Proposal for concerted lobbying actions by interested National Chapters and TI-S to ensure an effective and comprehensive international legal instrument against corruption.

Background Proposals to ensure an effective and comprehensive UN Convention against Corruption Draft UN Convention texts

Background

In January 2001, the UN General Assembly, recognising the desirability of an effective international legal instrument against corruption, decided to begin the elaboration of such an instrument and to establish an ad hoc committee for its negotiation, pursuant to the adoption of the Terms of Reference for the negotiation.

The Terms of Reference are instructive in understanding the genesis and purport of the developing drafts of the currently negotiated convention. The Terms clearly call for the convention to be developed vis-à-vis a comprehensive and multidisciplinary approach, and importantly identifies some “indicative elements” i.e.

…definitions; scope; protection of sovereignty; preventive measures; criminalisation; sanctions and remedies; confiscation and seizure; jurisdiction; liability of legal persons; protection of witnesses and victims; promoting and strengthening international co-operation; preventing and combating the transfer of funds of illicit origin derived from acts of corruption, including the laundering of funds, and returning such funds; technical assistance; collection, exchange and analysis of information; and mechanisms for monitoring implementation.

Transparency International has, since the start of negotiations, emphasised the need to provide for, in an international standard-setting way, a pertinent selection of these indicative elements in the text of the Convention. Through its interventions at the first and third sessions of the Ad Hoc Committee and its Proposals submitted at its second session, TI has emphasised generally the need for effective monitoring provisions and for informed and professional participation by civil society, in particular NGOs, and has specifically made concrete proposals regarding the texts of various provisions.

TI’s contributions to the draft Convention have, to date, been an important and independent resource for the Committee Delegates. It is important to note that while the Assembly has invited the Committee to take into consideration the contributions of NGOs and civil society, TI has been the only visible and vocal NGO providing significant input to the process. This invitation suggests that not only the input during the negotiation stages of the convention are important but also that the contributions and involvement of civil society and NGOs in the actual framework of the Convention serves to be an important element provided in the instrument’s text.

As of the third session, the Draft of the Convention contained comprehensive provisions regarding the indicative elements listed above. Generally, these have matched the key issues for which TI would lobby in the Convention. However, in the third session negotiations, the numerous interventions made by a wide range of State Parties, indicates that there is a strong likelihood that a number of these provisions will be struck from the text in order to gain unanimous agreement, and/or that the language of the provisions will be ineffectual, making them less compelling on State Parties to reform their governance systems.

In accordance with the proposed agenda for the fourth Session of the Ad Hoc Committee, TI-Secretariat (TI-S) has identified, examined and, where necessary, made further proposals regarding key provisions and their texts under the current draft, so that the final instrument addresses the demands of the anti-corruption movement.

1Proposals to ensure an effective and comprehensive UN Convention against Corruption

On 13 January 2003, the drafting process for the UN Convention Against Corruption enters its fourth session. The process is timed to be completed by December 2003 for a signing ceremony in Mexico.

Transparency International has identified seven key issues essential to ensure that the current draft UN Convention against Corruption is an effective and comprehensive legal instrument.

These key issues are:

Corruption in the private sector [articles 11, 12, 32] Participation of civil society [article 13, Preamble] Measures to enhance co-operation at national level [articles 46,48,48bis] Measures to enhance international co-operation [Part IV] Recovery of corruption proceeds and looted assets [article 42, chapter V, articles 61,62,67 and 71] Mechanisms for monitoring implementation [chapter VII, articles 76 and 77 and proposals of Austria/Netherlands and Norway] Entry into force [article 82]

Corruption in the private sector

Article 11: Private sector Article 12: Accounting standards for [the] private sector Article 32:Criminalisation of corruption in the private sector

TI strongly believes that, so far as practicable, private sector corruption should be subject to preventive measures and should be criminalised just like corruption in the public sector.

There are many reasons including:

private sector larger than public sector in many countries line between two sectors blurred by privatisation, outsourcing and other developments bribery of corporate officials has transnational dimensions just like bribery of public officials tolerating private sector corruption undermines public confidence in the private sector with potentially serious economic and political consequences growing recognition of need for action against private sector bribery in many countries as well as at OECD.

