
ratification and implementation by their governments.
    TI-USA enjoys the support of numerous leading U.S. multinationals 
who share the view that this Convention has great potential. We worked 
closely with the administration to craft Convention provisions and, 
more recently, a transmittal package that would maximize these benefits 
and address concerns.
    Through my work with TI and the World Economic Forum, I am aware of 
a growing number of international companies throughout the world who 
are seeking to form partnerships against corruption.
    Through my work at Covington & Burling, I am aware that 
corporations are very interested in strengthening their compliance 
programs. The Convention will help create an environment in which they 
can operate according to these programs.
    Through my work with other countries, I am aware that many 
governments consider corruption to be a central issue. Clearly, the 
fact that 140 countries signed and 53 ratified the Convention reflects 
a global consensus that corruption must be addressed.
    Even in the United States, the public has become increasingly 
concerned about failures of corporate governance and instances of 
public corruption.
    For all these reasons, prompt Senate ratification of the Convention 
will position the United States where our citizens and companies expect 
it to be and where the citizens and companies of other countries count 
on us to be.
Concluding Remarks
    Mr. Chairman, I have had the honor to testify before this committee 
on many occasions as the representative of administrations of both 
parties. I am pleased that today, in my first appearance as a private 
citizen, I am able to testify in support of a cause that has been 
championed by both parties. It is a cause on which I labored while in 
government and on which the organization I now represent has an 
unparalleled record of leadership.

    The Chairman. Thank you very much, Secretary Larson. We're 
grateful your public service continues.
    Mr. Reinsch, will you please give us your testimony.

   STATEMENT OF HON. WILLIAM A. REINSCH, PRESIDENT, NATIONAL 
             FOREIGN TRADE COUNCIL, WASHINGTON, DC

    Mr. Reinsch. Thank you, Mr. Chairman. I'm here in my 
capacity as president of the National Foreign Trade Council and 
the cochair of USA*Engage to make clear the American business 
community's support for a swift ratification of the Convention 
in accordance with the statements received from the 
administration in its transmittal package to this committee.
    American business understands that corruption is highly 
detrimental to the global trading system. It impedes economic 
growth and development and siphons money from productive uses. 
In addition, it disadvantages U.S. firms internationally, as 
domestic laws like the Foreign Corrupt Practices Act have held 
American firms to higher standards than many of their foreign 
competitors. The business community supports efforts to create 
a more stringent anticorruption regime and thereby raise the 
bar for the behavior of foreign businesses and governments and 
in the process promote expanded investment and growth.
    Ten organizations, including the NFTC, American Petroleum 
Institute, the Business Roundtable, the National Association of 
Manufacturers, the U.S. Chamber of Commerce, and the U.S. 
Council for International Business, have written you, Mr. 
Chairman, indicating that ``the Convention can be a critical 
tool in the global fight against corruption,'' and that it is 
``noncontroversial and has broad support.'' I would like to ask 
that this letter be included in the record following my 
testimony.
    The Chairman. The letter will be included.
    Mr. Reinsch. Thank you. The business community has come to 
its support for the Convention after a long and fruitful dialog 
with representatives of the administration, including those who 
negotiated the document, who were sitting behind me. I don't 
know if they're still there. And I'd like to thank them for 
their hard work, particularly former Assistant Secretary 
Anthony Wayne and his staff, and, of course, former 
Undersecretary Al Larson, who is sitting next to me.
    The interaction we had with these people is a fine example 
of how good government is supposed to work. During the 
negotiation of the Convention, some of my members raised 
concerns as to how this new instrument might affect U.S. laws 
and questioned its potential domestic impact on American 
companies. The administration officials carefully listened to 
our concerns, participated in an extensive, open, and frank 
dialog, and provided detailed language in the transmittal 
package that enabled us to come to four very positive 
conclusions about the Convention. They also permitted us to 
review that language prior to submitting it and received a 
number of comments that we had on it.
    First, the Convention, we believe, will level the playing 
field for American business by holding foreign companies around 
the world in places including Brazil, China, France, Russia, 
and the United Kingdom accountable for acts of corruption. It 
is the first truly global anticorruption effort, and it 
improves substantially upon other existing regional conventions 
that have attempted to address the issue of corruption. Those 
others, I gather, were discussed in some detail in previous 
testimony, so I won't elaborate on them now. I would point out, 
though, that some of the major exporters, as I believe Mr. 
Larson just mentioned, including China and India and all of 
Africa, are not parties to the existing conventions but 
hopefully will be to this one.
    By harmonizing anticorruption obligations at a higher 
standard than any before and globalizing the standard for the 
first time, the United Nations Convention raises the bar 
overall and has the potential to level the playing field to a 
greater degree than any treaty or convention currently in 
existence.
    The convention includes mandatory preventive measures, 
including calls to establish anticorruption policies and 
bodies, mechanisms to prevent public sector corruption and 
transparency in public procurement, and measures related to the 
judiciary, the private sector, and to civil society. The 
convention also criminalizes corrupt practices, including 
bribery and embezzlement of public funds, and includes 
provisions to recover illegally obtained assets and improve 
mutual legal assistance.
    The United States already abides by the requirements 
spelled out in the Convention. For example, the transnational 
bribery provisions are incorporated in the United States within 
the FCPA. Campaign finance laws, obstruction statutes, and 
various State and Federal laws incorporate the remainder of the 
mandatory provisions contained in the Convention. As a result, 
no changes to U.S. law are required, which is a key point for 
the American business community.
    Second, the reservations, declarations, and understandings 
contained in the transmittal package which accompanies the 
Convention ensure that the Convention does not impose any new 
costs or obligations under U.S. law. Secretary of State Rice 
indicated in her letter of submittal to the Senate that, ``if 
the United States makes the proposed reservations, the existing 
body of Federal and State law regulations will be adequate to 
satisfy the Convention's requirements for the legislation, and 
thus further legislation will not be required for the United 
States to implement the Convention.''
    The administration has concluded that this Convention does 
not require any changes to U.S. law and is generally not self-
executing, with the exception of the articles that have already 
been discussed, subject to the declarations, understandings, 
and reservations they have already proposed. In addition, 
nothing in the treaty creates a private right of action to 
permit foreigners to litigate corruption complaints in U.S. 
courts. These statements confirm that the United States is 
already in compliance with its obligations under the 
Convention, and has no further steps to take beyond 
ratification to implement this treaty into U.S. law.
    From our perspective, it's important that the Senate 
include the reservations, declarations, and understandings as 
part of its advice and consent, as the administration 
recommends in its transmittal package. We particularly support 
the following declaration in its resolution, which is contained 
on page 21 in the administration's transmittal package: ``The 
United States declares that the provisions of the Convention, 
with the exception of articles 44 and 46, are non-self-
executing. None of the provisions of the Convention creates a 
private right of action.''
    With the necessary declarations, reservations, and 
understandings in place, this Convention is costless from a 
domestic legal perspective, and squarely in the interest of the 
American business community.
    Third, since this treaty raises the bar for other countries 
without imposing new obligations on us, the United States must 
focus its attention on implementation and monitoring, which was 
the subject of several of your questions for the preceding 
panel. The administration must make certain that implementation 
of the Convention is transparent and honest, and that 
implementation actually focuses on rooting out corruption and 
is not used as a pretext to bar or harass American businesses.
    We should also urge other countries to implement the 
Convention consistent with due process protections and 
fundamental rights. In order to speak with the strongest and 
most credible voice to shape implementation of the Convention 
with these objectives in mind, prompt ratification by the 
Senate is imperative before December of this year, when the 
first Conference of State Parties meets in Amman.
    That meeting will be the first time the parties to the 
Convention will have an opportunity to discuss implementation, 
monitoring, and technical and capacity-building assistance. As 
countries incorporate the requirements of the Convention into 
domestic law, U.S. negotiators will be in position, starting in 
December, to help ensure that implementation focuses on 
developing legal mechanisms to root out corruption as opposed 
establishing new levers to make life more difficult for 
American and other foreign competitors. If we do not have a 
vote and a voice at that meeting, our ability to achieve those 
objectives will be jeopardized.
    Finally, the Convention will benefit political systems and 
investment regimes worldwide by empowering reform elements with 
tools they need to root out corruption and encourage 
transparent, stable investment climates. Consultations and 
technical assistance from developed countries and institutions 
will benefit elements in developing countries interested in 
improving transparency and reducing corruption, thereby 
improving the climate for American and local businesses and 
aiding overall development.
    For all these reasons, the National Foreign Trade Council 
supports swift ratification by the Senate of this Convention 
subject to the declarations and understandings contained in the 
transmittal package as received from the administration.
    And we thank you in particular, Mr. Chairman, as I have 
many times before, for holding a hearing so promptly on the 
subject. Thank you.
    [The prepared statement of Mr. Reinsch and the letter he 
requested to be put into the record follows:]

  Prepared Statement of Hon. William A. Reinsch, President, National 
   Foreign Trade Council and Cochairman of USA*Engage, Washington, DC

