OECD: REPORT OF JUNE 2008 MEETING OF THE WORKING GROUP ON

C O N F I D E N T I A L PARIS 001369 STATE FOR EB/IFD/OMA, EUR/ERA, INL/C, L/LEI AND L/EB DOC FOR ITA/MAC/MTA/KOZLOWICKI, OGC/NICKERSON/MANSEAU DOJ FOR CRIMINAL DIVISION/FRAUD SECTION/MMENDELSOHN/JACOBSON USEU FOR MRICHARDS PASS TO US SECURITIES AND EXCHANGE COMMISION/ENFORCEMENT/RGRIME, INTL.AFFAIRS/TBEATTY FROM USOECD SIPDIS E.O. 12958: DECL: 07/17/2013 TAGS: KCOR ECON EINV ETRD PREL OECD SUBJECT: OECD: REPORT OF JUNE 2008 MEETING OF THE WORKING GROUP ON BRIBERY Classified By: EEST COUNSELOR CURTIS STONE FOR REASONS 1.5 (B AND D) ¶1. (U) SUMMARY. The OECD Working Group on Bribery (WGB) met June 16-20, 2008 at OECD headquarters in Paris. The agenda for the plenary session included the following topics: Responses by stakeholders to WGB Consultation Paper Argentina Phase 2 report Australia post-Phase 2 written report Estonia Phase 2 report Slovenia post-Phase 2 oral report South Africa Phase 1 report Spain post-Phase 2 follow-up report Denmark post-Phase 2 follow-up report United Kingdom oral follow-up report to Phase 2 recommendations Tour de table methodology for cases Israel accession ¶2. (U) An in-depth record of the plenary and of the management group meeting will be available from the WGB Secretariat in the near future. This cable highlights issues of particular importance for the U.S. that were discussed at the plenary, management group meeting, or on the margins of the meetings, as well as specific topics raised in consultations with stakeholders that took place on June 16. A prosecutors meeting also took place on June 16, with attendance limited to prosecutors and investigative officials. Results of that meeting will be reported separately. MANAGEMENT GROUP MEETING ¶3. (SBU) The management group (composed of heads of delegation of Argentina, France, Italy, Korea, Sweden, and the U.S. plus WGB chair Mark Pieth and vice chair Maria Gouvanelli and the WGB Secretariat) met on July 16. The management group discussed: ¶4. (C) Israel/Russia accession - despite what was agreed to in March, that both candidate countries would come into the WGB in December [whether as full or ad hoc participants], Secretariat legal counsel said that Israel could come in as early as October provided the Israelis have anti-bribery legislation in place by then and the OECD Council of Ministers agrees to invite them. US rep pushed back, pointing out that the record of the meeting in March 2008 leaves no doubt that the full plenary intended to bring both in for the 
December 2008 plenary at the earliest. He also reminded the management group that the Phase 2bis report on the UK is on the agenda for the October meeting and that the discussion is expected to touch on national security exceptions and the proper interpretation of Article V of the Convention, unsettled issues that the current membership should deal with prior to admitting new countries. After some discussion, WGB Chair and the Secretariat staff sided with the US rep. ¶5. (C) Turning to the preliminary results of the UK Phase 2bis visit led by lead examiners France and Canada in April, the Chair and Secretariat Legal Counsel reported that the lead examiners had uncovered more problems with British implementation of the Convention. The French representative at the management group indicated that while he was not at liberty to discuss specific details of the report, the report being drafted will be frank about the UK's legislative and administrative shortcomings with regard to investigating and prosecuting foreign bribery. Among the myriad problems, the agency in charge of investigating foreign bribery, the Serious Fraud Office (SFO),is being downgraded. The Management Group briefly discussed what political pressure could be brought to bear but did not reach a decision. ¶6. (C) Turning to accession, the group discussed the importance of dialogue with Enhanced Engagement program countries. The Chair noted that the most important country in the program, China, is backtracking on fighting bribery. The management group expressed concern that China has not renewed a request for observer status in the WGB or rescheduled an anti-bribery conference that it had requested the OECD to organize in the spring of 2008. ¶7. (C) The group discussed the need to replace Italy and Korea on the management group. The two withdrew their participation shortly before the June meeting. USdel suggested deadline of July 30 for nominations to be voted on at the October plenary. That gives delegations sufficient time to consider running for the vacant seats and allows the WGB time to properly vet candidates. The Secretariat agreed to the