Foreign bribery: the dark side of enterprises

Foreign bribery may foil economic growth in OECD countries

Transparency International warns that half of the anti-bribery Convention countries have failed to prosecute any cross-border bribery case since 1999. It means that they violated their obligation to combat cross-border bribery.

However, some countries have improved their efforts and only one has worsened.

In order to improve the level of anti-foreign bribery enforcement it is crucial that civil society and the private sector start national programmes that address the shortcomings of their governments.

According to the 11th Transparency International’s report on enforcement of the convention, only four of 41 countries signed up are actively investigating and prosecuting companies that bribe foreign officials to get or inflate contracts, or obtain licenses and concessions. Six countries are classified as having moderate enforcement, while another nine have limited enforcement. The remaining 20 countries are doing little or nothing to ensure their companies do not spread corruption around the world and two countries (Iceland and Latvia) could not be assessed.

The 20 countries with little or no enforcement make up 20.4 per cent of world exports. These countries are failing to investigate and prosecute cross-border bribery due to a lack of political will and inadequate resources allocated toward enforcement measures and investigations. There are 12 convention countries, including some old democracies, where effective political influence or its risk hinders the work of the criminal justice system.

The report does not consider China, since it is not an OECD member. In China, the economic slowdown and the corruption appear to be worse than officials had anticipated and could mark the end of its era of fast growth.

Inadequate sanctions also hinder efforts in 21 countries. Last OECD Foreign Bribery Report, published in December 2014, shows that remarkable penalties were imposed in only 17 of 41 countries. In Russia, changes to the criminal code in 2015 reduced the size of penalties for receiving or giving bribes, including those relating to foreign officials.

The four leading enforcers (Germany, Switzerland, United Kingdom, United States) completed 215 cases and started 59 new cases from 2011-2014. The other 35 countries completed 30 and started 63. Unfortunately, twenty countries have not brought any criminal charges for major cross-border corruption by companies in the last four years.

Since the 2014 progress report, Norway has moved from “limited” to “moderate” enforcement. Greece, Netherlands and South Korea have improved to “limited” from “little or no Enforcement”. Argentina is the only country slipping one position back to “little or no Enforcement”.

Six of the countries in the G20 are in the “little or no enforcement” category, meaning they are failing to meet the goals set in the G20’s Anti-Corruption Action Plan 2015-2016.

“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, José Ugaz. “The OECD must ensure real consequences for such poor performance. Violation of international law obligations to counter cross-border corruption cannot be tolerated.”

Italy: the lack of a central database of information is a major problem

There were important improvements to the Italian anti-corruption framework in 2014 and in the beginning of 2015. The National Anti-corruption Authority was reinforced with further powers of investigation.

In May 2015 an anti-corruption law was approved by the Parliament. It introduces a number of significant reforms, in particular:

•    an increase in the sanctions for the crime of corruption.
•    an extension of the statutes of limitation for corruption-related crimes.
•    the re-introduction of the crime of “false accounting”.
•    a revision of settlement/plea bargain agreements. These can now only be considered once the charged person has repaid the proceeds of the offence

Moreover, Italian Parliament has approved the introduction of the crime of “self-laundering”, as required by many international organizations.

Despite longer statute of limitations introduced by the new anti-corruption law, the suspension and interruption mechanisms still require revision. The statute of limitations starts to run from the date when the crime was committed, and keeps running throughout all stages (first instance, appeal and final). These features, along with the current length of Italian judicial procedures, are an obstacle to effective enforcement.

 Whistleblower protection remains inadequate. The European Commission, in its 2014 Anti-Corruption Report, calls for “clarity on reporting channels, protection mechanisms, and awareness-raising” in both the public and private sector to ensure a fully functioning protection regime.

Furthermore, the lack of an open and easily accessible central database of cases is a major problem in Italy. Such a tool would allow for the effective coordination between enforcement agencies, prevent intelligent gaps and enable accurate monitoring of Italy’s progress in tackling corruption.

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