    Mr. Chairman and members of the committee, thank you for the 
opportunity to testify in support of Senate ratification of the U.N. 
Convention against Corruption. I am the President of the National 
Foreign Trade Council (NFTC), a trade association of more than 300 
companies committed to an open, rules-based trading system. Along with 
our USA*Engage coalition, we support multilateral cooperation and 
economic, humanitarian, and diplomatic engagement as the most effective 
means of advancing U.S. foreign policy interests and American values.
    My testimony details the American business community's support for 
swift ratification of the Convention in accordance with the statements 
received from the administration in its transmittal package.
    American business understands that corruption is highly detrimental 
to the global trading system. It impedes economic growth and 
development and siphons money from productive uses. In addition, it 
disadvantages U.S. firms internationally, as domestic laws like the 
Foreign Corrupt Practices Act have held American firms to higher 
standards than many of their foreign competitors. The business 
community supports efforts to create a more stringent anticorruption 
regime and thereby raise the bar for the behavior of foreign businesses 
and governments and in the process promote expanded investment and 
growth.
    Ten organizations, including the NFTC, American Petroleum 
Institute, Business Roundtable, National Association of Manufacturers, 
U.S. Chamber of Commerce, and U.S. Council for International Business, 
have written you, Mr. Chairman, indicating that ``the Convention can be 
a critical tool in the global fight against corruption,'' and that it 
``is noncontroversial and has broad support.'' The letter states that 
``timely Senate ratification is necessary for the United States to play 
a leadership role in moving implementation forward.'' Mr. Chairman, I 
would like to ask that this letter be included in the record following 
my testimony.
    The business community has come to its support for the Convention 
after a long and fruitful dialog with representatives of the 
administration, including those who negotiated the document. I would 
like to thank these individuals for their hard work on this Convention 
and for their outreach to the business community. In particular, former 
Assistant Secretary of State for Economic and Business Affairs Tony 
Wayne and his staff should be commended for their efforts.
    Our interaction with Ambassador Wayne and his staff is a fine 
example of how good government is supposed to work. During the 
negotiation of the Convention, some of my members raised concerns as to 
how this new instrument might affect U.S. law and questioned its 
potential domestic impact on American companies. Administration 
officials carefully listened to our concerns, participated in an 
extensive, open and frank dialog, and provided detailed language in the 
transmittal package that enables us to come to four very positive 
conclusions about the potential of the Convention to benefit American 
business:
          (1) The Convention will level the playing field for U.S. 
        businesses.
          (2) There are no domestic costs or obligations imposed on the 
        United States.
          (3) Effective and transparent implementation by foreign 
        governments is imperative.
          (4) The Convention will benefit trade and improve investment 
        climates worldwide.
    I would like to discuss each of these in turn, as together they 
make clear why prompt ratification of this Convention by the United 
States is important to the American business community:
Leveling the playing field for U.S. businesses
    This Convention will level the playing field for American business 
by holding foreign companies around the world--in places including 
Brazil, China, France, Russia, and the United Kingdom--accountable for 
acts of corruption.
    It is the first truly global anticorruption effort. This Convention 
improves substantially upon other existing regional conventions that 
have attempted to address the issue of corruption. The broadest of the 
four, the Inter-American Convention Against Corruption, includes all 35 
nations of the Western Hemisphere. The strongest of the four, the 
Organization for Economic Cooperation and Development's Convention on 
Combating Bribery of Foreign Public Officials in International Business 
Transactions, has 30 parties from Europe, Asia, and the Western 
Hemisphere. However, it only covers bribery and not other forms of 
corruption such as interference in a judicial process, which also 
threaten the interests of U.S. business. The Council of Europe Criminal 
Convention on Corruption has 45 States Parties, nearly all in Europe. 
Africa attempted its own convention, but that convention has not yet 
entered into force. Thus some of the major exporters--including China 
and India, and all of Africa--have been omitted from the international 
anticorruption legal regime until now.
    Thus, by harmonizing anticorruption obligations at a higher 
standard than any before, and globalizing that standard for the first 
time, the United Nations Convention raises the bar overall and has the 
potential to level the playing field to a greater degree than any 
treaty or convention currently in existence.
    The Convention includes mandatory preventive measures including 
calls to establish anticorruption policies and bodies, mechanisms to 
prevent public sector corruption and transparency in public 
procurement, and measures relating to the judiciary, the private 
sector, and to civil society. The Convention also criminalizes corrupt 
practices including bribery and embezzlement of public funds and 
includes provisions to recover illegally obtained assets and improve 
mutual legal assistance.
    The United States already abides by the requirements spelled out in 
the Convention. For example, the transnational bribery provisions are 
incorporated in the United States within the Foreign Corrupt Practices 
Act. Campaign finance laws, obstruction statutes, and various State and 
Federal laws incorporate the remainder of the mandatory provisions 
contained in the Convention. As a result, no changes to U.S. law are 
required, which is a key point for the American business community.
No domestic costs or obligations imposed on the United States
    The reservations, declarations, and understandings contained in the 
administration's transmittal package, which accompanies the Convention, 
ensure that this Convention does not impose any new costs or 
obligations under U.S. law.
    Secretary of State Condoleezza Rice indicated in her September 23, 
2005, letter of submittal to the Senate that, ``if the United States 
makes the proposed reservations, the existing body of Federal and State 
law and regulations will be adequate to satisfy the Convention's 
requirements for legislation, and, thus, further legislation will not 
be required for the United States to implement the Convention.''
    The administration has concluded that this Convention does not 
require any changes to U.S. law and is generally not self-executing, 
subject to the declarations, understandings, and reservations that they 
have proposed. In addition, nothing in the treaty creates a private 
right of action to permit foreigners to litigate corruption complaints 
in U.S. courts. These statements confirm that the United States is 
already in compliance with its obligations under the Convention and has 
no further steps to take beyond ratification to implement this treaty 
in U.S. law.
    From our perspective, it is important that the Senate include the 
reservations, declarations and understandings as part of its advice and 
consent, as the administration recommends in its transmittal package. 
We particularly support the following declaration in its resolution, 
which is contained on page 21 of the administration's transmittal 
package:

          The United States declares that the provisions of the 
        Convention (with the exception of Articles 44 and 46) are non-
        self-executing. None of the provisions of the Convention 
        creates a private right of action.

    With the necessary declarations, reservations, and understandings 
in place, this Convention is costless from a domestic legal 
perspective, and squarely in the interests of the American business 
community.
Effective and transparent implementation is imperative
    Since this treaty raises the bar for other countries without 
imposing new obligations on us, the United States must focus its 
attention on implementation and monitoring. The administration must 
make certain that implementation of the Convention is transparent and 
honest, and that implementation actually focuses on rooting out 
corruption and is not used as a pretext to bar or harass American 
businesses. We should also urge other countries to implement the 
Convention consistent with due process protections and fundamental 
rights.
    In order to speak with the strongest and most credible voice to 
shape implementation of the Convention with these objectives in mind, 
prompt ratification by the Senate of this Convention is imperative. The 
business community urges the Senate to ratify the Convention before 
December of this year, when the first Conference of State Parties meets 
in Amman, Jordan.
    That meeting will be the first time the parties to the Convention 
will have an opportunity to discuss implementation, monitoring, and 
technical and capacity-building assistance.
    As countries incorporate the requirements of the Convention into 
domestic law, U.S. negotiators will be in a position--starting in 
December--to help ensure that implementation focuses on developing 
legal mechanisms to root out corruption as opposed to establishing new 
levers to harass American or other foreign competitors. If we do not 
have a vote and voice at that meeting, our ability to achieve those 
objectives will be jeopardized.
    This Convention will only be truly effective if it is implemented 
properly and subject to adequate monitoring. By ratifying this 
Convention promptly and before the December conference, the United 
States will be in the strongest position to guide implementation and 
monitoring efforts, which will be essential to its ultimate success. 
Timing is important, and swift ratification is absolutely in the 
interests of the American business community.
Providing tools for reform-minded leaders
    Finally, this Convention will benefit political systems and 
investment regimes worldwide by empowering reform elements with the 
tools they need to root out corruption and encourage transparent, 
stable investment climates.
    Consultations and technical assistance from developed countries and 
institutions will benefit elements in developing countries interested 
in improving transparency and reducing corruption, thereby improving 
the climate for American and local businesses and aiding overall 
development.
    For all of these reasons, the National Foreign Trade Council 
supports swift ratification by the Senate of this Convention subject to 
the declarations and understandings contained in the transmittal 
package as received from the administration.

                                 ______
                                 
                                                     June 19, 2006.

Re ratification of the United Nations Convention Against Corruption.

Senator Richard G. Lugar,
Chairman, Senate Foreign Relations Committee,
Hart Senate Office Building, Washington, DC.
    Dear Senator Lugar: We are writing on behalf of the undersigned 
organizations to urge the Senate to ratify the United Nations 
Convention Against Corruption before December 2006. The Convention, 
which entered into force on December 14, 2005, reflects a global 
consensus on the international legal system necessary to fight 
corruption. To date, more than 140 countries have signed the 
Convention, and over 50 countries, including France, Russia, Brazil, 
Mexico, and the United Kingdom, have ratified it. Timely Senate 
ratification is necessary for the United States to play a leadership 
role in moving implementation forward.
    The Convention can be a critical tool in the global fight against 
corruption. It includes provisions to prevent and criminalize 
corruption, and procedures for governments to recover assets that have 
been acquired illicitly by corrupt officials. It also includes a broad 
range of measures that enhance international cooperation among 
governments, including extradition and mutual legal assistance. As a 
leading prosecutor of transnational crime, the United States stands to 
benefit greatly from this enhanced cooperation.
    United States ratification of the Convention in accordance with the 
Administration's October 27, 2005, transmittal package is non-
controversial and has broad support. The transmittal package notes that 
no change in U.S. law is required. The Convention's universal 
prohibition on foreign bribery--the first effort of its kind with truly 
global reach--has unique potential to reduce the competitive 
disadvantage faced by U.S. companies, which have long operated under 
more stringent rules than their foreign competitors. It is also a 
crucial tool to improve rule of law, thus promoting more effective 
economic development and a more stable environment in countries around 
the world.
    An effective monitoring process is critical to successful 
implementation of the Convention. Although the Convention provides for 
such a process, its specific contours will be decided in December 2006, 
at the first Conference of States Parties. United States leadership at 
that Conference is vital to ensure that an effective and transparent 
monitoring mechanism is put in place. As a global defender of due 
process rights, it is also important that the United States participate 
actively in interpretation and application of the Convention around the 
world to ensure that those countries with less robust protections use 
it as a tool to prosecute corrupt actors, not harass political or 
economic competition. The ability of the U.S. to influence these 
discussions will be significantly diminished if it has not ratified the 
Convention before the Conference takes place.
    Accordingly, we would appreciate your leadership in moving the 
Convention through the ratification process in a timely manner.
            Respectfully,
                    American Petroleum Institute; Business Roundtable; 
                            Coalition for Employment Through Exports; 
                            Coalition of Service Industries; Emergency 
                            Committee for American Trade; National 
                            Association of Manufacturers; National 
                            Foreign Trade Council; United States 
                            Council for International Business; U.S. 
                            Chamber of Commerce; USA*Engage.

