Keynote Address at the Transnationalization of Anti-Corruption Law at Sciences Po

Remarks delivered at the Sciences Po Transnationalization of Anti-Corruption Law.

Distinguished guests, colleagues, it is a pleasure to be here. Let me first thank the Anti-Corruption Law Interest Group of the American Society of International Law, Sciences Po Law School and The Zicklin Center for Business Ethics Research of the Wharton School for their warm welcome and for giving me the opportunity to be part of this important event.

Global context of inequalities

We are all here because we agree that corruption continues to have a destructive effect on societies and economies around the world. But I am sure you will agree that it is a complex problem to fix, for two key reasons.

First, corruption is endemic: a recent study shows that 38% of senior decision makers in some of the world’s largest companies knew that bribery or corruption happened widely in business in their country. This number jumps to 52% – over half – in emerging countries!

OECD analysis also shows that corruption is a global problem, busting the myth that this is confined to developing countries.

Alarmingly, officials were bribed from 15 out of the 19 G20 member countries.[1]

And as we have seen, corruption can reach the highest levels of government, OECD data shows that 11% of the total amount in bribes went to Ministers and Heads of State.

Second, crimes have become increasingly complex, sophisticated and – as this conference attests – transnational.

They are complex to track and find the root of; in 75% of cases, intermediaries were involved, such as local sales and marketing agents, distributors and brokers.

Over a third of intermediaries were corporate vehicles, such as subsidiary companies, local consulting firms, companies located in offshore financial centres or tax havens, or companies established under the beneficial ownership of public officials receiving the bribes.

We know that corruption is more prevalent in some sectors than others, for example, the extractive sector (19% of cases); construction (15%); transportation and storage (15%); and information and communication sectors (10%).

Public procurement can also a hotbed for corruption; in over half of the cases looked at by the OECD, bribes were paid to obtain public procurement contracts. Indeed, scandals like Odebrecht have rocked the world and continues to make headlines.

I don’t have to tell you that corruption fuels poverty and inequality. But I wanted to emphasise the effect on governance.

Being wealthy can often buy you access to political influence and decision-making. Inequalities of income and wealth can translate into political inequalities.

This concentration of wealth, power and influence at the top can breed corrupt practices and self-interest.

All this has a devastating effect on public trust in governments and business.

On average, only 42% of citizens in OECD countries trust their governments. In some countries, trust has collapsed by more than 20 percentage points.

In Latin America, only 25% of citizens trust their government. And can you blame them?

Corruption is being reported as the number one concern by citizens. In 2017, only 15% of people felt the system was working for them, with 69% of those surveyed expressing concerns about ‘corruption’.[2]

This low trust environment feeds populism, nationalism, and protectionism. We are seeing these reactionary movements play out daily in election outcomes, decreased civic engagement, and social unrest.

It is clear that establishing a global level playing field is urgent.

Policy action

So how do we do that? The good news is that hard work does make a difference. The OECD has been a champion and world leader on this issue for decades; as a global integrity standards-setter, we have seen progress, growing awareness and interest in addressing the issue.

However, there is still work to do in key areas. Let me run through three of them:

Firstly, we need stronger and more widespread implementation of global anti-corruption standards. When it comes to foreign bribery, progress has been largely due to the OECD’s Anti-Bribery Convention, which has been in force for over 20 years. Foreign bribery is now illegal in 44 economies – including in non-OECD members such as Argentina, Brazil, and Colombia; bribes are no longer tax deductible; and all countries have either strengthened or created corporate liability laws from scratch.

However, there is a clear enforcement gap as only half of the 44 Parties to the Convention have ever imposed a sanction for foreign bribery.

This therefore means we need stronger, clearer, and more insistent commitments by global leaders to combat corruption. Since 2010, G20 countries have committed to lead by example in the fight against corruption. However, not all G20 countries are living up to this commitment, including by failing to join the OECD Anti-Bribery Convention.

We also need strong standards on public procurement. For example, installing electronic procurement systems, to avoid face-to-face meetings between procurement officials and government suppliers, or ensuring the non-disclosure of bidders’ identities and the terms of their bids to avoid collusion and illegal bid rigging.

Secondly, to fight transnational corruption and complex financial crimes, we need comprehensive international cooperation and strong international instruments.

The Anti-Bribery Convention facilitates this cooperation. For example when Brazil, Switzerland and the United States worked together to sanction Odebrecht in 2016, being members of the Convention enabled the conduct of coordinated parallel investigations, the necessary exchange of valuable information, and brought a swift and comprehensive resolution in the case.

Indeed, the OECD Convention is unique and effective, because it requires signatories to affirm their commitment to fighting transnational corruption, to pass laws to do so, and it also encourages cooperation and a collaborative approach.

