1. Houghton
1
Chad
Houghton
POLI
190
Professor
Niehaus
3/23/12
The
Influence
of
Laws
Addressing
Transnational
Bribery
on
Domestic
Problems
of
Corruption
Background
Countering
corruption
is
one
of
the
most
confounding
problems
of
all
time.
Corruption
has
been
discussed
since
the
start
of
governments.
But
no
great
method
of
solving
it
has
been
developed.
In
this
paper,
I
will
examine
the
way
corruption,
specifically
bribery,
is
addressed
in
a
new
way.
I
will
also
evaluate
the
performance
of
one
of
the
landmark
international
treaties
to
combat
corruption.
First
though,
some
background
on
the
issue
at
hand
is
necessary.
Corruption
is
“the
misuse
of
public
office
for
private
gain”
(Niehaus).
This
can
apply
to
both
governments
as
well
as
companies.
Corruption
remains
difficult
to
study
because
of
its
nature
as
a
near-­‐
universally
criminalized
action.
Through
various
studies
we
are
able
to
get
a
fuller
view
of
what
corruption
is.
In
2010,
one
out
of
every
four
people
paid
a
bribe,
with
the
total
cost
exceeding
$1
trillion
each
year
(Zakaria).
Corruption
and
bribery
is
actually
a
systemic
problem,
not
a
problem
of
individuals
(Pearson
41).
Dealing
with
corruption
therefore
is
a
difficult
issue
to
even
start
grappling
with.
The
causes
of
corruption
range
from
institutional,
governance,
structural,
cultural,
and
other
factors
(Pearson
34).
One
major
aspect
of
corruption
that
only
recently
became
an
area
of
focus
is
the
spillover
effect
of
the
various
forms
of
corruption
and
the
way
it
can
spread
from
one
person
to
another
(Grabosky
149;
Warburton
231).
Like
a

2. Houghton
2
virus,
it
can
start
to
corrupt
people
that
come
into
contact
with
corruption.
However,
bribery
can
be
fought,
and
successfully.
But
why
should
we
fight
bribery?
There
are
direct
and
indirect
consequences
of
bribery,
including:
corruption
of
economic
systems,
undermining
development,
reducing
transparency,
and
destabilization
of
democratic
governments
(Pacini,
Swingen
and
Rogers
385-­‐386).
Bribery
and
corruption
pose
a
threat
to
democracy
because
of
the
hidden
nature
of
the
act
and
the
corruption
of
trust
it
causes.
The
effects
of
corruption
and
bribery
on
development
are
also
significant.
There
are
some
studies
showing
cross-­‐country
evidence
that
corruption
reduces
growth
(Hunt
and
Laszlo
1;
Pearson
35).
Bribery
also
acts
as
a
regressive
tax.
Not
only
do
the
poor
pay
a
disproportionate
amount
of
their
income,
they
also
are
less
likely
to
seek
services
in
the
future
(Kaufmann,
Montoriol-­‐Garriga
and
Recanatini
3).
It
also
becomes
a
transfer
of
wealth
from
the
poor
to
the
bureaucrats,
reducing
equality(Hunt
and
Laszlo
1)Finally,
bribery
usually
occurs
in
connection
with
other
crimes.
Hunt
sees
“the
crimes
of
fraud
and
larceny
are
positively
related
to
bribes
to
government
officials,
the
police
and
customs”
(Hunt
and
Laszlo
20).
Money
laundering
is
also
associated
with
bribery
(Pacini,
Swingen
and
Rogers
10).
The
crime
of
bribery
carries
with
it
many
other
crimes,
as
well
as
other
ramifications.
The
most
prominent
law
in
recent
history
to
combat
bribery
is
the
Foreign
Corrupt
Practices
Act
(FCPA).
Passed
in
1977
on
the
heels
of
the
misconduct
surrounding
the
Watergate
scandal,
it
was
one
of
the
most
far-­‐reaching
and
dramatic
laws
of
its
time.
Its
standards
“apply
to
any
person,
including
foreign

