Honesty is the best policy

The 1990s was a busy decade in the fight against international corruption. Several high-profile campaigns were launched, in the world Bank, the Council of Europe, the Organization of American States, to name but a few. In the Clean Hands campaign, the pool of Milan magistrates purged Italy’s public sector with a thoroughness and a forthrightness that inspired other countries to follow suit.

In 1995 Transparency International launched its corruption perceptions index, which, despite its critics, no country wishes to do badly on. Four years later, in February 1999, one of the most important initiatives of all entered into force: the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This has made it possible for governments to criminalise the offer, promise or delivery of a bribe to foreign public officials in order to obtain or retain international business deals.

With so many soldiers in the field, one might think the battle against corruption was finally being won. Yet in a recent survey by Transparency International a third of respondents believed corruption had risen in recent years, not fallen. The survey was of professionals working in transition and emerging economies, which Transparency identifies as being particularly exposed to corruption. The respondents’ views should not be taken lightly.

Nonetheless, there has been some tangible progress. In the 1970s bribing foreign public officials to clinch business contracts was common practice in many OECD countries. Today it is a crime in most of them. Why has this change come about? The reasons are simple.

It is now widely accepted that bribery wastes public resources, undermines development and distorts competition. Governments believe in the Convention because it can help them to stop corruption from corroding their democracies. Corporate leaders and labour unions back it because they know corruption undermines business and destroys jobs.

Still, every year an estimated US$100 billion is paid out in bribes worldwide. To put it in perspective, this sum is equivalent to nearly twice New Zealand’s GDP. And that may be just the tip of the iceberg. Clearly, more needs to be done. The Convention is a major step in the right direction, but it is only a step. What more can OECD governments do?

A good start would be to ensure that the Convention is enforced. It is not enough to agree on the laws to be adopted, nor is it right to cite other governments’ lax regimes as a pretext for delaying implementation. It is the large exporting companies, many of which have headquarters in OECD countries, that supply most of the world’s bribes affecting trade. Signatory governments that have not yet adopted their legislation should do so as quickly and as fully as possible.

Implementing the Convention is vital, but as the Spotlight in this OECD Observer shows, governments cannot stop there. They must see to it that their legislation is effective too. And they must make sure that bribes can no longer be treated as deductible business expenses, as was the case in some OECD countries.

Governments also have a responsibility to do what they can to combat bribery within the private sector, as the OECD is mandated to do. One reason is that so many public-sector entities where bribery took place in the past have been privatised and now escape the reach of the Convention. But the essential aim should be to prevent the illicit market for industrial secrets or early warnings of mergers involving private companies from growing. OECD governments also have to strengthen their joint defences against money laundering, whose techniques are becoming more sophisticated as technology and markets evolve.

Fighting corruption needs more than punitive laws. Improving ethics and governance at every level is also essential. The OECD has a programme in place to help its governments instil excellence in public sector management, to strengthen their ethics infrastructure. On the private-sector side, the OECD’s Guidelines for Multinational Enterprises, which are discussed briefly in this edition, have a similarly laudable aim. Like our Principles on Corporate Governance, they are not aimed primarily at fighting corruption, though they contribute to the cause by helping to build a more honest global market place.

The battle against corruption is being fought everywhere, not just in the developed economies, but in transition and emerging markets and developing countries alike. The OECD has an important role to play, through its development work, its partnership programmes in transition countries and by disseminating information, not least via its online anti-corruption network. Let us remember that five non-members are presently part of the Convention and many others are interested in associating themselves with its principles.

For them as for us, the OECD’s Bribery Convention is not just about markets, but about values as well. Public repugnance towards corruption is deepening, which is reflected in the growing importance of civil society in the fight against bribery worldwide. Modern democracies depend on honesty in government and in business. They also rely on public trust. To lose that trust would be to shake the very rock on which our societies depend. Quite simply, the Convention is a pillar of support for our democratic values and beliefs. We have a duty to make it work. Only by doing so will we be able to reaffirm that honesty is the best policy.

©OECD Observer No 220, April 2000

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