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