3. Houghton
3
individuals
and
entities,
acting
in
furtherance
of
the
improper
inducement
of
a
foreign
public
official
while
in
the
territory
of
the
United
States”
(Deming
7).
This
broad
scope
was
significantly
larger
than
any
other
law
at
the
time.
It
served
to
instruct
companies
at
home
and
abroad
on
what
was
permissible
conduct
when
trying
to
do
business
(Beed,
Fleming
and
Shooshtari
1).
The
FCPA
was
also
one
of
the
first
laws
to
criminalize
the
act
of
bribing
a
foreign
official,
often
considered
a
domestic
issue
for
the
country
where
that
official
resides.
However,
the
FCPA
did
have
problems
with
what
actually
constituted
a
bribe
(Beed,
Fleming
and
Shooshtari
1).
The
FCPA
was
passed
at
a
time
when
increasing
attention
was
being
paid
to
the
global
nature
of
corruption
and
bribery.
During
the
1970s,
bribery
became
a
global
issue.
This
was
partly
due
to
the
start
of
globalization
and
rapid
development
of
transnational
companies
(Larmour
and
Wolanin
xii).
Numerous
debates,
forums,
and
summits
were
called
to
discuss
the
issue.
Policy
papers
and
position
statements
were
issued,
but
none
of
the
results
of
the
talks
were
binding
nor
called
for
any
real
action
to
be
taken(Deming
93).
The
problems
of
corruption
for
the
global
community
were
realized
as
other
issues,
such
as
climate
change,
were
beginning
to
be
discussed.
Many
in
the
global
community
recognized
the
necessity
of
taking
action
to
confront
these
issues(Giddens
193).
At
the
same
time,
the
focus
of
discussion
shifted
from
the
people
taking
the
bribes
to
those
who
were
offering
them.
Entirely
new
approaches
to
bribery
were
developed
to
tackle
bribery
from
the
“supply
side”
(Pacini,
Swingen
and
Rogers
398).
Numerous
conventions
and
treaties
address
bribery
now.
Some
of
the
international
organizations
with
regulations
on
bribery
include:
the
United
Nations,
the

4. Houghton
4
Organization
of
American
States,
the
European
Union,
the
Organization
for
Economic
Cooperation
and
Development
(OECD),
and
the
African
Union.
Interestingly,
most
of
the
regulations
enacted
resemble
the
approach
and
methods
of
the
FCPA
(Deming
94).
In
addition
to
intergovernmental
action,
private
companies
began
to
address
corruption
themselves.
Companies
now
form
international
collective
groups
to
confront
bribery,
recognizing
the
disadvantage
individual
companies
place
themselves
in
by
refusing
to
pay
bribes
(Petkoski,
Jarvis
and
Frauscher
2).
Likewise,
Nongovernmental
Organizations
discuss
the
issue
of
bribery
and
its
effects
on
their
work.
Some
groups
even
emphasize
the
impact
of
corruption
on
human
rights,
and
use
the
rhetoric
of
human
rights
to
address
bribery
(Carmona
83).
There
are
dissenting
voices
against
these
anti-­‐bribery
treaties
and
laws.
Some
question
if
they
are
creating
a
uniform
standard
of
good
governance,
or
imposing
subjective
values
on
other
people
(Pearson
33).
The
standards
of
Western
business
practices
are
often
very
different
from
other
countries,
so
the
point
is
very
valid
and
not
easily
resolved.
The
OECD
Convention
on
Combating
Bribery
of
Foreign
Public
Officials
in
International
Business
Transactions
(hereafter,
OECD
Anti-­‐Bribery
Convention)
was
the
first
convention
from
outside
regional
areas.
The
anti-­‐bribery
convention
passed
by
the
Organization
of
American
States
in
1996
was
the
first
international
agreement
with
enforceable
rules
about
bribery
of
foreign
officials
was
technically
first.
However,
its
lack
of
enforcement
and
signatories
meant
it
was
not
very
effective.
Thus,
the
OECD
convention
“reflected
a
sea
change
in
public
attitudes
about
corruption
in
both
developing
and
industrialized
countries
that
in
turn

5. Houghton
5
influenced
the
attitudes
of
business
leaders
and
government
officials”
(Quinones
201).
It
was
actually
modeled
after
the
FCPA
(Deming
95).
The
Convention
was
adopted
in
1997
and
went
into
effect
in
1999.
There
are
currently
38
signatories
to
the
Convention,
8
of
them
are
not
members
of
the
OECD.
All
signatories
are
required
to
“make
it
a
criminal
offense
under
their
national
laws
for
any
person
to
intentionally
offer,
promise,
or
give
any
undue
pecuniary
or
other
advantage,
directly
or
through
intermediaries,
to
foreign
public
officials
in
order
to
obtain
or
retain
business
or
to
obtain
any
other
improper
advantage
“
(Deming
96).
This
narrow
scope
of
the
convention
gives
little
leeway
for
countries
to
avoid
the
provisions
of
the
agreement.
Some
of
the
other
significant
provisions
include:
imposing
effective,
proportionate
and
dissuasive
sanctions
for
natural
and
legal
persons;
disallowing
economic
and
political
considerations
in
investigating
and
prosecuting
offences;
setting
accounting
and
auditing
standards
for
prohibiting
the
use
of
accounting
documents
for
bribing;
and
providing
for
systematic
monitoring.
Because
most
transnational
companies
reside
in
OECD
countries,
this
treaty
was
hailed
as
a
major
step
forward
in
the
elimination
of
bribery
of
foreign
officials
(Zinnbauer
et
al.
xxvii).
This
convention
was
groundbreaking
as
a
new
approach
to
the
issue
of
international
norms
on
bribery.
It
highlighted
the
importance
of
good
systems
in
reducing
corruption
and
brought
many
changes
to
the
countries
that
passed
the
laws.
This
is
because
the
convention
requires
a
very
specific
implementation
of
laws
and
enforcement
mechanisms.
It
also
provided
the
international
convention
with
a
monitoring
mechanism
for
compliance
of
its
members.
Countries
all
had
to
conform

