Anti-bribery progress: indefinitely delayed?

An overdue commitment

In 1999 leaders from OECD countries took a big step. They committed to holding their companies to account for their behaviour abroad. Until then, bribing abroad to win contracts had largely been tacitly accepted and was even a tax deductible expense in at least 14 OECD countries.

Twelve years on, progress with implementation of the OECD Anti-Bribery Convention is in danger of grinding to a halt. For seven years, Transparency International (TI) has monitored how well governments live up to their promises and enforce the OECD Convention. This year’s progress report, for the first time, shows no improvement in the number of countries enforcing the Convention, with the same countries in the same enforcement categories as in last year’s report.

active enforcement (7 countries)

moderate enforcement (9 countries)

little or no enforcement (21 countries)

non-states parties

By the end of 2010, the seven countries in the active enforcement category were known to have sanctioned at least 185 individuals and companies, but the other 30 countries, accounting for more than a third of world exports, are only known to have sanctioned 60 (according to our Table B).

A problem for business, government and the public alike

Greater enforcement is badly needed. Bribery takes a heavy toll on developing countries, and on businesses and citizens alike.

Bribing to win business is a short-term strategy. Companies only win contracts as long as they can continue to pay the largest bribe, rather than competing on merit. In a 2008 Ernst & Young survey of more than 1,000 executives, almost one in five claimed to have lost business due to a competitor paying bribes.

Bribery ends up costing the tax payer. Whether for a contract to supply equipment to a hospital, the defence sector or build public infrastructure, TI research shows that corruption can add 20-25 per cent to the costs of government procurement.

The role of the OECD

In 2011, the OECD celebrates its 50th anniversary. The time is right to push for better anti-bribery enforcement. The OECD needs to increase the pressure on governments, and mobilise the political will needed to move from commitment to action in enforcing the Convention.

Setting a high standard will be important as more countries pledge to take on corruption: Russia and China passed anti-bribery rules this year, and India has ratified the UN Convention against Corruption, which requires prohibition of foreign bribery.

Ten of the record 21 companies charged for foreign bribery by leading enforcer the United States were foreign. This includes the French company Technip, part of a consortium accused of using agents and intermediaries to bribe Nigerian government officials to win more than US $6 billion worth of contracts for construction of a natural gas facility in Nigeria. Technip agreed to pay US $338 million in criminal penalties and disgorgement of profits after the US brought charges, because the company partly traded on the New York Stock Exchange at the same time as consortium records show allegedly questionable “consulting” and “service” fees to Nigerian officials.

For the OECD Convention to work, companies must know that bribing will not just harm their reputation, but will lead to criminal punishment with heavy fines and jail time.

Political will is key

Parties to the OECD Convention need stronger political will to achieve greater enforcement. TI’s Progress Report finds gaps in the laws and enforcement systems of countries, from weak sanctions to lack of resources for investigators and prosecutors.

White collar crime is complicated and time-consuming to investigate and prosecute. Low enforcement countries need to put more resources behind investigators. The report warns that there are insufficient resources allocated in 19 out of the 37 OECD Convention Parties.

Statutes of limitation can also be a barrier to bringing the corrupt to justice. The report highlights that in 10 countries foreign bribery trials either expire too early or cannot be extended due to inadequate periods of limitation.

Statutes of limitations have hindered the search for justice and have prevented parties of the massive UN Oil for Food scandal from being brought to justice. The confiscation of bribes paid by two companies in Denmark and the criminal conviction of two Italian oil company employees were abandoned because the statute of limitation expired, in the Italian case during the appeal phase.

Employees must know that they can come forward to report bribery and extortion without fear of reprisals or punishment, but the necessary complaints system or whistleblower protection is missing in 23 countries.

Recommendations

To address these enforcement gaps Transparency International calls on the OECD to adopt a 12 month programme in which:

Resources

Download Progress Report 2011: Enforcement of the OECD Anti-bribery Convention

TI Press release (Français, Español)

TI blog posts about the OECD anti-bribery convention

OECD Working Group on Bribery 2010 Annual Report

Business Principles for Countering Bribery A common anti-bribery code, developed with a group of multi-nationals and non-corporate stakeholders.

RESIST Resisting Extortions and Solicitations in International Transactions helps businesses counter solicitation and extortion demands in the most efficient and ethical manner, as well as reduce the probability of such demands being made.

SET Self-Evaluation Tool (SET) is a checklist that enables companies to examine the design of their anti-bribery programme and assess its effectiveness.

Country reports on the implementation of the OECD Anti-Bribery Convention
Council of Europe GRECO

Media coverage

Enforcement of OECD anti-graft convention stalls – report
TrustLaw

Canada ranks last among G7 for anti-bribery efforts
CTV News

Critican la falta de avances para cumplir el convenio contra el soborno
EFE

Canada ranked worst of G7 nations in fighting bribery, corruption
Globe and Mail

Q+A – Transparency International discusses OECD anti-graft problems
TrustLaw

Review of OECD data finds no improvement against bribery
Wall Street Journal Corruption Currents

La Belgique ne combat pas sufisamment la corruption de fonctionnaires étrangers
Le Vif

Laxisme belge dans le dossier « Pétrole contre nourriture » ?
Le Soir

For any press enquiries please contact press@transparency.org

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