TI therefore supports the principle of these provisions. However, TI notes with regret that the proposal by Colombia in Article 11 bis on code of business ethics has not been included in the revised draft. This text included some useful concepts and could have been improved by adopting some of the concepts embodied in the OECD revised recommendation of 1997:

“Internal company controls

1.Member countries should encourage the development and adoption of adequate internal company controls, including standards of conduct. 2.Member countries should encourage company management to make statements in their annual reports about their internal control mechanisms, including those that contribute to preventing bribery. 3.Member countries should encourage the creation of monitoring bodies, independent of management, such as audit committees of boards of directors or of supervisory boards. 4.Member countries should encourage companies to provide channels for communication by, and protection for, persons not willing to violate professional standards or ethics under instructions or pressure from hierarchical superiors.”

If Article 11 bis is not to be reinstated TI strongly advocates the following amendments to Article 11, as the integrity of public procurement and protection for public interest disclosures are vital issues:

1.Adding at the end of para 1 (e) the words: “and those regarding direct public procurement, bidding and competitive tenders;”

2.Adding a new para 1 (g) reading: “(g) Promoting the provision of channels for communication by, and protection for, persons not willing to violate professional standards or ethics under instructions or pressure from hierarchical superiors and/or who report, internally or to external auditors or competent authorities, in good faith and on reasonable grounds, any incidents which may be considered to constitute an offence as defined in this Convention by a private entity.”

With regard to Article 32, TI strongly supports the principle of criminalising private sector corruption and prefers Option 1 as it would not only criminalise active and passive private-to-private corruption but also participation as an accomplice.

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Participation of civil society

Article 13: Participation of civil society

It is a fundamental belief of TI that civil society has an essential role in facilitating effective corruption prevention and enforcement. This view has gained general acceptance over the past few years by intergovernmental organisations such as the World Bank and United Nations, by international non-governmental organisations as well as by governments and organisations at national level.

Moreover, TI notes that the concept embodied here and the term “civil society”, owing to their importance, have been included in other significant anti-corruption instruments, including:

the preamble para 52 and Article 3, para 113 of the Inter-American Convention Against Corruption of 1996; the preamble para 54 of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997; the preamble5 and elaborate provisions under Pillar 3 – Supporting Active Public Involvement in relation to encouraging public discussion of corruption, access to information and public participation in anti-corruption activities of the ADB/OECD initiated Anti-Corruption Action Plan for Asia-Pacific of November 2001; and the preamble6 and article 12 Civil society and media7 of the Draft African Union Convention on preventing and combating corruption of September 2002.

Drawing on these models and reflecting the important role for civil society in fighting corruption, TI proposes the following amendments to Article 13:

Amalgamating paras 1(a) and 1(b) (and re-designating subsequent paras accordingly) to read:

“(a) Ensuring the highest levels of transparency and access to information to enable such individuals and groups to hold both public and private sector actors accountable for their actions, and to be actively involved in public decision-making processes;”

Amending para 1 (d) to read:

“(d) Promoting public information activities that contribute to non-tolerance of corruption, that inform about this Convention, and that empower such individuals and groups to be fully engaged in the fight against corruption. Such activities may include public education programmes, including school and university curricula.”

Amending paragraph 2, by insertion in line 2 after the word “corruption” of the words “and related offences”.

Adding an additional paragraph 4:

“4. Each State Party shall encourage public participation in anti-corruption activities, in particular through the participation of civil society in monitoring public sector programmes and activities and in the implementation of this Convention.” note: this reflects the corresponding provision in the Asia-Pacific Action Plan

Preamble

TI proposes further that the Preamble acknowledge the important role of civil society in the anti-corruption struggle, and suggests the following clauses:

“Convinced of the importance of creating public awareness of corruption and its gravity, and of the need to strengthen the participation of civil society in preventing and fighting corruption, and promoting integrity, transparency and accountability;” and “Determined to build partnerships between governments and all segments of civil society, in particular women, youth, media and the private sector, in order to fight the scourge of corruption;”

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Measures to enhance co-operation at national level

Article 46: Measures to enhance co-operation with law enforcement authorities

TI recognises the importance of encouraging participants in the commission of a corruption offence to supply information useful to the competent authorities for investigative or evidentiary purposes. This has proven to be an important contributing factor in the fight against corruption and the recovery of stolen assets.