6. Houghton
6
to
a
particular
standard
and
develop
strategies
to
deal
with
cases
of
corruption
to
abide
by
the
convention.
This
means
that
the
countries,
their
governments,
their
judicial
systems,
and
the
companies
that
operate
within
their
borders
had
to
make
changes
to
adhere
to
these
anti-­‐bribery
laws.
For
companies
and
governments,
the
most
effective
method
of
dealing
with
unethical
behavior,
in
this
case:
bribery
in
general
and
bribery
of
foreign
officials
in
the
specific,
is
to
create
a
culture
of
proper
ethical
behavior.
Empirical
research
has
shown
the
importance
of
ethical
culture
within
organizations
on
individual
behavior
(Gorta
25).
Many
researchers
and
business
consultants
advocate
for
the
creation
of
good
systems
in
order
to
ensure
ethical
behavior
(Larmour
and
Wolanin
xiv).
Since
this
convention
required
criminal
or
civil
penalties
for
the
bribery
of
foreign
officials,
the
countries
also
needed
to
ensure
they
had
effective
judicial
systems
to
deal
with
these
cases.
The
effects
of
compliance
with
the
OECD
convention
is
beginning
to
be
recognized
by
organizations
like
Transparency
International,
who
noted
the
importance
of
domestic
cases
of
prosecution
using
the
OECD
laws
upon
bribery
in
general
in
those
countries
(Zinnbauer
et
al.
426).
For
companies,
compliance
with
the
anti-­‐bribery
laws
required
by
the
OECD
conventions
requires
developing
internal
controls
over
organizational
and
individual
behavior,
and
the
most
effective
way
of
achieving
this
is
through
developing
an
ethical
culture
within
the
organization
itself.
This
culture
is
then
incorporated
into
the
individual,
affecting
not
only
their
work
life,
but
may
have
effects
on
their
behavior
outside
the
workplace.
This
holistic
behavioral
approach
to
employees’
personal
lives
is
noted
in
Hunt’s
paper,
which
considers
the
impact
of

7. Houghton
7
bribery
in
everyday
settings
upon
creating
a
climate
amenable
to
business
corruption
(Hunt
and
Laszlo
2).
Other
researchers
have
also
noted
how
creating
a
resistance
to
bribery
in
general
for
individuals
can
impact
a
general
permissiveness
to
corruption
within
a
company
(Beed,
Fleming
and
Shooshtari
2).
One
approach
for
creating
this
resistance
is
to
consider
any
violations
of
a
business’
code
of
ethics
as
a
violation
of
the
culture
of
business
itself
(Larmour
and
Wolanin
xx).
Codes
of
ethics,
if
they
reflect
an
organization’s
values,
are
most
effective
if
they
become
engendered
in
the
individual(Brien
65,
72).
These
changes
are
highly
important
to
businesses
because
of
the
risks
of
getting
caught
for
violations
of
the
OECD-­‐mandated
laws.
To
avoid
these
risks,
such
as
fines,
imprisonment,
litigation,
and
loss
of
market
value,
internal
auditing
mechanisms
are
urged
for
companies
to
maintain
internal
compliance
(Deming
2;
Pacini,
Swingen
and
Rogers
18).
Thus,
creating
individual
values
against
corruption
and
maintaining
proper
deterrence
schemes
like
auditing,
can
create
a
climate
against
corruption
within
a
company.
These
are
some
of
the
most
dramatic
effects
for
businesses
trying
to
abide
by
the
OECD
Convention.
Since
most
of
the
transnational
corporations
operate
in
countries
that
have
signed
on
to
the
OECD
Convention,
this
means
a
significant
number
of
individuals
will
be
expected
to
abide
by
anti-­‐corruption
norms.
Likewise,
governments
need
to
create
cultures
against
corruption
to
comply
with
the
OECD
Convention.
The
culture
of
a
bureaucracy
and
government
will
have
definite
effects
upon
businesses.
One
way
is
through
their
enforcement
role
to
provide
a
business
climate
free
from
corruption
(Pearson
42).
Laws
play
an
important
role
in
providing
that
climate.
Like
a
business’
code
of
ethics,
the
laws
of
a