deadline. ¶8. (SBU) Permanent review mechanism. The Chair came up with an elegant solution to the dispute between the US and the Secretariat over whether the WGB had approved in March 2008 a post phase 2 review on a trial or permanent basis. Pieth proposed calling the permanent review the "monitoring stage" whereby phase 3, which will last four years, is followed by a phase 4, then phase 5, etc. This satisfies those who want to keep a tally of the number of times each party has been reviewed while preserving the concept of permanent cycle of reviews. REPLACING THE WGB CHAIRMAN ¶9. (C) On the margins of the plenary meeting, USdel spoke with Mark Pieth about his plans to remain at the helm of the WGB. Pieth indicated he would like to see all Phase 2 reviews completed, which would extend his tenure through the end of 2009. He plans to run for re-election in December 2008 at which time he will announce that it will be his last year as Working Group Chairman. We told him we are supportive of his plans. We consulted with the Secretariat and two members of the management group to begin identifying candidates and the skill set and experience that will be required in the selection process. UK PHASE 2 REVIEW ¶10. (C) The WGB heard a report from the United Kingdom delegation with respect to progress on recommendations which had been made to the UK in March 2005. This oral report showed that the UK has made little progress toward meeting its obligations under the Convention since it was first asked to correct deficiencies in its national legislation. On the contrary, the briefing made clear that the UK has backtracked in some ways. The main concerns are: -- continued failure of the UK to address deficiencies in its laws on the crime of bribery of foreign public officials and on corporate liability for foreign bribery. Although the deficiencies constitute substantial barriers to successful investigations and prosecutions, it appears that the UK government does not intend to submit a bill for a new bribery law to Parliament during the 2008-2009 session and that there is still not even a schedule for UK government attention to the Working Group's 2005 recommendation on corporate liability; -- extraordinary turnover in senior management at the SFO, with the actual or expected departure of six of the most senior staff, including senior lawyers with experience in major foreign bribery cases, and a public statement by the new SFO Director that priority would be given to domestic fraud investigations; -- while the constitutional reform bill would restrict the power of the Attorney General to withhold consent for prosecutions, a statutory power to block investigations or prosecutions would be created where a national security interest has been invoked. It is unclear whether the proposed statutory power to block investigations or prosecutions would remain subject to judicial review. ¶11. (U) The Working Group authorized the Secretariat to draft a letter for the Chairman's signature conveying concern over the lack of progress. The letter was sent to the British Attorney General and the Minister of Justice on June 27, 2008. CONSULTATIONS WITH STAKEHOLDERS ¶12. (SBU) WGB delegations met with a number of academics, NGO, and private sector organizations which had submitted written comments to the Consultation Paper. Among the attendees were Transparency International (TI) and the International Chamber of Commerce (ICC). The most frequently mentioned issues mentioned by the stakeholders were: -- Expand coverage to include private-to-private bribery; -- Eliminate exception for facilitation payments; -- Provide whistleblower protection; and -- Improve coordination between OECD, GRECO, and UNCAC The WGB made clear to the stakeholders that while their input and recommendations would be considered, the parties to the Convention are not contemplating amending it at this time. Any changes likely will involve a revised recommendation and/or new commentary. ¶13. (U) In addition to discussing cross-cutting issues and challenges ahead, the consultations provided an opportunity for TI to preview its report on how signatories are implementing the Anti-Bribery Convention. REFORM OF THE TOUR DE TABLE ¶14. (U) A decision was made to separate the Oil for Food cases from the matrix. The Secretariat was tasked with drafting a paper laying out options for streamlining the exercise. There was agreement that two tour de tables a year would be dedicated to discussion of cases and the remaining two to legislative developments. U.S. DELEGATION (U) The U.S. was represented by: Mark Mendelsohn, DOJ Troy Beatty, SEC Richard Figueroa, head of delegation, DOS EGAN