    The Chairman. Well, thank you, sir, for the very strong 
endorsement of American business in the letter that you asked 
to be inserted in the record. It has a very important group of 
business organizations.
    Let me start the questions with you, Secretary Larson. I 
want you to discuss, essentially, the role the Convention will 
play in global transparency efforts. Based on Transparency 
International's experience and anticorruption efforts around 
the world, do you expect that this Convention is likely to 
become truly global in scope? And what are you hearing from 
your counterparts with other Transparency International 
chapters around the world? Are they engaging their host 
governments in an effort to expand the reach of the Convention, 
as you are?
    Mr. Larson. Thank you very much, Mr. Chairman. I believe 
that this Convention will create, over time, the global 
framework that you were alluding to. And I can tell you that 
the TI chapters around the world are actively involved in this 
effort. TI chapters have been very engaged in the ratification 
efforts with their governments and in offering strong support, 
and in some cases strong pressure, for ratification.
    I think the work of Transparency International abroad will 
also be enhanced by the ratification of the treaty. In other 
words, this creates a global set of expectations, norms, and 
obligations. Many of these norms and obligations had not been 
part of the legal fabric in many of these countries. And now it 
is much easier for local TI chapters to go to the government 
and say, well, you know you are not quite living up to this 
obligation. We need to strengthen our track record in another 
area. And it was that which I had in mind when I alluded to the 
fact that in many countries this treaty provides support and 
cover for individuals and groups that are fighting for greater 
transparency, but don't necessarily have--did not have, before 
the Convention, a legal framework in place in the countries in 
which they are operating.
    The Chairman. How many chapters are there of Transparency 
International?
    Mr. Larson. We have chapters throughout the world, and 
we're finding that there's interest in countries that don't 
have chapters in getting involved. One thing that truly is the 
case in my experience is that this issue has become a salient 
central issue for people around the world.
    When we first came to the OECD, at the encouragement of the 
Congress, to try to get the first antibribery convention 
negotiated, frankly, people thought we were a little foolish. 
You know, how could we be trying to negotiate something that 
was just a fact of life? Now we are seeing, some 16-18 years 
later, that countries around the world recognize that this is a 
serious problem. They may not welcome the fact that they are 
under pressure in some cases, but they recognize that it is so 
important to their people that they have to be involved in 
tackling it.
    And so I think there's been tremendous progress. I think 
this Convention gives a base for further progress.
    The Chairman. Fine. Well, if you could satisfy the record 
with a number, that would be helpful.
    Mr. Larson. I will.
    [The requested information follows:]

    Transparency International currently has 96 national chapters and 
chapters-in-formation around the world. In their view, the Convention 
is a critically important instrument by which to hold their leaders 
accountable. Many are promoting ratification in their countries and 
believe that U.S. ratification would assist their efforts.

    The Chairman. I take your points very seriously. In fact, 
in our own legislation, our Millennium Challenge Account 
situation really highlights corruption as a major factor. It is 
an item that is discussed with each applicant country. Each of 
these applicants are taken very seriously as a part of our own 
major foreign aid assistance area. You've had experience 
throughout the formation of that legislation, as well as in 
your current capacity.
    Mr. Larson. If I could just add one or two sentences on 
that point, Mr. Chairman. When I was, briefly, the temporary, 
interim CEO of the Millennium Challenge Corporation, it was 
striking to me that Ministers from foreign governments would 
come to me and grab me and want to sit me down so they could 
say, we know that having a strong record against corruption is 
essential for us to be eligible for MCC support, we know that 
we fall short today, but let me take the next 20 minutes to 
explain to you all the measures that we are introducing to 
correct our record, because we're serious about tackling this 
issue.
    And I think it has been demonstrated that those responses 
have not just been rhetorical, they have spurred change in many 
developing countries, and so that is another indication of just 
how much an effect a strong stance on the part of the United 
States and a commitment to that stance can--how important that 
can be in changing behavior around the world.
    The Chairman. Well, it certainly has. I would just say, 
anecdotally, from my own experience, that having gone to 
Albania, to take a look for weapons of mass destruction and 
nerve gas in the mountains above Tirana, I found in the host 
government a very considerable concern about the corruption 
provision. But likewise, interestingly enough, among some of 
the Ministers, I noted some relief that because the United 
States had taken such a strong stand on this, they could do so 
within their own internal affairs. This had become, really, a 
world standard in a different way from, as you suggested, the 
early part of your experience. People might have sat you down 
and said, now, I want to tell you how the world works. So the 
fact that the world is working differently comes, in part, from 
our own leadership in the Unites States, but also now in this 
more broadly based international compact that we're discussing 
this morning.
    Let me ask you, Mr. Reinsch, if you would illuminate, if 
you can, some more of the economic benefits to U.S. companies 
that U.S. ratification of the Corruption Convention might 
bring. Can you give, perhaps, an example of how a company might 
benefit directly from the implementation process? What would be 
the financial costs to American businesses if for some reason 
the United States failed to ratify this Convention?
    Mr. Reinsch. Well, on the benefit side, Mr. Chairman, I 
think the general answer is contained in what you said. It 
levels the playing field, which means there will be more 
situations in which we do not lose deals because of corrupt 
activities on the part of our companies' competitors.
    I can site a couple of anecdotes in that regard that might 
be helpful. I don't want to name corrupt countries--I'm not 
sure that would be fruitful at this point--but, I can suggest, 
first of all, that the Commerce Department, about 10 years ago, 
in the mid-1990s, actually did that, and conducted a study in 
which they detailed a fairly lengthy list of transactions in 
which the American company had lost out or was at risk because 
of corruption from another party. That report was classified, 
but it might be something the committee would want to look at. 
The information, of course, is old, but I don't think a lot has 
changed in the intervening period. Maybe the quantity, but not 
the kinds of cases that occur.
    When I was in the government, I was personally aware of a 
situation, where, without mentioning the country involved, 
there was an American company bidding on a very large project 
valued at more than a billion dollars in exports of both goods 
and technology and with a lot of ongoing benefits down the line 
in follow-on costs, so it was a major opportunity. Information 
came to the attention of the U.S. Government that the main 
foreign competitor on this particular project, which was a bid 
to the government--it was going to be a decision by the 
procuring government--was essentially using a corrupt action to 
attempt to obtain the contract.
    The fact that the United States found out about it allowed 
us to take some remedial measures, and in the end the Americans 
prevailed. Were this kind of agreement to be in effect, there 
would be, I think, two benefits for the Americans. One, because 
in that particular case both the procuring country and the 
country that was engaged in the corrupt activities would be 
parties, it would be less likely that would happen, and the 
playing field would actually be level. In addition, though, 
there would be recourse for the American company were it to 
lose in the circumstances I described.
    Those things happen a lot. Companies don't like to talk 
about them because they don't like to talk about any deal that 
they don't get. So it would be very hard to get people to come 
up and go on the record. That's why I referenced the Commerce 
Department study.
    The other comment I'd make that would be a little bit more 
specific on that is--I don't know if you had the same 
opportunity, about a month, 6 weeks ago, to meet with the 
Nigerian Finance Minister when she was here. I had an 
opportunity to attend a luncheon with her, and she gave a 
really stirring speech about the importance of transparency and 
opposing corruption and described, in some detail, things that 
she had done in her country in her scope of responsibility to 
try to deter corruption. And it occurs to me, in light of your 
question, that I have a number of members who do business in 
Nigeria, particularly those in extractive industries, because 
that's where the resources are. I have probably a larger number 
that don't do business in Nigeria, and the reason they don't is 
because they find it impossible to do business there 
successfully because of the level of corruption.
    Anything that we can do to help the Finance Minister or 
anybody else in Nigeria who wants to create a climate of 
intolerance of corruption and create a general view that this 
is a pariah activity that legitimate countries don't engage in, 
is going to be a good thing. It's going to provide 
opportunities for American business to go back in there because 
they're deterred now. And it will give them an opportunity to 
succeed on the basis of a better climate for both investment 
and trade. I singled that one out only because the Minister 
herself has been so prominent in making the same statements 
about the cultural problem that she's trying to deal with.
    Now, on the down side, or the second half of your question 
about financial costs, we've been thinking about that, and 
those, of course, are harder to quantify because it would 
depend upon how the implementation plays out. The downside risk 
is simply that in the absence of the United States being there 
pursuing and pushing for implementation in the way that I 
described in my testimony, States Parties might instead choose 
to implement the Convention in ways that do not provide 
protection or due process or permit, effectively, 
discrimination against foreigners, foreign competitors, which 
might not only be the United States but would be others, in the 
domestic laws that they establish to implement the Convention.
    There are some other circumstances that I can think of, and 
I can site one circumstance, in particular, that is not 
involved in corruption, as an example. It involves a case of 
environmental protection where another country has created a 
law that for all intents and purposes is designed to 
discriminate against, essentially, American polluters as 
opposed to indigenous polluters, and to try to create, in a 
sense, a funnel for a large amount of claims to be made against 
the American company, but not necessarily anybody else.
    That's not, as I said, a case of corruption, but it does 
demonstrate that some countries find it difficult to resist the 
temptation to structure their laws in a way that disadvantages, 
in particular, large multinational companies, the assumption 
being that they have large wallets and can afford to pay large 
costs, whether they're legal costs or other kinds of fees.
    I don't know that a convention would deliberately set out 
to permit those activities. That would be, I think, unlikely. 
On the other hand, there is always that potential. And the 
absence of the United States as a vigorous force in the 
implementation of the monitoring process, I think, would make 
it more likely that that would happen. If it did happen, of 
course, then American companies, have several downside risks. 
One, the risk of lost business, because they wouldn't enter 
into transactions in those situations, but also they would run 
the risk of significant legal costs and reputational costs when 
they would have to defend themselves in adverse situations that 
would end up being very expensive for them.
    They have a lot of experience with that right now in other 
contexts, and they discover that the problem with these cases 
is they go on and on and on. Even when you win, somebody 
appeals, and they go on and on and on. It costs companies 
enormous amounts of money in legal costs and enormous 
reputational damage, particularly if they have a brand name. So 
that's the kind of thing that we would like to avoid, and I 
think effective and balanced implementation of the Convention 
would enable us to avoid those risks.
    The Chairman. Well, I thank you very much for that 
response.
    Mr. Reinsch. Sorry for the long answer.
    The Chairman. It is an important one. And I join you in 
commending, not only the Finance Minister of Nigeria in her 
testimony, but our Government in inviting important leaders 
from countries to come and offer that kind of testimony, in 
either governmental forums or forums provided by American 
business. I think this has been a very important advance in 
this general area we're discussing this morning.
    Secretary Larson, I'd like for you, likewise, to pick up in 
a two-part way, the adverse impacts on international 
transparency efforts if we were not to ratify. But then on a 
more positive theme, in your statement you've emphasized the 
importance of monitoring the implementation of the Convention. 
Could you briefly summarize the key findings of this study that 
you have completed on this issue?
    Mr. Larson. Certainly, Mr. Chairman. I think that my answer 
to your first question really picks up where Mr. Reinsch was, 
that we have an opportunity, through prompt ratification of 
this treaty, to play a leadership role in the implementation 
process, including at the meeting to be held in Jordan in 
December. We will have a louder and more effective voice, and 
we'll be able to lead effectively in a more substantial way, if 
we have ratified. And we'll be able to shape this treaty and 
its implementation so that it achieves the results that we all 
have in mind.
    Second, I would repeat what I was saying earlier about the 
importance politically of strong U.S. leadership in the 
Convention in our efforts elsewhere in pursuing anticorruption 
and transparency objectives. I think our efforts to ensure 
greater transparency and effectiveness in the United Nations 
and to repair some of the mistakes like the oil-for-food 
program will proceed better if we're seen as leading in this 
area as well. Similarly, I think it will strengthen the efforts 
that the administration is making more generally to promote a 
transparent approach toward economic development through reform 
of the practices of the multilateral development banks. I think 
it will support the role the United States is taking to promote 
democracy around the world.
    This administration, correctly, has made anticorruption a 
significant part of the governance and prodemocracy initiatives 
that we've stressed throughout the world, because we know that 
nothing works more quickly to undermine support for free 
institutions than the sense on part of the public that they're 
being corruptly managed. So I think in all these ways movement 
on this Convention supports important administration policy 
objectives.
    If I could, I'd just add one other example. Mr. Reinsch was 
talking about particular problems acknowledged by the 
Government of Nigeria. Your colleague, Senator Hagel, chaired 
or cochaired a series of hearings about energy security over 
the last several years, and I testified once at one of those 
hearings that work to promote a more transparent approach 
toward the use of oil resources in countries like this, so 
their people know how the money is being spent by their own 
government, not only is a good government initiative, not only 
is a prodevelopment initiative, but for us it's an energy 
security initiative, because it helps ensure that production 
will be forthcoming and will be reliable.
    Now, on the question that you asked about monitoring, per 
se, and our analysis of the importance of monitoring, I think I 
can limit it to three basic points. One is that many of these 
obligations, standards, and norms that countries accept in this 
Convention are new to them, and it requires a change in 
behavior, not only on the part of private individuals, but on 
the part of the government. You mentioned, Mr. Chairman, that 
in the early days of work on the OECD Anti-Bribery Convention, 
many of our trading partners in Europe not only tolerated 
bribery of foreign public officials, but they subsidized it 
through a tax deduction. And it has been important to have a 
monitoring process in place and efforts to work with 
prosecutors in place, so that the people who are in charge of 
enforcing the laws recognize the ways in which the laws are 
enforced and understand how to proceed, where appropriate, with 
prosecutions.
    Second, I think that it is important for a convention 
that's as wide-ranging as this one--you heard this morning 
about a number of the important provisions that this treaty 
has, the new obligations that countries are accepting--for it 
to be monitored. There's a lot of things that need to be done 
in a lot of countries that haven't had these obligations 
before, and it's only, in my estimation, through a monitoring 
process that we will have the visibility into whether those 
things that should be done are being done. And I think, for the 
sake of the countries involved, you have a little bit of 
constructive pressure. They know that someone is looking over 
their shoulder, and that is an incentive in many instances to 
getting governments to do what needs to be done.
    The third and last point I'd stress is that this can be a 
collaborative approach that identifies problem areas and helps 
countries address them. This gets back, Mr. Chairman, to the 
point about technical assistance. I think we've seen in other 
cases where we have been trying to change behavior in large 
developing countries that you need to be able to identify 
problems, and where appropriate, provide technical assistance 
at an early stage so that they can deal with these 
implementation problems effectively. And that's why monitoring 
is important. Monitoring, in other words, isn't simply a way of 
saying to a country you're not completely living up to what 
your obligation is in this area, but it's to sit down with a 
country and say, you clearly have a problem in this area, let's 
figure out how, through stronger enforcement on your part, but 
also through targeted technical assistance, you'll have the 
tools to enforce this in the way that it's intended to be 
enforced.
    The Chairman. Well, thank you very much for that response. 
I would supplement the work of my colleague, Senator Hagel, by 
mentioning that during a visit I had in Azerbaijan in September 
with President Aliyev at the beginning of the long awaited 
Baku-Jehan pipeline, it was apparent that the wealth of his 
country may even double in terms of their gross national 
product in 2 years time. With the addition of a natural gas 
pipeline 2 years later, it could quadruple. So the issue of 
transparency to Azeris, quite apart from the rest of the world, 
becomes of critical importance when you have these dynamic 
changes occurring. His assurance was that they would adopt the 
so-called Norwegian model, which is a good suggestion. We're 
hopeful that will be the case for the sake of transparency as 
well as for the success of that modern state.
    Let me ask one final question of you, Mr. Reinsch. Article 
35 of the Convention requires parties to ensure that persons 
suffering damage as a result of an act of corruption can 
initiate legal proceedings to obtain compensation. I understand 
this article initially raised some concern within the United 
States business community. Those concerns were the focus of 
discussion with the administration. Please, if you will, 
explain the concerns, the discussion, and how they have been 
resolved.
    Mr. Reinsch. Well, let me say first, Mr. Chairman, it was 
an iterative process. Over more than a year, we presented a 
number of thoughts to the administration. In some cases they 
persuaded us that they were not important problems, and we 
agreed with the administration. In other cases, I think we were 
able to persuade the administration, not that they were so much 
problems, but persuade them to be a little bit more detailed in 
their letter of transmittal in addressing the problems. I don't 
think there were many situations where they and we disagreed 
over fundamental interpretation of the Convention or its 
significance. It was more a question of how many words one 
wanted to put into the various documents.
    I think the three most important issues were the following. 
Initially, we took the view that a reservation would be 
necessary with respect to article 35, and the administration 
ultimately persuaded us that that was the wrong course, and we 
no longer believe that and are satisfied with the way they've 
chosen to deal with it.
    The other two issues that we discussed with them in some 
detail were, one, the statutory basis for their belief and our 
belief that existing law covers the obligation adequately 
already, and, second, the degree of liability that would be 
attached via article 35. Our concern, which is now addressed in 
the transmittal statement, was that it be clear that the right 
of action that would be provided here under our implementation 
process would relate to direct liability of those directly 
engaged in acts of corruption as opposed to those who are 
simply associated with others who are engaged in acts of 
corruption.
    One of the problems for the business community in other 
contexts has been the extension of the liability chain to the 
point where it becomes very tenuous, and people are being sued 
because they were in the room. Or, in the case of some alien 
tort law cases, that I'm sure you're familiar with, many of 
these companies that have been sued in what are known as the 
South African cases. The essence of the allegation in most of 
them is, you were in South Africa, you did business between 
1948 and 1994, and, therefore, you're guilty and owe a large 
amount of damages. I think the companies believe that if they 
actually engage in a corrupt activity or they actually engage 
in some illegal activity that's one thing, but their mere 
presence or their association with somebody else who's engaged 
in the activity shouldn't be construed as liability.
    Those points were all addressed satisfactorily in the 
submission document, and so we had a happy ending to our 
dialog. And I must say that I was a little surprised, frankly, 
that it was a happy ending because I've been in so many of 
these that weren't. It was led by the State Department, but it 
was a joint effort that included the Justice Department as well 
as other relevant agencies. They consistently listened and 
consistently attempted to deal with the concerns that I've just 
described. We passed a lot of papers back and forth in which we 
suggested some wording, and they'd come back and say, well, how 
about this? We don't want to, you know, be as specific as that. 
A lot of their concerns were not in substantive opposition, but 
addressed more the question of what was appropriate to put into 
a declaration, understanding, or letter of transmission as 
opposed to what was not appropriate. And they, of course, are 
better judges of that than we are, having done this many times. 
So it was a genuinely joint exercise in which they ended up 
persuading us that they were right in a number of areas, and we 
ended up persuading them that there were some things they 
needed to address in more detail.
    The Chairman. Well, I thank you for complimenting the 
Department of State and the Department of Justice. These have 
been a remarkably harmonious two panels of discussion of people 
who have been visiting with each other constructively. Let me 
just spread the compliments to our bipartisan staff, who are 
deeply interested in these issues, and their excellent 
preparation for this hearing and the timely way in which they 
have moved so that we could all meet together today.
    I'll ask that the record be kept open until the end of 
business tomorrow, which would be June 22, for any further 
questions of members of this committee who were not able to 
attend the hearing today, and who may, for the sake of 
completing the record, want to raise questions. And I would ask 
you and the members of our first panel to respond as promptly 
as you could to help us complete that record.
    Let me finally ask if you have any further statements that 
you would like to make before we adjourn our hearing.
    Mr. Reinsch. Only, Mr. Chairman, that we would also like to 
thank the members of the bipartisan staff, who were very kind 
to meet with us at some length on this and have had a lot of 
interaction with us by e-mail or on the phone since. We 
particularly appreciate their work in creating and facilitating 
the hearing, and your work in being willing to schedule it and 
sit through all this testimony.
    I know that the management of treaties is complicated in 
the Senate. We've worked on some where the ending was not quite 
so happy, Law of the Sea, and we've worked together on some 
where the endings were very happy. I have enormous respect for 
the amount of time and attention it takes you and the staff to 
put these things together. We are very grateful that you have 
been willing to move this one forward so quickly. We're 
delighted, and we hope it will move on to ratification.
    The Chairman. Thank you.
    Secretary Larson.
    Mr. Larson. Thank you. I'd simply like to thank you for the 
hearing; thank the staff for an excellent job, and to make 
certain you all understand that Transparency International-USA 
is ready to assist in any way we can on the road to 
ratification, but also on the other important initiatives on 
transparency that you and other senators are leading. Thank 
you.
    The Chairman. Well, thank you. We'll continue to work on 
this treaty. And let me just say, given the spur of your 
comment, we are still trying to continue to work on the Law of 
the Sea. Sufficient endurance may finally prevail. This is one 
aspect, as you know, of public life.
    Mr. Reinsch. I think it's approaching the Genocide 
Convention in longevity at this point.
    The Chairman. Longevity, persistence, patience are all 
required. Well, thank you very much, and the hearing is 
adjourned.
    [Whereupon, at 11:26 a.m., the hearing was adjourned.]
                              ----------                              


