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C O N F I D E N T I A L PARIS 000830 
 
SIPDIS 
 
STATE FOR EB/IFD/OMA, EUR/ERA, INL/C, L/LEI AND L/EB 
DOC FOR ITA/MAC/MTA/BARLOW, 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: 03/05/2012 
TAGS: KCOR ECON EINV ETRD PREL OECD
SUBJECT: OECD: REPORT OF JANUARY 16-18, 2007 MEETING OF THE 
WORKING GROUP ON BRIBERY 
 
Classified By: CHARGE D'AFFAIRES CURTIS STONE FOR REASONS 1.5 (B 
AND D) 
 
REF: Paris 829 
 
¶1.  (U) SUMMARY:  At its January 16-18 meeting, the OECD Working 
Group on Bribery (WGB) heard remarks from Secretary General 
Gurria on the need for the WGB to combat corruption.  The WGB 
also conducted a Phase 2 peer-review evaluation assessing 
Poland's implementation of its OECD Anti-Bribery Convention 
obligations.  The WGB called on Poland to strengthen its 
corporate liability laws and close a significant loophole that 
makes it difficult to prosecute companies that bribe foreign 
public officials.  The WGB reviewed country enforcement actions 
on foreign bribery and UN Oil-for-Food cases, began discussions 
on the U.K.'s discontinuation of the BAE/Saudi Arabia case and 
released a public statement about this inquiry.  The WGB 
discussed a future monitoring mechanism and possible revision of 
the 1997 Revised Recommendation, which outlined best practices 
in areas such as accounting, auditing and public procurement, 
non-tax deductibility of bribes and other measures to combat 
bribery; discussed release of an annual report, compilation of 
WGB enforcement statistics, and distribution of a typology on 
bribery and public procurement; reviewed follow-up reports by 
Korea, Finland, and Italy, held a special session on China; 
addressed other accession and outreach issues, and reelected the 
Chair, Vice Chair and three new members of the Management Group 
(MG).  END SUMMARY. 
 
TABLE OF CONTENTS 
 
Secretary General Gurria's address - para 2 
 
SIPDIS 
Poland Phase 2 Evaluation - para 3 
Tour de Table of Enforcement Actions - para 4 
-- UK: BAE/Saudi Arabia - paras 5-11 
-- Remaining Cases - para 12 
Phase 2 Follow-up Reports 
-- Italy - paras 13-14 
-- Korea - para 15 
-- Australia - para 16 
-- Slovak Republic - para 17 
Revision of Anti-Bribery Instruments and 
  Post Phase-2 Monitoring Mechanism - paras 18-19 
Accession and Outreach 
-- China Special Session - paras 20-23 
-- Outreach continued - para 24 
Annual Report/Statistics - para 25 
Export Credit Group /Bribery and 
     Public Procurement Report - para 26 
Other:  Elections/Calendar - paras 27-29 
 
SECRETARY GENERAL GURRIA ADDRESSES WGB 
 
SIPDIS 
 
¶2.  (U) OECD Secretary General Angel Gurria told WGB members 
they must provide leadership to reduce the supply side of 
bribery.  While progress had been made, far too few countries 
have shown enforcement results; the WGB must do better.  Gurria 
urged the WGB to maintain rigor in designing the next phase of 
its monitoring process and said it is right to review OECD 
anti-bribery instruments to ensure they reflect the highest 
standards.  The Secretary General noted the WGB has an 
opportunity to exercise global leadership through cooperation in 
implementing the U.N. Convention against Corruption (UNCAC) and 
by reaching out to new emerging market players who must begin to 
address the supply side of bribery, as well as the demand side. 
The Secretary General said the U.K.'s decision to discontinue 
investigating the BAE/Saudi Arabia case was of concern for the 
OECD Anti-bribery Convention (the Convention) and asked the 
Chair and Secretariat to keep him informed.  He welcomed the 
forum provided by the OECD for a full and fair discussion of the 
issues and underscored the expectation that integrity of the 
Convention will be maintained.   Investigations and prosecutions 
 
are where the Convention is put to the test, stated Gurria, and 
political will of members individually and collectively is of 
critical importance.  He encouraged the WGB to extend its 
cooperation with other institutions, including the multilateral 
development banks. 
 
POLAND PHASE 2 EXAMINATION 
 
¶3.  (U) Lead examiners Turkey and U.K. briefed on results of the 
Phase 2 on-site visit to Poland, identifying key deficiencies in 
its enforcement efforts.  WGB members agreed that Poland should: 
amend its law to confirm clearly that bribes to foreign public 
officials cannot be tax deductible, review the "impunity" 
provision in article 229.6 of the Penal Code which allows 
perpetrators of foreign bribery to escape punishment 
automatically by notifying authorities of the offense, and 
either exclude its application to foreign bribery or 
significantly limit its scope, work more proactively to detect, 
investigate and prosecute cases of foreign bribery and raise 
awareness of foreign bribery in the public and private sector, 
and consider strengthening safeguards to ensure that 
prosecutorial decisions cannot be affected by political and 
economic considerations set out in Article 5 of the Convention, 
a potential risk because of the dual role of the Prosecutor 
General and Minister of Justice.  The WGB welcomed Poland's 
declaration that it would address a deficiency in the law on 
corporate liability to eliminate a requirement that a natural 
person be convicted as a prerequisite to proceeding against a 
collective entity.  The WGB also recognized its responsiveness 
in providing information, evidence and other forms of mutual 
legal assistance (MLA) in other countries. 
 
