20 January 2000
(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.)