While, in principle, TI supports the inclusion of this article, we have serious reservations regarding para 3 which raises concerns over impunity when a person who provides substantial co-operation in the investigation or prosecution of an offence may be granted immunity from prosecution or exempted from criminal responsibility.

Article 48: Co-operation with national authorities;

Article 48 bis: Co-operation between the private sector and national authorities.

TI fully supports the inclusion of these articles, given the importance of information exchange and reporting of offences. However, Article 48 para (a) should be redrafted to resemble Article 48 bis in qualifying the criminal offences as those covered by the Convention.

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Measures to enhance international co-operation

Part IV: Promoting and strengthening international co-operation

TI recognises the crucial importance of promoting and strengthening international co-operation and of effective law enforcement mechanisms. However, TI cautions that express provision should be made, both in the Preamble and in the operative part of the Convention, that inalienable human rights and fundamental freedoms must be respected at all times in implementing the Convention.

Article 58: Bank Secrecy

TI strongly supports the inclusion of this article. Bank secrecy has been a potent shield for hiding and laundering proceeds of crime including corruption. For the same reason TI also supports the reference to limiting bank secrecy in Article 64 para 2.

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Recovery of corruption proceeds and looted assets

Article 42: Confiscation and seizure

While this article relates to national measures, it is essential to international co-operation in the recovery of corruption proceeds as recognised by the cross-reference in para 8.

Chapter V: Preventing and combating the transfer of funds of illicit origin derived from acts of corruption, including the laundering of funds, and returning such funds.

This Chapter proposes a comprehensive set of provisions seeking to ensure effective preventing and combating of funds of illicit origin derived from acts of corruption, including the laundering of funds, and returning of such funds. TI has been advocating such measures for some years and views this Chapter as a key element in the prevention of and fight against corruption.

General Proposals

TI proposes that throughout this Chapter, the following two concepts should be incorporated as far as possible:

1.That the principle of transparency be observed in terms of the public disclosure of information regarding the existence, detection, prevention, confiscation, return, and/or disposal of funds of illicit origin derived from acts of corruption. 2.That references to banking and financial institutions should also include references to multinational enterprises in view of the latter’s potential to participate in and facilitate corruption.

Specific proposals

Article 60: International co-operation for the purposes of confiscation

TI welcomes para 5 whereby States Parties are required to submit copies of their laws and regulations implementing this article to the UN Secretary-General.

TI proposes the addition of a provision requiring the creation and maintenance of a database of such laws and regulations by an appropriate body of the UN, and that such database be made publicly available world-wide.

Article 61: Disposal of confiscated proceeds of crime or property

TI strongly supports the inclusion of this article, in particular para 3 of Option 1 as it introduces the possibility of using proceeds of corruption to assist in economic development and technical assistance and to support intergovernmental bodies specialising in the fight against corruption.

Article 64: General Provisions

TI likewise supports the text proposed by the United States, which would require States Parties to co-operate and assist in matters of prevention and co-operation. TI welcomes the inclusion of para 1(c) whereby States Parties must co-operate with one another in eliminating any regulatory gaps in their respective laws that might give rise to transfers and concealment of assets, including funds, of illicit origin derived from acts of corruption and in providing the guarantees necessary for facilitating the return of such assets to their countries of origin. TI also welcomes the inclusion of para 3, stating that the recovery by the affected countries of origin of assets, including funds, of illicit origin derived from corruption shall be a right.

Article 65: Detection [and prevention] of transfers of illicitly acquired assets

TI strongly supports the inclusion of this comprehensive and instructive article, in particular para 5 which describes the information content of transaction records provided for in the previous clause. TI agrees, however with the argument in footnote 160, which would call for the deletion of the word “senior” to qualify public officials in this article.

Article 66: Financial intelligence units

TI supports the establishment of Financial Intelligence Units as an important source of information to assist in law enforcement work. It is assumed that the staff of such units would be specialised and trained, and could be an important source for corruption prevention programmes as well as the training of law enforcement officials.

Article 67: Recovery Mechanisms

The usefulness and importance of this article in describing HOW illicitly acquired assets can be recovered cannot be understated. TI strongly supports the inclusion of this article.