TOUR DE TABLE DISCUSSION OF CASES 
 
¶4.  (U) The Tour de Table on enforcement actions on alleged 
foreign bribery cases is an essential part of monitoring country 
enforcement of the OECD Convention.  Discussion is keyed to a 
restricted matrix of foreign bribery allegations, organized by 
member country.  USdel presented an update on Foreign Corrupt 
Practices Act matters under inquiry or investigation by DOJ 
and/or the Securities and Exchange Commission.  In some cases, 
USdel noted that we had made inquiries and determined the items 
included in the matrix should be removed, as the allegations did 
not appear to involve a U.S. nexus or we could not verify any 
basis for the allegations.  The January meeting included a 
special session devoted to the U.K.'s termination of an 
investigation into BAE plc and a defense contract with Saudi 
Arabia. 
 
U.K. TERMINATION OF BAE/SAUDI ARABIA INVESTIGATION 
 
¶5.  (C) The Acting Chair noted that the U.K.'s decision in this 
case appeared to constitute a violation of the Convention.  U.K. 
delegation head Jo Kuenssberg recognized the level of interest 
in the case and stressed the need to respect the confidentiality 
of the Tour de Table and the information relayed.  She said the 
case would be part of the written follow-up of the U.K.'s Phase 
2 examination scheduled for March and noted that the U.K. 
delegation had not requested the discussion be held in 
restricted session (closed to non-WGB members).  Other officials 
present to discuss the case represented the Serious Fraud Office 
(SFO), the Ministry of Defense Police (MOD Police), and the 
office of the Attorney General (AG).  The lead SFO rep expressed 
the U.K. delegation's willingness to answer as much as possible 
WGB questions, bearing in mind pending litigation.  She advised 
that on December 14, SFO Director Robert Wardle decided to 
discontinue the joint SFO/MOD Police investigation based on his 
personal, independent judgment.  Key U.K. contentions included: 
the BAE/Saudi Arabia case had been discontinued by SFO Director 
in the public interest, based on risks to international and 
national security; the decision was based on exceptional factors 
and the U.K. government did not view it as precedent-setting; 
 
 
U.K. authorities did not consider the decision to have 
constituted a breach of Article 5 of the Convention; other 
investigations involving BAE involving South Africa, Tanzania, 
Romania, Chile, and the Czech Republic continued; and the U.K. 
remained committed to tackling international corruption.  (Note: 
 A detailed report of the U.K. briefing on the BAE/Saudi case is 
provided reftel). 
 
¶6.  (C) Co-lead examiners of the U.K. Phase 2 review, Canada and 
France, placed the decision in the wider context of that review. 
 The Canadian delegation commented that public interest may 
inform prosecutorial discretion, but noted the U.K. Phase 2 
report identified specific concerns regarding the U.K.'s 
definition of public interest and obstacles to its ability to 
initiate investigations of the foreign bribery offense.  Nothing 
in the U.K.'s explanation answered these concerns.  The French 
delegation underscored that Article 5 of the Convention 
prohibited consideration of the impact on relations with another 
State in enforcement decisions and stressed the need for 
safeguards on the invocation of national security.  It noted 
France was interested in considering a Phase 2 bis examination 
of the U.K. following discussion of the written follow-up report 
in March. 
 
¶7.  (C) In response to U.S. questions, the SFO rep conceded that 
as the investigation was terminated before charges were brought 
and a conviction obtained, there were "unpalatable economic and 
commercial results that will have to be resolved in another 
forum."  The AG rep conceded differences in views of the AG and 
the SFO Director on the merits of the case, but said the 
decision had been based on public interest considerations, 
rather than an assessment about the sufficiency of the evidence. 
 He asserted that all intelligence agencies in the U.K. had 
agreed that national and international security risks were 
present in the case. 
 
¶8.  (C) The Italian delegation stated that it was important that 
the WGB understood whether the UK decision was based on specific 
information regarding the safety and security of the U.K.  The 
Australian delegation stated that it fully supported proper 
prosecutorial discretion and considered valid a distinction 
between relations with another State and national and 
international security interests. 
 
¶9.  (C) The Acting Chair commented that it was not in the 
interest of the WGB or of the U.K. to be seen as throwing the 
Convention out the window.  She said that another option was to 
treat this case as an exceptional situation requiring 
exceptional measures.  She noted that the March WGB meeting 
would include a review of institutional issues that may have 
influenced the U.K. decision.  The U.S. delegation commented 
that it was not appropriate at this juncture to conclude that 
Article 5 does not contemplate the proper invocation of national 
security interests, and it was also inappropriate to end 
consideration of the case before the WGB heard more about the 
U.K. system of implementation of the Convention and this case 
during the U.K.'s follow-up written review in March.  The Acting 
Chair said the WGB would consider all possible appropriate 
actions at the March meeting, including a Phase 2 bis 
examination of the U.K., if additional questions regarding 
implementation remained. 
 
