No longer business as usual : Fighting bribery and corruption

263 Pages·2000·2.05 MB·English

by  OECD

«
GOVERNANCE
No Longer Business as Usual No Longer
FIGHTING BRIBERY AND CORRUPTION
Business
Why has the OECD, along with other members of the international
as Usual
community, mobilised to fight corruption? The answer is simple: corruption
respects no borders, knows no economic distinctions and infects all forms
of government. In the long run, no country can afford the social, political or FIGHTING BRIBERY
economic costs that corruption entails.
AND CORRUPTION
Not so long ago, bribing public officials in foreign countries to obtain
business deals was, if not an acceptable, at least a tolerated business
practice in many OECD countries. Today, corruption has moved to the top
of the global political agenda as its dramatic impact on economic GOVERNANCE
development and its corrosive effect on political stability and democratic
political institutions has become increasingly obvious.
In the new millennium, the OECD and associated governments, which
account for over 75% of trade and investment worldwide, will play by
stricter rules. The Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions will outlaw the practice of
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bribing foreign officials, making competition for international business much o

more fair and open. L
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Bribery in commercial transactions is only part of the problem. A whole e
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arsenal of legal instruments to combat corruption has now been developed
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to improve ethical standards in the public sector, to end tax deductibility for u
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bribes, to curtail money laundering, and to clean up public procurement in
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practices. The private sector and civil society will continue to play a critical
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role in making these new rules a reality.

