Bribery and corruption

Panel on Countering Corruption in International Business and Development Activities


Remarks by Angel Gurría, OECD Secretary-General
World Bank and IMF Annual Meeting, Panel on Countering Corruption in International Business and Development Activities
Washington, 21 October 2007

Some of you may have heard me address this same subject last October at the International Conference of Bank Supervisors in Merida, Mexico, and these messages may sound familiar. That is true. They have not changed nor has the strong emphasis that the OECD places on this issue.

Corruption is the cancer of globalisation; a powerful corrosive on the very fabric of social cohesion. It undermines democracy, public policy and social capital, becoming a major hindrance to sustainable development, with a disproportionate impact on poor communities.

More than $1 trillion dollars is paid in bribes each year globally, according to the World Bank Institute.  This is equivalent to nearly 10 times what we channel every year to developing countries in aid flows.  The cost for private entrepreneurship is also very high, imposing an extra financial burden estimated to add 10% or more to the costs of doing business in many parts of the world.

All of us stand to benefit from a global economy where bribery and corruption have been ruled out. Corporations want to seek business opportunities based on the price, quality and pertinence of their goods and services, instead of having to look over their shoulders to check if their competitors are offering bribes to get the contract. Taxpayers want assurance that their taxes are reaching the people they were designed to help, and not being siphoned off into secret bank accounts. And the people in the developing world need to know that the aid they are expecting to receive is being used to maximum effect.

So what is being done to tackle this scourge? In the past ten years, there is something that the international community has done right about corruption. It has developed a better understanding of how it functions and how it affects good governance and economic development. The understanding of the consequences of corruption is not enough to fight it but it is an important first step. . To be effective, any approach has to be linked to the specificities of each type of corrupt practice so that this information can be used to design effective tools to combat it.

At the OECD we have developed standards for government and multinational companies that address money laundering, public procurement, ethics in the public sector and corporate governance. We are trying to help with the problem of corruption in development aid.  We have developed Principles of Donor Action in Anti-Corruption to help keep bribery out of aid programmes and also work with developing countries to support their own efforts to fight corruption.  We are also working on a code of conduct for donor agencies to prevent, detect and respond to corruption.

Our flagship is the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This treaty - now with 37 members after the recent addition of South Africa - tries to stop the "supply side" of bribery.  Participants make it a crime for companies operating in or from their territory to bribe foreign officials in order to get business. 

In Rome, on this day next month, we will celebrate the tenth anniversary of the signing of the Convention. I say celebrate because we are proud of the progress made over the past decade.

Thanks to the OECD Convention, governments have passed new anti-bribery laws and created special investigation and prosecution units.  They have made the penalties for bribery more effective and dissuasive, and improved international co-ordination and co-operation. Bribes can no longer be claimed as a tax deduction. The OECD recently also adopted additional concrete measures to ensure that export credit transactions are not tainted by bribery. Under these measures, any company convicted or under charge of bribery would be subject to the strictest scrutiny when seeking export credit support.

The challenge is that all governments move together to address this problem by creating a level playing field. That is why we put a strong emphasis on monitoring and evaluating implementation of the Convention.  This acknowledges the fact that it is one thing to enact laws, and another to execute them.

Transparency International even says that we have "the gold standard" of monitoring.  States parties to the Convention boldly and openly examine and critique each other. Through the Working Group on Bribery, they make recommendations to remedy inadequate performance, and the country under scrutiny must report back on how it has rectified the problems.  Where there are serious failings, countries may undergo a second examination and the Group can take further, more stringent measures if countries continue to fail to meet the Convention's standards.

Since the entry into force of the OECD Anti-Bribery Convention in 1999, there has been a marked increase in the number of investigations and convictions.  There are more than 150 ongoing foreign bribery investigations.  At least 30 individuals and companies that committed foreign bribery have been penalized, in some cases with fines of more than 44 million US dollars and most recently the German authorities fined a local company for €201 million for bribery.

As we move forward, the OECD will continue to put strong emphasis on implementation of the Convention, with a renewed system of rigorous monitoring and more action to help members solve enforcement issues. For example, using real life cases, we have analysed how criminals use bribery to subvert public procurement systems. We will be looking at the techniques that are applied in the use of intermediaries to disguise such bribes.

Of course, our objective is not just to prosecute companies and punish their executives. We must create incentives for companies to develop policies and control systems to prevent bribery from happening. They are the ones who must take practical steps and we must continue to press for this.

But more needs to be done. The performance of OECD countries and of other important trading and investing nations on the supply side of bribery is critical to our credibility -- as we encourage developing countries to implement integrity and anti-corruption programmes and as we work to build the success of the UN Convention Against Corruption.

However, we are concerned that some countries, including in the G7, are still holding back on implementing the OECD Anti-Bribery Convention.  They have almost no investigations; they have brought no cases to court.  They are not being pro-active. 

This needs to change because unless there is credible action across a broad front, pressures will build on governments - even those who are currently strong performers -- to go the other way - to go back to the "business as usual" attitude.  Yes, we need practical measures, but just as important, we need political commitment. At the same time, we need more countries, especially the emerging economies like China, Russia and India, to join the Convention. They are now home to an increasing number of companies that operate internationally, some of them publicly owned.

These are the goals. Strong laws and even stronger political will in our countries, as well as invariable ethical behaviour by our businesses will help us achieve them.

The size and complexity of this challenge demands a coordinated action, a genuine anti-corruption global partnership among international organisations, national governments, the corporate sector and civil society. We must double our efforts to identify common synergies, complementary capacities and associative strength. Corruption might never fully go away, but it can be pushed back, and certainly it can no longer be condoned as some kind of inevitable side-effect of globalisation.


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