¶10.  (C) The Netherlands, U.S., Canada, France, Switzerland, 
Spain, Sweden, Chile, Italy, Norway, Greece, Estonia and 
Argentina joined a WGB consensus that the case presented serious 
concerns and that a clear public statement expressing those 
concerns was necessary to maintain credibility. 
 
TOUR DE TABLE - OTHER ISSUES 
 
¶11.  (SBU) ATTENTION:  Please be advised the following 
information summarizes an OECD restricted document; names of 
 
individuals and/or companies should not be disclosed.  A summary 
of delegates' statements focused on foreign bribery case updates 
and other developments is set forth below: 
GERMANY: Reported the Siemens/ENEL (Italy) case, in which 
Siemens allegedly had made improper payments of 6 million Euro, 
continues.  Germany is very satisfied with the mutual legal 
assistance (MLA) provided by Italian authorities; reported the 
Freeport/Manila case continues, and is divided into one case for 
German prosecution and one case for Italian prosecution; 
confirmed that Germany cannot provide MLA unless a criminal case 
is proceeding; noted ten Oil-For-Food (OFF) cases in four 
different districts had been consolidated under one prosecutor 
who is investigating the illegal breaking of the Iraq embargo; 
advised that most of the cases involving Siemens are being 
handled by prosecutors in Munich, who intend to brief the WGB 
after preliminary investigations are completed; and requested 
deletion of the Bristol Myers Squibb case from the matrix of 
ongoing cases.  USdel noted an ongoing SEC investigation, 
activity in Germany by a subsidiary of a publicly traded 
company, and advised that the case should not be deleted from 
the matrix. 
 
ARGENTINA: Reported no update on cases, but advised that 
Argentina is completing a self-evaluation/analysis of 
anti-corruption efforts as part of implementation of the 
Inter-American Convention Against Corruption and reported that 
Argentina's Senate had passed a law regarding funding of 
political parties. 
 
AUSTRALIA: Reported that AWB, Rhine Ruhr and Alkaloids OFF cases 
continue; briefed on the Cole Inquiry, which issued findings 
November 24, 2006, and stated the expectation of appropriate law 
enforcement follow-up on the referrals by the Cole Inquiry of 12 
individual for investigation and possible prosecution; advised 
that the Cole Inquiry had found that payments made by AWB to 
Iraq could not be classified as bribes under the Australian 
criminal code; noted that in follow-up to Phase 2 
recommendations, Australia is considering amending the law that 
allows a defense if conduct was lawful in the country where 
payment was made; requested deletion of the Conoco Phillips case 
given dismissal by a U.S. District Court and deletion of the 
allegation against an Australian official; reported Oil 
Exploration/Mauritania and Anvil/Dikulushi Concession (DRCongo) 
investigations are ongoing. 
 
AUSTRIA: Reported that OFF investigations are ongoing, but 
prosecutors are considering dropping case because of problems 
with documents received from the ICC and because the Iraqi 
government charged all companies and no Iraqi public official 
benefited.  After the Acting Chair noted continuing WGB and 
Secretariat concerns regarding the Schlaff/Oasis Casino (Israel) 
 
SIPDIS 
case, Austria del noted that Austria had responded "partly" to 
three requests for MLA; a fourth MLA request was pending; the 
limitation period was not in risk of running out; and Austria 
will provide more details in an oral follow-up in March.  The 
Acting Chair took note that Austria had received four requests 
for MLA in the Schlaff case and is only now considering opening 
a case.  The USdel echoed Chair's concern regarding Schlaff case 
and questioned the Austrian delegation's position regarding OFF 
prosecutions, noting the need for investigation if there is 
indication that acts committed by Austrian companies violated 
any laws.  The Swedish delegation raised the possibility of 
Austria bringing a sanctions busting case.  The Chair questioned 
whether Austria had passed legislation penalizing violations of 
UNSC sanctions.  If it had not, it was incumbent that it does so 
promptly.  The Austrian del said they will confer with 
prosecutors. 
 
BRAZIL: Reported inquiries into OFF cases continued. The Univen 
Petroquimical (Bolivia) case is being investigated, but appears 
to be a tax evasion case; no proceeding has been open in the 
 
Meat Exports (Russia) case.  USdel inquired whether Brazilian 
authorities have the power to compel documents, and noted the 
case should remain on the matrix until authorities have taken 
reasonable steps to determine whether an allegation may be 
substantiated. 
 
