The document discusses international conventions and measures against corruption in the business sector. It outlines the costs of corruption, including over $1 trillion paid in bribes annually. Various international conventions are summarized that prohibit corruption, such as the OECD Convention and UN Convention Against Corruption. Best practices for businesses to prevent corruption are presented, including adopting ethics codes, auditing controls, and prohibiting bribery. The roles and responsibilities of both governments and businesses in combating corruption are also discussed.

1. International conventions against
corruption and measures against
corruption in business sector
Vanja Mihajlova, Anti- Corruption Consultant
Skopje, November 16, 2010

2. Costs of corruption
 Corruption hurts everyone;
 Corruption damages the reputation of the country and
the people who works for it;
 Corruption is not a trivial offence-it leads directly to
criminal liability;
 Corruption starts with small favors;
 Corruption leaves open door to blackmail;
 Bribery and Corruption has long been perceived as a
major obstacle for socio-economic development and as
distorting national and international economic relations;

3. Corruption damages
 More than US$1trillion is paid worldwide in bribes
each year, 70% of SMEs face corruption risk in all
their business dealings, 40% of companies in
emerging markets have no formal or documented
ant-fraud policy;
 Corruption decreases profit, limits progress and
growth of the company and economy in general;
 States and international bodies have recognized this
and drawn up regulatory frameworks to fight corrupt
practices;

4. Some types of payments for bribe
 Cash,
 Electronic transfers to offshore bank accounts,
 Financial instruments ( such as bearer bonds and/or
shares) gifts including cars, holidays, property, school
fees,” business and personal truism”;
 Employing and paying close relative or friend of a
governmental official;
 Making “donations” to nominated” charities” which
are actually private accounts;

5. Some types of payments for bribe
 Offering excessive and inappropriate hospitality and
entertainment ;
 Sharing the proceeds of fixed price under the budget
contracts;
 Over invoicing of services and labor;
 Overcharging raw materials and commodity prices;
 Rental of property from governmental officials or
his/her closely related parties at above market rates;

6. International Conventions
 Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions,
(OECD Convention);
 Criminal Law Convention Against Corruption of the
Council of Europe (CoE Convention);
 Inter-American Convention Against Corruption,
adopted by the Organization of American States (OAS
Convention);
 African Union’s Anti-Corruption Convention,
 United Nations Convention Against Corruption
(Merida Convention);

7. OECD Convention
 The OECD Convention is covering:
 the offense of transnational bribery, ancillary or related
offenses, jurisdiction and penalties, international cooperation in
the investigation and prosecution of transnational bribery;
 The main purpose of the OECD Convention is to require
countries to prohibit the bribery of foreign public officials in the
same way that countries prohibit the bribery of their domestic
officials;
 the OECD Convention requires from the counties to enact
national laws criminalizing the bribery of foreign public officials
with the focus on the supplier of funds;
 the person who promises or gives the bribe, in contrast to the
offense committed by the official who receives the bribe;

8. Un Convention Against Corruption
 Article 21. Bribery in the private sector
 Each State Party shall consider adopting such legislative and
other measures as may be necessary to establish as criminal
offences, when committed intentionally in the course of
economic, financial or commercial activities:
 The promise, offering or giving, solicitation or acceptance,
directly or indirectly, of an undue advantage by any person who
directs or works, in any capacity, for a private sector entity, for
the person himself or herself or for another person, in order
that he or she, in breach of his or her duties, act or refrain from
acting;
 Taking measures, to prevent corruption involving the
 private sector, enhance accounting and auditing standards in the
private sector;

9. Un Convention Against Corruption
 and, where appropriate, provide effective, proportionate and
dissuasive civil, administrative or criminal penalties for failure to
comply with such measures;
 Promoting the development of standards and procedures
designed to safeguard the integrity of relevant private entities,
including codes of conduct for the correct, honorable and proper
performance of the activities of business and the prevention of
conflicts of interest, and for the promotion of the use of good
commercial practices among businesses;
 Promoting transparency among private entities;
 Entities who have suffered damage as a result of corruption
have the right to initiate legal procedure in order to obtain
compensation;

10. Frequently asked questions by
businessmen
 Isn't bribery" the way business is done” in certain countries?
 Don't companies lose out on business when they say" no” to
bribery?
 It's possible to do business in regular manner in high level
corrupted countries like Balkan's ?
 Is corruption prevention very costly?
 The law prohibits corruption –isn't enough?
 Is any regulation against corruption?
 My company has never bribed any public official-is this insulting,
or normal?
 What actions should be taken if concerned that other companies
may not be meeting these high standards?

