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Foreign Bribery Prosecutions Rising

By Forrest Hartman  10/11/2012
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The battle against bribery in international business transactions is gaining headway, but there’s still work ahead, according to a report by advocacy group Transparency International.

Issued in September 2012, the report states that several key nations have stepped up enforcement of laws forbidding bribery of foreign officials, but notes, too, that more enforcement and monitoring is needed. What’s more, the report expresses concern that the struggling global economy could lead to a reduction in anti-bribery enforcement—particularly in cases where bribery is customary.

“You are more likely to find supporters of this kind of cross-border crime in tough economic times when companies are in fierce competition for foreign markets,” said Transparency International Program Manager Gillian Dell in an e-mail interview. “Thus, at the present time, it is of key importance to increase the resolve among major exporting countries.”

Transparency International regards the ongoing fight against bribery in foreign business transactions as crucial because it believes corruption hurts everyone. According to the report, “Government leaders must reject arguments that winning foreign orders during the recession justifies condoning foreign bribery. Such arguments are dangerously short-sighted and are incompatible with the long-term interests of the business community. Responsible business leaders know that bribe payments cannot be turned on and off.”

A Complex Issue

Bribery in some nations is often the norm. “Sometimes you’re operating in a culture where what could be considered bribery here might very well be normal business practice there. It’s kind of built into their salary structure,” said Michael Hoffman, executive director of the Center for Business Ethics at Bentley University, to The Christian Science Monitor in an August 2012 interview.

The Organisation for Economic Co-operation and Development (OECD) Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions, a 1997 pact requiring its 39 signatory countries to make bribery a crime, has been a major player in the reduction of global bribery. In examining OECD enforcement since 2011, Transparency International found encouraging trends. Austria, Australia and Canada, for example, are more actively prosecuting cases than in the past; however, the report notes that “the overall level of enforcement remains inadequate.”

One reason, according to the study, is that only seven nations are pursuing bribery litigation at a level that Transparency International views as adequate. Several key countries, including China, India and Saudi Arabia, are not part of the OECD Convention. Transparency International believes it’s important that these countries join the convention. Dell said there are indications that this can happen, but “it may take some time.”

Either way, she sees the current trends in anti-bribery enforcement as positive. 

“Enforcement under the OECD Convention is gaining momentum, but has not yet reached the critical mass at which its success can be said to be assured,” Dell said. “Despite the absence of the major nations mentioned, [the convention] can be effective because those nations’ companies may still be subject to enforcement by other countries.”

U.S. Leads Prosecutions

According to the Transparency International report, the U.S. is the global leader in foreign bribery prosecutions. In 2011, the United States launched 275 new cases, up from 227 in 2010. Forty-two of those are still pending. Nevertheless, Dell said, there is some pressure from the business community—both in the U.S. and abroad—to reduce enforcement because in some countries bribery is commonplace.

“After the Siemens case and other cases broke in Germany, German companies were complaining strongly about foreign bribery enforcement,” Dell said, “but that has died down somewhat recently.”    

Siemens was required to pay huge fines for reportedly making more than $1 billion in illegal payments to officials in multiple countries.

Dell says that “government resolve needs to be strengthened. There is a real risk of backtracking in the face of increased competition in global markets.”

Forrest Hartman is a Nevada-based journalist whose work has appeared in numerous newspapers, magazines and online publications for more than 15 years.

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