CANADA: Reported that as of December 12, 2006, a Director of 
Public Prosecutors has replaced the Federal Prosecution Service 
of the Department of Justice; Parliament is considering limiting 
how the Attorney General can instruct prosecutors, requiring 
such instruction be in writing and be made public; OFF 
investigations continue; re: Skytel (Haiti) case, said Canada 
understands an investigation is ongoing in the U.S., and Canada 
is ready to assist; re: Terra Seis case, reported company 
involved is a wholly owned Trinidad and Tobago subsidiary, USdel 
noted U.S. is looking for a more proactive stance, Canadian del 
does not want to duplicate efforts, but will take the issue back 
to Canadian authorities; Canadian prosecutors had found nothing 
to start investigations in the Dundee (Bulgaria), UN Procurement 
Fraud/Peacekeeping Ops; or Oil Exploration Companies 
(Mauritania) cases; reported Bangladesh is looking into Niko 
Resources (Bangladesh) case and Canada is prepared to assist; in 
ITXC (Nigeria) case, stated that the U.S. is investigating and 
Canada is prepared to assist; Acting Chair noted that WGB is 
waiting for further cases.  USdel questioned whether Canada had 
asked for formal or informal MLA in the Terra Seis case 
regarding evidence that the parent company had authorized the 
conduct which took place in the foreign subsidiary or had asked 
Terra Seis to provide evidence or documents relating to whether 
anyone at the parent company had authorized a bribe. 
 
CZECH REPUBLIC: Reported investigation continues in Cocoa 
Scandal (Ghana) case. 
 
KOREA: Reported that a GOK UNCAC Task Force is considering an 
asset recovery bill; plans to participate in an APEC 
Anti-Corruption Meeting in Australia in February; re: 
Hyundai/Police Vehicles case (Kenya), has found no Korean 
company in Kenya; re: Kia/Hyundai (Slovakia), has found no 
sufficient evidence to investigate Kia; re: Powers/US Army Base, 
has not received information from U.S. Army. 
 
SPAIN: Reported Spain had responded to an MLA request by Kenyan 
authorities in the AngloLeasing case; and reported that neither 
company involved in the case was registered in Spain and no 
inquiry had been opened in Spain. 
 
ESTONIA: Reported that a law on liability of third parties will 
become effective February 1, 2007. 
 
UNITED STATES: Reported that the U.S. ratified UNCAC on October 
30, 2006; a new FCPA/money laundering case (Sapsizian/Alcatel) 
was charged December 1, 2006 in case involving $2.5 million in 
bribes and requested that matrix be updated accordingly; DOJ had 
issued two opiQon releases (one involved a contribution to an 
African country's Customs department to support 
anti-counterfeiting programs [approved]; the other involved the 
proposed retention of an attorney/law firm for acquisition of a 
large sum of foreign exchange [approved]); advised that former 
UN official Benon Sevan had been indicted Jan. 17, 2007 in New 
York with a co-conspirator in a case involving kickbacks; 
advised that Oily Rock/Azerbaijan Privatization Program case is 
scheduled for trial in October 2007; re: IBM/China Construction 
Bank and NCR/China Construction Bank, noted U.S. has an ongoing 
investigation involving Alltel and will expand it to see whether 
there are grounds to investigate IBM or NCR; re: Teleglobe 
(Nigeria), reported Yaw Osei Amoako had been charged and pled 
guilty; re: U.S. v. Giffen (Kazakhstan), reported that Second 
Circuit decision had been received and the case will be further 
litigated in the trial court regarding access to classified 
documents; re: Instrumentarium case, Finnish del noted that 
Costa Rica had not answered Finland's request for MLA, and that 
 
Finland had renewed the request; requested removal of SAIC 
(Greece) case having conferred with French magistrate and 
company counsel; requested deletion of Chevron (Ecuador) case as 
no complaint ever received; requested deletion of Mowag (Chile) 
as conduct preceded the acquisition by a U.S. company. 
 
FINLAND: Reported on progress on follow-up to recommendations, 
including consideration by a higher-level Working Group on 
whether to amend legislation to require an obligation of tax 
administration officials to report corrupt payments. 
 
FRANCE: Reported that five cases have been initiated; re: 
Total/Iraq case, prosecution opened in October 2006; re: 
Alstom/Enelpower (Italy), awaiting information from Italian 
authorities whether Enelpower official is considered foreign 
public official; re: unidentified companies (EU Commission) 
case, reported that no French company was mentioned and France 
has no info, awaiting info from Belgium, U.K.del provided 
additional information that Czech and British companies who were 
approached by official had declined bribe solicitation and 
notified officials; Acting Chair suggested France raise the 
issue with Belgian authorities; re: Bollore (Cameroon) case, 
French prosecutors had no information on Cameroon proceedings; 
in response to inquiry by USdel whether French authorities had 
contacted Cameroon authorities, French del reported they had not 
and were waiting for contact from Cameroon authorities.  Acting 
Chair suggested France contact Cameroon directly; re: Bollore 
(Ivory Coast), France reported no allegation of any crime in 
Ivory Coast; re: AREVA/Ethiopia Electric Power Co., reported 
that Ethiopian Power had lost case in Ethiopian court; re: 
Alcatel/ICE (Costa Rica), an MLA request to Costa Rica has 
received partial response; re: Thales Slush Fund, proceeding 
opened in France in December 2005 and investigation continues; 
re: Thales-DCN (India), investigation opened in 2006; re: THEC 
(Cambodia), same case as Thales Slush Fund; re: TSKJ (Nigeria) 
and Sagem/ID Cards (Nigeria) cases, proceedings continue; re: 
EU/Subsidized Cereals case, investigation launched by Paris 
prosecutor followed by MLA request by Belgian authorities, 
Belgian authorities are continuing proceedings and requested the 
case be deleted from matrix for France. 
 