 Additional Questions and Answers and Letters Submitted for the Record


 Responses of State Department Deputy Legal Adviser, Samuel M. Witten, 
and Justice Department Deputy Assistant Attorney General, Bruce Swartz, 
                to Questions Submitted by Senator Lugar

    Question 1(a). Several provisions in chapter III (Criminalization 
and Law Enforcement) of the Convention against Corruption require the 
parties to consider criminalizing certain conduct under their domestic 
laws. These provisions are articles 16(2), 18, 19, 20, 21, 22, and 24.
    What, if any, of the conduct described in these articles is 
criminalized under current U.S. law?

    Answer.

   Article 16(2): Solicitation by Foreign Public Official.
          The conduct described in article 16(2) could be punishable 
        under various Federal criminal theories, including but not 
        limited to the honest services, wire, and mail fraud statutes 
        (18 U.S.C. 1341, 1343, and 1346), depending upon the facts of a 
        given case. State laws may also criminalize solicitation by 
        foreign public officials under various theories.

   Article 18: Trading in Influence.
          Although lawful lobbying activity is constitutionally 
        protected in the United States, U.S. law criminalizes unlawful 
        trading in influence in various ways. For example, the Federal 
        bribery and gratuity statute (18 U.S.C. 201) criminalizes 
        trading in influence for Federal officials. Additionally, the 
        honest services, wire, and mail fraud statutes (18 U.S.C. 1341, 
        1343, and 1346) could be used to prosecute trading in influence 
        for Federal, State and local officials. The Hobbs Act prohibits 
        extortion under color of official right by Federal, State and 
        local officials (18 U.S.C. 1951). The Federal Program Bribery 
        statute (18 U.S.C. 666) covers bribery in programs that receive 
        Federal funds. Finally, State law bribery statutes also 
        prohibit trading in influence in various ways.

