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‘Regulators must intervene to stop companies bribing governments and public officials abroad,’ says Peter Eigen on launch of Global Corruption Report 2003

Developed country governments must ‘insist on full disclosure of aid budgets, enforce OECD Anti-Bribery Convention, and require companies to disclose taxes and royalties paid to governments abroad,’ says Peter Eigen

"The right to access information is a powerful weapon and protection against the corrupt," said Peter Eigen, Chairman of Transparency International (TI), speaking today on the launch of the Global Corruption Report 2003, which includes a special focus on Access to Information. "Accountability enforced by disclosure requirements is a vital check on the abuse of entrusted power, on the misuse of shareholders' money, and on the incompetent or corrupt misallocation of taxpayers' money," he said, speaking at the start of the Annual Meeting 2003 of the World Economic Forum in Davos, Switzerland.

Eigen called on developed country governments "to insist on full disclosure of aid budgets to ensure that aid goes to those who need it and not into the pockets of corrupt politicians and public officials, and to enforce the OECD Anti-Bribery Convention so that businesses know that paying bribes to foreign public officials will result in fines and jail sentences at home".

He also called for regulators, such as the US Securities and Exchange Commission, "to require companies to disclose taxes and royalties paid to governments abroad as a condition for stock exchange listing. TI, through the "Publish What You Pay" campaign, is pressuring regulators to require companies in the oil and mining sectors to declare taxes and royalties paid to the governments where they operate, such as Angola. "Regulators must intervene to stop companies bribing governments and officials abroad," said Eigen today.

The "Publish What You Pay" campaign, along with a series of articles on access to information, and a data and research section, features in the Global Corruption Report 2003. Published on 23 January by Profile Books, the book was prepared by TI, the world's leading non-governmental organisation fighting corruption, and includes 16 regional reports. The book is TI's second annual report on the state of corruption around the world.

Campaigning for transparent budgets

TI campaigned in the course of 2002 to ensure that OECD member states gave high priority to the funding of peer review monitoring of the implementation of the 1997 OECD Anti-Bribery Convention, which outlaws bribes to foreign public officials. "TI has worked to keep the OECD Convention on the agenda," said Peter Eigen in Davos, "but governments must now devote the resources to ensure that investigations and prosecutions are forthcoming, giving the Convention the necessary teeth to deter corruption." Since it came into force in February 1999, the OECD Convention has resulted in only a handful of investigations and no convictions in the 35 signatory countries.

Both donor agencies and civil society groups in the developing world are increasingly demanding fuller disclosure of budgets and a commitment to clamp down on corruption. "Donor agencies have become more demanding in the last year, insisting on a commitment to anti-corruption policies and procedures," writes Peter Eigen in the Global Corruption Report 2003. "They should also insist that civil society organisations have full access to monitor spending and verify that support reaches intended recipients and projects, such as schools and hospitals."

Jeremy Pope, Executive Director of TI's Centre for Innovation and Research, writes in the Global Corruption Report 2003 that "donors have too often appeared to shore up secretive regimes with loans and assistance, the details of which are kept from the citizens they are ostensibly intended to help. In some countries, these citizens are now expected to make good the loans plundered by their former leaders with the apparent acquiescence of the lenders."

Cleaning up after Enron

In the Global Corruption Report 2003, Eigen cites encouraging evidence that leading companies are beginning to clean up their business. "The TI Bribe Payers Index 2002 reveals that companies from leading industrial countries are seen as slightly less likely to bribe than they were in the first BPI, carried out in 1999. Companies from Britain and the United States, however, were notable exceptions to the trend. But many businesses understand that stopping bribery makes sound economic sense."

Wholesale reform is needed to improve corporate governance, according to TI Executive Director and CFO, Jermyn Brooks. "Truly independent directors should hold a majority on the board and should chair audit and remuneration committees," he argues in the Global Corruption Report 2003. "All elements of directors' remuneration should be fully disclosed in the financial statements and be subject to separate voting at each annual general meeting." The audit committee, he continues, "should approve any non-audit work awarded to auditors".

"If auditors wish to avoid regular rotation of firms performing audits," concludes Brooks, "as a minimum they should develop standards for independent reviews of assignments following internal rotation and should document the results. So far, no country has specified such requirements." Auditors should be in a position "to demonstrate that they have reviewed their clients' anti-fraud and anti-bribery systems and recommended improvements", he writes.

TI recommends the adoption of codes of conduct and related compliance programmes, and that details of implementation and monitoring results be published in each annual report. Codes of conduct should include rules designed to combat bribery at home or by subsidiaries abroad. To this end, TI has developed, with companies including BP, General Electric, Shell and Tata, a set of Business Principles for Countering Bribery. These include training programmes with guidance for all employees to ensure that bribery - direct or indirect - is eliminated.

The Global Corruption Report, ed. Robin Hodess (£14.99 plus shipping and handling), can be ordered through www.amazon.co.uk.


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