8. Houghton
8
society
embody
the
values
of
a
society
(Brien
65).
The
laws
do
not
always
represent
the
values
of
a
society,
but
they
often
do.
Recently,
a
trend
of
increasing
intolerance
of
abuse
of
official
power
among
citizens
of
Western
countries
has
emerged
(Brien
80).
On
the
other
hand,
countries
with
significant
bribery
usually
are
“deeply
ingrained
with
nepotism,
patronage,
low
government
wages,
poverty
and
a
weak
economic
condition”
(Beed,
Fleming
and
Shooshtari
4).
In
either
situation,
the
general
attitudes
of
people
in
society
are
both
the
drivers
and
targets
of
programs
against
corruption.
The
government
structures
themselves
will
reflect
these
attitudes.
Availability
of
public
input
through
freedom
of
the
press
and
proper
enforcement
mechanisms
within
a
bureaucracy
can
change
the
way
the
government
operates
(Kaufmann,
Montoriol-­‐Garriga
and
Recanatini
19).
Bureaucracies
can
also
use
the
same
mechanism
of
creating
cultural
values
against
corruption
that
businesses
do.
The
Philippines
considered
this
a
major
part
of
their
reform
efforts
(Parayno
211).
Since
corruption
and
bribery
are
systemic
problems,
simply
requiring
corporations
to
self-­‐police
in
order
to
comply
with
the
OECD
convention
isn’t
enough:
the
bureaucracy
must
change
as
well.
A
country
must
also
change
its
judicial
system
to
comply
with
the
OECD
Convention.
Not
only
does
it
require
the
passage
of
laws,
these
laws
must
be
enforced.
It
also
mandates
no
preferential
treatment
toward
any
person
or
entity
committing
bribery
of
foreign
officials
(Pacini,
Swingen
and
Rogers
399).
Norway
is
a
prominent
example
of
this
principle
in
practice.
In
2006,
a
major
oil
company
was
found
guilty
of
bribing
officials
in
order
to
secure
contracts
(Heimann
and
Dell
30).
For
this
reason,
governments
must
have
an
effective
method
of
prosecuting
offenses.

9. Houghton
9
But,
these
changes
do
not
happen
in
a
vacuum.
Changes
made
to
enable
prosecution
of
bribery
of
foreign
officials
will
also
affect
the
rest
of
the
judicial
system.
Once
impartial
trials
and
effective
judicial
measures
are
in
place,
domestic
crimes
of
corruption
can
be
prosecuted
in
the
same
ways.
It
is
worth
noting
that
simply
passing
the
laws
to
combat
bribery
of
foreign
officials
is
not
enough
to
ensure
compliance
with
the
OECD
Convention.
Peer
monitoring
and
internal
enforcement
of
the
laws
is
a
must.
The
lack
of
monitoring
was
one
of
the
reasons
for
the
failure
of
the
treaty
passed
by
the
Organization
of
American
States
in
1996.
The
OECD
itself
recognizes
the
effects
of
peer
monitoring
on
the
success
of
multi-­‐party
treaties
(Quinones
197).
For
this
reason,
an
additional
phase
was
added
to
the
implementation
of
the
OECD
Anti-­‐Bribery
Convention.
Phase
3
creates
a
permanent
peer-­‐monitoring
group
to
continue
monitoring
the
extent
of
compliance
for
parties
to
the
treaty(OECD).
This
is
only
one
possible
pitfall
of
relying
on
passing
laws
only.
Even
if
the
judicial
system
is
functioning
to
prosecute
these
cases,
deterrence
is
not
effective
by
itself(Larmour
and
Wolanin
xvii).
On
one
hand,
simply
having
penalties
may
not
be
enough,
since
effective
deterrence
may
require
the
penalties
to
be
very
high
(Menezes
127).
On
the
other
hand,
without
an
impartial
judiciary
and
prosecution
group,
politicians
can
abuse
anti-­‐corruption
laws
to
punish
their
opponents
(Parayno
211).
Another
problem
with
simply
passing
rules
is
the
stagnation
and
inflexibility
it
brings.
Businesses
who
implement
rule-­‐based
approaches
to
combatting
corruption
are
a
good
example
(Larmour
and
Wolanin
xvii).
In
addition,
if
the
laws
do
not
reflect
the
views
of
a
society,
they
become
punitive(Brien
68).
There
is
another
problem
in
treating