   Article 19: Abuse of Functions.
          U.S. law criminalizes ``abuse of functions'' in various ways. 
        First, abuse of functions is criminalized by the Federal 
        bribery and gratuity statute (18 U.S.C. 201) and the conflict 
        of interest statute (18 U.S.C. 208) for Federal officials. 
        Second, the honest services, wire, and mail fraud statutes (18 
        U.S.C. 1341, 1343, and 1346) could be used to prosecute trading 
        in influence for Federal, State, and local officials. Third, 
        the Hobbs Act prohibits extortion under color of official right 
        by Federal, State and local officials (18 U.S.C. 1951). Fourth, 
        the Federal Program Bribery statute (18 U.S.C. 666) covers 
        bribery in programs that receive Federal funds. Finally, State 
        law bribery statutes also criminalize abuse of functions in 
        various ways.

   Article 20: Illicit Enrichment.
          U.S. law does not criminalize illicit enrichment as described 
        in article 20. See response to question 1(c) for additional 
        explanation of this provision.

   Article 21: Bribery in Private Sector.
          The conduct described in article 21 could be punishable under 
        various Federal criminal theories, including but not limited to 
        mail and wire fraud, antitrust violations, conspiracy, and 
        securities fraud, depending upon the facts of a given case. 
        Additionally, commercial bribery can be charged federally under 
        18 U.S.C. 1952(b)(2) (interstate and foreign travel or 
        transportation in aid of racketeering enterprises), which 
        criminalizes bribery in violation of the laws of the State in 
        which committed, based on State commercial bribery violations. 
        Commercial bribery has been criminalized in most, but not all, 
        of the 50 States. Even in the States where commercial bribery 
        is not a crime, the conduct is often punishable under unfair 
        trade practices laws, which define bribery as an improper means 
        of gaining a competitive advantage.

   Article 22: Embezzlement in the Private Sector.
          The conduct described in article 22 could be punishable under 
        various Federal criminal theories, including but not limited to 
        mail and wire fraud, securities fraud, conspiracy, or 
        interstate transportation of stolen property, depending upon 
        the facts of a given case. Additionally, State law typically 
        criminalizes private theft and embezzlement.

   Article 24: Concealment of Ill-Gotten Property.
          Federal law prohibits the type of conduct described in 
        article 24 under various theories, principally the receipt of 
        stolen money statute, 18 U.S.C. 2315 (which states that 
        ``whoever . . . conceals . . . money of the value of $5,000 or 
        more . . . which has crossed a State or United States boundary 
        after being stolen, unlawfully converted, or taken, knowing the 
        same to have been stolen, unlawfully converted or taken'' is 
        subject to punishment). Additionally, concealment of ill-gotten 
        property could be punishable under, among other provision, the 
        Federal aiding and abetting statute (18 U.S.C. 2), the Federal 
        accessory after the fact statute (18 U.S.C. 3), or the Federal 
        misprision of felony statute (18 U.S.C. 4).

    Question 1(b). Does the executive branch plan to seek the 
criminalization of any of the conduct described in these articles that 
is not now criminalized under U.S. law?

    Answer. The executive branch does not currently intend to seek the 
criminalization of any of the conduct described in articles 16(2), 18, 
19, 20, 21, 22, and 24 that is not now criminalized under U.S. law.

    Question 1(c). Article 20 requires each party, ``subject to its 
constitution and the fundamental principles of its legal system'' to 
``consider'' establishing the crime of illicit enrichment which is 
defined as ``a significant increase in the assets of a public official 
that he or she cannot reasonably explain in relation to his or her 
lawful income.'' The conduct described in this article appears to place 
the burden on the defendant to prove the absence of wrongdoing. Does 
U.S. law currently criminalize this conduct? What is the executive 
branch's interpretation of the obligation imposed on each party under 
this article? What action, if any, does the executive branch intend to 
take with regard to this article?

    Answer. U.S. law does not criminalize illicit enrichment as 
described in article 20. As the Department of State's Letter of 
Transmittal, dated September 23, 2005, stated: ``Article 20 was 
included at the insistence of a number of the developing nations. The 
article requires States Parties to consider establishing the offense 
known as illicit enrichment, which is defined as a significant increase 
in the assets of a public official that such official cannot reasonably 
explain in relation to his or her lawful income. Such an offense could 
require a defendant to bear the burden of establishing the legitimate 
source of the income in question. This article is nonobligatory.''

    Question 2. Article 27(3) states that parties may criminalize the 
``preparation for an offense established in accordance with the 
Convention.'' Does U.S. law currently prohibit preparation for an 
offense?

    Answer. U.S. law would criminalize ``preparation'' for an offense 
to the extent that such conduct constitutes an inchoate offense 
recognized under U.S. law. U.S. Federal law, for example, criminalizes 
inchoate offenses principally under the conspiracy statute (18 U.S.C. 
371) and also punishes attempts to commit certain offenses covered 
under the Convention (see, e.g., 18 U.S.C. 1512 (tampering with 
witness, victim, or an informant)). In addition, ``preparatory'' 
activities may also be punishable under the aiding and abetting statute 
(18 U.S.C. 2(a)). State law also typically criminalizes ``attempted'' 
crimes as well as conspiracy and aiding and abetting, all of which 
could be considered ``preparation'' for an offense.

    Question 3. Article 31(8) provides that parties ``may consider the 
possibility of requiring that an offender demonstrate the lawful origin 
of [the] alleged proceeds of crime or other property liable to 
confiscation, to the extent that such a requirement is consistent with 
the fundamental principles of their domestic law and with the nature of 
judicial and other proceedings.'' The requirement described in this 
provision appears to shift the burden of proof from the government to 
the defendant. Does U.S. law currently require such a demonstration by 
the offender? Does the executive branch plan to take any action with 
respect to this provision?

    Answer. Under U.S. asset forfeiture law, a defendant may be 
required to prove that his assets are not subject to forfeiture in some 
limited instances. Although the general rule is that the Government 
must prove the forfeitability of assets to be recovered, U.S. law 
provides for certain exceptions where burden shifting occurs, such as 
forfeitures in traditional customs cases, see 19 U.S.C. 1615, 18 U.S.C. 
983(i), and forfeitures of terrorists' assets under the USA PATRIOT 
Act, see 18 U.S.C. 981(a)(1)(G), USA PATRIOT Act sections 316(a)(1) and 
316(b), 115 Stat. at 309. Even in those cases, however, the Government 
must make an initial showing of forfeitability, but the burden then 
shifts to the defendant to establish that the property is not subject 
to forfeiture. Regardless, article 31(8) is nonobligatory and only 
applies to the extent consistent with domestic law, which article 31(8) 
generally is not. Accordingly, the executive branch does not interpret 
this article as imposing any obligation on the U.S. Government, and the 
executive branch does not intend to take any action with regard to this 
article.

    Question 4. Article 34 requires each party to take measures ``in 
accordance with the fundamental principles of its domestic law'' to 
address the consequences of corruption. What new measures, if any, does 
the executive branch plan to take to implement this article?

    Answer. No new measures are needed to implement article 34. As a 
world leader in anticorruption efforts, the United States has in place 
a broad spectrum of measures that establish standards for government 
conduct, provide oversight of public activities, and establish remedies 
for redress. These measures include laws that address specific conduct, 
such as 18 U.S.C. 218, which allows the Federal Government to rescind a 
contract or other benefit gained through bribery or graft, and which is 
consistent with article 34; an extensive network of laws and 
regulations related to government contracting, government procurement, 
and ethics in government; integrity policy institutions, such as the 
Office of Government Ethics; institutional monitors, such as inspectors 
general; and remedies such as suspension and debarment of contractors 
pursuant to the authority of the General Services Administration, which 
maintains a web-based list (the Excluded Parties List System) that 
identifies parties excluded from receiving Federal contracts. From time 
to time, the administration may suggest additional provisions to 
improve its domestic laws and regulations, but no changes are needed to 
discharge the obligations of this Convention.

    Question 5. Article 49 requires parties to consider entering into 
bilateral or multilateral agreements or arrangements regarding the 
establishment of joint investigative bodies. Does the executive branch 
plan to enter into such agreements or arrangements?

    Answer. In a number of contexts, U.S. law enforcement agencies 
currently pursue joint investigative efforts with foreign counterparts. 
For example, our DEA frequently works closely with certain drug 
enforcement agencies overseas to investigate drug trafficking activity 
that affects both countries. In an appropriate case, we would consider 
undertaking a joint investigative effort with another country where 
acts of corruption had a nexus with both the United States and that 
country. In an appropriate case, we would consider undertaking a joint 
investigative effort with another country where the criminal acts had a 
nexus with both the United States and that country.
    Our ability to engage in such joint efforts does not depend on this 
or any other treaty. In large measure, joint investigative efforts take 
place on a case-by-case basis, at the level of informal police 
cooperation, and entail sharing information and cooperating on 
developing effective investigative strategies. A more formal 
arrangement may be appropriate if requested by the foreign government, 
or where it otherwise appears appropriate in light of: The potential 
subject matter for investigation; our experience with the foreign 
country and law enforcement agency involved; the types of investigative 
activity contemplated; and the respective laws and other authorities 
that may govern the activities of law enforcement agents working in 
such a setting.
    As reflected in the text of article 49, such joint investigative 
efforts do not contemplate visiting law enforcement personnel acting in 
any manner in violation of the sovereignty of the host nation. 
Generally, U.S. law enforcement personnel involved in any joint 
investigative activity overseas are either prohibited from exercising 
law enforcement powers in the host government or are permitted to do so 
only as explicitly authorized by the law enforcement or judicial 
authorities of the host government.
    With respect to the activities of foreign law enforcement officers 
in the United States, as we recently explained in response to a 
question for the record from Senator Biden about a similar provision 
regarding joint investigative teams in the pending MLAT with Germany, 
foreign law enforcement agents are subject to the provisions of the 
Foreign Agents Registration Act (18 U.S.C. 951), which are implemented 
in part through regulations at 28 CFR 73.3. Subsections (b) and (c) of 
those regulations provide that foreign law enforcement agents must 
notify U.S. law enforcement authorities, or the Justice Department's 
Office of International Affairs, with respect to their pursuing 
investigative or other official actions in the United States. As a 
practical matter, U.S. law enforcement authorities would object to 
foreign law enforcement authorities conducting investigative activities 
within the United States unless such activities were approved by, and 
coordinated with, U.S. law enforcement authorities. To the extent 
foreign law enforcement authorities act within the United States they 
are subject to U.S. laws.