HUNGARY: Reported a conviction had been obtained in a foreign 
bribery offense case involving visas and the U.S. and Australian 
embassies; smuggling case on the Hungarian-Slovak border is in 
criminal court phase; matrix cases - prosecutors looked into 
cases but did not find sufficient information to begin 
investigation, requested deletion from matrix. 
 
IRELAND: Reported cases still under investigation; Ireland Phase 
2 examination in March. 
 
ITALY: Reported that a court had denied a preventive seizure of 
assets in an OFF case; requested deletion of Immucor/Italian MD 
and Czech Tank Modernization/Officine Galileo cases from matrix. 
 
JAPAN: Reported re: Hitachi/China Construction Bank case 
Japanese authorities are seeking information from the Chinese 
court; USdel suggested Japanese authorities request company for 
information regarding internal inquiry; re: Japanese steel 
suppliers (China), Japan has requested information informally; 
reported Japan was seeking MLA in two cases (one on matrix and 
one not on matrix); Mitsui (China) and Eidai (Brazil) cases 
deleted from matrix. 
 
LUXEMBOURG: Reported preliminary investigation of OFF case 
indicated no crime of bribery of foreign public official; 
investigation continuing to extent of another possible crime; 
will contact French colleagues regarding a case which appears to 
involve suspected foreign bribery of a Luxembourg public 
official. 
 
NORWAY: Reported no developments in cases, but requested that 
 
Steps Taken report reflect Norway had ratified UNCAC June 29, 
¶2006. 
 
NETHERLANDS: Reported in the OFF/Trafigura case a plea agreement 
between parent company in U.S. in which company will be fined 
and  Netherlands looking into matter; Trafigura/Jamaica case is 
in prosecution in Netherlands; re: Shell/Iran, there is no 
indication of foreign bribery by Shell and delegation proposes 
deletion; re: Mittalgate/Iran, the allegation was found to be 
false; re: TSKJ/Nigeria, case is not under independent 
investigation in Netherlands; U.S. will request MLA for 
Netherlands, which will act on it; reported re: EU/Subsidized 
Cereals case, a Dutch national is being tried in Belgium and the 
case should be removed from matrix for Netherlands; U.S. 
delegation inquired about status of Mr. Pluimers, whose 
extradition was requested five years ago. 
 
U.K.: Reported UNCAC has been extended to the British Virgin 
Islands and Cayman Islands will present bill to extend both the 
OECD Convention and UNCAC; reported opening of nine preliminary 
inquiries, most of which are not reflected in the matrix; 
reported a number of operations undertaken by the new City 
Police Unit; noted the U.K. may require MLA from the U.S. in the 
Weir case; re: UN Procurement Fraud/Peacekeeping case, reported 
that U.K. expects to receive information from the U.N. soon; re: 
Oil Exploration companies (Mauritania) case, U.K. is in contact 
with Australian authorities; requested deletion of Mabey and 
Johnson (Iraq, Papua New Guinea and Philippines) case, as 
attempts to obtain information has been unsuccessful; re: BOTEC 
(Botswana), UK has sought information from Botswana without 
success, requests deletion; requests deletion of Royal Dutch 
Shell (Iran) case; re: Lincoln Park (U.S.) case, notes Potter 
sentenced in U.S. and UK does not propose trying him in U.K, 
requests deletion; requests deletion of GlaxoSmithKline 
(Germany) case as it involved old allegations; re: Anglo-leasing 
(Kenya), U.K. is seeking more information from Kenya. 
 
SLOVAK REPUBLIC: Requested deletion of Multinational Smuggling 
Ring case, as investigation indicated it was a domestic 
corruption case in Hungary. 
 
SWEDEN: Reported that it had no specific information to share 
regarding the unidentified companies (EU Commission) case, but 
Sweden is expecting assistance from the U.K. SFO; requested 
deletion of Skanska (Czech Republic) case as no information 
obtained regarding connection to Sweden; re: Ericsson/ICE (Costa 
Rica), reported receipt of assistance from French prosecutor, 
but no formal investigation initiated, still seeking evidence to 
initiate case. 
 
SWITZERLAND: No new case information, but prosecutors plan to 
attend the March WGB meeting; seeking information from the 
Secretariat on the Roche (Turkey) case. 
 
SIPDIS 
 
TURKEY: Reported Barmek (Azerbaijan) case is ongoing; requested 
deletion of Customs Fraud/Bulgarian Checkpoint case in view of 
lack of allegations. 
 
Bulgaria, Denmark, New Zealand, Portugal and Slovenia were 
absent from the Tour de Table.  Poland and Mexico reported no 
new developments.  Belgium, Greece, Slovak Republic and Sweden 
reported Oil-For-Food (OFF) cases were proceeding. 
 
PHASE 2 FOLLOW-UP REPORTS 
 
¶12.  (U) Within one year of the WGB's approval of the Report of 
Phase 2 Examination, countries must, at a minimum, provide an 
oral report on steps it has taken or plans to take to implement 
the WGB's priority recommendations.  A detailed written 
follow-up report must be provided within two years. 
 