10. Houghton
10
corruption
as
simply
a
technocratic
problem
that
can
be
alleviated
by
passing
and
enforcing
laws.
Doing
so
ignores
the
realities
of
public
life
(Hindess
10).
Finally,
if
a
code
of
ethics
or
a
code
of
law
is
not
incorporated
into
the
values
of
society,
it
will
fail.
For
governments,
this
means
its
structures
and
procedures
need
to
reflect
the
spirit
of
the
law
as
well
(Brien
64).
The
role
of
the
leadership
is
an
important
aspect
of
the
way
a
society
or
organization
implements
a
culture
of
ethics.
On
the
positive
side,
the
head
of
a
government
or
a
company
can
have
a
significant
impact
on
the
atmosphere
of
governance
and
the
ethics
of
his/her
subordinates
(Parayno
219).
On
the
negative
side,
a
strong
leader
is
not
enough
to
change
an
organization.
Even
with
a
reformist
in
power,
it
is
not
enough
to
change
a
culture
of
corruption
if
the
rest
of
the
environment
is
poor
(Parayno
212).
Once
the
leader
is
gone,
the
organization
simply
reverts
back
to
previous
habits.
Countering
corruption
and
bribery
effectively
requires
a
concerted,
sustained
effort
of
many
groups
simultaneously.
Hypothesis
and
Data
Considering
the
systemic
nature
of
corruption
and
bribery,
I
wanted
to
examine
the
effects
of
the
OECD
Anti-­‐Bribery
Convention
upon
the
countries
that
implemented
the
agreement.
Simply
passing
laws
and
regulations
against
bribery
of
foreign
officials
isn’t
enough:
these
laws
must
be
enforced.
As
a
result,
I
expect
the
levels
of
corruption
within
participating
countries
to
be
affected
by
the
extent
to
which
they
implement
these
rules
and
regulations.
To
analyze
this,
I
have
decided
to
use
Transparency
International’s
Corruption
Perception
Index
(CPI).
Started
in
1995,
this
annual
report
ranks
the

11. Houghton
11
level
of
corruption
within
each
country
on
a
1
to
10
scale,
with
10
indicating
no
corruption.
Many
authors
recognize
the
importance
of
the
CPI
in
combatting
corruption
(Pearson
38)
.
The
rankings
are
given
based
on
the
following
methodology:
The
CPI
ranks
countries/territories
based
on
how
corrupt
their
public
sector
is
perceived
to
be.
It
is
a
composite
index,
a
combination
of
polls,
drawing
on
corruption-­‐related
data
collected
by
a
variety
of
reputable
institutions.
The
CPI
reflects
the
views
of
observers
from
around
the
world,
including
experts
living
and
working
in
the
countries/territories
evaluated
(Transparency
International)
.
All
of
the
reports
are
available
from
the
Transparency
International
web
site
(http://www.transparency.org/policy_research/surveys_indices/cpi).
The
number
of
countries
evaluated
has
slowly
expanded
over
the
years
to
include
almost
every
country.
However,
this
does
pose
a
problem
for
analysis,
as
some
countries
do
not
have
rankings
for
every
year.
Most
of
the
countries
that
have
signed
on
to
the
OECD
Anti-­‐Bribery
Convention
were
evaluated
each
year
since
1995,
so
tests
should
be
able
to
see
effects
before
and
after
implementing
the
Convention.
As
another
check
for
the
effects
of
the
OECD
Anti-­‐Bribery
Convention,
I
will
use
the
corruption
rankings
from
the
International
Country
Risk
Guide
(ICRG)
compiled
by
the
PRS
Group.
The
ICRG
is
an
evaluation
of
the
business
climate
in
many
countries
each
year
since
1984.
A
component
of
this
ranking
is
an
evaluation
of
the
level
of
corruption
in
the
country
based
on
a
6-­‐point
scale.
The
rankings
are
given
based
on
the
following
methodology:

12. Houghton
12
Although
our
measure
takes
such
corruption
(demands
for
special
payments
and
bribes
connected
with
import
and
export
licenses,
exchange
controls,
tax
assessments,
police
protection,
or
loans.)
into
account,
it
is
more
concerned
with
actual
or
potential
corruption
in
the
form
of
excessive
patronage,
nepotism,
job
reservations,
'favor-­‐for-­‐
favors',
secret
party
funding,
and
suspiciously
close
ties
between
politics
and
business
(PRS
Group)
.
The
data
was
pulled
from
the
University
of
California,
San
Diego’s
web
site
(http://libraries.ucsd.edu/ssds/data/icrg/3BResearchersdataset2011.xls).
A
few
modifications
were
made
to
the
data
to
make
comparisons
to
the
CPI
a
little
easier.
They
are
as
follows:
• Renamed
Congo
to
Congo,
Republic
• Renamed
Congo,
DR
to
Democratic
Republic
of
the
Congo
• Renamed
UAE
to
United
Arab
Emirates
• Renamed
Trinidad
&
Tobago
to
Trinidad
and
Tobago
• Added
Czechoslovakia
data
to
both
Czech
Republic
and
Slovakia
• Removed
Czechoslovakia
• Removed
East
and
West
Germany
Information
on
the
members
of
the
OECD
Anti-­‐Bribery
Convention
is
compiled
from
the
OECD
Working
Group
on
Bribery
Annual
Report.
The
data
on
members
of
the
Convention
and
their
date
of
implementation
is
extracted
from
the
current
report.
The
current
report
is
available
here:
http://www.oecd.org/document/46/0,3746,en_2649_34859_44271086_1_1_1_1,00
.html.
The
degree
of
enforcement
of
the
OECD
Anti-­‐Bribery
Convention
for
each
country
will
also
be
analyzed.
Each
country
has
distinct
legal
traditions,
methods,
and
government
structures
so
direct
comparison
is
difficult.
The
OECD
Working
Group
on
Bribery
Annual
Reports
will
not
used
to
assess
the
degree
of
enforcement
because
they
do
not
contain
good
analysis
of
the
conditions
or
quantity
of
cases
for