                                 ______
                                 

Responses from Samuel Witten and Bruce Swartz to Questions Submitted by 
                             Senator Biden

    Question. Were there any statements made by the U.S. delegation in 
connection with signature of the Convention or at the session of the 
U.N. General Assembly when the Convention was adopted? If so, please 
provide them.

    Answer. The U.S. delegation made statements in connection with the 
signing of the Convention and in connection with the adoption of the 
Convention at the United Nations General Assembly, as follows:

 Statement of John D. Negroponte, U.S. Permanent Representative to the 
United Nations at the U.N. General Assembly, New York, NY, October 31, 
                                  2003

    Mr. President, bribes were still tax deductible in some countries 
10 years ago and no international anticorruption treaties existed. 
Today's resolution is therefore a milestone achievement in the global 
effort to ensure transparency, fairness, and justice in public affairs.
    This is vital not only to the rule of law, but to the fundamental 
confidence citizens must have for representative government and private 
enterprise to succeed.
    Corruption and democracy are incompatible; corruption and economic 
prosperity are incompatible; and corruption and equal opportunity are 
incompatible.
    As a consequence, I am pleased to say that the draft convention (A/
58/422 and Add.l) we consider for adoption represents the first 
globally negotiated anticorruption treaty and will likely be the first 
anticorruption treaty applied on a truly global level. It is more 
comprehensive than any existing anticorruption treaty, and, for the 
first time in any multilateral agreement, provides a useful framework 
for governments to cooperate in recovery of illicitly obtained assets. 
An important chapter of the text creates a Conference of States Parties 
that will be responsible for followup. We expect that this body will 
play a prominent role in promoting implementation, and we believe it is 
not too soon for us to share our visions informally of how that body 
can be most effective.
    Like other anticrime treaties before it, the new convention 
establishes commitments to criminalize certain undesirable and harmful 
conduct--in this case, corrupt actions such as bribery, embezzlement, 
and money laundering. But the convention does not stop there. It also 
requires that governments take action in a number of areas--for 
example, in public procurement, public financial management, and in 
regulating their public officials--that will help prevent corruption 
from happening in the first place.
    The international fight against corruption has long been a priority 
for my country, beginning with our efforts in the 1980s to rally 
international attention to bribery in international business 
transactions. In fact, President Bush considers anticorruption efforts 
to be so central to development that he has made progress on fighting 
corruption an essential element for participation in the Millennium 
Challenge Account (MCA), which we expect will add $5 billion and 
thereby increase our core development assistance 50 percent by fiscal 
year 2006.
    Mr. President, experts from approximately 130 countries spent 
countless hours over the past 2 years developing this convention. The 
United States was pleased to participate actively in these long and 
highly technical negotiations. Our experience convinces us that the 
United Nations Convention Against Corruption is the product of a true 
partnership among most of the countries represented in this room.
    We think this is crucial. A successful fight against corruption 
requires action on many fronts; clearly our efforts will only be 
effective to the extent that we maintain the partnership we have forged 
over the last 2 years.
    So now, as with all treaties, the end of negotiations marks the 
real beginning of engagement. The words of this convention must be 
translated into action, or else the hard work of the ad hoc committee 
will be for naught. Numerous compromises had to be made in the 
negotiations; no country obtained everything it sought, but with an 
agreed text before us, the time has come for all countries to move as 
quickly as possible in their national processes to consider signature 
and ratification, to engage civil society and the private sector and to 
work to promote the implementation of the innovative and helpful 
approaches that we have developed together.
    In closing, we thank the members of the bureau of the ad hoc 
committee and its Secretariat from the United Nations Office on Drugs 
and Crime in Vienna, Eduardo Vetere and his staff, particularly Dimitri 
Vlassis, for their tireless dedication during the 2 years of 
negotiations.
    Our acting chair, Ambassador Muhyieddeen Touk from Jordan, deserves 
special credit for his wise leadership following the sad and untimely 
death of Ambassador Chary Samper of Colombia. We also want to recognize 
the contributions of the late Ambassador Samper, who believed 
wholeheartedly in our efforts and, we believe, would be pleased with 
the finishing touches to his work.
    Thank you, Mr. President, for allowing me the floor and 
congratulations to our colleagues who participated in the important 
work of the ad hoc committee.
                                 ______
                                 

  Prepared Remarks of John Ashcroft, U.S. Attorney General, at Treaty 
               Signing, Merida, Mexico, December 9, 2003

    Thank you for the opportunity to address this conference. By making 
the fight against corruption a priority for his administration, 
President Fox has become a hemispheric and world leader for integrity 
in government. The United States applauds his efforts and expresses 
gratitude for the excellent work of the Government of Mexico to bring 
the world community together in Merida for the signing of the United 
Nations Convention Against Corruption.
    Just 10 short years ago, corruption was a topic that governments 
avoided in international discourse. Bribery was generally considered to 
be a domestic issue. It was simply a part of human nature, a trivial 
issue, or even promoted as a normal business expense to be deducted 
from taxes at home. In some nations, corruption threatened to, in the 
words of philosopher and poet Alexander Pope, ``deluge all; and spread 
like a low-born mist, and blot the sun.''
    The fight against corruption is critical to realizing our shared 
interests. Corruption undermines the goals of peace loving and 
democratic nations. It jeopardizes free markets and sustainable 
development. It provides sanctuary to the forces of global tenor. It 
facilitates the illicit activities of international and domestic 
criminals. It saps the legitimacy of democratic governments and can, in 
its extreme forms, threaten democracy itself. Worst of all, it is a tax 
on the poor--it provides benefits to the crooked by channeling money 
from projects to pockets. From projects like better roads and water 
supplies to the bank accounts of cronies. It steals from the needy to 
enrich the wealthy. Corruption must end.
    By combating corruption, we restore confidence in democracy and the 
rule of law. We strengthen the open trade and investment that drive the 
world economy. We ensure that donor and government resources benefit a 
wide range of citizens, not only a select few. When these conditions 
are secured, they combine to create faith in the institutions of a 
civil society.
    Beginning with a series of regional anticorruption conventions and 
related initiatives, among the first of which was this hemisphere's 
1996 Inter-American Convention against Corruption, the international 
community has made concerted efforts to address this serious problem. 
The United States is thankful to have worked alongside other nations in 
this international movement. In the past 6 years, working together, we 
have achieved:

   A major campaign to end bribery in international business 
        transactions;
   The creation of a high-level Global Forum process to 
        generate governmental political will against corruption;
   The development of several regional anticorruption treaties; 
        and
   The creation of several regional multilateral mechanisms to 
        monitor implementation of anticorruption commitments.

    The United Nations Convention Against Corruption we are signing 
today is a permanent enshrinement of the new global attitude towards 
corruption. Corruption is now unacceptable in any form, and 
international cooperation is considered a key element of our respective 
efforts to combat this scourge.
    The product of our negotiations over the past 2 years will sustain 
our fight against corruption. It will ensure that corruption is more 
than merely a passing common interest among nations.
    But this document is not enough. It must not become an empty 
symbolic gesture, Our governments must translate the words of this 
convention into effective actions. These deeds will reinforce 
intergovernmental cooperation and, through domestic efforts to stem 
corruption, reaffirm our collective goals.

    Question. What is the authoritative nature of the travaux 
preparatoires that was submitted to the Senate for its information in 
connection with submission of the Convention?

    Answer. The Interpretive Notes for the official records (travaux 
preparatoires) preserve certain points relating to articles of the 
instruments that are subsidiary to the text, but nonetheless of 
potential interpretive importance. In accordance with article 32 of the 
Vienna Convention on the Law of Treaties, to which the United States is 
not a party but which reflects several commonly accepted principles of 
treaty interpretation, preparatory work such as that memorialized in 
the Interpretive Notes may serve as a supplementary means of 
interpretation, if an interpretation of the treaty done in good faith 
and in accordance with the ordinary meaning given to the terms of the 
treaty results in ambiguity or is manifestly absurd. Thus, the 
Interpretive Notes, while not binding as a matter of treaty law, could 
be important as a guide to the meaning of terms in the Convention and 
Protocols.

    Question. In the course of the negotiations, and in preparing to 
submit the Convention to the Senate, did the executive branch review 
the OECD Anti-Bribery Convention and the Inter-American Convention 
Against Corruption to ensure that the obligations of those conventions 
did not conflict with the obligations of the U.N. Convention?

    Answer. The interagency team tasked with negotiating the U.N. 
Convention carefully reviewed provisions of the OECD and Inter-American 
Conventions when developing and negotiating U.N. Convention provisions. 
The team sought to ensure that U.S. compliance with the U.N. Convention 
provisions would not adversely affect or conflict with our 
implementation of OECD and Inter-American Convention provisions. At the 
same time, the negotiating team searched for areas where we could, 
consistent with current U.S. law and practice, strengthen standards 
found in the OECD and Inter-American Conventions.
    As a result, the U.N. Convention contains certain provisions that 
are almost identical to those found in the OECD and Inter-American 
Conventions (e.g.--articles on criminalizing bribery of domestic and 
foreign public officials), but also contains provisions that go further 
than the OECD and Inter-American Conventions (e.g.--articles that 
mandate the disallowance of tax deductibility for bribes and promote 
transparency in government procurement) and provisions that are not 
found in either convention (e.g.--articles relating to asset recovery 
and the disposition of illicitly obtained assets).

    Question. In the United States, what body or bodies will fulfill 
the obligation of articles 6(1) and 36?

    Answer. Article 6(1) requires States Parties to ``ensure the 
existence of a body or bodies'' to prevent corruption. As the analysis 
accompanying the Secretary's transmittal message stated, in the United 
States those bodies include the Department of Justice (including the 
Office of Justice Programs and the National Institute of Justice) and 
the Department of State, Bureau of International Narcotics and Law 
Enforcement Affairs, Anticorruption Unit. Additional bodies that 
fulfill this role include, but are not limited to, the U.S. Office of 
Government Ethics, departmental inspectors general, and the Government 
Accountability Office.
    Article 36 complements article 6 in requiring a State Party to 
ensure the existence of at least one body that is specialized in 
combating corruption through law enforcement. In the United States, the 
Criminal Division of the Department of Justice and the 93 United States 
Attorneys' Offices combat corruption through enforcement of Federal 
antibribery laws. The United States is, therefore, in compliance with 
article 36.

    Question. Article 7(2) calls on State Parties to consider adopting 
measures to ``prescribe criteria concerning candidature for and 
election to public office.'' What types of criteria are envisaged by 
this provision? What current U.S. law, if any, would be relevant to 
this provision?

    Answer. Article 7(2) is nonmandatory. Accordingly, the executive 
branch does not intend to take or propose any action to implement this 
article. Various provisions of U.S. law prescribe criteria concerning 
candidature for and election to public office. For example, the United 
States Constitution prescribes age and citizenship requirements for 
election to office as President, Vice President, and Member of 
Congress, Federal and State laws also prescribe various candidature 
requirements, including residence requirements, candidate registration 
requirements, and the like.