ITALY (WRITTEN FOLLOW-UP) 
 
 
¶13.  (SBU) Lead examiners Germany and U.K. shared grave concerns 
regarding Italy's failure to implement the recommendation to 
amend its legislation to exclude the defense of concussione from 
the offense of foreign bribery, leaving serious gaps in its 
implementation of Convention obligations.  Italy maintained that 
concussione should not be considered as involving bribery of a 
public official, but rather as a defense to extortion committed 
by a public official.  The lead examiners differed regarding 
appropriate next steps.  The U.K. considered that monitoring and 
follow-up would not address the deficiency and recommended the 
WGB send a letter to draw the relevant Minister's attention to 
Italy's failure to implement adequately the Convention and 
Revised Recommendation, a position strongly supported by the 
U.S. delegation.  Germany favored extending the follow-up and 
monitoring period and postponing a letter to the Minister, a 
position which the Slovak and Czech Republics supported.  The 
Acting Chair advised that ordinary procedure regarding 
non-compliance with a strong recommendation would be to put the 
Party on notice.  Although the recommendation stands, given the 
requirement for consensus-minus-one support for further action, 
the Acting Chair advised Italy it must report back to the WGB in 
one year's time on its implementation of the recommendation. 
 
¶14.  (SBU) Examiners also noted a recommendation regarding tax 
amnesty had lost its relevance as the tax amnesty program was 
not continued; that Italy had partially implemented a 
recommendation to amend provisions on false accounting, but the 
new law may not be sufficiently dissuasive; steps were underway 
to implement a recommendation to extend the length of the 
"ultimate" limitation period as a bill is pending; 
recommendations regarding cooperation between MOJ and law 
enforcement on MLA had been satisfactorily implemented; 
clarified a follow-up issue by confirming that a decree relating 
to liability of legal persons covered State-owned enterprises. 
 
KOREA (WRITTEN FOLLOW-UP) 
 
¶15.  (SBU) Lead examiners Australia and Finland reported 
significant follow-up of recommendations, including very good 
progress in awareness raising efforts.  Regarding a 
recommendation to ensure that the defense of social customs is 
not applicable to the foreign bribery offense, lead examiners 
advised that case law in 2006 recognized that the defense does 
not apply to foreign bribery.  Korea had made no progress on 
recommendations to consider increasing the maximum penalty for 
foreign bribery, to clarify that Korean foreign bribery 
legislation applies when a bribe is transmitted directly to a 
third party or to consider ensuring that government and 
government-funded agencies that provide contracting 
opportunities to Korean companies have authority to audit 
companies suspected or convicted of bribing foreign public 
officials. 
 
AUSTRALIA (ORAL FOLLOW-UP) 
 
¶16.  (SBU) The Australian delegation briefed on the 
recommendations made by the Cole Inquiry, which had investigated 
Australian actions in relation to the UN Oil-for-Food program. 
The Cole Inquiry recommended the Criminal Code be changed to 
include offenses for acting contrary to UN sanctions that 
Australia has agreed to uphold.  The Australian government has 
established a Task Force to consider possible prosecutions as 
recommended by the Cole Inquiry.  In the context of the Cole 
Inquiry findings, Australia is considering a WGB recommendation 
to amend the defense for conduct that is "lawful" in the foreign 
public official's country to ensure consistency with Commentary 
8 of the Convention.  The Australian del assured that an 
appropriate approach will be implemented.  Although the Cole 
Inquiry did not have a mandate to review Australia's tax code, 
the Australian Tax Office (ATO) is examining how possible 
changes to the Criminal Code to include sanctions busting would 
 
require tax legislation changes.  Such changes, which will take 
some time, will likely to be prospective.  Australia has 
continued with its foreign bribery awareness campaign; placed a 
higher priority on corruption and foreign bribery by the 
Australian Federal Police (AFP); clarified that Commonwealth 
agencies must report all cases of suspected foreign bribery to 
the AFP; clarified that all Australian Public Service employees 
must report any instances of bribery that they observe in the 
course of their employment; is reviewing whistleblower 
protection provisions; is reviewing penalties for the offense of 
bribing a foreign public official; and has issued a direction to 
all prosecutors that when deciding whether to bring a 
prosecution for bribery of a foreign public official, the 
Director of Public Prosecutions should not be influenced by 
considerations specified in Article 5 of the Convention. 
 
SLOVAK REPUBLIC (ORAL FOLLOW-UP) 
 
