Photo credit: Transparency International - Photo: 2018

Bribery Rampant in Over Half of Global Trade

By Sean Buchanan

LONDON (IDN) – There are many losers and few winners when companies bribe foreign public officials to win lucrative overseas contracts. In prioritising profits over principles, governments in most major exporting countries fail to prosecute companies flouting laws criminalising foreign bribery.

What is missing, according to Transparency International – the global coalition against corruption – is active enforcement. In its recently-released 2018 Progress Report on Exporting Corruption, the coalition finds that only 11 major exporting countries – accounting for about one-third of world exports – have active or moderate law enforcement against companies bribing abroad in order to gain mining rights, contracts for major construction projects, purchases of planes and other deals.

The report is an independent assessment of enforcement of the Anti-Bribery Convention agreed by the Organisation for Economic Cooperation and Development (OECD) in 1997, which requires parties to criminalise bribery of foreign public officials and introduce related measures.

Foreign bribery has huge negative consequences for the economies of the nations targeted. Money is wasted on deals that are overpriced or do not yield real benefits. Limited resources are diverted to benefit a few individuals while citizens are denied vital public services, such as access to clean water, safe roads or basic health services.

Around the world, competitors that offer better products lose out in an unfair marketplace and this triggers a race to the bottom, with some companies choosing to engage in bribery because others are doing it.

According to the report, the mushrooming of world merchandise trade and intensification of  competition for markets has increased the risk of cross-border bribery and corruption, which has enormous negative consequences for people in affected countries by threatening foreign investment, diverting resources and undermining the rule of law.

The top priority, says Transparency International, should be directed to cases of grand corruption involving politicians and senior public officials, which have serious corrosive political and societal consequences and block achievement of the UN Sustainable Development Goals (SDGs).

Based on enforcement data, the report classifies countries into four enforcement levels (Active, Moderate, Limited and Little/No). It regrets that there has been little change in the overall enforcement level (taking the share of world exports into account) since the last report in 2015. The number of countries in the top two levels has increased by only one, and these nations account for roughly the same share of world exports as in 2015.

This apparent standstill means the convention’s fundamental goal of creating a corruption-free level playing field for global trade is still far from being achieved, due to insufficient enforcement.

Improvements are reported in eight countries, with three (Israel, Italy and Norway) moving into the Active category, three (Brazil, Portugal and Sweden) joining the Moderate category and two (Argentina and Chile) entering the Limited category. Taken together, these countries account for 7.1 percent of world exports. There are now seven countries in the Active category accounting for 27 percent of world exports, up from four countries in 2015 accounting for 22.8 percent of world exports.

However, this is offset by four countries – Austria, Canada, Finland and South Korea – accounting for 6.7 percent of world exports, with declining levels of enforcement, with the biggest deterioration in Finland.

The 2018 report also notes that China, Hong Kong, India and Singapore – all with two percent or more of world exports, but not parties to the OECD Convention – are classified for the first time and all fall into the lowest level (Little or No Enforcement), indicating the need for these countries to join the Convention.

Country by country, the report names the top offenders as well as the flaws in national legal systems that allow this crime to continue unchecked. One of the most shocking examples exposed in recent years is the massive foreign bribery scheme carried out by the Brazilian construction conglomerate Odebrecht involving about 788 million dollars in bribes to government officials and political parties in at least 12 countries.

Arguing that worldwide “we are far from bringing enforcement against foreign bribery to a tipping point”, Transparency International calls on governments to scale up their foreign bribery enforcement. This means investigating allegations and pressing charges, as well as courts convicting guilty individuals and companies, and imposing substantial sanctions where appropriate.

It recommends that, among others, governments should address weaknesses in their legal frameworks and enforcement systems, including inadequate resources for cross-border enforcement, and ensure that settlements of foreign bribery cases are reached transparently, accountably and through appropriate processes, with dissuasive and even-handed sanctions.

It also recommends that the OECD’s Working Group on Bribery make greater use of public announcements to name and shame countries that are not enforcing against foreign bribery. [IDN-InDepthNews – 04 October 2018]

Photo credit: Transparency International

IDN is flagship agency of the International Press Syndicate.

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Tags: UN Insider, SDG16

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