    Question. In the United States, what laws or programs fulfill the 
obligation of article 13?

    Answer. The United States has a variety of laws and practices in 
place that promote the active participation of individuals and groups 
outside the public sector in the domestic fight against corruption. For 
example, our inspectors general and various law enforcement agencies 
provide hotlines that allow the public to report potential 
mismanagement or corrupt government activities. Our Freedom of 
Information Act allows public access to government information. Our 
Administrative Procedures Act provides for open and transparent 
government decisionmaking and the input of the public into government 
rulemaking. Agencies may also seek outside policy advice and 
recommendations by establishing an advisory committee following the 
requirements of the Federal Advisory Committee Act (FACA) including 
publishing advance public announcements of committee meetings and 
holding open meetings. The Government in the Sunshine Act requires 
Federal agencies that are headed by a collegial body to publish public 
notices of meetings and to hold, with some exceptions, those meetings 
in public. Various organizations, including the Offices of Inspectors 
General and the General Accountability Office, produce publicly 
available reports on government activities and efforts to stem 
mismanagement and corruption within government. The public availability 
of government budgets and related financial information allow the 
public to monitor and help shape government fiscal priorities and 
spending. Furthermore, various government agencies and offices involved 
in the prevention of corruption and promotion of integrity within 
government, such as the U.S. Office of Government Ethics, maintain 
outreach to nongovernmental and private sector individuals and 
organizations via Internet Web sites and formal advisory groups.

    Question. In a briefing with committee staff, administration 
representatives described articles 15, 16(1), 17, 23, and 25 as the 
``core criminalization'' provisions of the Convention. What U.S. laws 
fulfill the obligations of these articles?

   Article 15: Bribery of national public officials

    Bribery of national public officials is criminalized under U.S. law 
in various ways. First, Title 18 U.S.C. Section 201 makes it illegal 
for a Federal official to solicit or take things of value in exchange 
for a promise to do an official act. It also punishes the individual 
who offers or agrees to give the thing of value to the public official. 
Second, the honest services, wire, and mail fraud statutes (18 U.S.C. 
1341, 1343, and 1346) could be used to prosecute bribery of Federal, 
State and local officials. Third, the Hobbs Act prohibits extortion 
under color of official right by Federal, State and local officials (18 
U.S.C. 1951). Fourth, the Federal Program Bribery statute (18 U.S.C. 
666) covers bribery in programs that receive Federal funds. Finally, 
State law bribery statutes also criminalize abuse of functions in 
various ways.

   Article 16(1): Bribery of foreign public officials and 
        officials of public international organizations

    U.S. Federal law criminalizes bribery of foreign public officials 
and officials of public international organizations principally through 
the Foreign Corrupt Practices Act as amended).

   Article 17: Embezzlement, misappropriation or other 
        diversion of property by a public official

    U.S. Federal law criminalizes embezzlement, misappropriation or 
other diversion of Federal property by a public official in 18 U.S.C. 
641. The honest services, mail fraud and wire fraud statutes (18 U.S.C. 
1341, 1343, and 1346) also could be used to prosecute such conduct. The 
Federal Program Bribery statute (18 U.S.C. 666) criminalizes the 
bribery, conversion, or embezzlement of money or property valued at 
$5,000 or more from a program that receives Federal funds. State 
embezzlement statutes also criminalize this conduct on the State and 
local level.

   Article 23: Laundering proceeds of crime

    U.S. Federal law criminalizes the laundering of proceeds of crime 
in 18 U.S.C. 1956.

   Article 25: Obstruction of justice

    U.S. Federal law criminalizes obstruction of justice in various 
ways, including but not limited to the following:
    Title 18, U.S.C., Section 1505 criminalizes actions to avoid, 
conceal, or impede the due administration of a proceeding before any 
department or agency. Title 18, U.S.C., Section 1510 criminalizes 
bribery to obstruct, delay, or prevent communications related to the 
violation of a criminal law. Title 18, U.S.C., Section 1510 
criminalizes witness tampering. Title 18, U.S.C., Section 1519 
criminalizes conduct meant to impede, obstruct, or influence an 
investigation by altering, destroying concealing any record or tangible 
object. State laws also criminalize obstruction of justice in various 
ways.

    Question. The analysis accompanying the Secretary's letter of 
submittal to the President states ``current laws and practices of the 
United States are in compliance with article 35,'' and further states 
that ``U.S. jurisprudence permits persons who have suffered from 
criminal acts such as bribery to seek damages from the offenders under 
various theories.'' Please elaborate on (a) the laws and practices of 
the United States that comply with article 35; and (b) the theories 
under U.S. law and jurisprudence that permit victims of bribery to seek 
damages.

    Answer. Article 35 does not create new causes of action against 
U.S. companies or citizens. The combination of a declaration--that none 
of the provisions of the Convention creates a private right of action 
and that the provisions of the Convention (except for articles 44 and 
46) are non-self-executing--and the discussion of article 35 in the 
Secretary's transmittal package provide ample protection against the 
possibility that article 35 could be misconstrued in a manner that 
would increase the litigation exposure of U.S. companies in the United 
States.
    Furthermore, the executive branch does not intend to take any 
action to implement article 35, because U.S. law already permits 
persons who have suffered damage from criminal acts such as bribery to 
seek damages from offenders under various theories. For example, 
shareholders whose stock value declines as a result of a company's 
indictment for violations of the Foreign Corrupt Practices Act 
potentially have a private cause of action for securities fraud against 
the company individually or as a class. Likewise, a company that is 
harmed by the corrupt actions of one of its officers and a resulting 
government investigation potentially has a cause of action against that 
officer for, depending upon the facts of a given case, breach of 
contract or breach of fiduciary duty.
    Other private causes of action may apply in particular 
circumstances as well, including tort offenses (such as conversion or 
intentional interference with contractual relations); civil RICO 
remedies under 18 U.S.C. 1964 (based upon fraud, bribery, or money 
laundering offenses), private causes of action under antitrust and 
unfair competition theories, or qui tam actions.

    Question. Article 50 of the Convention provides that each party 
``shall, to the extent permitted by the basic principles of its 
domestic legal system and in accordance with the conditions prescribed 
by its domestic law, take such measures as may be necessary, within its 
means, to allow for the appropriate use by its competent authorities of 
controlled delivery and, where it deems it appropriate, other special 
investigative techniques, such as electronic and other forms of 
surveillance and under cover operations, within its territory.''
    Does this provision authorize warrantless surveillance in the 
United States, including any surveillance authorized by the President 
and about which the Attorney General testified before the Senate 
Committee on the Judiciary on February 6, 2006 (the so-called 
``Terrorist Surveillance Program'')?

    Answer. Article 50 complements articles 48 and 49, which govern 
police-to-police law enforcement cooperation between States Parties 
regarding the offenses established under the treaty, i.e., bribery and 
money laundering in various forms. Article 48, for example, states that 
``States Parties shall cooperate closely with one another . . . to 
enhance the effectiveness of law enforcement cooperation to combat the 
offenses covered by this Convention.'' Article 49 requires States 
Parties to consider forming joint investigative bodies. Article 50(1), 
as indicated in the analysis accompanying the President's letter 
transmitting the Convention to the Senate, ``contemplates that, if 
permitted by the basic principles of its domestic legal system, law 
enforcement authorities be given the ability to use controlled 
delivery, electronic surveillance, and undercover operations.'' Article 
50(2)-(4) provides for cooperative use of these ``special investigative 
techniques'' between nations, which ``would be regulated by the States 
Parties involved through general or case-specific agreements or 
arrangements.''
    As indicated in the analysis accompanying the President's letter of 
transmittal, article 50, like virtually all of the articles in this 
treaty, is non-self-executing. Accordingly, article 50 does not confer 
any new authority on U.S. law enforcement agencies to conduct 
electronic surveillance or any other investigative techniques referred 
to in the article. However, there is no need for any new legislation to 
implement article 50(1), since current U.S. law provides appropriate 
authority for the conduct of controlled deliveries, undercover 
operations, and electronic surveillance. Thus, this provision of the 
Convention neither enlarges existing surveillance authorities nor 
requires any expansion of such authorities for its implementation.
    The administration has stated previously that the Terrorist 
Surveillance Program is a narrowly focused early warning system, 
targeting for interception only those international communications for 
which there is probable cause to believe that at least one of the 
parties to the communication is a member or agent of al-Qaeda or an 
affiliated terrorist organization. It is a critical intelligence tool 
for protecting the United States from another catastrophic al-Qaeda 
attack in the midst of an armed conflict. It is not a means of 
collecting information for ordinary criminal investigations of public 
corruption and other related offenses covered by this Convention.

    Question. In the United States, what laws fulfill the obligations 
of articles 53, 54 and 55?

    Answer. The provisions of the Asset Recovery Chapter are consistent 
with, and often inspired by, U.S. law. Accordingly, the United States 
is in compliance with articles 53, 54 and 55, and the executive branch 
does not intend to take any action with regard to these articles.
    In article 53, States Parties recognize that victim states can take 
action and responsibility for recovering the proceeds of corruption, 
independent of mutual legal assistance procedures, by participating as 
a litigant in the courts of another State Party. United States law does 
not preclude foreign governments from litigating in our courts to 
establish ownership, superior title, or as a victim for purposes of 
restitution, and accordingly is in compliance with article 53.
    Article 54 requires countries to adopt legislation to enable them 
to either open their own case in response to a foreign request for 
assistance or to recognize a foreign forfeiture judgment for 
enforcement. It also includes parallel provisions for instituting a 
restraint of assets through domestic action or by enforcing a foreign 
restraint order. The United States complies with the obligation to be 
able to open its own proceedings and institute domestic restraints 
through such provisions as 18 U.S.C. 981 and 982, which authorize the 
United States to initiate in rem civil forfeiture and post-conviction 
criminal forfeiture proceedings based upon a broad range of foreign 
offenses, including foreign corruption as enumerated in 18 U.S.C. 
1956(c)(7)(b)(iv), as well as other violations of U.S. law. It complies 
with the requirement of being able to enforce foreign restraint and 
forfeiture orders through 28 U.S.C. 2467. Article 54 suggests that 
countries should consider enacting nonconviction-based forfeiture in 
certain circumstances, and further follows U.S. legislation in 
suggesting countries be able to base a preliminary restraint on a 
foreign arrest or charge, as provided for in 18 U.S.C. 981(b)(4).
    In contrast to article 54, which establishes the legislative 
framework for countries to be able to provide assistance, article 55 
sets forth the procedures for requesting and providing assistance in a 
particular case. The procedures in article 55 largely track the 
traditional forfeiture cooperation provisions embodied in the U.N. 
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic 
Substances and the U.N. Convention against Transnational Organized 
Crime, such as in paragraphs 7, which informs countries that they must 
provide supporting evidence in a timely fashion or risk release of 
restrained assets and that requests for forfeiture assistance must be 
reserved for cases of a serious nature. Application of this article is 
subject to the requirements of mutual legal assistance under article 
46, and does not impose new obligations on the United States. The 
United States will comply with article 55 to the extent it receives or 
submits requests for assistance pursuant to article 54.