13. Houghton
13
all
members
each
year.
Instead,
the
Transparency
International
report
series
Enforcement
of
the
OECD
Anti-­‐Bribery
Convention
will
be
used
instead.
The
methodology
used
to
assess
each
signatory’s
level
of
enforcement
is
as
follows:
TI’s
OECD
Anti-­‐Bribery
Convention
Progress
Report
2008,
the
fourth
in
an
annual
series,
is
based
on
information
provided
by
national
experts
selected
by
TI
national
chapters
in
each
country.
These
experts
assess
progress
with
a
semi-­‐structured
questionnaire
that
addresses
thirteen
specific
issue
clusters,
ranging
from
the
number
of
cases
and
investigations
brought
to
important
related
institutional
features
such
as
whistleblower
protection,
complaints
procedures
and
legal
obstacles.
The
number
of
investigations
was
difficult
to
obtain
in
many
countries
and
was
recorded
only
for
the
year
covered
to
avoid
the
double-­‐counting
of
investigations
that
turned
into
prosecutions.
The
inclusion
in
the
progress
report
of
key
domestic
cases
concerning
bribery
by
foreign
companies
or
subsidiaries
of
such
companies
gives
additional
insights
into
how
bribery
affects
OECD
countries
themselves
and
is
addressed
by
those
countries
(Dell
426).
In
Dell’s
evaluation,
“significant
enforcement
is
present
in
only
sixteen
out
of
thirty-­‐
four
countries,
with
little
or
no
enforcement
in
the
others”
and
“the
status
of
related
legislation
and
enforcement
systems
is
still
far
from
adequate
in
many
countries”
(Dell
427)
.
However,
as
I
will
explain
in
the
methodology,
I
will
use
an
overall
ranking
of
implementation
for
each
country.
The
reports
are
available
here:
• http://www.transparency.org/publications/publications/conventions/
oecd_report_2011
• http://www.transparency.org/publications/publications/conventions/
oecd_report_2010
• http://www.transparency.org/global_priorities/international_conventi
ons/projects_conventions/oecd_convention
There
are
a
few
problems
with
using
these
rankings.
First,
it’s
important
to
note
the
subjective
nature
of
these
rankings.
Van
Rijckhem
highlighted
the
problems
of
trying
to
quantify
the
issue
of
fairness,
and
the
same
apply
to
the
issue
of
corruption
(Van
Rijckhem
and
Weder
30)
.
The
methodology
of
the
CPI
rankings

14. Houghton
14
should
help
with
this
issue
by
being
an
aggregate
of
surveys
of
scholars
in
each
country.
This
is
not
completely
ameliorated
though,
because
the
sample
size
of
those
interviewed
is
typically
small.
Another
consideration
is
way
subjective
measures
can
be
influenced
by
other
factors
(Mancur
Olson
Jr.,
Sarna
and
Anand
V.
Swamy
357)
.
This
is
a
valid
point,
but
it
also
explains
the
strengths
of
this
type
of
measurement.
As
noted
previously,
corruption
is
systemic
and
has
many
hidden
factors.
A
subjective
measurement
may
be
unconsciously
influenced
by
these
hidden
factors.
It
may
end
up
being
a
better
measurement
than
simple
quantified
data,
because
quantified
data
may
not
incorporate
all
the
factors
or
may
see
only
one
aspect
of
corruption.
Experiment
For
the
experiment
itself,
I
analyzed
the
differences
in
differences
within
each
country
from
year-­‐to-­‐year,
as
well
as
between
countries.
I
then
compared
the
effects
of
implementation
of
the
OECD
Convention
using
a
scale
of
implementation.
A
Repeated
Measure
regression
was
used
to
find
the
means.
First,
I
gathered
all
the
CPI
ratings
for
each
country
from
each
report
from
1995
to
present.
I
also
gathered
the
ICRG
data
and
modified
it
as
previously
explained,
keeping
only
the
corruption
rating
for
each
country.
I
determined
the
implementation
date
for
each
country
from
the
OECD
Working
Group
on
Bribery
Annual
Report
from
2010.
I
gathered
the
data
on
enforcement
from
each
of
the
Transparency
International
reports
in
the
Enforcement
of
the
OECD
Anti-­‐Bribery
Convention
series.

