OECD Foreign Bribery Report
15 Dec 2014 12:00 am by Claire Barker
How is foreign bribery detected?
Foreign bribery is a crime that is complex and covert in nature. Bribery schemes often involve a series of offshore transactions and complex corporate structures. Detecting foreign bribery cases is therefore one of the major obstacles to effective enforcement of anti-bribery legislation.
- Out of 427 enforcement actions analysed by OECD, 31% of defendants self-reported or voluntarily disclosed their involvement in foreign bribery. This could be an indication of willingness by companies to self-report in countries whose legal systems permit voluntary disclosure that leads to mitigated sanctions.
- There were negligible detection rates by financial intelligence units (FIUs), tax authorities and embassy officials, whose functions imply regular exposure to foreign bribery allegations.
- Other instances included media, whistleblower and international organisation.
How is foreign bribery punished?
The OECD Anti-bribery Convention requires Parties to provide for "effective, proportionate and dissuasive" sanctions for the offence of bribery of foreign public officials. In relation to the 427 cases, 261 received civil/criminal fines as well as other penalties. Eleven defendants have been ordered to pay a total of approximately 43.7 million USD in compensation for civil damages, state costs and victims. This was paid to either NGOs (Non-Governmental Organisations) designated by the law enforcement authority or as restitution to the government of the country where the bribery took place.
To date, a total of 5.4 billion USD has been imposed in monetary sanctions, including fines, confiscation and compensation.
Who is bribing?
The OECD Anti-bribery Convention requires its Parties to hold their citizens and companies liable for the crime of bribing foreign public officials in international business transactions. From their data gathered, only 4% of sanctioned companies were small and medium sized enterprises. In 60% of cases, the company associated with the corrupt transaction had more than 250 employees. The size of the company involved was unknown in 36% of cases.
Their analysis also showed that almost two thirds of the foreign bribery cases occurred in four sectors; extractive (19%), construction (15%), transportation and storage (15%) and information and communication (10%).
Who is receiving the bribe?
The largest category of foreign public officials who were bribed is that of employees of State Owned Enterprises, or public enterprises, who received the bribes in 27% of cases. In terms of the role of the SOE official who received the bribe, this ranged from CEO or President-level, to management and even lower-level employees. In some cases, the SOE official had a dual role, such as transport minister or advisor to a senior government official. This data raises the issue of the integrity of corporate governance practices and the implementation and supervision of decision-making processes in SOEs.
The OECD Foreign Bribery Report provides a clearer picture of the crime of foreign bribery and how it has been committed to date. Foreign bribery is a complex crime. It is not surprising, therefore, that the majority of foreign bribery cases are carried out via an agent or intermediary. A surprising outcome is that corruption is not the scourge of solely developing countries. Almost one in two concluded bribery cases involved officials from countries with high Human Development Index rankings, so it is clear that this is a crime that takes place in countries at all levels of development.
Detection and reporting
Tax officials, embassy officials, financial intelligence units, public procurement officials and competition authorities are well-positioned to detect and report foreign bribery cases. The extremely low number of concluded cases that were originally detected by these authorities suggests a need for strengthened foreign bribery detection and reporting mechanisms within these agencies, along with greater cross-agency cooperation.
While the report is a first attempt to measure transnational corruption, there is scope for much more to be done to better understand and combat this crime. Ideas include; updating the publication annually if there is new data, making the OECD Foreign Bribery Report public, further analysis between cases comparing sanctions when it comes to deprivation of liberty and future work focusing on the role of SOEs in bribes.
Read the full report here: http://www.oecd.org/corruption/oecd-foreign-bribery-report-9789264226616-en.htm