    Question. What is likely to be on the agenda for the first 
Conference of States Parties? How is that agenda being formulated? What 
role is the United States playing in shaping the agenda?

    Answer. The agenda for the first Conference of States Parties will 
likely include several topics for plenary debate that will help parties 
establish a future process for promoting and reviewing implementation 
of the Convention and facilitating related donor technical assistance. 
We expect that the Conference will seek to determine how best to gather 
information on how countries are implementing the Convention and how to 
best facilitate and integrate donor technical assistance. The 
Conference is also mandated by U.N. General Assembly Resolution 58/4 of 
October 31, 2003 (the resolution that formally adopted the Convention) 
to consider how the Convention standards might be utilized to fight 
corruption within international organizations. The Conference agenda 
may also include events that showcase international and regional 
anticorruption efforts and allow dialog with nongovernmental observers.
    A draft agenda for the first Conference of States Parties is 
currently being developed by the U.N. Office on Drugs and Crime (UNODC) 
in Vienna, with the input of various Convention parties and 
signatories. Any such draft agenda must be approved by the Conference 
at its opening session in December.
    The United States is active in trying to shape the agenda and 
ensure that the work of the Conference ultimately leads to wide 
implementation of the Convention provisions and more effective 
international efforts to fight corruption. U.S. Government 
representatives have attended multiple informal meetings in the past 2 
years--in Vienna and elsewhere--with various interested governments to 
help shape an agenda that will further our goals mentioned above. We 
will continue to work closely with UNODC and relevant governments on 
this issue.

                                 ______
                                 

                    Letters Received for the Record

                                                      May 11, 2006.
Senator Richard G. Lugar,
Hart Senate Office Building, Washington, DC.
Senator Joseph R. Biden, Jr.,
Russell Senate Office Building, Washington, DC.
    Dear Senators Lugar and Biden: We are writing on behalf of the 
undersigned organizations to urge the Senate to ratify the United 
Nations Convention Against Corruption before December 2006. The 
Convention, which entered into force on December 14, 2005, reflects a 
global consensus on the international legal system necessary to fight 
corruption. To date, more than 140 countries have signed the 
Convention, and more than 50 countries, including China, France, and 
the United Kingdom, have ratified it. Timely Senate ratification is 
necessary for the United States to play a leadership role in moving 
implementation forward.
    The Convention can be a critical tool in the global fight against 
corruption. It includes provisions to prevent and criminalize 
corruption and procedures for governments to recover assets that have 
been acquired illicitly by corrupt officials. It also includes a broad 
range of measures that enhance international cooperation among 
governments, including extradition and mutual legal assistance. As a 
leading prosecutor of transnational crime, the United States stands to 
benefit greatly from this enhanced cooperation.
    United States ratification of the Convention in accordance with the 
Administration's October 27, 2005, transmittal package is non-
controversial and has broad support. The transmittal package notes that 
no change in U.S. law is required. The Convention's universal 
prohibition on foreign bribery--the first effort of its kind with truly 
global reach--has unique potential to reduce the competitive 
disadvantage faced by U.S. companies, which have long operated under 
more stringent rules than their foreign competitors. It is also a 
crucial tool to improve rule of law, thus promoting more effective 
economic development and a more stable environment in countries around 
the world.
    An effective monitoring process is critical to successful 
implementation of the Convention. Although the Convention provides for 
such a process, its specific contours will be decided in December 2006, 
at the first Conference of States Parties. United States leadership at 
that Conference is vital to ensure that an effective and transparent 
monitoring mechanism is put in place. As a global defender of due 
process rights, it is also important that the United States participate 
actively in interpretation and application of the Convention around the 
world to ensure that those countries with less robust protections use 
it as a tool to prosecute corrupt actors, not harass political or 
economic competition. The ability of the U.S. to influence these 
discussions will be significantly diminished if it has not ratified the 
Convention before the Conference takes place.
    Accordingly, we would appreciate your leadership in convening a 
hearing on the Convention in the very near future. We are hopeful that 
ratification by the full Senate will quickly follow, and we will work 
with you to secure this objective. We look forward to meeting with the 
Senate Foreign Relations Committee staff on May 15, 2006, to discuss 
this issue.
            Respectfully,

                                   Nancy Boswell,
                                           President, Transparency 
                                               International-USA.
                                   William A. Reinsch,
                                           President, National Foreign 
                                               Trade Council.
                                   Jake Colvin,
                                           Director, USA*Engage.
                                   Dennis R. Martenson,
                                           President, American Society 
                                               of Civil Engineers.
                                   Peter M. Robinson,
                                           President, U.S. Council for 
                                               International Business.
                                   Alexandra Wrage,
                                           President The TRACE 
                                               Institute.

                                 ______
                                 
                          American Bar Association,
                                   Office of the Secretary,
                                    Chicago, IL, September 1, 2005.
Re UN Convention Against Corruption.

Hon. Richard G. Lugar,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: At the meeting of the House of Delegates of the 
American Bar Association held August 8-9, 2005, the enclosed resolution 
was adopted upon recommendation of the Section of International Law. 
Thus, this resolution now states the official policy of the 
Association.
    We are transmitting it for your information and whatever action you 
think appropriate. Please advise if you need any further information, 
have any questions or if we can be of any assistance. Such inquiries 
should be directed to my Chicago office.
            Sincerely yours,
                                        Ellen F. Rosenblum,
                                                         Secretary.
    Enclosure.

          Adopted by the House of Delegates, August 8-9, 2005

                             recommendation
    Resolved, That the American Bar Association supports the prompt 
ratification by the United States, and by other members of the United 
Nations of the United Nations Convention Against Corruption (UN 
Convention).
    Further Resolved, That the American Bar Association urges that:
          (1) such ratification be subject to minimal reservations, 
        understandings and declarations by the United States, but 
        should include in the Senate's resolution of advice and consent 
        a declaration that (i) the Convention, except for Articles 44 
        (Extradition) and 46 (Mutual Legal Assistance) is non-self-
        executing, (ii) that no new legislation is necessary to 
        implement the Convention, including Article 35 (Private Rights 
        of Action), given that U.S. courts currently recognize private 
        remedies in certain circumstances for corruption-related 
        actions, and that (iii) in ratifying the Convention, the United 
        States does not intend to broaden or enhance current U.S. law; 
        and
          (2) to the extent implementation is required in other 
        countries, the United States should urge other countries to 
        implement the UN Convention in ways consistent with recognized 
        concepts of due process and fundamental rights, including the 
        presumption of innocence.
    Further Resolved,  The American Bar Association supports the 
development of a mechanism to monitor the implementation and 
enforcement of the UN Convention, taking into account the monitoring 
efforts of other organizations such as the Organization for Economic 
Cooperation and Development, and taking such steps as may be necessary 
or appropriate to promote efficiency in monitoring and avoid 
duplication of effort, while promoting the participation of civil 
society in the monitoring process.
                                 ______
                                 
                       National Foreign Trade Council, Inc.
                                     Washington, DC, June 22, 2006.

Re June 21 hearing on the United Nations Convention Against Corruption.

Senator Richard G. Lugar,
Chairman, Senate Foreign Relations Committee,
Hart Senate Office Building, Washington, DC.
    Dear Senator Lugar: As a followup to the June 21 hearing of the 
Senate Foreign Relations Committee regarding the U.N. Convention 
Against Corruption, I wanted to submit the following for the record 
regarding corruption in the global construction industry:

          The American Society of Civil Engineers (ASCE) estimates that 
        corruption siphons off approximately 10 percent--or roughly 
        $400 billion--of the annual $4 trillion spent globally on the 
        construction industry. Capturing even 25 percent of that loss 
        through the mechanisms provided under the U.N. Convention 
        Against Corruption would save money and redirect scarce 
        national resources to productive development around the world. 
        This type of cost savings from corruption is likely to benefit 
        the least developed countries the most.

    Thank you for holding this important hearing and for your continued 
attention to the Convention.
            Sincerely,
                                               Jake Colvin,
                                              Director, USA*Engage.
                                 ______
                                 
                                  American Bar Association,
                                         Chicago, IL, May 11, 2006.
Hon. Richard G. Lugar,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: On behalf of the American Bar Association, I 
write to urge the Senate to ratify the United Nations Convention 
Against Corruption. The Convention, which entered into force on 
December 14, 2005, reflects a global consensus on the international 
legal system necessary to fight corruption. To date, over 50 countries, 
including China and the United Kingdom, have ratified the Convention.
    The Convention can be a critically important tool in the global 
fight against corruption. It includes provisions to prevent and 
criminalize corruption and procedures for governments to recover assets 
that have been acquired illicitly by corrupt officials. It also 
includes a broad range of measures that enhance international 
cooperation among governments, including extradition and mutual legal 
assistance. As a leading prosecutor of transnational crime, the United 
States stands to benefit greatly from this enhanced cooperation.
    U.S. ratification of the Convention is non-controversial and has 
broad support. The Administration's transmittal of October 27, 2005, 
notes that no change in U.S. law is required. The Convention's 
universal prohibition on foreign bribery can help level the playing 
field for U.S. companies which have long operated under more stringent 
rules than their foreign competitors. It is also a crucial tool for 
improving the rule of law, thus promoting more effective economic 
development and a more stable environment in countries around the 
world.
    Prompt Senate ratification is also necessary for the United States 
to take a leadership role in moving forward with implementation. This 
is particularly true with respect to creation of an effective 
monitoring process. Although the Convention provides for such a 
process, the specific contours of that process will be discussed in 
November 2006 at the first Conference of States Parties. U.S. 
leadership at the Conference of States Parties is vital to ensuring 
that an effective and transparent monitoring mechanism is put in place. 
As a global defender of due process rights, it is also important that 
the United States participate actively in interpretation and 
application of the Convention around the world to ensure that those 
countries with less robust protections use it as a tool to prosecute 
the guilty, not harass political or economic competition. The ability 
of the U.S. to influence these discussions will be significantly 
diminished if it has not ratified the Convention before the Conference 
takes place.
    For these reasons, we would appreciate your leadership in convening 
a hearing on the Convention in the very near future. The ABA is hopeful 
that ratification by the full Senate will quickly follow, and will be 
pleased to work with you to secure this objective.
            Sincerely,
                                          Michael S. Greco,
                                                         President.

                                 
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