11. What are the obstacles for doing
business?
 Inefficient and non transparent public administration,
generally is addressed as one of key obstacles for
efficient functioning of business sector;
 The public administration's officials deciding on
specific businessmen's requirement (various approvals,
permissions, licenses), are using the discretionary
rights only in favor of some prefered companies, not
acting in public interest;
 Additionally- lack of liability of public servants for
performing of their duty results with delaying in making
decisions on requested service- using different excuses,
which goal actually is to receive a bribe or any other
service;

12. Consequences from the corruption
 Lack of transparency and accountability-contracts are awarded
by direct negotiations “under table”-it's impossible to have
access to criteria for reaching decisions;
 Limitation of competion,( especially in public procurement
process) efficiency and innovations;
 Dislocation of resources-instead to invest in increasing of
productivity and in new employments funds are using to bribe
governmental officials, which increasing the company's costs;
 Lack of good governance, uncertainty, weak protection of
ownership's rights –impacts on making decision for investment
in some country and for distortion of economic growth;
 Unfavorable business climate- dissuasive new investment;

13. Consequences from the corruption
 Corruption is large burden especially for small and new
companies to enter into market and compete-the big companies
enjoy a monopolistic position on the market due to established
“business relations with governmental officials” ;
 This is notable especially in defining of technical specifications
of contract documentation in public procurement process-
creating unjustified obstacles to the opening up of public
procurement to competition and do not afford equal access for
all interested companies;
 Instead to invest in innovations and develop their business,
SMS,s are preoccupied to survive on the market and try to avoid
a bankruptcy;
 Low rate of employment;

14. What business sector can do?
 Can this magic circle be overcame?
 Can the business sector, especially the SME,s and
the new established companies fight against criminal
activities and create possibility to conduct their
business in legal way?
 Institutionally, the regulations promote fair
competion, equal treatment and non discrimination of
companies on the market;
 How this functioning in the practice? Can companies
freely participate and compete without any obstacle
and not favorising certain companies?

15. Actions of business sector to combat
corruption
 The participation of the private sector against corruption is
crucial;
 The most efficient anti-corruption programmes adopted in
some countries, include the private sector in institutional
reforms promoting fair competion and good governance;
 The business community must undertake positive actions at the
public arena-trough supporting the legal and regulatory reforms
and improving the corporative governance, better reporting and
voluntary standards;.
 Some of successful measures are:
 Open discussion on corruption issue and damages of corruption
on business activities-this topic can not be further tolerate and
treated as a taboo;

16. Actions of business sector to combat
corruption
 Identifying the roots of corruption, the weakness that
create a possibility for corruption and mechanisms
trough which it's appears;
 Promoting dialog among business sector and
governmental officials for insuring that designed
policy against corruption will address the needs of
business community;
 Adoption of action plan, including specific anti-
corruption politics, focusing on specific most
vulnerable areas-in which the business sector will
have a leading role in promoting transparent
relations with public sector and adoption of internal
auditing over the transactions;

17. How to prevent corruption in the private
sector?
 Some actions should be taken in legislative field-to
eliminate or change some unclear and confused legal
solutions;
 The initiatives should be taken by young
businessmen;
 Adoption of Code of Conduct for enhancing the
integrity of public contracts and fair competion, while
transparency is consider to take a key role in public
procurement;
 Informal economy is result of inappropriate
implementation of legislation, or due to obstacles or
complicated criteria for doing business, especially for
small business. Integration of informal (or grey)
economy trough certain deductions for SMS,s sector;