Article 68: Special Co-operation provisions

TI proposes, in line with footnote 188, that the word “appropriate” is struck from line one of para 4.

Article 69: Contents of Request Article 70, Limitations on co-operation (Option 1).

TI supports these provisions. However, in Article 70 para 2 (b), the expression “or other essential interests,” although reproduced from Article 18 para 21, section (b) of the United Nations Convention against Transnational Organised Crime, is vague and may allow room for abuse of discretion, and accordingly should be struck from the text or otherwise better qualified to ensure that limitations on co-operation are minimised.

Further, Article 70 para 2 (d) introduces a new limitation on co-operation when offences are minor or the illicitly acquired assets are of a de minimis value. If this provision remains, the terms “minor offences” and “de minimis value” would require elaboration.

Article 71: Disposition of Assets Article 72: Additional Provisions

TI welcomes these provisions and in particular:

Article 71 para 1 (a), which gives priority to using recovered assets to compensate the victims of the crime or to return them to their legitimate owners Article 71 para 1 (b), which encourages the use of recovered assets to support anti-corruption initiatives and programmes. Article 72 para 7, which calls for training programmes in relation to asset recovery.

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Mechanisms for monitoring implementation

Part VII: Mechanisms for monitoring implementation

TI strongly supports the amendments to Articles 66 to 70 proposed by the Governments of Austria and the Netherlands (pdf-download 109 kb), and the further amendment to Article 68 proposed by the Government of Norway (pdf-download 105 kb), which are in line with the proposals TI submitted at the Second Session of the Ad Hoc Committee in June 2002.

Experience with other international anti-corruption instruments shows that without a clear and effective monitoring mechanism such instruments are unlikely to achieve their stated objective. On the other hand, peer review based on mutual respect is clearly an effective way to encourage implementation and enforcement.

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Entry into force

Article 82: Entry into force

TI strongly supports the proposal submitted by Colombia that the Convention should come into force 90 days after deposit of the 20th instrument of ratification, acceptance, approval or accession. A requirement for 40 countries to ratify constitutes too high a threshold.

Draft UN Convention texts may be located at the following sites:

1.The revised text (Nov. 02) for Preamble to Article 1 – 39: Doc A/AC.261/3/Rev.2 2.The revised text (Jul 02) for Articles 40-85: Doc A/AC.261/3/Rev.1/Add.1 3.Proposals received from governments [India, Lebanon, Pakistan, Russia] (4 Nov 2002) 3. Doc A/AC.261/11:

All the above documents are in English, French, Spanish, Russian, Arabic, Chinese. The above addresses are for English version.

Proposals by Austria/Netherlands on monitoring provisions (in PDF format)

Proposals by Norway on monitoring provisions (in PDF format)

Footnotes

1 UNGAOR A/RES/56/260 2 “Convinced of the importance of making people in the countries of the region aware of this problem and its gravity and of the need to strengthen the participation of civil society in preventing and fighting corruption.” 3 “State Parties agree to consider the applicability of measures within their own institutional systems to create, maintain and strengthen mechanisms to encourage participation by civil society and NGOs in efforts to prevent corruption.” 4 “Welcomes efforts of companies, business organisations and trade unions as well as NGOs to combat bribery,” 5 “WELCOME the pledge of representatives of the civil society and the business sector to promote integrity in business and in civil society activities and to support the governments of the region in their anti-corruption effort” 6 “Determined to build partnerships between governments and all segments of civil society, in particular women, youth, media and the private sector, in order to fight the scourge of corruption;” 7 “State Parties undertake to:

1.Be fully engaged in the fight against corruption and related offences and the popularisation of this Convention with the full participation of the media and civil society at large; 2.Create an enabling environment that will enable civil society and the media to hold governments to the highest levels of transparency and accountability in the management of public affairs; 3.Ensure and provide for the participation of civil society in the monitoring process and consult civil society in the implementation of this convention; 4.Ensure that the media is given access to information in cases of corruption and related offences on condition that the dissemination of such information does not adversely affect the investigation process and the right to a fair trial.”

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Document last modified: Monday, December 23, 2002 05:45:08

December 23, 2002