Page 24 of OECD foreign bribery report
The OECD has released a new report on corruption. This document serves as a useful guide for those looking to uncover scandal stories.
According to the OECD, state-owned enterprises contribute significantly to the issue. Eighty percent of identified cases of foreign bribery involve these state companies. The natural resource sector is the most prone to such activities. Notably, three-quarters of these cases involve intermediaries, many operating from offshore tax havens.
State firms, natural resources, and intermediaries from offshore tax havens. Where else could these elements be found? It appears there will be no shortage of work for those of us dedicated to tracking energy-related corruption stories in Latin America.
Shout-out to Global Witness for alerting us to this new report. They aim to mitigate corruption by advocating for the abolition of anonymous corporate registration. Achieving this will require robust international collaboration. There will always be some underdeveloped country eager to cater to corporations, whether as a tax haven or a venue for anonymous corporate registrations. As Panama becomes more transparent, other places like Nevis and Mauritius emerge.
Global Witness’s remarks:
Today, the OECD—a consortium of wealthy nations—has published an insightful review of 427 bribery cases from 1999 onwards, when the OECD’s anti-bribery convention took effect. Before delving into specifics, it’s essential to stress why this matters—bribery isn’t a victimless crime. It results in vast amounts of money that ought to be funding things like schools and infrastructure in impoverished nations going missing, thus keeping these countries dependent on external aid.
Four findings particularly caught my attention from today’s report, revealing how bribery and corruption impact developing nations in ways that are not widely recognized.
The extractive sector has the highest incidence of bribery, accounting for 19% of total cases. For Global Witness, this fact isn’t surprising. For two decades, we’ve advocated for increased transparency in the oil, gas, and mining sectors, ensuring that these large sums benefit the populace rather than merely lining the pockets of a small corrupt elite. Solutions include making payment reports from the industry publicly accessible and improving information on who receives lucrative contracts.
Seventy-five percent of the cases involved intermediaries who channeled the bribe funds. In 35% of the instances, these intermediaries were companies, often based in offshore tax havens. Global Witness’s investigations repeatedly show how vital anonymous company ownership can be in facilitating bribery and corruption. It’s alarmingly easy for corrupt politicians and other criminals to use covert corporate structures to obscure their involvement in illegal activities (see our Idiot’s Guide to Money Laundering). This is why we’re campaigning against anonymous businesses and pushing for public registries revealing true company ownership details. The UK is on board, and the EU is currently debating this subject.
Senior management was implicated in the decision to pay bribes in more than half the cases. Corruption often reaches the upper echelons of organizations, with top managers actively participating in such wrongdoing. It’s crucial that these executives are properly motivated to eliminate corruption. This is especially true in the finance sector, where the incentives for senior management teams to ensure compliance with regulations are misaligned. The rewards for accepting dubious funds from corrupt officials can be substantial, with little risk if discovered. The answer lies in holding senior managers accountable when issues arise.
Over 80% of all bribes were directed toward officials from state-owned enterprises (SOEs). Anyone involved in the fight against corruption knows that state-owned companies present a significant risk. They tend to be less transparent, and those accountable often have their hands in the pot. However, it is shocking that they account for such a sizable portion of total cases. Global Witness has called for enhanced transparency regarding the governance of SOEs, particularly in the oil sector. Additionally, it’s crucial for nations to separate the issuing of licenses from the state oil company to mitigate potential conflicts of interest and corruption.
This report offers very engaging insights. I would like to request the OECD to make the underlying database publicly accessible. This type of detailed information is rare and incredibly useful for identifying trends and allowing campaigners to decide where to concentrate their efforts.
In my view, there isn’t a single policy reform that will solve this issue. As long as “everyone does it,” corruption will remain a way of life. We need a broad societal rejection of corruption, embedded in the culture to truly put an end to it. This requires an environment where people feel there’s enough to share. Having enough resources available, instead of it being hoarded by a small minority, is vital. While I’m not saying that the Gini coefficient can forecast crime rates, I can see how significant wealth gaps and restricted social mobility may make corruption—be it line-skipping at the market or high-stakes kickbacks—more tolerable in society.