Business, NGO Representatives Urge G-20 To Expand Fight Against Bribery, Corruption

By Rick Mitchell

PARIS--The Group of 20 countries, in their battle against trans-border corruption and bribery, should pay closer attention to government officials who solicit bribes from companies, if the G-20 is to secure fair and competitive conditions for international business, sources told BNA after a two-day conference that ended April 28 at the Organization for Economic Cooperation and Development.

The Paris-based OECD, whose 34 members include the world's most advanced economies, hosted the April 27-28 conference, “Joining Forces against Corruption: G-20 Business and Government,” which it organized jointly with the French G-20 presidency and support from the United Nations Office on Drugs and Crime.

Representatives from business and transparency advocate groups attending the conference told BNA that, although OECD's 1997 anti-bribery convention is a trailblazer in the fight against corruption, the treaty's focus on punishing companies' bribery of foreign public officials is missing at least half of the problem.

They said stepped up G-20 and U.N. efforts will be needed to focus on foreign officials who solicit bribes, adding that this will also require far more involvement by companies in the fight against corruption.

Bali Meeting Planned

Christine Lagarde, French minister of economy, finance and employment, told about 350 business and government officials attending the conference that corruption and bribery cost the world economy some 5 percent of gross domestic product per year.

Lagarde noted that France has made the fight against corruption a priority of its 2011 G-20 presidency. She called the event a first effort to bring together government officials and high-level representatives from the private sector, from G-20 and other countries, to discuss best practices and other ways that business can help fight corruption.

France plans a meeting of the G-20 working group on corruption in Bali, co-chaired by Indonesia, and will hold the G-20 leaders' summit in Cannes in November, she said.

The G-20 Seoul Leaders' Summit in November 2010 produced an action plan for combating corruption, promoting market integrity, and supporting a clean business environment. Among other things, the plan called on G-20 countries not party to the OECD convention—China, India, Indonesia, Russia, and Saudi Arabia—to cooperate more closely with the OECD Working Group on Bribery or join the treaty.

France has vowed to continue this effort.

OECD Secretary-General Angel Gurría urged ministers and business leaders attending the conference to improve enforcement and compliance with the treaty. He announced that Russia has adopted anticorruption legislation and would soon be invited to join the treaty.

Report Finds Few Enforce Treaty

But in an April 20 report, the working group said that most of the 38 signatories of the convention—including some non-OECD members—have failed to enforce it. Only five—the United States, Germany, France, Switzerland, and the United Kingdom—have prosecuted individuals or companies in the past year for corruption of foreign officials, it said.

Some at the conference said the treaty would be unlikely to solve the problem of corruption on its own.

“The OECD cannot really fight this, because the problem is mainly coming out of non-OECD countries,” Jean Monville, chairman of the bribery and corruption task force of the Business and Industry Advisory Committee to the OECD, told BNA.

Non-OECD Companies Fill Gap

As an example, Monville said construction companies from OECD countries have essentially been shut out of the African market, due to unfair competition from companies from non-OECD emerging countries.

“From the beginning, the OECD thought that prison sentences and big fines for companies would push companies to refuse to pay bribes if they were solicited,” he said.

“But there are still non-OECD countries that continue to play another game. In several recent surveys, a large percentage of companies have said they have lost markets because they have refused to pay bribes. So corruption has not been reduced. It is just taking other forms,” he said.

G-20 Involvement Seen as Needed

Monville said G-20 involvement in the fight against corruption is more promising, because it includes major non-OECD countries like China, India and Russia. If the G-20 leader summit's final communiqué in Cannes, France, in November included a ban on solicitation of bribes by foreign officials, it would be legally binding, he said.

He said addressing solicitation would make the fight against corruption by governments and international organizations more effective and relevant.

But business doesn't expect improvement overnight. “The idea is that, within the G-20, key emerging countries could be first asked to make strong efforts to fight solicitation of bribes by officials. We are seeing some progress. At this conference, we saw China and India taking the problem more seriously than in the past,” he said.

Sector Approach Eyed

Another possibility considered at the conference is for the G-20 to lead the way in establishing a sector-by-sector approach to rooting out the payment of bribes, Monville said.

Under this approach, with G-20 help, a small number of key corporate players in two or three major sectors, such as aerospace, telecommunications or defense, would establish general guidelines for the entire sector, and these rules could gradually be extended through the sector.

The G-20 could initiate the process and then extend it to other sectors, he said. However, for this to work it would require the big countries like China, India, the United States, Germany and others to “all play the same game,” he said.

U.N. Pact Said to Have More Potential

Fritz Heimann, senior adviser on international conventions at Transparency International, said the 2003 U.N. Convention Against Corruption, unlike the OECD treaty, does address the solicitation of bribery by foreign officials, or “the demand side of bribery.”

“Some 151 countries have ratified it, including developing countries, so the potential of the U.N. convention is much greater,” he said. The United Nations has just begun to review signatories' compliance with the treaty. The OECD is in its third phase of reviews of signatories to the OECD treaty.

Heimann said he sees no conflict between the two conventions. The OECD meeting “is a big step forward, a very positive meeting, in that instead of having people working in individual silos, it allows government and business to start working together on this,” he said.

However, Heimann, who is based in Connecticut, said officials need to do much more to involve business in the fight against corruption, especially smaller businesses, and not just at a big international meeting.

“Companies need to establish meaningful internal compliance programs,” he said. “The important thing is to keep this conversation going, and the Bali meeting will be very important for that,” he said.

(Appeared May 3, 2011)