fighting corruption in developing countries and the evolving views of European governments

1. 4th Corporate Fraud and Corruption Forum
Introduction
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

2. Introduction
Now more than 100 chapters and
partners worldwide

3. Introduction
WHAT IS CORRUPTION ?
The abuse of entrusted power for private gain
(including nepotism and cronyism)

4. Introduction
WHY FIGHT CORRUPTION?
DISTORTS TRADE, MARKETS & FAIR COMPETITION Feeds poverty
INCREASES POLLUTION & WASTES RESOURCES
BREEDS SOCIAL, ECONOMIC & POLITICAL
UNREST, SEEDS VIOLENCE &
UNDERMINES RULE of LAW & THE STATE
JEOPARDISES SOUND GOVERNANCE
& ETHICS
UNDERMINES
DEMOCRACY & HUMAN RIGHTS

5. Introduction
WHY FIGHT CORRUPTION?
Hurts everyone and harms the poor the most
From a business point of view:
Gives richer companies unfair advantages in business
bypassing the vetting process and thereby exchanging
cash for professional responsibility
Business-to-business bribery can distort markets and
competition by 1. facilitating hidden business cartels
2. allowing large companies to
demand bribes or kickbacks from
smaller suppliers.

6. Data &
analysis
Globally, corruption adds up to 10 % to the cost of doing business
Corrupt leaders of poor countries steal as much as US $ 40 billion a
year and stash these overseas
Money laundering using western banks & tax havens; e.g Cayman
Islands: 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 of
assets frozen by western financial centres

7. Data & analysis Bribe Payers index 2011

8. 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.

9. Data & Analysis Corruption development
Vary varied picture: some countries have moved forward, but
others stayed behind or even deteriorated.
Level of corruption in a country depends on cultural and
institutional factors and quality of government.
Corruption often linked to trafficking in drugs and human
beings, 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

10. Key Results TI Progress Report on
Data & Analysis
Enforcement of the OECD Anti-
Bribery Convention, (May 2011)
Category Percentage of Countries
world trade
Active 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 Sweden
Little 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

11. Trends & developments
Different 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

12. 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)

13. Trends & developments
EU: new directive for a mandatory disclosure rules for
extractive industries (energy, mining, logging) similar to
Dodd-Frank (US ), but 600 listed and large non-listed
companies. The amounts of money per project paid to
different levels of government have to be specified.
Multinationals object: no project based figures
EU: EU bi-annual Anti-Corruption Report
2013 report: use of existing anti-corruption laws &
enforcement methods member states.
Focus: implementing & enforcing internationally
agreed anticorruption standards

14. Global anti-corruption regulatory
Trends &
movement & enforcement
developments
 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

15. 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

16. Trends & developments
Yet
Current 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

17.  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

18. TI last year developed a new five year strategy with new strategic priorities and
challenges 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 are
nowadays involved in processes of long term strategic planning to be able to
live up to our commitments.

19. Attention turning to influencing other stakeholders
and 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)

20. Recent developments in fighting corruption
Thank you
Questions ?
Transparency International Nederland
Benoordenhoutseweg 23
2596 BA ’s Gravenhage
Nederland
Tel: 070-3142452 of 063-0386643
E-mail: secretaris@transparency.nl A. P.Ranner , Member of Board TI-
Netherlands