Matthew recently expressed skepticism about proposals to expand the OECD Anti-Bribery Convention to countries like China and India. As he explained, adding new parties may undermine the peer review system that is key to the Convention’s success. To succeed, that system requires (in Matthew’s words) that “(1) countries are willing to issue harsh reports about their peers, and (2) countries care about the reports, and find bad reviews embarrassing and/or politically damaging.” But what if public shaming isn’t enough? Imagine that a member state didn’t care enough to change its ways after critical reports. What would be next? Unfortunately, South Africa might help answer that question soon.
Last month, the OECD Working Group on Bribery (“WGB”) issued a scathing Phase 3 Report on South Africa’s compliance with the Convention. As the FCPA Blog recounted, the OECD appeared to have “encountered a brick wall,” with the reviewing nations “repeatedly express[ing] exasperation with South Africa’s failure . . . to prosecute a single foreign bribery case.” Calling the need for enforcement “imperative,” the WGB insisted that South Africa take “urgent steps” to address a host of infirmities; among other problems, the WGB found that South Africa had allowed political and economic considerations to impede investigations by the nation’s under-resourced anticorruption unit. The OECD also took the unusual steps of (1) asking South Africa to submit a self-assessment and (2) threatening to “take appropriate measures,” including requiring an additional Phase 3bis review, to address South Africa’s continued compliance problems.
With South Africa’s ruling party under increasing fire for its failure to combat corruption, the nation’s 2014 elections could mark a turning point in South Africa’s antibribery efforts. But what if they don’t? What if continuing to embarrass South Africa through follow-on reports and a statement of noncompliance isn’t enough to jumpstart enforcement of the Convention in Africa’s largest economy?
To answer this question is to realize that the key to the Convention’s success is also a symbol of its greatest weakness. Bluster as it might, there is little the WGB can do but to keep trying to shame members into compliance. This state of affairs is a product of compromises embedded in the Convention itself:
- First, the Convention neither provides for sanctions nor contemplates expulsion. These gaps are not surprising. After all, in pushing for the Convention, the United States was trying to get other nations to commit themselves to combating corruption, to acculturate them to an anticorruption norm, and to get them to begin prosecuting transnational bribery for the first time. Given those goals, and the desire to get as many OECD members as possible on board, it didn’t make much sense to push for sanctions (which might scare off new members) or expulsion.
- Second, South Africa acceded to the Convention without becoming an OECD member, as is permitted under Article 13(2). Allowing non-OECD members to become Convention members made sense from the perspective of wanting to draw nations into the fight against transnational corruption as soon as possible. Today, though, the WGB contains several members — like South Africa — over whom the OECD itself exercises little leverage since it cannot threaten their broader membership or other interests in the OECD.
What does this all mean? Perhaps it’s time — as Matthew seems to suggest — to reconsider the next steps for the Convention. Rapid expansion of the WGB, especially if coupled with seemingly defiant noncompliance by members like a recalcitrant South Africa, will threaten the Convention’s continued vitality. Unfortunately, amending the Convention to add a more robust compliance mechanism — e.g., an escalating sanctions regime — is both a political nonstarter (since it would require the votes of even the noncompliant parties) and a death-knell for future expansion.
Perhaps there is a middle ground: In my view, the best way to maintain the effectiveness of the Convention is to:
- Slow down its expansion (accepting only countries with a demonstrated commitment to enforcement in the form of preexisting prosecutions under foreign anti-bribery laws);
- Hope that shame is, in fact, enough for most countries; and
- Develop an extra-Convention agreement among willing members to (a) offer political and economic rewards to noncompliant nations who step up enforcement efforts and (b) impose collateral consequences upon those who don’t.
This approach would hopefully give moderate and active enforcers carrots and sticks with which to flexibly incentivize compliance without scaring off states considering accession in the way that a rigid intra-Convention sanctions regime might.