¶17.  (SBU) The Slovak delegation briefed on actions implementing 
recommendations regarding: (a) awareness raising (issuance of 
guidelines regarding auditors' reporting obligations; 
dissemination of anti-bribery information by EXIMBANKA SR, 
Foreign Ministry and overseas representations, tax authorities 
(translation and distribution of OECD Bribery Awareness Handbook 
for Tax Examiners), and the Supreme Audit Office (training)); 
(b) prevention and detection of foreign bribery through taxation 
(enactment of legislation expressly denying tax deductibility of 
bribe payments to foreign public officials), export credits 
(reformulation of exporters' statement regarding submission of 
agents' commissions); accounting and auditing (training of 
auditors in International Auditing Standards, training on 
proceeds of crime and corruption; preparation and publication of 
guidelines on the duty of auditors to report unusual 
transactions by the Slovak Auditors' Chamber); anti-money 
laundering measures (interagency discussions and training); (c) 
raising awareness in the private and public sector of the 
obligation to report foreign bribery cases and to raise 
awareness about whistleblower protection (no apparent progress); 
(d) investigation of foreign bribery (training police officers 
and recruits on investigating foreign bribery and coordinating 
meetings to enhance cooperation among law enforcement agencies 
involved in combating foreign bribery); (e) need to amend 
legislation to exclude defense of "effective regret" (Ministry 
of Justice analysis is currently pending receipt of additional 
information from Special Prosecution Office); (f) prosecution of 
foreign bribery (increased penalties for false accounting;  GOS 
decided not to submit to Parliament draft law to abolish Special 
Court and Office of Special Prosecutor, but will attempt to 
address constitutionality issues separately; reported admission 
of one judge to Special Court; organized training sessions on 
foreign bribery for Special Judges and Special Prosecutors; and 
regarding recommendation to establish liability of legal persons 
for foreign bribery without delay, reported draft law submitted 
to Parliament in February 2006 has not yet been discussed). 
 
REVISION OF ANTI-BRIBERY INSTRUMENTS AND ESTABLISHMENT OF 
POST-PHASE II MONITORING MECHANISM 
 
¶18.  (U) The Acting Chair reported that correspondence from the 
International Chamber of Commerce to Secretary General Gurria 
strongly encouraged the WGB to adopt a Post-Phase 2 mechanism 
for robust monitoring.  The Secretariat presented three draft 
papers setting out options based on discussions at the October 
WGB meeting.  The Secretariat's preliminary work, welcomed by 
many delegations, contemplates simultaneous completion by 
October 2008 of the revision of anti-bribery instruments 
(Revised Recommendation, possible additions to Commentaries, and 
interpretive notes) and development of a post-Phase 2 monitoring 
mechanism, which would focus on progress made on outstanding 
Phase 2 recommendations, enforcement results, new issues raised 
by changes in legislative or institutional framework for 
implementing Convention and horizontal thematic issues.  While 
 
current OECD rules do not permit public posting of draft 
documents during public consultation process, Secretariat 
officials said the issue is under active review.  The Swiss and 
Argentine delegations expressed concerns about how to 
accommodate the additional burden on workload these activities 
will impose. 
 
¶19.  (U) The Secretariat's suggestion for establishment of two 
sub-groups to work on (1) criminalization issues and (2) 
preventive mechanisms such as export credit, official 
development assistance, public procurement, auditing and non-tax 
deductibility drew mixed comments from several delegations, with 
some expressing concerns that subgroups could impose additional 
travel and workload burdens, especially on smaller delegations. 
 
 
OUTREACH ACTIVITIES: SPECIAL SESSION ON CHINA 
 
¶20.  (U) Kong Xiang Ren, Deputy Director-General of the Ministry 
of Supervision, which coordinates China's Anti-Corruption 
Campaign, briefed on China's efforts to spur economic 
development while controlling corruption.  Kong noted that 
President Hu in July 2005 had directed the government to focus 
on the issue of bribery in commercial transactions. Kong 
described the legal framework supporting those efforts, 
including a 2007 law on money laundering and the recent 
ratification of UNCAC.  He said efforts were shifting from 
prosecution to prevention, and the government was building 
public awareness through the use of 24-hour hotlines and 
Integrity Programs to educate pubic servants and the public. 
China continues to establish the systems and institutions needed 
to fight corruption.  While China has not yet enacted 
legislation to prohibit the bribery of foreign public officials, 
the government recognizes the growing risks posed by Chinese 
companies which are increasingly active oversees and is 
establishing codes of conduct that prohibit bribery.  The 
government supports self-examination and self-ratification by 
both public and private enterprises, and focuses efforts to 
combat bribery in various activities and sectors.  Kong advised 
that from August 2005 to November 2006, over 15,000 cases of 
commercial bribery involving 4 billion yuan were identified, of 
which more than 3,000 involved public officials. 
 
¶21.  (U) Secretariat Legal advisor Niccola Bonucci briefed the 
Chinese del on OECD Anti-bribery instruments, including the 
Convention, the Revised Recommendation of 1997, the 1996 
Recommendation on Non-Tax Deductibility of Bribes, and the 2006 
Recommendation on Bribery and Export Credits, underscoring the 
need for a level playing field in international business 
transactions and an intensive monitoring process to ensure that 
all members are meeting their obligations. 
 
¶22.  (U) In a question and answer session, the Chinese del 
reported that China: faces no limitation on jurisdiction in 
bribery of foreign public officials, but would have difficulty 
in obtaining evidence and would require MLA from other 
countries; recognizes the liability of legal persons; has 
criminal, civil and administrative sanctions; is party to 85 
treaties with other countries addressing issues such as MLA and 
extradition; can provide MLA to Parties not covered by a treaty 
on a reciprocity basis through diplomatic channels; and had 
authorized Hong Kong to provide MLA in OFF cases.  The 
delegation advised that a new anti-money laundering law 
contained extensive recordkeeping requirements and that while 
China lacks specific whistleblower protection, administrative 
rules protect them and a specific law is being considered. 
Chinese authorities expressed interest in exchanging information 
with the WGB and in gaining additional know-how from the group's 
experience with review and monitoring mechanisms, as it moves 
forward to implement UNCAC. 
 
