Corruption remains rife in many countries, but the trend is going in the right direction albeit slowly
Greece is in a mess. And we all know why. Greeks, as the lazy media cliché goes, don’t like paying tax. Fiscal forgetfulness reigns. That same laissez-faire attitude seems to extend to corruption too.
Along with the likes of Ireland, Poland and the Czech Republic, Greece finds itself in a list of non-enforcers when it comes to the OECD’s landmark convention against bribery in international business.
The country rankings appear in a new report, Exporting Corruption, from the Germany-based non-profit group Transparency International. The campaigning super-sleuth has analysed prosecution rates in all 27 national signatories to the OECD anti-bribery.
TI is lukewarm about the findings. “[Prosecution] is going too slowly,” says Gillian Dell, the report’s co-author. “But we’re pleased that at least it’s going.” She adds that the past 12 months mark an improvement on the previous year, when TI feared that enforcement was stagnating.
Clear consciences
The list of leading countries doesn’t throw up too many surprises. Out in front comes the United States, which unilaterally committed itself to combating bribery overseas back in the 1970s. The world’s largest economy ratcheted up an impressive 275 prosecutions last year. Germany is the only other country to reach triple figures, with 176 cases.
Dell credits the US with internationalising the criminalisation of bribe-paying over the past few decades. The willingness of US courts to impose hefty fines has encouraged US companies to take the rules seriously.
And fines are not just meted out at corporate level – the authorities get personal, too. Elicit payments by Jeffrey Tessler, an agent for Kellogg, Brown & Root, left him out of pocket by a cool $149m. The reputational damage from such convictions adds an additional incentive to keep clean, says Dell.
The threat of prosecution needs to be real if companies are to clean up their acts. Nothing concentrates the mind of executives like the threat of criminal prosecution, says Simon Webley, director of research at the London-based Institute of Business Ethics. Corruption being corruption, it is difficult to get empirical figures on current practice. But it can be fairly assumed that non-enforcement leads to “higher levels of lapses”, Webley argues.
What can be done? On the political side, much. While enforcement is a judicial issue, legislators determine how the court system is funded and organised. Prosecuting corruption in international business is both time-consuming and expensive. Without political will, effective enforcement is a non-starter.
Progressive companies can contribute, too. Paying bribes clearly represents a business cost. But in countries where corruption is commonplace, not paying can also be costly in terms of lost opportunities. For that reason, companies in high-enforcement countries have a vested interest in seeing the playing field levelled. Companies should challenge policymakers to implement a plan of action to improve anti-bribery enforcement, and then pressure them to stick to it, Dell says.
In-house vigilance is also key. Compliance mechanisms are important, of course. But research published recently in the Harvard Business Review (Greased Palms, Giant Headaches by Currell and Bradley, September 2012) suggests these aren’t enough. Crucial to building so-called “integrity capital” is management action in the face of misconduct, and non-retaliation when reporting misconduct. Get those in place and bribery levels should reduce, regardless of whether there is a threat of prosecution or not.
Enforcement league
Top enforcers (covering 28% of global exports)
Denmark, Germany, Italy, Norway, Switzerland, UK and US
Moderate enforcers (covering 25% of global exports)
Argentina, Australia, Austria, Belgium, Canada, Finland, France, Japan, South Korea, Netherlands, Spain and Sweden
Poor enforcers (covering 6% of global exports)
Brazil, Bulgaria, Chile, Hungary, Luxembourg, Mexico, Portugal, Slovak Republic, Slovenia and Turkey
Absent enforcers (covering 4% of global exports)
Czech Republic, Estonia, Greece, Ireland, Israel, New Zealand, Poland and South Africa