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Former USSR: U.S. Wants Action To Reduce International Bribes

  • Ron Synovitz

Prague, 1 May 1997 (RFE/RL) -- The United States is moving forward with a global campaign that aims to clean up international business by cracking down on private firms that bribe foreigners.

U.S. Treasury Secretary Robert Rubin raised the issue at last Sunday's meeting of G-7 finance ministers. Washington hopes other industrial countries will commit themselves at next month's ministerial meeting of the Organization for Economic Cooperation and Development (OECD).

The United States is among the few countries with laws that block private firms from paying bribes to ensure business contracts in foreign countries. By comparison, German law makes it illegal to demand and accept bribes, but German companies are allowed to make such payments and even deduct the expenditures from their tax bills as a business expense.

Alan Larson, a senior official in the U.S. State Department, says the practice is denying developing countries access to the most efficient bidders in major infrastructure projects. Larson says funds are being diverted that could have been used for economic and social development. He says fragile democratic institutions also are being corrupted.

Both Germany and France subscribed last year to a non-binding OECD recommendation that would end the tax loophole for bribes abroad and make bribe paying a criminal offense. But both countries now say they want to negotiate a binding international treaty on the issue before changing their laws. That process could take as long as ten years.

Meanwhile, European Union officials say they plan to criminalize bribery between EU countries. That development would make it a crime for a German to bribe, for instance, an Italian official or businessman. But they could still legally pay bribes to eastern Europeans.

Washington wants each OECD country to enact its own legislation next year in order to eliminate the tax loopholes and criminalize bribes altogether. The stage is set for a showdown at the OECD's meeting in Paris on May 26 and 27. Chaired by France, the meeting will draw together finance, foreign affairs and trade ministers of the 29 OECD member countries.

U.S. President Bill Clinton's administration also has been urging the World Bank and International Monetary Fund (IMF) to expand the scope of their anti-corruption activities.

In eastern Europe and the former Soviet Republics, World Bank and IMF loans are helping to build a much-needed market infrastructure -- including reliable transportation and communication networks. The work often is contracted with foreign businesses.

U.S. Treasury Secretary Rubin says the IMF and World Bank should "focus on establishing uniform rules" for all of their projects. He says the institutions should create a standard contract with a no-corruption pledge and "strong headquarters oversight."

World Bank President James Wolfensohn said in Washington last week that the bank can help in the fight. But he said that governments and their senior leaders ultimately must take action.

"If it's not cured at the top, corruption is not going to be cured," said Wolfensohn.

Wolfensohn said the World Bank already makes spot audits of projects that it sponsors. If corruption is found, he said projects are canceled and offenders are "blackballed." But World Bank officials could not provide an example of a contract that was canceled because of corruption.

Meanwhile, Wolfensohn says anti-corruption programs with Ukraine, Hungary and Poland are being expanded and that the World Bank is helping Latvia and others to develop similar programs.

Earlier this month, President Bill Clinton appealed to officials in Kyiv to clean up corruption that is slowing market reforms. Three major U.S. firms -- Motorola, Marathon Oil, and the sugar firm Tate & Lyle -- have left the Ukrainian market recently because of the vast corruption they've encountered there.