Recent developments in the fight against corruption

A. P.Ranner , Board Member of TI-Netherlands

Introduction

Fighting corruption in developing economies

Evolving views European governmentsregarding corruption in developing economies

4th Corporate Fraud and Corruption ForumAmsterdam, November 18th 2011

Introduction

Now more than 100 chapters and partners worldwide

WHAT IS CORRUPTION ?

The abuse of entrusted power for private gain (including nepotism and cronyism)

Introduction

WHY FIGHT CORRUPTION?Feeds poverty

BREEDS SOCIAL, ECONOMIC & POLITICAL UNREST, SEEDS VIOLENCE &UNDERMINES RULE of LAW & THE STATE

DISTORTS TRADE, MARKETS & FAIR COMPETITION

JEOPARDISES SOUND GOVERNANCE& ETHICS

UNDERMINESDEMOCRACY & HUMAN RIGHTS

INCREASES POLLUTION & WASTES RESOURCES

Introduction

From a business point of view: Gives richer companies unfair advantages in business bypassing the vetting process and thereby exchanging cash for professional responsibility

WHY FIGHT CORRUPTION?

Business-to-business bribery can distort markets and competition by 1. facilitating hidden business cartels

2. allowing large companies to demand bribes or kickbacks from smaller suppliers.

Introduction

Hurts everyone and harms the poor the most

Globally, corruption adds up to 10 % to the cost of doing business

Corrupt leaders of poor countries steal as much as US $ 40 billion a year and stash these overseas

Money laundering using western banks & tax havens; e.g Cayman Islands: over $ 1.7 trillion in assets at end of 2008 (more than Italy, Spain and Portugal combined)

Ben Ali, Mubarak & Quaddafi: at least $ 40 billion of assets frozen by western financial centres

Data & analysis

Bribe Payers index 2011Data & analysis

No significant change since 2008, fight against foreign bribery by firms based in European Union "stalled“

Perceived likelihood of companies from a given country to bribe abroad relates to perceptions of corruption in the public sector of home country.

Bribery of public officials but also of other businesses (supply chains).

Emerging market companies more likely to be involved in bribery than developed world groups.

Bribery is particularly widespread in construction, energy and extractive industries.

Bribe Payers index 2011Data & analysis

Vary varied picture: some countries have moved forward, but others stayed behind or even deteriorated.

Level of corruption in a country depends on cultural and institutional factors and quality of government.Corruption often linked to trafficking in drugs and human beings, money laundering and other forms of crime.

Chances for Corruption are high in countries with lax supervision, weak or opaque legal systems , lacking collective responsibilities and weak accountability lagging human rights

Corruption developmentData & Analysis

Category Percentage of world trade

Countries

Active Enforcement

( 7)

30% Denmark, Germany, Italy, Norway, Switzerland, United Kingdom, United States

Moderate Enforcement

( 9 )

20% Argentina, Belgium, Finland, France, Japan, Korea (South), Netherlands, Spain and Sweden

Little or No Enforcement

( 21)

15% Australia, Austria, Brazil, Bulgaria, Canada, Chile, Czech Republic, Estonia, Greece, Hungary, Ireland, Israel, Luxembourg, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia, South Africa and Turkey

Key Results TI Progress Report on Enforcement of the OECD Anti-Bribery Convention, (May 2011)

No level playing field

Data & Analysis

Different public sector iniatives in EU countries due to

Increased public interest and moral outrage about corruption issues (media and internet coverage) Need for more effective development aid, value for money, increased accountability and budgetary restraints

Need to maintain a level playing field in trade improving economic and social conditions in emerging markets

Increased interest in good governance

Trends & developments

Development aid: Preventing leakage of aid money Sponsoring fight against corruption in developing countries (including whistleblowers) and anti-corruption NGO’s

Sponsoring Extractive Indices Transparency Iniative United Nations Convention Against Corruption (UNCAC) with review mechanism (problem enforcement of commitments) United Nations Development Programme: research & reporting about corruption