¶23.  (SBU) On the margins of the WGB meeting, the delegation, 
 
which consisted of three Ministry of Supervision officials and 
one Foreign Ministry official (Xu Yu, Deputy Director of Treaty 
and Law), approached USdel and expressed great interest in 
prosecuting and extraditing Chinese citizens suspected of 
corruption who had fled to the U.S. 
 
OUTREACH (CONTINUED) 
 
¶24.  (U) The Secretariat briefed on outreach activities, 
including: 
 
-- The ADB-OECD Anti-Corruption Initiative for Asia and the 
Pacific, which involves 27 countries, features a self-reporting 
monitoring mechanism.  The initiative participants will launch 
in 2007, on a trial basis, a peer review process essentially 
based on the WGB's Phase 2 examinations.  Malaysia has 
volunteered to be the first country reviewed.  Organizers would 
welcome participation by WGB members in the review process, in 
addition to the three WGB members who currently participate in 
the ADB-OECD initiative (Korea, Japan and Australia); 
 
-- The Anti-Corruption Network for Eastern Europe and Central 
Asia (ACN), in which reviews have been completed for Armenia 
(which found some progress) and Ukraine (lack of progress).  The 
Russian Federation attended the December ACN meeting and 
expressed interest in reactivating its involvement.  Organizers 
have advised Russia it has to take official steps by mid-2007 to 
complete its review or the group will consider suspending it 
from participation.  Reviews will next be completed for 
Kazakhstan and Kyrgyzstan.  A seminar, co-organized by the OSCE, 
COE, UNODC and OECD, to raise awareness and focus on 
international legal standards for criminalization of corruption 
covering the OECD, COE and UN anti-corruption conventions will 
take place in Almaty, Kazakhstan, March 26-28, 2007. 
 
-- A representative from the Council of Europe reported that the 
Group of States Against Corruption (GRECO), which will have 44 
members as of February 1, 2007, launched new third phase 
evaluations in January 2007, including transparency of political 
party funding. 
 
-- A representative from the Organization of American States 
reported that the Inter-American Convention Against Corruption 
(IACC) has been ratified by 33 of 34 OAS member countries and 
the that the OAS has created a mechanism for follow up. A Joint 
OAS-OECD anti-corruption and integrity meeting is tentatively 
scheduled for Spring 2007 in Washington. 
 
-- Ted Greenberg briefed on WB technical assistance to member 
countries on financial issues such as anti-money laundering and 
the "Strengthen Bank Group Engagement on Governance and 
Corruption" initiative.  He said the WB is working with FATF to 
build confiscation regimes, develop a Best Practices Book for 
financial supervisors in the areas of anti-money laundering and 
countering terrorism finance, and is preparing a report on 
corruption and money laundering related to illegal logging. 
 
ANNUAL REPORT/STATISTICS 
 
¶25.  (U) The WGB discussed a Secretariat-prepared draft annual 
report for 2006 and agreed to go forward with it to increase 
visibility.  A number of delegations (France, U.S.) favored 
inclusion of a statistical annex as soon as such information is 
available to provide quantitative, as well as qualitative 
information, which would be useful, given the limitations on 
existing indices on perceptions of corruption.  The WGB then 
discussed a draft instrument prepared by the Secretariat to 
compile more comprehensive foreign bribery and related 
accounting misconduct enforcement and sanctions statistics. 
While most delegations appeared to support the effort, some 
noted that not all proposed categories of information would be 
available in their countries or could require additional 
 
 
explanatory information in the instrument.  Members agreed that 
delegations should attempt to identify the statistical 
information currently available and forward that information and 
any additional suggestions regarding the draft instrument to the 
Secretariat as soon as possible and prior to the March meeting. 
 
SIPDIS 
 
EXPORT CREDIT GROUP ANTI-BRIBERY ACTIVITIES 
 
¶26.  (U) A representative of the OECD ECG reported that its 
Action Statement was transformed into an OECD Council 
Recommendation on December 14, 2006.  Most countries have 
implemented the recommendation and the ECG expects full 
implementation by March 2007. 
 
OTHER ITEMS: ELECTIONS, CALENDAR 
 
¶27.  (U) WGB members reelected Dr. Mark Pieth WGB Chair and Dr. 
Maria Gavouneli Vice-Chair of the Working Group.  They also 
elected candidates from France (Guillaume Vanderheyden); Italy 
(Valeria Piccone) and Chile (Marcelo Garcia Silva) to fill three 
vacant Management Group seats. 
 
¶28.  (U) The Acting Chair briefed on the invitation by the 
Government of Italy to hold a Prosecutors' Meeting in Rome in 
November as part of an event marking the 10th anniversary of the 
Convention and the need to coordinate with the OECD Committee of 
Fiscal Affairs on activities involving anti-bribery efforts. 
 
¶29.  (U) The March WGB plenary meeting will take place March 
12-14, with preliminary meetings to begin March 11. 
STONE