Experiences of Poland in implementation of the oecd convention on combating bribery of foreign public officials in international business transactions and lessons learned in a peer review process

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Experiences of Poland in implementation of the OECD Convention on combating bribery of foreign public officials in international business transactions and lessons learned in a peer review process

(By Jacek Garstka)

I. In order to understand the impact of the OECD Convention on Polish law and functions of the state structure, it is necessary to recall briefly the Polish "staring point". When the negotiations commenced, Poland was a newcomer to the OECD with a 2 year long membership, a candidate to the EU at the beginning of negotiations, and, above all, a fresh, 7 year old free-market economy. Invented somewhere – probably in the Western Europe - the term “state in transition” correctly described Poland and other countries of the region at the time. This transition period meant a difficult process of building up and setting into action a completely new state structure, whilst continuing to perform all the necessary state functions. Poland was constantly trying to increase its export volume, or rather - after the Russian crisis - not to loose too much. This showed Poland’s determination to adopt standards developed within the community of free-market democratic states and to show its ability to be a credible partner. Obviously, state laws and structures at the beginning of the transition were not prepared to cope properly with all the "black sides" of market economy, which were imported sometimes more rapidly than the advantages. As regards the threat of corruption, it was almost entirely viewed as an issue of domestic bribery, as well as abuse of power. In the former model of social-economic relations we mostly dealt with petty corruption. State owned enterprises did not have to bribe; however, even their managers had to keep good relations with political decision-makers, sometimes supported by not very legal actions. With the beginning of market reforms and the opening of the market to private entrepreneurs, including from abroad, “high level” corruption occurred. The state structure was not prepared to cope properly with this problem, especially to disclose corruption and bring its perpetrators to justice, which resulted in a lack of criminal prosecutions. That the threat of corruption was not substantial in Poland was a recurring argument. This obviously is not the case today, and – as will be developed below –, it is to the large extent the result of OECD action against bribery. With the growth of awareness of corruption in Poland, many reforms were carried out. By and large, they were not genuine innovative responses to the problems, but rather the implementation of existing models and standards. International organisations served as channels for transferring those standards and models.
II. In the negotiations of the Convention, Poland tried to play an active role, while respecting at the same time the experience of other states and the visible need to establish a really high standard. At the time, worldwide action against corruption, with the participation of governments was already in motion. We had had some experience with the European Union concepts, as well as with the Council of Europe’s work in this area. But the rationale for these was much simpler and the interest to be protected much more obvious than in the case of the OECD Convention. We had to abandon the traditional way of thinking, which, in the context of international business transactions may be summarised as “good fellows from our companies have to bribe bad guys from other governments in order to make business abroad”. This was obvious from the beginning of the negotiations and was strongly supported during the negotiations by several major free-market economies. Therefore, it should be said that the OECD Convention was an important factor in changing the perspective from a purely domestic vision of the threat of corruption, to a more global one. We started to think that –regardless of domestic corruption – Poland also bore some part of the responsibility for the corruption in other states.

It was clear to us that the legislative work to be done with respect to implementation would be a major one. The most important problems for Poland were the issue of the liability of legal persons in corruption, and the definition of a foreign public official. In fact this first issue, being almost a brand-new idea in Poland with no clear precedent in the legal system, was the reason for the late ratification of the Convention by Poland. The legal solutions we applied were an attempt to conciliate the need for full implementation on the one hand, and the need to preserve the traditional concepts of our legal system.

It should be said that from the Polish perspective, the OECD Convention is part of a set of international legal instruments aimed at combating corruption, adopted at the end of the 1990: the Council of Europe’s criminal and civil law conventions, the European Union’s Convention on corruption, preceded by the Additional Protocol to the Convention on the protection of the Communities’ financial interests, and finally United Nations’ Convention on transnational organised crime. The fact that the EU assumed the Convention as a part of its acquis contributed to speeding up the work, since the membership in the UE was – and still is – a priority of Polish policy. Actions taken by several governments, including that government of our host – the Republic of Korea –, within the limits of peer pressure, consisting of the use of different occasions in bilateral relations to raise the issue, were also important for obtaining the support for necessary legal actions on the highest political level. But the most important role was played by the mechanism of peer pressure exerted within the OECD on different levels, from the Working Group to the highest bodies of the organisation. It did not allow us to slow down our efforts and gave us a strong tool to turn the attention of the highest state authorities to the necessity of implementation of the Convention.

Late ratification of the Convention, frankly speaking, had some advantageous dimension, namely the results of the first evaluations of the Convention’s implementation (Phase 1) and the discussions conducted within the WGB, which had an influence on the final draft law submitted to Parliament.