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This book provides the key elements needed to build and preserve U
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corruption-free institutions, systems, and private enterprises. u
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ISBN 92-64-17660-8
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No Longer
Business as Usual
Fighting Bribery and Corruption
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960,
and which came into force on 30th September 1961, the Organisation for Economic
Co-operation and Development (OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a
rising standard of living in Member countries, while maintaining financial
stability, and thus to contribute to the development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member
countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-
discriminatory basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada,
Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United
Kingdom and the United States. The following countries became Members
subsequently through accession at the dates indicated hereafter: Japan
(28thApril 1964), Finland (28th January 1969), Australia (7th June 1971), New
Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic
(21stDecember1995), Hungary (7th May 1996), Poland (22ndNovember1996)
and Korea (12th December 1996). The Commission of the European Communities
takes part in the work of the OECD (Article 13 of the OECD Convention).
Publié en français sous le titre :
AFFAIRISME : LA FIN DU SYSTÈME
Comment combattre la corruption
© OECD 2000
Permission to reproduce a portion of this work for non-commercial purposes or classroom
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made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.
Foreword
The OECD first put international corruption on its agenda in 1989 and later
evolved two basic objectives for its work: to fight corruption in international business
and to help level the competitive playing field for all companies. After several years
spent analysing the nature of corruption in international business and studying the
measures that countries might take to combat it, OECD countries agreed in 1994 on
an initial Recommendation on Bribery in International Business Transactions. Subse-
quently, in May1996, they adopted a Recommendation on the Tax Deductibility of
Bribes to Foreign Public Officials. In May, 1997, a revised Recommendation on Com-
bating Bribery in International Business Transactions was adopted.
The 1997 Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions was born out of the conviction that bribery of
foreign public officials in international business transactions is a serious threat to the
development and preservation of democratic institutions. Not only does it under-
mine economic development but it also distorts international competition by seri-
ously misdirecting resources. The Convention was signed by all 29 OECD countries
and five non-member countries and came into force on 15February1999.
The OECD takes a multidisciplinary approach to fighting corruption, address-
ing both the supply and the demand side of bribery. Corruption thrives where public
institutions are weak or wherever poor governance is prevalent. The OECD helps
countries to improve their systems of governance and public sector management.
Ensuring the transparency of public procurement systems is another essential ele-
ment in the fight against corruption as is the effective enforcement of money laun-
dering legislation.
Preventing corruption and enforcing laws to punish it require concerted actions
by government, international organisations, business and labour, and civil society.
The OECD acknowledges the important initiatives launched by these various actors
and this book is, in large measure, a tribute to them as well. Above all, sustained,
high-level political will is needed to ensure that anti-corruption strategies can
deliver on their promises.
© OECD 2000 3
No Longer Business as Usual
This publication is the result of the collaborative efforts of many individuals.
The project was managed by Enery Quinones, Head of the OECD Anti-Corruption
Unit (ACU) in the Directorate for Financial, Fiscal and Enterprise Affairs and co-
ordinated by Nicola Ehlermann-Cache. Editing was carried out by Robert Cornell.
The ACU wishes to express its gratitude to the Centre for Co-operation with Non-
Members for its collaboration and for the support of the Public Affairs and Commu-
nications Directorate which has made this publication possible.
The ACU is particularly grateful to the contributing authors. The views
expressed are those of the authors and do not necessarily reflect those of govern-
ments of the OECD and associated Member countries. This book is published on the
responsibility of the Secretary-General of the OECD.
4 © OECD 2000
Preface
Donald Johnston
In 1997 the OECD Members joined by five other countries negotiated and signed
the Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions. These 34 countries sent a message to the world that the way
international business was conducted would never be the same.
The Convention, which entered into force in February 1999, requires the parties
to make bribery of foreign public officials a crime, levy significant penalties on
those who bribe, and tighten up accounting procedures to make it harder to hide
illegal payments. The OECD is actively monitoring the effective compliance with
the Convention, first the conformity of national implementing legislation with the
requirements of the Convention, and in a second phase the application of laws in
practice. I believe the 1997 Bribery Convention is making an essential contribution
to the broader effort undertaken by OECD Members and partner countries to build
a more honest and fair global market place and achieve greater prosperity.
The OECD is playing a leading role in the fight against corruption. Not only has
the Organisation addressed the supply of bribes with the Convention and its 1996
recommendation against the tax deductibility of bribes, it has also taken steps to
address the demand side of the problem. It has adopted Principles for Ethical
Conduct in the Public Service, and its SIGMA Program (Support for Improvement
in Governance and Management) is helping the countries of Central and Eastern
Europe strengthen public procurement systems, establish effective financial controls,
and reform civil service laws.
The OECD’s initiative has galvanised anti-corruption action in other interna-
tional organisations, such as the Council of Europe, the Organisation of American
States, the European Union, the United Nations, and many others. Co-operation on
a global scale is crucial and must involve all actors in the fight against corruption –
national governments, business and labour, non-governmental organisations, and
the public.
© OECD 2000 5
No Longer Business as Usual
No Longer Business As Usual provides a unique overview of the broad range of
legal and regulatory measures taken by governments to combat all forms of bribery
and corruption. It also gives a comprehensive description of various initiatives by
business and labour groups as well as civil society representatives in support of
government anti-corruption efforts. I hope this publication will prove to be a valuable
tool in the international fight against bribery and corruption.
6 © OECD 2000
Table of Contents
Foreword.................................................................................................................... 3
Preface....................................................................................................................... 5
Part I.
CORRUPTION: A ZERO SUM GAME
Chapter 1. The Causes and Consequences of Corruption: Economic Analyses
and Lessons Learnt............................................................................... 11
Chapter 2. To Bribe or not to Bribe?...................................................................... 29
Chapter 3. From Ideal to Reality: Making the New Global Standard Stick........... 51
Chapter 4. No More Tax Breaks for Bribes............................................................ 67
Chapter 5. Cleaning Up Public Procurement.......................................................... 77
Chapter 6. A Sea Change in Anti-corruption ........................................................ 93
Chapter 7. The Promise and the Reality: Monitoring Compliance with
the Convention ...................................................................................... 101
Part II.
PREVENTION AS THE BEST REMEDY
Chapter 8. Public Sector Ethics: an Infrastructure................................................. 111
Chapter 9. Money Laundering and Corruption: Two Sides of the Same Coin....... 127
Chapter 10. Sunshine: the Best Disinfectant............................................................ 137
Part III.
GLOBALISING THE FIGHT AGAINST CORRUPTION
Chapter 11. Sharing Anti-corruption Values............................................................ 149
Chapter 12. Dealing with Corruption in Developing Countries............................... 159
© OECD 2000 7
No Longer Business as Usual
Part IV.
SOCIETY’S GADFLIES
Chapter 13. How International Business Combats Extortion and Bribery:
Anti-corruption Efforts by the International Chamber of Commerce... 169
Chapter 14. Beyond the 1997 Bribery Convention: The Business and Industry
Advisory Committee’s Work on Corruption......................................... 175
Chapter 15. Why Trade Unions have Mobilised Against Corruption: Views of
the Trade Union Advisory Committee.................................................. 181
Chapter 16. Instilling an Anti-bribery Corporate Culture........................................ 185
Chapter 17. Citizens Against Corruption: Calling Governments to Account .......... 199
Chapter 18. Recovering the Rage: Media and Public Opinion................................. 215
Abbreviations and Acronyms.................................................................................... 227
Suggested Further Reading....................................................................................... 229
Annex 1. Convention on Combating Bribery of Foreign Public Officials
in International Business Transactions...................................................... 243
Annex 2. Revised Recommendation of the Council on Combating Bribery
in International Business Transactions...................................................... 257
Annex 3. Recommendation of the Council on the Tax deductibility of Bribes
to Foreign Public Officials........................................................................ 265
Annex 4. Recommendation on Anti-corruption Proposals for Aid-Funded
Procurement............................................................................................... 267
Annex 5. Recommendation of the Council on Improving Ethical Conduct
in the Public Service Including Principles for Managing Ethics
in the Public Service.................................................................................. 269
8 © OECD 2000
I
CORRUPTION: A ZERO SUM GAME
No Longer Business as Usual has encouraging things to say
about successful initiatives in the anti-corruption battle, in
which the OECD plays a major role.
This first part starts with a detailed analysis of the causes and
consequences of corruption. The following chapters deal
extensively with the 1997 Convention on Combating Bribery
of Foreign Public Officials in International Business Transac-
tions, which took the major step of making the bribery of for-
eign public officials a criminal act in all the signatory
countries. Significant related areas such as tax deductibility
and corruption in public procurement are also focused on.
Finally, the Organisation’s strategy is examined as a dynamic
component of the broadening international effort against
corruption.