FCPAméricas Blog

The OAS’s Convention Against Corruption: What companies need to know

Author: Matteson Ellis

This week, a Committee of Experts met at the Organization of American States (OAS) in Washington, DC to consider the extent to which certain Latin American countries are complying with the OAS’s Inter-American Convention against Corruption (IACAC). Among other things, they discussed the responsibility of the private sector in the fight against corruption. What do FCPA compliance officers need to know about the IACAC?

It Is More Than Just a Treaty. The IACAC is a treaty, and a very important one in the world of anti-corruption. It has the great distinction of being the world’s first international legal instrument to deal with cross-border corruption. It was adopted on March 29, 1996, and entered into force a year later. It has more than thirty member states throughout the Americas.

Perhaps more importantly, the instrument has a peer review body too, called MESICIC, the Mechanism to Follow Up on Implementation of the IACAC. This week’s meeting in Washington was part of MESICIC. The fact that this group exists means that each country’s implementation of the convention is subject to constant evaluation. Experts regularly provide recommendations. This encourages ongoing (albeit gradual) improvement.

MESICIC is now in its Fourth Round of review. Like the OECD Anti-Bribery Convention’s Working Group (described here), it generates periodic reports after on-site visits. Dozens have already been conducted. They are highly detailed and offer extensive technical insights into improvements. It makes sense for the reviews to be so expansive and in depth. The treaty covers a broad range of areas of domestic and foreign corruption, unlike the targeted OECD Anti-Bribery Convention that focuses specifically on foreign bribery in international business transactions.

Various Relevant Provisions. There are various provisions of the IACAC that are relevant to the private sector. Like the OECD Anti-Bribery Convention, the IACAC obligates member states to criminalize foreign bribery (see Article VIII on “Transnational Bribery”). This means that, in essence, the IACAC establishes an additional legal duty, above and beyond the duties created under the OECD, for countries like Mexico, Brazil, Argentina, Chile, and Colombia to enact foreign bribery laws. It also establishes a similar duty for non-OECD participating countries in Latin America. Countries like Peru, Uruguay, and Ecuador are therefore expected to address foreign bribery too. Adherence to these obligations has already been evaluated once by MESICIC in its Third Round review, reported here.

In addition, member states are obligated to enact laws that prohibit domestic forms of corruption (see Articles VI and VII). Thus, insofar as a company or its officials might pay bribes to public officials within a Latin American country, it could be subject to that country’s own domestic corruption laws. Moreover, under Article III(10), member states “agree to consider” requiring publicly held companies to maintain adequate books and records and internal controls, much like the requirements under the FCPA’s accounting provisions. Though Article III is purely aspirational (no legal obligation), the MESICIC reviews it too (see a review of accounting provisions in the Third Round review), applying a level of encouragement and pressure.

Leveling the Playing Field. FCPAméricas has discussed how, given agreements like the IACAC, countries are encouraged to do a better job at reforming their anti-corruption laws. In this way, the FCPA does not operate in a vacuum. Yes, improvement is a slow process. Yes, we cannot expect every country throughout Latin America to adopt and enforce robust domestic and foreign bribery laws overnight. But mechanisms like MESICIC show that, little by little, the playing field is being leveled. Countries are incentivized to move in the right direction. Indeed, the FCPA has helped put in motion a series of impressive international developments.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2013 Matteson Ellis Law, PLLC

Matt Ellis

Post authored by Matt Ellis, FCPAméricas Founder & Editor

Categories: Anti-Corruption Compliance, FCPA, IACAC, OECD

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One Response to “The OAS’s Convention Against Corruption: What companies need to know”

  1. Alyce Ahn Says:

    Having participated in several MESICIC Committee of Experts meetings since the fall of 2010 as a member of the U.S. delegation, I can confirm that peer review mechanisms such as the MESICIC incentivize and assist countries in fulfilling their treaty commitments. Indeed, the review process compels governments to report on their efforts to prevent and combat corruption; facilitates intra-government coordination; helps identify specific reforms to address gaps and obstacles; and promotes domestic as well as international accountability, especially where civil society organizations are invited to contribute to the review process. Where a country needs resources and/or technical assistance, a recommendation from the MESICIC to that effect may also help the country obtain needed assistance.

    Anyone interested in FCPA enforcement in the Western Hemisphere would benefit from perusing the MESICIC reports that are being published in this Fourth Round of Review, as well as those from the Third Round. While the reports in the Third Round included a direct review of countries’ respective criminalization of foreign bribery, the Fourth Round currently underway focuses on the oversight bodies that are responsible for “preventing, detecting, punishing, and eradicating corrupt acts”—institutions that are directly and indirectly involved in the enforcement of domestic and foreign bribery laws. The reports being published in this Fourth Round also contain especially specific and concrete recommendations as a result of information obtained during the on-site visits that have been incorporated into this round of review.
    The MESICIC’s discussion on the responsibility of the private sector in the fight against corruption—a “topic of collective interest” that the MESICIC Committee of Experts chose to discuss at last week’s meeting—also provided countries with an opportunity to exchange best practices and learn from one another. Several practices, tools, and ideas were shared, and the Organization of American States (OAS) plans to compile tools and approaches to serve as a resource for member states.

    In addition, the OAS has begun to live webcast the presentations made by civil society organizations prior to each MESICIC meeting, and the video from last week’s meeting is available at http://www.youtube.com/playlist?list=PLkh9EPEuEx2u9y6VvX4QlDVVBzCur_dZb. Tune-in in September for presentations from NGOs on their recommendations for the next group of states under review.

    For more information on the United States’ efforts to promote implementation of international anti-corruption commitments and combat bribery and kleptocracy, please see http://www.state.gov/documents/organization/200526.pdf.

    Alyce Ahn is an Anticorruption Advisor in the U.S. Department of State’s Bureau of International Narcotics and Law Enforcement Affairs.

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