Bribery and corruption

Fighting corruption, boosting integrity

 

Why has your street been full of potholes for five years, while the next block along where the mayor lives is resurfaced every year? How come your children are on the waiting list for the best local school, while your teacher neighbour’s were admitted immediately? Who really pays the price of corruption?

Life may not be fair, but we all need to believe that the rules governing our lives are fair, and that corruption will be rooted out. That means ensuring that the spirit of the law, not just the letter of the law, is respected, and that we have the right set of rules and regulations governing our societies. Tackling corruption and abuse of the system is vital to restoring people’s trust and recovering from the current economic crisis. Public sector corruption results in poorer public services, while in the private sector the cost is passed on to consumers who end up paying more for their goods and services. And at a time of economic crisis, when every dollar, euro, peso, pound and yen counts, it is all the more important that scarce money is not lost to corruption.

So far, so obvious, which is why national and international rules and principles such as the OECD Anti-Bribery Convention and the Principles for Enhancing Integrity in Public Procurement offer clear definitions of what corruption is and the way to combat it. And the OECD’s CleanGovBiz Initiative supports governments, business and civil society in their efforts to build integrity and fight corruption across the board.

But rules on their own are not enough – to mean anything, they have to address the issue adequately and they need to be implemented. Wrongdoers should be prosecuted and pay the penalty for their crimes. The economic and financial crisis shattered a fundamental trust in that people had in the ability of governments and financial institutions to regulate the system – and themselves. . On average in OECD countries, only a little over half – 56% -- of people say they trust their public institutions, and in some countries the rate is below 30%. And the less people trust their governments, the more likely they are to believe they suffer from corruption.

This is not just about big bribes to high-ranking officials to win contracts; it is also about ordinary taxpayers who end up with shoddy bridges, roads and buildings as a result. It is about ordinary people’s access to public services – one in four people reported paying a bribe for services such as health and education in Transparency International’s latest corruption survey of people in 86 countries.

There is also a question of context. When the economy is doing well, people are less inclined to notice or to be interested enough to read a newspaper story about a civil servant awarding contracts to his brother-in-law, or a big company paying a small amount of tax. Governments are keen to enlist citizens in the fight against corruption – but for that they need to restore public trust in the system and reassure people that allegations will be investigated.

The public sector is big business. OECD governments spend 15% of GDP on public procurement every year – and lose 400 billion dollars of it to fraud and corruption, money that is very much needed to provide public services. Instruments such as the OECD Anti-Bribery Convention, making it illegal for companies to bribe a foreign public official to win a contract, and other national and international measures to combat public sector corruption, are an important tool. Equally important is the inbuilt monitoring system which calls countries to account for not making enough effort to find and punish those responsible for corruption.

Sometimes, monitoring systems are not enough. Corruption is by its very nature secretive and often it takes someone inside to expose corruption. If you believe your employer, public or private, is guilty of giving or accepting bribes, flouting environmental rules or ignoring food safety regulations, as a good citizen you would want to warn someone. But what if you did not know who inside your organisation you should complain to, or if the last person who did so lost their job or was accused of breaking confidentiality rules? 

Whistleblowers acting from the best of motives often find that they are seen as the problem, not the solution, losing their jobs, being discredited, and even ending up in jail for speaking out, enough to discourage anyone from doing the right thing. Civil society groups such as Transparency International have long campaigned to protect whistleblowers, and OECD work on combating bribery has also argued strongly for whistleblower protection. G20 leaders pledged at the Seoul summit in 2010 to take action to protect whistleblowers by the end of 2012, as part of an Anti-Corruption Action Plan, based on recommendations put forward by the OECD. The Financial Action Task Force (FATF) is also revising the 40 Recommendations on Money Laundering and Terrorist Financing in order to provide national authorities the world over with stronger tools to act against the criminals who launder the proceeds of corruption and crimes.

The crisis has also spurred governments to crack down on corruption in other areas. Take tax, where concerted international efforts to crack down on tax avoidance have netted almost 14 billion euros of tax revenues in about 20 countries in the past two years. The OECD had been working on this issue – and making very gradual progress -- for a decade before the crisis, but then it moved to the top of government agendas as leaders made it clear that illegal tax evasion would no longer be tolerated.

At the same time, amid reports of a growing gap between rich and poor in our societies, people are asking whether some of the rules themselves also need revisiting. Should bankers’ contracts allow them to claim a full bonus even when profits have plummeted and the taxpayer has paid for a bailout? Should a CEO of a company be paying tax at the same rate as his secretary? The OECD’s latest Going for Growth report looks at how governments structure their tax systems and suggests there is room to cut back on tax breaks that favour the wealthier sectors of society, such as reduced tax on mortgage interest or stock options, in order to spread the tax burden more fairly and free up money to support people at the poorer end of the scale.

One thing is clear. Having clear rules and ensuring that they are respected are key to rebuilding trust.  And better trust leads to better policies, which leads to better lives. 

“Corruption is often the door through which illegal drugs flow, through which illegal medicines flow, through which people smuggling takes place, through which all kinds of transnational crime goes.”

Richard Boucher, Deputy Secretary-General of the OECD
14th IACC Bangkok


“Let’s never forget:  Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same.  It’s time to apply the same rules from top to bottom… An America built to last insists on responsibility from everybody.”

Barack Obama, US President 
State of the Union address 2012 (full speech)

 

Further reading on corruption/tax:



Previous articles:

Beating the crisis: the role of the OECD and G20

A question of trust

Good job?

Back to school

Cool, clean water

Greening growth

Food prices

Development

 

 

 

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