18. How to prevent corruption in the private
sector?
 Initiatives to limits discretionary power of public servants and
tax relief for small business;
 Clear and appropriate procedures regarding licenses granted by
public authorities for commercial activities;
 Preventing conflicts of interest by imposing restrictions, as
appropriate and for a reasonable period of time, on the
professional activities of former public officials or on the
employment of public officials by the private sector after their
resignation or retirement, where such activities or employment
relate directly to the functions held or supervised by those
public officials during their tenure;

19. Business principles for countering
bribery and corruption
 Adoption of legislation against corruption-law, anti-corruption
programmes and strategies on national level;
 However, regulatory approaches alone are unlikely to be
sufficient to fight bribery and corruption-in order to be effective
on a sector or individual company level, they need to be
complemented by private sector commitments;
 Businesses should increasingly recognize the benefits of having
a no-tolerance position on bribery and corruption. Among other
things, it reduces uncertainty and helps to create a more stable
business environment; it reduces the likelihood of split loyalties
among staff and has positive reputation effects.

20. Business principles for countering
bribery and corruption
 Enterprises have to develop effective approaches to
countering bribery in all of their activities.
 The Principles outline the areas in which corrupt
 practices can occur:
 • Bribes
 • Political Contributions
 • Charitable Contributions and Sponsorships
 • Facilitation Payments
 • Gifts, Hospitality and Expenses
 • Training

21. Business principles for countering
bribery and corruption
 The aim of Principles is to provide:
 framework for good business practices and risk
 management strategies for countering bribery.
 They are intended to assist enterprises to:
 • eliminate bribery
 • demonstrate their commitment to countering
 bribery
 • make a positive contribution to improving
 business standards of integrity, transparency and
 accountability wherever they operate.
 Companies should commit themselves to a zero tolerance
 policy towards bribery and the development of a practical and
effective implementation programme.

22. Business principles for countering
bribery and corruption-best practices
 Most large business organizations address the issue
of bribery and corruption in their codes of ethics or
codes of business conduct and set out expectations
of employee behaviour in this area, an organization's
commitment to a not tolerance bribery;
 position can be made stronger by reference to wider
private sector initiatives and frameworks;
 These frameworks can also serve as checklist for
businesses to ensure that their anti-bribery policy is
comprehensive and good practice is followed in policy
implementation and monitoring;

23. Business principles for countering
bribery and corruption-best practices
 Ensuring sufficient internal auditing controls to assist in
preventing and detecting acts of corruption and that
the accounts and required financial statements of such
private enterprises are subject to appropriate auditing
and certification procedures;
 Monitoring and review;
 Prohibit bribe in any form-directly or indirectly;
 Commit to implement anti-corruption programs and
strategies;
 Adoption of programs for good business practices and
strategies for risk management for combating
corruption;
 .

24. Best practices
 Business community agreed to eliminate bribe of foreign
public officials as a manner for doing business, especially in
the new market economy (mutual commitment of German
businessmen);
 Guidelines for awarding contracts:
 The principle of public invitations to tender and of open
procedures is especially important for prevention corruption.
Fair competition in the public procurement and for awarding
public contracts;
 When public contracts are awarded, anti-corruption clauses
shall be included as appropriate;

25. Best practices
 The most developed countries have adopted:
 Recommendations and Directives for prevention of
bribe and corruption in the business sector;
 Regulations for not sponsoring the public
administration official or their close relatives or
friends;
 The awarding of public contracts shall be regularly
monitoring as part of administrative and task-related
supervision to identify any prohibited influencing
factors;


26. Best practices
 When public contracts are awarded, the planning
and description of requirements shall in principle be
kept separate in organizational terms both the
implementation of the award process;
 If private businesses are involved in carrying out
publicly funded projects, the individual employees of
these business shall agree to fulfill their obligations
arising from contract;
 Imposing of conditions, granting of concessions,
approvals, permits and the like setting and levying of
fees;
 Processing of transactions and operations using
internal information not intended for third parties;