More pressure to enforce /ratify OECD Anti-Bribery Convention & ratification of Criminal law convention on corruption and applying recommendations of GRECO (Council of Europe)

Trends & developments

EU: new directive for a mandatory disclosure rules for extractive industries (energy, mining, logging) similar to Dodd-Frank (US ), but 600 listed and large non-listed companies. The amounts of money per project paid to different levels of government have to be specified. Multinationals object: no project based figures

Trends & developments

EU: EU bi-annual Anti-Corruption Report 2013 report: use of existing anti-corruption laws &enforcement methods member states. Focus: implementing & enforcing internationally agreed anticorruption standards

Global anti-corruption regulatory movement & enforcement

Global effects of Bribery Act and / or US Foreign Corrupt Practices Act for multinational corporations & trickling down to third partners.

Focus of US prosecution: conduct in emerging markets (BRIC). Leveraging off findings of investigations originating in the

US and Europe through ’follow-on’ actions Countries like Nigeria & Korea initiated own investigations

& enforcement Start of domestic bribery investigations against foreign companies / individuals in other countries: Croatia, Cuba, Georgia, Israel & Poland Increased cross border cooperation of enforcement agencies International Pressure to enforce existing anti-corruption laws in OECD countries following prosecuting DOJ & SEC actions (US) and SFO (UK) and stalling foreign bribery enforcement actions of others

Trends & developments

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India: Ratification UNCAC,Legislation criminalizes foreign bribery

Russia: Joins OECD convention on

fighting Bribery of foreign public officials in international business transaction

China: anti-bribery law criminalising international

corruption

Indonesia anti

bribery laws

Signs of improvement

Mexico: new federal anti-corruption law

Colombia: plans

Brazil:plans

Taiwan: higher penalties

Regulatory developmentsTrends & developments

Spain: law reform

Australia: reform to ban

facilitation payments

Quebec (Can.)New law with higher fines

Current regulatory system not working satisfactory:

Lack of political will to enforce anti-money laundering regulations ,especially vis-a-vis Politically Exposed Persons

Insufficient corporate responsibility and integrity in banking sector

Trends & developments

Yet

Assists diplomatic efforts to level playing field for bribe-free international business, e.g. a. member of NGO coalition pressing for anti-corruption reforms in UNCAC

b. pressures governments to enforce OECD commitments c. helps donor countries realizing less corrupt aid programmes d. helps to fight money laundering and recover stolen assets

Assists FIFA and similar sports organizations in becoming free of corruption Participates in coalition for Extractive Industries Transparency Iniative

Lobbies for EU directive for country-by country reporting and project by project base publishing of payments to foreign governments

Provides whistleblower assistance (ALACS) , also in developing countries

TI last year developed a new five year strategy with new strategic priorities and challenges and last month adopted an implementation plan . 1. Engage with people more widely than ever before – for ultimately, only people can

stop corruption.2. Ensure that commitments to stop corruption are translated into actions,

enforcement and results. 3. Enforce fair legal frameworks, ensuring there is no impunity for corruption. 4. Secure greater commitment to integrity by both current and future generations in

all aspects of public and business life. 5. Expand the knowledge base of the TI movement to enable a more effective anti-

corruption solutions which have a real impact on people’s lives. 6. Ensure that TI has a strong presence and anti-corruption voice nationally, regionally

and globally.

To enable this resources have to be well spent and most chapters arenowadays involved in processes of long term strategic planning to be able tolive up to our commitments.

Attention turning to influencing other stakeholdersand channels: assist man in the street to fight corruption ( “Anna Hazare”, people uprisings in Arab countries) approach banking sector shareholders: annual reporting & share price

developments) Intensify use of social media (“I paid a bribe”,

corruption maps and platforms)

Recent developments in fighting corruption

A. P.Ranner , Member of Board TI-Netherlands

Transparency International NederlandBenoordenhoutseweg 232596 BA ’s GravenhageNederlandTel: 070-3142452 of 063-0386643E-mail: secretaris@transparency.nl

Thank youQuestions ?