To effectively combat corruption and financial crime, we also need to know where the money is. Addressing tax evasion and avoidance also requires strong international cooperation. The G20/OECD Base Erosion and Profit Shifting work has already had great impact, and has the potential to recover 240 billion dollars in lost revenues every year.

The OECD has also worked to make it harder for people to use trusts, companies and partnerships to hide their wealth by setting a global standard for tax transparency and exchange of information, involving almost 150 jurisdictions around the world. Our work on Automatic Exchange of Information has already brought in 93 billion euros in additional tax revenues.

However, law enforcement agencies in many countries are struggling to keep pace with the increasing complexity of financial crimes and transnational corruption.

As part of the Oslo Dialogue, the OECD’s Task Force on Tax and Other Financial Crimes highlighted the importance of efficient inter-agency and international cooperation in the investigation and prosecution of financial and economic crimes. For example, implementing joint investigation teams and multi-agency intelligence centres, to enable a whole-of-government approach.

Capacity building programmes are also essential, especially to help developing countries.

The OECD has recently expanded its International Academy for Tax and Financial Crime Investigations, with a new centre in Argentina, following successful centres in Italy and Kenya. We have also expanded the OECD/UNDP Tax Inspectors Without Borders initiative to include criminal investigations.

Our hard work is paying off:

OECD data published last year shows that countries appear to be cooperating more on foreign bribery cases. More than 40% of the resolutions in US foreign bribery cases involved co-operation with foreign law enforcement agencies, well up from 10 years ago.

Part of this is also about having the right information. A major problem with documenting corruption is that it relies a lot on self-reporting. We need more and better data on corruption and anti-corruption efforts. Numbers speak. The OECD will continue to work with  Transparency International and others to build the evidence-base for policies to promote good governance and combating corruption.

Third, we need to ensure that the multilateral system adapts to a rapidly changing global context.

As our global economy becomes increasingly complex, interconnected, and digitalized, we need to ensure our international standards are modern and relevant.

At the OECD, we have both the OECD Guidelines for Multinational Enterprises and the G20/OECD Principles of Corporate Governance, which provide global benchmarks on transparency, accountability and business integrity.

As these OECD Guidelines are over 40 years old, we regularly update them to ensure they remain the leading international instrument for the promotion of responsible business conduct.

Not only must these be relevant, but they must be well implemented and accessible to everyone: since the year 2000, 82% of the cases of alleged non-observance of the Guidelines have been brought by trade unions and NGOs. 56% of the cases since 2011 were human rights cases.

We also need to provide clear channels for blowing the whistle and effective protections for both public and private sector whistleblowers. The whistleblowing landscape remains patchwork.

Not all OECD and G20 countries have legislated for these protections, indeed, 46% of countries do not have comprehensive protection, and there are significant discrepancies in standards and coverage of these laws, and practical uptake has been slow.

Vulnerable groups require special attention and protection, including women. Corruption systematically hampers women’s ability to improve their economic situation, to stand up to corruption, and to protect themselves from corruption-related abuse.

We are also about to undergo an important exercise to strengthen the Anti-Bribery Convention with a review of the 2009 OECD Anti-Bribery Recommendation. Engaging with all relevant stakeholders during this exercise – including all of you here today – will be essential to ensuring this standard continues to respond to the challenges of fighting modern transnational corruption.

Next steps

While the OECD is a front-runner in this field, we are not resting on our laurels.

We continue to work with our members, non-OECD countries – particularly Brazil, China, South Africa – organisations like the IMF, UN and the World Bank, and business and civil society, to make progress.

We also continue supporting the G20; I was at the summit last week and clearly there are differences between countries, but it is important to maintain dialogue and focus on collective action and interests.

The OECD’s work on corruption is one of these areas, and leaders committed to advance the Anti-Bribery Convention, and we are also going to work with India to look at illicit financial flows, and the repatriation of the assets.

Our annual OECD Global Forum on Anti-Corruption and Integrity in March will help us to strengthen multilateral cooperation, create new partnerships and expand our stakeholder engagement. I hope to see you many of you there.

We are also developing an Anti-Corruption and Integrity Hub to facilitate engagement with the global anti-corruption and integrity community.

The Hub, once launched, will serve as a reference and virtual platform for the global anti-corruption and integrity community.

As you can see, the OECD remains 100% committed to tackling corruption.

Please count on us to keep providing the evidence, data, analysis, experience, and expertise in efforts to fight corruption and promote integrity.

I wish you a rich and fruitful final day of discussions tomorrow.

Thank you

[1] OECD Foreign Bribery Report, 2014

[2]  Source: 2017 Edelman Trust Barometer, http://www.edelman.com/trust2017/  cited in2017  OECD Recommendation on Public Integrity

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