*{Milan, 28 April 1999
[Chairman on OECD MNE Guidelines Review]

Dear Ambassador,}

Thank you for chairing the consultation on the review of the Guidelines for Multinational
Enterprises last Monday. As the new chairman of the BIAC Committee on International
Investment Multinational Enterprises and Development, it was my first opportunity to participate
in the policy dialogue among members of OECD governments on the subject of the Guidelines.
The business community is very committed to participating in the Review, as evidenced by the
large turnout at the meeting.

Attached you will find the BIAC summary of the meeting, reinforcing the positions we took on the
subjects. Speaking as a businessperson who chairs a large multinational company, two points
stand out.

First, it is important to see how much the landscape has changed since the Guidelines were first
established. In 1976 there were maybe 200 MNE’s—companies with facilities in several OECD
countries. This set of largest companies, who have grown in number, practice good corporate
conduct as espoused in the Guidelines—it is good business for them to do so, and helps them in
the face of market competition. Interestingly, because the nature of markets has changed,
participants in global markets are increasingly small and medium-sized companies operating in
countries all over the world (OECD and non-OECD). They number maybe 20,000, maybe more
and their number could double in a short span of time. Recent UNCTAD reports on foreign direct
investment indicate that there are close to 45,000 parent firms investing in approximately 280,000
foreign affiliates. It is helpful to keep this “audience” in mind.

Any revision must reflect these new realities. The Guidelines must be flexible and not too
specific, because markets can change quickly and companies have to adapt. If the OECD says that
the Guidelines must be applicable in all countries, I would recommend that the views of non-
OECD members, including their private sectors and those of other members of civil society, be
incorporated into the review process.

Second, while modest resources have been expended by the NCP’s to promote the Guidelines, I
observed at the meeting a great deal of discussion about enforcement, compliance, white and black
lists and other similar sanctions. I suggest that to achieve the objective—namely, adherence to
principles of good business practices among as many firms as possible—in the most efficacious
manner, governments should change from their focus on enforcement and sanctions to one of
promoting awareness of the self-interest of the business community in the practices of the
Guidelines.

When you create an atmosphere of sanctions, my experience has shown me that people will focus
on avoiding the punishment rather than taking advantage of the opportunity, and, importantly, open
communication can break down. But when you create a positive atmosphere, people will respond
and participate. Their participation is enormously helpful, if not essential. It is in this vein that I
urge governments to rethink their approach to this exercise.

By focusing on the modernisation and promotion of the Guidelines, OECD member governments
can show businesses that it is to their advantage to follow and to use the Guidelines. This
approach, I believe, will achieve the desired goal of Guidelines that are more visible, more
relevant, reach a larger audience, spread and reinforce good corporate practices, by as many
companies in as many countries as possible.

I ask that you share this letter with the other members of your committee, the Secretariat, and
senior OECD officials so that we can set the Guidelines on a positive course.

*{Yours Sincerely,

Bruno Lamborghini
Chairman, Olivetti Lexikon

Enclosure

To: His Excellency Mr. Marino Baldi

Cc: Donald Johnston
William Witherell
Rainer Geiger
Robert Ley}