News

USIS Washington File

20 January 2000

Text: Survey Finds Executives Perceive Bribery As Widespread

(Many ignorant of OECD anti-bribery convention) (1260)

There is a widespread perception among private-sector executives in
major emerging market countries that bribery continues to play a role
in securing major contracts, particularly in public works,
construction and the arms industries, according to a new survey by the
anti-bribery advocacy organization Transparency International (TI).

The survey also found widespread ignorance of the 1999 Organization
for Economic Cooperation and Development (OECD) Anti-Bribery
Convention with only 6 percent of the 779 people questioned describing
themselves as familiar with the pact, compared with 38 percent who
said they had not heard about it.

The survey results appear in a new TI report entitled "The
Transparency International Bribe-Payers' Survey." The report noted
that companies that ignore the 1999 anti-bribery convention are
exposing their employees to severe penalties. "Companies doing
business abroad will have to wake up to the reality that foreign
bribery is now a crime," said Peter Eigen, chairman of TI, which is
based in Berlin. The report was released January 20 in Washington and
Berlin.

The survey, which polled executives in 14 leading emerging market
countries, also found that low public-sector salaries are seen as the
prime cause of corruption of senior government officials, closely
followed by a belief among the bribe-takers that they will not
prosecuted.

The report is available on the Internet at:
http://www.transparency.org/documents/cpi/bps.html.

Following is the text of a January 20 TI press release on the report:

(begin text)

Transparency International
http://www.transparency.org
Press Release
January 20, 1999

Construction and Arms Industries Seen as Leading International
Bribe-Payers
New Transparency International Survey Highlights Bribe-Paying Sectors

Washington DC & Berlin, 20 January, 2000: The construction and arms
industries are seen as the business sectors with the greatest
propensity to pay bribes to government officials in emerging market
economies, according to Transparency International (TI), the leading
anti-corruption organisation.

TI today released a report based on in-depth interviews by Gallup
International with more than 770 business executives, lawyers,
accountants, bankers and officials of chambers of commerce in 14
leading emerging market countries. On a scoring basis of

"This is our first business sector survey and the results indicate
great willingness by many international firms to bribe senior
government officials around the world," said TI Chairman Peter Eigen.
"While firms in manufacturing, mining and healthcare appear less
willing to use bribes than in construction and defence, they too are
seen as widely using bribes in their foreign business dealings.
Bribery by international corporations is weakening national economies,
creating great waste of scarce public funds and encouraging
large-scale abuse of public office by high level civil servants and
politicians."

OECD Anti-Bribery Convention

TI report shows that most corporations doing business abroad are seen
to be exposing their employees to the risk of severe penalties as they
appear to ignore the 1999 OECD Anti-Bribery Convention that
criminalises the bribery of foreign officials. "Companies doing
business abroad will have to wake up to the reality that foreign
bribery now is a crime," Peter Eigen said. "Only a fraction of the
international business executives questioned indicated awareness of
the new Convention, or corporate plans to comply with the new
international anti-corruption rules."

TI's report includes detailed results of questions to private sector
leaders, including senior representatives abroad of international
firms, that show that only six percent of those surveyed are familiar
with the OECD Convention that was signed by the 34 leading
industrialised countries at the end of 1997 and entered into force
last year. Only 19 percent of those surveyed said that a review of
bribery practices is planned by their firms as a result of the OECD
Convention. "Leading corporations need to demonstrate that they
understand the law and are acting to voluntarily enforce it," said
Eigen.



Bribery in Business Sectors

Transparency International Question: Which are the sectors in your
country of residence where senior public officials would be very
likely, quite likely, unlikly to accept or extort bribes?

The scores below are mean averages from all the responses on a

The standard error in the responses was small at 0.2 or less.

Public works contracts and construction             1.5
Arms and defence industry                           2.0
Power (including petroleum and energy)              3.5
Industry (including mining)                         4.2
Healthcare/social work                              4.6
Post, telecommunications (equipment and services)   4.6
Civilian aerospace                                  5.0
Banking and finance                                 5.3
Agriculture                                         6.0



Today's TI report further notes that low public sector salaries are
seen as the prime cause of corruption of senior government officials
(65 percent), followed by immunity from prosecution (63 percent).
These findings underscore the need for a transparent civil service
system and an independent judiciary as cornerstones of anti-corruption
efforts. Peter Eigen said: "Low public sector salaries must be
understood within the broad national economic and budgetary framework
of countries. Developing countries must be able to afford an effective
public sector. Civil service reforms, which include raising salaries
to decent levels, need to be supported by the international
community."

Transparency International's Chairman added: "When we look at the
reasons that senior officials are seen to take bribes and at the
propensity of international firms to use bribes, then we have to
reflect on some basic realities - although it is mostly the rich who
are the most corrupt in international grand corruption, the taking of
bribes is often driven by greed not by need."


Notes

The BPI poll respondents were in the following emerging market
countries that between them account for more than 60 percent of total
imports of all emerging market economies:

Asia/Pacific Latin America Europe Africa
India Argentina Hungary Morocco
Indonesia Brazil Poland Nigeria
Philippines Colombia Russian Fed. South Africa
South Korea
Thailand

Grand corruption

The questions in this survey, including those on business sectors,
focused on large-scale business transactions. It is probable,
therefore, that few of the respondents related their answers to issues
of petty corruption. The questions in the survey related to both
contracts involving government and the granting by government
officials of licenses, participation in public tenders and matters
related to the enforcement of regulations. This is the first time that
TI has published data on perceptions of bribery in business sectors.
TI would like to see more research being undertaken in this area and
would like to encourage industry associations at national and
international levels to demonstrate leadership on this front. The TI
Integrity Pact seeks to prevent corruption in large-scale government
contracts. A current status report is available at:
www.transparency.de/activities/integrity-pact.html

TI and the OECD Convention

The new Convention is an impetus for TI to develop and commission the
survey on the supply-side of bribery. The OECD Convention will
massively change business conditions in emerging markets and companies
will have to adopt swift internal compliance mechanisms. Yet, the
survey showed that executives from foreign companies located in the
emerging market countries had even less familiarity with the
Convention than the overall sample of respondents. TI will be asking
similar questions in coming years to monitor improvements in knowledge
and compliance of the Convention, which makes the payment of bribes to
foreign officials a criminal offence.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State.)