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Bribery: the hidden global danger

1st April 2014

MGI World Bribery: the hidden global danger

The long battle against bribery and corruption continues, with two new reports highlighting the problems that surface around the world. After years of concerted focus, corrupt payments in international business transactions persists.

Two reports from the OECD, one on Chile and one on South Africa, provide a view of how efforts to stamp out bribery and corruption are progressing. These reports look at the countries’ implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Chile

According to the OECD, Chile has made “positive efforts” to implement the convention. But in spite of six allegations since 2001, there has not been a single foreign bribery conviction. “Chilean embassies failed to alert prosecutors to these cases which were widely reported in the foreign media. Only one of the cases has been detected through domestic sources. Chile should improve its investigative and detection efforts,” the report stated.

A number of positive aspects were noted, including Chile’s current efforts to improve its implementation of the convention through a proposed Penal Code reform. “Chile has also improved its foreign bribery offence, and introduced corporate liability and nationality jurisdiction to prosecute,” said the authors. “Efforts to raise awareness of foreign bribery appear successful.”

The OECD also praised Chilean companies for putting in place certain measures to address foreign bribery, while the government has taken steps to protect whistleblowers.

South Africa

Again South Africa has failed to prosecute any foreign bribery cases since it joined the convention in 2007. Four allegations are currently being looked at, but the OECD says the country “must take urgent steps to proactively investigate and prosecute foreign bribery”.

On the positive, South Africa has a “well-drafted foreign bribery offence and a broad and flexible corporate liability regime”. The Prevention of Organised Crime Act (POCA) allows for the broad use of freezing orders and confiscation measures, while steps have also been taken to encourage companies to take a number of steps themselves. These include strengthening internal controls, ethics and compliance measures.

Global problem

Bribery and corruption are not relegated to these two nations, of course. It’s a worldwide problem, as evidenced by Transparency International’s corruption index. For example, for all the problems faced by Chile, as pointed out by the OECD, it is among the ‘cleanest’ nations around. The country is the 22nd least corrupt country globally and among the cleanest inSouth America after Uruguay. South Africa fared less well, ending up 72nd, though still in the top half of nations.

Corruption is also not just a regional problem. Ukraine was ranked 144th out of 177 countries by TI. Recently Bloomberg reported on Ikea’s failure to break into the country over the last decade, with the prime reason being its refusal to pay a bribe.

A World Bank report, released before the current crisis in Ukraine, warned of “endemic” corruption and an ineffective regulatory environment holding back business growth and competition.

Of course these reports from various countries simply provide a snapshot of the overall picture; the situation varies greatly from one country to the next and it's hard to draw firm conclusions about the worldwide picture.

But these reports do offer anecdotal evidence of a broader narrative; governments around the world are taking steps, but a lot more needs to be done. Critically, the evidence suggests that companies themselves need to up their game by introducing the kind of tough compliance regime and pro-whistleblower environment that means corrupt acts are spotted before the regulators start inefficiently probing for wrongdoing.

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