Rich countries are doing a poor job of combatting corruption abroad, according to a new report by global watchdog Transparency International.
The international nongovernmental organization issued its annual progress report this week that measures the efforts taken by the Organization for Economic Cooperation and Development countries to combat bribery and corruption-related crimes in foreign countries. And the grades it assigned were low, indicating the enormity of the challenge to stamp out a practice that has long afflicted developing countries.
The issue of public sector graft sits atop the development agenda. Among the sustainable development goals that the United Nations expects to ratify next month is the goal to promote accountable and inclusive institutions by “substantially reducing corruption and bribery in all forms.”
But according to the report, 22 out of the 41 countries that ratified the OECD’s anti-bribery convention have failed to investigate or prosecute any cases related to foreign bribery in the last four years. The lack of such action puts those countries in violation of their obligation to tackle cross-border bribery and corruption, according to a statement from Transparency International.
“Exporting Corruption,” the eleventh installment of Transparency International’s annual survey grades OECD countries on their enforcement of foreign corruption, rather than examining cases of domestic embezzlement or laundering. The OECD convention constitutes foreign corruption as any act of bribery that is paid to a foreign official for a business transaction.
The illicit practice is commonly associated with developing countries where opaque public institutions that often oversee large, lucrative infrastructure or natural resource projects create conducive conditions to pay out bribes. That, in turn, deteriorates the credibility of governing institutions and saps governments of potentially vast revenues that could otherwise be channeled towards development priorities.
The anti-bribery accord was brought into force in 1999 as a means to purge the “supply-side” of corruption. By coming on board, signatory countries were committing to punish acts of graft carried out by their local companies abroad.
But as Transparency International notes in the report, 16 years on “the convention’s fundamental goal of creating a corruption-free level playing field for global trade is still far from being achieved.”
The report rated just four countries — Germany, Switzerland, the U.S. and U.K. — as actively enforcing crimes of foreign bribery. Fifteen countries were rated as carrying out moderate or limited enforcement and the remaining 20 as having little to no enforcement. Two OECD countries were not classified altogether.
“By signing up to the OECD anti-bribery convention, governments commit to investigate and prosecute cross-border corruption, yet nearly half of signatory governments are not doing so,” said Transparency International chair Jose Ugaz. “The OECD must ensure real consequences for such poor performance. Violation of international law obligations to counter cross-border corruption cannot be tolerated.”
To determine its ratings, the Berlin-based NGO tallied the number of open and active foreign bribery cases in a country’s judiciary and weighed the total against the size of a country’s international trade. Combined, they are meant to be general indicators of how countries manage their international commerce.
It is an imperfect methodology that takes a skeptical view of enforcement efforts. For example, the survey would assign a low rating to a country with relatively few open investigations into foreign bribery. The underlying assumption would be that not enough is being done to prosecute corruption rather than a clean business culture prevailing in a country.
The report cites multiple shortcomings in governance as contributing to weak enforcement efforts. They range from limited public resources for thorough anti-corruption investigations to inadequate punishments and insufficient legal protections for potential whistleblowers.
Transparency International said that from 2011 to 2014, the four top-rated countries completed 215 cases against bribery and opened 59 new ones. Meanwhile, 20 OECD countries did not bring any criminal charges against companies for major cross-border corruption over that period.
Yet they still cite moderate progress. Four countries — Greece, the Netherlands, Norway and South Korea – were given higher ratings than last year. Argentina was the only country to drop, falling from “limited enforcement” to “little or no enforcement” based on the report’s classifications.
While the report focuses exclusively on efforts by governments, experts say that much is being done among businesses and their associations to address corruption from the bottom-up.
Corporate compliance is a booming business sector that offers an array of programs and services to multinational companies looking to improve their organization’s ethics and governance, Andrew Wilson of the Center for International Private Enterprise told Devex.
Industry associations are also increasingly taking action by setting high bars for industry ethics and standards.
“Rather than an individual company response, companies are banding together to take joint collective action,” Wilson said.
He cited, for example, recent efforts in Thailand, a country that Transparency International ranks as 102 out of 177 in its global corruption index. Since 2010 CIPE has been working with the Thai Institute of Directors — a business association that represents nearly 20 percent of the country’s gross domestic product — to rally support for anti-corruption pledges that are verified by various internal audit and certification programs.
Other examples of industry action beyond the direct scope of bribery and corruption include the Extractive Industries Transparency Initiative and GeSI, an initiative to promote social and environmental sustainability among multinational information and communication technology companies.
Ultimately, however, Wilson noted, the issue of corruption enforcement comes down to political will and a government’s willingness to challenge the status and reputation of the country’s business interests.
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Naki is a reporter for Devex Impact based in Washington, D.C., where he covers the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America and Australia.
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