Turning a blind eye to bribing foreign officials

Turning a blind eye to bribing foreign officials

Governments of big exporting nations still don’t do enough to stop multinational companies from bribing their way across new and existing international markets.

Exporting companies often argue that bribing is the normal way of doing business in foreign markets, everybody does it – so why shouldn’t they? This argument disregards the damages suffered by the victim countries where budgets are hijacked by bribes, and as a result their populations suffer the consequences of unneeded, overpriced and bad quality products and services. Moreover it also ignores the damage caused to their own countries by distorting domestic markets and decreasing the competitiveness of the bribing companies.

Cover of Exporting Corruption report

To overcome this short-sighted approach to doing business in foreign markets, since 1997 40 major exporting countries have signed up to the OECD Anti-Bribery Convention. It obliges these governments to adopt laws and enforce them properly to stop the bribery of foreign public officials in order to win contracts and licences, or dodge taxes and local laws, for example.

Transparency International annually assesses how much these countries lived up to their commitments. According to our latest assessment, Exporting corruption: OECD progress report 2013, 30 of the 40 countries signed up to the convention are barely investigating and prosecuting foreign bribery. Only eight countries have met their commitments under the Convention. The failure of so many countries to crack down on companies that bribe foreign governments imperils the 1997 agreement.

The 40 countries, which represent more than two thirds of the global exports, would make it very hard to get away with bribery if they lived up to the requirements of the OECD anti-bribery convention."

– Huguette Labelle, Chair of Transparency International

Countries fail to enforce foreign bribery rules for several reasons, including: budget cuts in enforcement agencies, a lack of specialised bodies to investigate foreign bribery and a failure to take advantage of existing deterrents.

Budget cuts

The Brussels Court of Appeal – Belgium’s most important court in the fight against foreign bribery – was threatened with temporary closure due to a lack of resources.

In the United Kingdom the resources of the Serious Fraud Office have been cut by a third since 2008 and now the treasury may provide grants to prosecute important cases. This means the British ministry of finance has a final say in operational questions, namely whether to prosecute or not, providing them a formerly unseen veto power.

Governments can do more to fight corruption

The countries actively enforcing the Convention only account for 26 per cent of global exports. If countries that accounted for 50 per cent of global exports were actively enforcing the OECD Convention, then it could be considered a success.

Some of the worse non-enforcers are surprising since many are considered low-corruption countries in our annual Corruption Perceptions Index. In fact, five countries in the top 10 of the Corruption Perceptions Index 2012 have taken limited or no steps to fight foreign bribery: Norway, Denmark, Sweden, Canada and The Netherlands. Sixteen of the 30 countries failing to enforce foreign bribery rules are in the top 40 of the Index.

Norway and Denmark were demoted in the 2012 ‘Exporting Corruption’ report from active enforcers to limited enforcers.

It raises questions when countries that have gained so much from the long process of building a strong culture of transparency in public institutions do so little to make sure that other countries benefit from the same advantages.

Twenty countries – including G20 members Brazil, Japan, South Korea and The Netherlands – have done little or nothing to hold companies and businesspeople to account for bribing foreign governments. Twenty-three countries have not brought any criminal charges for major cross-border corruption by companies in the last four years.

However, there are promising developments in legislative reforms and restructuring of anti-corruption agencies in Australia, Brazil and Canada that may bear fruit in the coming years.

Calling on G20 countries to fight bribery

Even though 16 years have passed since the Convention was adopted, there are still major exporters such as China, India, Indonesia and Saudi Arabia who haven’t signed up to it so far. The same countries are in the G20 and have pledged to step up the fight against foreign bribery.

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