15. Houghton
15
Next,
I
determined
an
overall
value
of
the
enforcement
level
for
each
member
of
the
OECD
Anti-­‐Bribery
Convention.
Each
year
a
country
is
listed
as
having
significant
enforcement,
it
is
given
two
points.
Each
year
a
country
is
listed
as
having
some
enforcement
or
a
mixed
record,
it
is
given
one
point.
Each
year
a
country
is
listed
as
having
little
or
enforcement,
it
is
given
negative
one
point.
For
each
of
the
countries
not
mentioned
in
a
report,
it
is
assumed
as
having
no
enforcement
if
the
year
of
the
report
is
after
the
implementation
date.
The
sum
of
the
numbers
for
each
year
provided
the
overall
rating
of
enforcement
for
each
country.
To
make
analysis
easier,
I
sorted
the
levels
of
enforcement
into
five
categories.
The
first
category,
strict
enforcement,
contained
all
of
the
countries
with
overall
ratings
of
enforcement
over
ten.
The
second
category,
moderate
enforcement,
contained
all
of
the
countries
with
overall
ratings
of
enforcement
below
ten
and
over
five.
The
third
category,
slight
enforcement,
contained
all
of
the
countries
with
overall
ratings
of
enforcement
below
ten
and
over
five.
The
fourth
category,
no
enforcement,
contained
all
of
the
countries
with
overall
ratings
of
enforcement
at
or
below
zero.
The
final
category
contained
all
countries
that
were
not
members
of
the
OECD
Anti-­‐
Bribery
Convention.
For
the
data
analysis,
each
category
was
scaled
from
zero
to
four,
with
four
representing
strict
enforcement
and
zero
representing
non-­‐members.
Finally,
I
ran
a
Repeated
Measure
regression
in
SPSS
using
each
of
the
years
as
separate
variables,
since
they
were
at
regular
intervals.
The
independent
variable
was
the
overall
enforcement
ranking,
and
the
dependent
variable
was
the
ratings
from
the
CPI
or
ICRG.
The
results
of
these
tests
are
below.
The
years
for
the
marginal
means
charts
start
with
the
first
year
of
observation,
continuing
to
the

16. Houghton
16
most
current
at
the
other
end
of
the
x-­‐axis.
For
the
CPI
ratings,
1
is
1995;
for
the
ICRG
ratings,
1
is
1984.
Repeated Measure Regression Using CPI Ratings
Tests of Between-Subjects Effects
Measure: MEASURE_1
Transformed Variable: Average
Source Type III Sum of
Squares
df Mean Square F Sig.
Intercept 23498.791 1 23498.791 317.771 .000
OverallEnforcement 1215.799 4 303.950 4.110 .008
Error 2588.206 35 73.949
Repeated Measure Regression Using ICRG Ratings
Tests of Between-Subjects Effects
Measure: MEASURE_1
Transformed Variable: Average
Source Type III Sum
of Squares
df Mean
Square
F Sig.
Intercept 17178.839 1 17178.839 966.950 .000
OverallEnforcement 2216.603 4 554.151 31.192 .000
Error 1723.302 97 17.766

17. Houghton
17
Marginal
Means
for
CPI
Ratings
Figure
1
Marginal
Means
for
ICRG
Ratings
Figure
2

18. Houghton
18
Analysis
Looking
first
at
the
data
on
the
CPI
rankings,
we
can
see
a
statistically
significant
(p
=
.008)
effect
of
enforcement
levels
between
countries.
I
did
not
estimate
the
overall
effect
of
the
variable
for
reasons
explained
in
the
next
section.
Looking
at
the
marginal
means
for
each
of
the
levels
of
enforcement,
we
can
notice
a
few
trends
in
the
CPI
rankings
(Figure
1).
First,
there
is
oscillation
for
strict,
slight,
and
no
enforcement
(Overall
Enforcement
4,
2,
and
1,
respectively).
This
seems
to
be
simple
variation
from
year
to
year,
with
no
real
impact.
Second,
there
is
a
slight
overall
improvement
for
countries
that
are
not
members
of
the
OECD
Anti-­‐Bribery
Convention
(Overall
Enforcement
0).
This
may
indicate
an
overall
reduction
in
corruption
levels.
However,
the
increasing
sample
size
for
more
recent
surveys
may
mean
the
increase
is
a
more
accurate
overall
measurement
than
earlier
levels.
Finally,
there
is
significant
overall
improvement
for
countries
with
moderate
enforcement
(Overall
Enforcement
3).
However,
the
actual
impact
of
the
enforcement
of
the
treaty
may
be
not
as
significant
as
this
shows
because
this
is
too
simple
of
a
data
analysis
to
capture
the
true
nature
of
the
changes
from
year
to
year.
Next,
checking
these
results
against
the
ICRG
ratings,
we
can
still
see
a
statistically
significant
influence
of
the
Overall
Enforcement
categories
(p
=
.000).
Again,
I
did
not
estimate
the
overall
effect
of
the
variable
for
reasons
explained
in
the
next
section.
Looking
at
the
marginal
means
for
each
of
the
levels
of
enforcement,
we
can
notice
a
few
trends
in
the
ICRG
rankings
(Figure
2).
First,
all
categories,
except
the
non-­‐members
(Overall
Enforcement
0),
saw
an
overall
decrease
in
rankings
from
the
first
year
to
present.
Second,
the
recent
improvement