It seems proper to make here a remark, which in fact is intended to be one of the conclusions of my presentation. The OECD Convention and its Commentary could be considered, and not only by careless readers, as a very general instrument. As provisions of international law, they obviously leave some space for interpretation, which, if only a little abused, could lead to conclusions which may considerably limit the scope of commitment of the Parties. What makes this Convention one of the strongest instruments is the mutual evaluation and peer review provided for in article 12 thereof.
III. The process of peer review, as carried out by the OECD WGB, is perceived – from the state official’s perspective – as a very difficult exercise but also an important lesson. In my opinion, it is a result of two factors, the first of which is the importance that governments attach to the Convention in political terms, and the second, the quality of expertise presented by the persons designated by the state Parties to perform the task of evaluators. It seems that those factors are strictly related to each other. Last but not least, the quality of assistance provided by the Organisation’s staff considerably contributed to the thoroughness of the reports. Poland found its own phase 1 evaluation very satisfying: only one incompatibility with the Convention was found (which resulted in the submission of a relevant proposal to the Parliament) and a few other issues were marked as requiring further examination in phase 2 (among them the question of provisions concerning the effectiveness of the liability of legal persons). However, we were influenced and inspired not only by the recommendations, but also by the exchange of views during the debate on the report on Poland within the Working Group on Bribery of the OECD, entrusted with the peer review task. How this mechanism works can be best illustrated by the fact that, although no recommendation concerning the definition of foreign public official was addressed to Poland, after the discussion in the WGB, we found it proper to better define this term. Currently, the relevant law, introducing the so-called “definition by the Convention” has been enacted by the Sejm (one of the two Chambers of the Polish Parliament) and is under examination by the Senate (the second Chamber). The already mentioned doubts concerning potential effectiveness of our provisions on the liability of legal persons were one of the reasons for the government to introduce a much more advanced regulation of this liability.

Indeed, the questions posed and the observations made by experts coming from different legal traditions and with different practical experiences, were a source for reflection on our own legal and organisational system. This statement seems to be relevant for the majority of the Parties to the Convention.

IV. Poland has not undergone the Phase 2 evaluation yet, but it had the opportunity to act as a "lead examiner" in such an evaluation and participated in the approval of the evaluation reports up to date. It was obvious from the very beginning, and it is underlined by the actual content of the Phase 2, that in order to fulfil the obligations under the Convention it is not sufficient to enact appropriate laws. The aim is to have these provisions work, and the question is how to achieve this end. The common understanding of the Parties, expressed in Phase 2, is that efficient enforcement and judicial authorities, as well as preventive measures, including state initiated actions directed to the private sector and civil society organisations, are necessary to fulfil the requirements of the Convention. Without those elements and activities, it would be naive to expect that some day we will see bribers in court. Why, I think, is it like this? For the same reasons that the Convention was enacted, it is because of the differences in approaches to the issue among OECD members, and because states (the officials of which were corrupted by foreign businesses) were not properly addressing the problem, which from their perspective was a domestic corruption problem. The legal answer to that, provided by the Convention, is to punish bribe-givers bribing abroad but falling within our jurisdictions. However this approach creates several challenges for law enforcement authorities. Disclosure and investigation of foreign bribery is extremely difficult. Thus, if a state does not aim for a generally high standard in law enforcement, and especially in dealing with economic crime, the capability of such a state to apply the Convention does not exist.

Again, as was the case in Phase 1, we are gathering concepts and ideas and, while thinking of other state’s solutions and their relevance, we are asking ourselves in Poland: Do we have everything in place? Do we have a proper ability to fight foreign bribery? It would be premature to speak about a particular outcome of this reflection, but I can indicate the areas in which we see room for improvements. The first one concerns co-operation of the government with the business sector aimed at developing proper ethical standards in conducting economic activity abroad and assuring them of our full support, in our capacity as a state party to the Convention, if they are found to be the “victims” of others’ bribery. The second one concerns the training of state authorities, other than police or prosecutors, in order to co-operate with the latter in combating foreign bribery. I think, of course, especially about tax and customs authorities, and – depending on the type of action concerned – about training them in detecting in companies’ documents, what we call “shadows of corruption,” as well as creating workable channels for sharing information with investigators and prosecutors.

Several states have already been criticised for not providing enough training to their law enforcement bodies, which could improve their capacity in carrying out investigations, especially financial ones, or for lack of interdepartmental information exchange. The same applies to raising awareness of tax authorities and their duty to report to organs responsible for investigation and prosecution any irregularities which may serve to cover bribery transactions.
V. The overall picture of the impact, which the Convention has had not only on Poland, but also on almost all Parties, would not be complete without mentioning the influence it has had on the legislation concerning domestic bribery. The Convention’s obligations are limited only to bribery of foreign public officials in international commercial transactions. But in many legal systems it would be very hardly acceptable to provide a higher standard of criminal law protection against foreign bribery than against domestic one. Because of this, from a formal point of view, the Convention unintentionally elevated and, to some extent, harmonised legal solutions applicable to domestic bribery. In the case of Poland the examples are very clear: the liability of legal persons and third parties’ non-pecuniary advantage. Before the Convention, there was no such thing as liability at all. When we introduced it, of course we did not limit it to foreign bribery, but covered domestic bribery as well. Again, when we prepared a draft, which eliminated the loophole of the lack of criminalisation of the bribery in cases where the advantage benefiting a third party is of a non pecuniary character, we applied this concept also to domestic bribery.
VI. In conclusion, I would like to refer to the provocative question which is the title of the workshop. I won’t attempt to answer it, speaking as a Polish official in charge of the Convention. Moreover, it seems to me difficult to find a non-disputable answer to that question. Of course, one could say that if the governments are ratifying conventions, they are showing the will for it to work. But history knows too many treaties which were not applied in practice. However, the mutual evaluation mechanism, as it was shaped by the Parties within the OECD structure, is some guarantee that the Convention will not be a dead letter. The fact, that the process and its outcome are not secret, and allows the participation in Phase 2 of civil society organisations, in my opinion makes it more credible and objective. The Convention, together with the evaluation reports, represents a point of reference for governments’ action in this area. Thus, each of you may make your own evaluation. However, I am of the opinion that action by the Parties’ governments would not be enough to have the Convention working. Without a multi-folded co-operation from other governments, from the business sector and civil society, we may achieve no more than a ready-to-go machinery, which will be of a very rare use.

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