[Senate Executive Report 109-18]
[From the U.S. Government Publishing Office]
109th Congress Exec. Rept.
SENATE
2d Session 109-18
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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).
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\2\ Id. at 12.
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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.
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\3\ The edited transcript of the hearing is attached to this report
(page 11).
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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
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UNITED NATIONS CONVENTION AGAINST CORRUPTION
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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\
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\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.