The OECD Convention
To combat the practices of bribery of foreign public officials in international transactions, the OECD Member States have adopted the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Poland ratified the Convention in 2000. The Convention obliges the OECD Member States to penalize bribery, which has been defined not only as the acceptance of illegal financial benefits in one´s own country but also outside of its borders.
The OECD Council Recommendation
On 14 December 2006 the OECD Council adopted the Recommendation of the Council on Bribery and Officially Supported Export Credits, known as the OECD Recommendation on Bribery. The OECD Recommendation obliges the Member States to undertake decisive steps to countermeasure bribery and recommends certain actions with respect to official support provided by the export credit insurance agencies. As such, the agencies have been given the mandate to analyze and select applications at the initial stages of the assessment in order to eliminate those applications where the existence of bribery may be suspected. Therefore, the export credit agencies are entitled to refuse insurance cover if it has been proven that bribery of foreign public official took place in connection with an export contract or a credit agreement. Moreover, if after the insurance agreement was concluded the agency learns of a court judgment ruling that the export contract or the credit agreement was concluded as a result of bribery it is authorized to refuse the indemnification or may demand its refund.
Procedures employed by KUKE
In light of Poland´s obligation to implement the principles and the solutions adopted by the ECG Group resulting from the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the Committee for Export Insurance Policy has introduced certain regulations, aimed at preventing bribery, into insurance procedures of export credit insurance with the State Treasury backing. KUKE is obliged to undertake following actions:
- to require exporter/financing institution to provide a statement confirming, among others, that neither they nor anyone acting on their behalf in connection with the transaction are currently under charge or, within five-year period preceding the application have been convicted for violation of law against bribery of foreign public official and that they are not listed on the publicly available debarment lists of the international institutions;
- to require exporter/financing institution to disclose, in justified cases, the identity of persons acting on their behalf in connection with export contract or credit agreement , as well as the amount and purpose of the commission paid;
- to verify, in justified cases, before making a final decision on providing insurance cover, whether internal corrective and preventative measures have been taken by the exporter/financing institution convicted of bribery of foreign public official in the past.
Furthermore, the Corporation encourages exporters and financing institutions to develop and apply management control systems, which would reflect transparency in their activity in relation to preventing bribery.
At the same time, the general conditions of export credit insurance with the State Treasury backing include provisions resulting from implementation of the a/m Convention and the OECD Recommendation into the Polish Criminal Code. These provisions allow refusal to pay indemnity for receivables relating to export contract - in case of supplier credit cover or refusal to indemnify with respect to agreement financing export contract if bribery has been committed in connection with the contract. If - in case of buyer credit cover - after insurance agreement has been concluded, it is proved that export contract was concluded as a result of bribery of foreign public official and the financing institution did not have any knowledge in this respect and could not have had this knowledge by undertaking due diligence, the Corporation is entitled to indemnify the Insured. Under such circumstances however the Corporation has a recourse to the exporter in relation to the indemnity paid.