19. Houghton
19
ratings
are
similar
for
all
ratings.
If
one
incorporates
the
overall
decrease
in
ratings,
no
real
effect
of
implementation
can
be
seen.
Finally,
there
is
some
difficulty
in
dealing
with
these
values,
as
the
enforcement
ratings
are
really
only
significant
from
2006
onwards,
when
the
TI
report
series
on
implementation
began.
So
what
can
be
inferred
from
this
data?
First,
there
seems
to
be
a
bias
of
countries
with
already
low
corruption
joining
and
enforcing
the
convention.
There
seems
to
be
no
effect
of
enforcement
beyond
the
simple
oscillation.
These
countries
already
having
effective
enforcement
mechanisms
may
also
explain
this.
Second,
there
seems
to
be
no
effect
of
the
treaty
on
countries
without
enforcement
of
the
laws.
This
is
in
line
with
my
hypothesis
that
simply
passing
laws
would
have
no
effect.
Finally,
there
seems
to
be
some
effect
of
joining
the
treaty
when
there
is
moderate
enforcement.
This
may
be
because
the
countries
would
need
to
make
changes
within
their
institutions
and
companies
to
comply
with
convention,
and
there
would
be
room
for
improvement.
However,
this
data
analysis
is
too
imprecise
to
tell
the
level
of
effect,
if
any,
this
may
be.
Conclusion
and
Ideas
For
Further
Investigation
For
further
analysis,
better
statistical
methods,
better
indicators,
and
alternative
treaties
could
be
examined.
First,
my
grasp
of
statistical
analysis
is
relatively
weak.
A
proper
test
of
this
data
would
look
at
the
level
of
enforcement
and
its
impact
on
each
country
for
each
year,
without
overall
categories.
However,
I
don’t
know
how
to
structure
a
proper
model
of
this
situation.
Also,
the
data
may
have
problems
with
sphericity,
especially
the
ICRG
data.
I
don’t
know
enough
about

20. Houghton
20
the
theory
behind
it
to
make
a
proper
analysis
or
correction
for
better
results.
Second,
finding
external
indicators
of
the
level
of
enforcement
of
the
treaty
instead
of
relying
on
the
Transparency
International
ratings
would
significantly
improve
the
results.
The
reports
only
cover
2006
until
2011,
so
a
lot
of
time
is
not
covered.
Also,
the
ratings
of
enforcement
changed
over
time
and
are
not
very
precise.
Finally,
looking
at
the
United
Nations
Convention
Against
Bribery
instead
of
the
OECD
Anti-­‐
Bribery
Convention
may
yield
more
interesting
results.
The
UN
Convention
has
a
much
more
diverse
group
of
countries
that
signed
on,
but
is
still
a
legally
binding
agreement
with
review
mechanisms
like
the
OECD
Convention.
Alternatively,
looking
at
regional
versions
of
the
OECD
Anti-­‐Bribery
Convention
may
be
worthwhile
as
well.
This
paper
described
the
nature
of
corruption
as
systemic,
with
many
facets.
It
has
many
causes
and
effects,
making
combatting
it
difficult.
Recent
research
and
attempts
at
reducing
corruption
have
concentrated
on
the
role
environments
of
corruption
play.
Then,
I
explained
the
new
transnational
approaches
to
combatting
corruption.
The
OECD,
following
the
example
of
the
FCPA,
created
a
landmark
international
treaty
to
combat
bribery.
Many
countries
have
signed
on
to
this
treaty,
but
the
effect
of
this
treaty
on
the
countries
that
have
signed
it
remains
unexplored.
Out
of
all
the
treaties
dealing
with
bribery
and
corruption,
I
chose
the
OECD
Anti-­‐
Bribery
Corruption
due
to
its
narrow
scope,
high
profile,
and
review
mechanisms.
From
looking
at
the
CPI
ratings
for
each
country,
we
can
see
some
effect
of
the
level
of
compliance
with
the
treaty,
but
further
analysis
is
necessary.

21. Houghton
21
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