4th Corporate Fraud and Corruption ForumIntroduction Amsterdam, November 18th 2011 Recent developments in the fight against corruption Fighting corruption in developing economies Evolving views European governments regarding corruption in developing economies A. P.Ranner , Board Member of TI- Netherlands
Introduction Now more than 100 chapters and partners worldwide
Introduction WHAT IS CORRUPTION ? The abuse of entrusted power for private gain (including nepotism and cronyism)
Introduction WHY FIGHT CORRUPTION?DISTORTS TRADE, MARKETS & FAIR COMPETITION Feeds povertyINCREASES POLLUTION & WASTES RESOURCESBREEDS SOCIAL, ECONOMIC & POLITICALUNREST, SEEDS VIOLENCE &UNDERMINES RULE of LAW & THE STATE JEOPARDISES SOUND GOVERNANCE & ETHICS UNDERMINES DEMOCRACY & HUMAN RIGHTS
Introduction WHY FIGHT CORRUPTION? Hurts everyone and harms the poor the most From a business point of view:Gives richer companies unfair advantages in businessbypassing the vetting process and thereby exchangingcash for professional responsibilityBusiness-to-business bribery can distort markets andcompetition by 1. facilitating hidden business cartels 2. allowing large companies to demand bribes or kickbacks from smaller suppliers.
Data & analysisGlobally, corruption adds up to 10 % to the cost of doing businessCorrupt leaders of poor countries steal as much as US $ 40 billion ayear and stash these overseasMoney laundering using western banks & tax havens; e.g CaymanIslands: 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 ofassets frozen by western financial centres
Data & analysis Bribe Payers index 2011 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.
Data & Analysis Corruption developmentVary varied picture: some countries have moved forward, but others stayed behind or even deteriorated.Level of corruption in a country depends on cultural andinstitutional factors and quality of government.Corruption often linked to trafficking in drugs and humanbeings, 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
Key Results TI Progress Report onData & Analysis Enforcement of the OECD Anti- Bribery Convention, (May 2011)Category Percentage of Countries world tradeActive Enforcement 30% Denmark, Germany, Italy, Norway, Switzerland, United Kingdom, United States ( 7)Moderate Enforcement 20% Argentina, Belgium, Finland, France, Japan, Korea (South), Netherlands, Spain (9) and SwedenLittle or No Enforcement 15% Australia, Austria, Brazil, Bulgaria, Canada, Chile, Czech Republic, Estonia, ( 21) Greece, Hungary, Ireland, Israel, Luxembourg, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia, South Africa and Turkey No level playing field
Trends & developmentsDifferent 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 & developmentsEU: new directive for a mandatory disclosure rules forextractive industries (energy, mining, logging) similar toDodd-Frank (US ), but 600 listed and large non-listedcompanies. The amounts of money per project paid todifferent levels of government have to be specified.Multinationals object: no project based figuresEU: EU bi-annual Anti-Corruption Report2013 report: use of existing anti-corruption laws &enforcement methods member states.Focus: implementing & enforcing internationally agreed anticorruption standards
Global anti-corruption regulatory Trends & movement & enforcementdevelopments 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 Regulatory developments India: power for private gain the abuse of entrusted power for private gain the abuse of Ratification UNCAC, Quebec (Can.) entrusted power for private gain the abuse of entrusted power for private gain the Legislation criminalizes New law with abuse of entrusted power for private gain the abuse of entrusted power for private gain foreign bribery the abuse of entrusted power for privatehigher fines gain the abuse of entrusted power for private gain the abuse of entrusted power for private gain the abuse of entrusted power for Russia: China: anti-bribery private gain the abuse of entrusted power for private gain the abuse of entrusted power Joins OECD convention on law criminalising for private gain the abuse of entrusted power for private gain the abuse ofof foreign fighting Bribery entrusted international public officials in power for private gain the abuse of entrusted power for private gain the abuse of corruption international business entrusted power for private gain the abuse of entrusted power for private gain the transaction Taiwan: higher abuse of entrusted power for private gain the abuse of entrusted power for private gain penalties the abuse of entrusted power for private gain the abuse of entrusted power for private Australia: gain the abuse of entrusted power for private gain the abuse of entrusted power for reform to ban private gain the abuse of entrusted power for private gain the abuse of entrusted power Mexico: new facilitation for private gain the abuse of entrusted power for private gain the abuse of entrusted federal anti- payments power for private gain the abuse of entrusted power for private gain the abuse of corruption law entrusted power for private gain the abuse of entrusted power for private gain the Colombia: abuse of entrusted power for private gain the abuse of entrusted power for private gain plans Indonesia the abuse of entrusted power for private abuse of entrusted power for private gain the Signs of anti abuse of entrustedBrazil: for private gain the abuse of entrusted power for private gain power plans improvement bribery Spain: law laws reform
Trends & developments YetCurrent 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
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 andchallenges 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 Thank you Questions ?Transparency International NederlandBenoordenhoutseweg 232596 BA ’s GravenhageNederlandTel: 070-3142452 of 063-0386643E-mail: firstname.lastname@example.org A. P.Ranner , Member of Board TI- Netherlands