“(1) In its resolution 55/61 of 4 December 2000, the General Assembly recognized that an effective international legal instrument against corruption, independent of the United Nations Convention against Transnational Organized Crime (resolution 55/25, annex I) was desirable and decided to establish an ad hoc committee for the negotiation of such an instrument in Vienna at the headquarters of the United Nations Office on Drugs and Crime (UNODC). The text of the United Nations Convention against Corruption was negotiated during seven sessions of the Ad Hoc Committee for the Negotiation of the Convention against Corruption, held between 21 January 2002 and 1 October 2003. The Convention approved by the Ad Hoc Committee was adopted by the General Assembly by resolution 58/4 of 31 October 2003. The General Assembly, in its resolution 57/169 of 18 December 2002, accepted the offer of the Government of Mexico to host a high-level political signing conference in Merida for the purpose of signing the United Nations Convention against Corruption. In accordance with article 68 (1) of resolution 58/4, the United Nations Convention against Corruption entered into force on 14 December 2005. A Conference of the States Parties is established to review implementation and facilitate activities required by the Convention.
(2) First International Forum on Tax and Crime ∙ Oslo ∙ 21-23 March 2011. Issues related to greater inter-agency co-operation were discussed by more than 150 delegates from 54 delegations who participated in the first tax and crime forum on 21-23 March 2011 in Oslo hosted by the Norwegian government. The conference brought together representatives from a range of OECD and non-OECD governmental agencies, including Tax Administrations, Finance and Justice Ministries, Financial Intelligence Units, Central Banks, FATF, International Organisations, as well as business and NGOs. Second International Forum on Tax and Crime ∙ Rome ∙ 14-15 June 2012. This Forum brought together senior policy makers from different government agencies including the tax, anti-money laundering and anti-corruption communities, as well as private sector representatives, NGOs and other interested stakeholders. Participants examined best practice approaches to closer inter-agency co-operation at the domestic level and explore how to improve international cooperation. The conference also showcased specific key risks in the tax and crime area, allowing countries to target resources and learn from the experience of others. Building on previous events in Oslo and Rome, the Third Forum on Tax and Crime provided an opportunity for senior government officials from tax and customs administrations, anti-money laundering and anti‑corruption authorities, police and law enforcement, public prosecutors, financial regulators and government Ministries, as well as international organisations and NGOs, to discuss current issues and country experiences on key policy and operational topics in combating all forms of financial crime.
(3) The 4th Joint African Union Commission/United Nations Economic Commission for Africa (AUC/ECA) Conference of African Ministers of Finance, Planning and Economic Development was held in 2011. This Conference mandated ECA to establish the High Level Panel on Illicit Financial Flows from Africa. Illicit financial flows out of Africa have become a matter of major concern because of the scale and negative impact of such flows on Africa’s development and governance agenda. By some estimates, illicit flows from Africa could be as much as US $50 billion per annum. This is approximately double the official development assistance (ODA) that Africa receives and, indeed, the estimate may well be short of reality as accurate data does not exist for all transactions and for all African countries.
Fronting means a deliberate circumvention or attempted circumvention of the South African B-BBEE Act and the Codes. Fronting commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person. Verification agencies, and /or procurement officers and relevant decision-makers may come across fronting indicators through their interactions with measured entities. The B-BBEE Commission may also approach a court of law to restrain any breach or for any appropriate remedial relief, which may include setting aside the transaction or initiative. The B-BBEE Commission will not discuss the merit or the details of its investigative process, but the findings will be published as required in the B-BBEE Act.
In my last blog post, “The OECD Foreign Bribery Report: 7 Insights To Improve Your Ethics And Compliance Training Program,” I identified the seven bribery trends covered in OECD’s Foreign Bribery Report. The report listed seven questions to ask when looking at bribery, and in that post , I took a closer look at what the answers to the first three questions can tell us not only about the state of corruption, but about how to improve our ethics and compliance programs to combat bribery and corruption.
Today’s post will delve into the final four questions:
4. How are bribes being paid? 5. Where are bribes being paid? 6. Where are the bribers being punished? 7. Why are the bribes being paid?
Examining the how, where and why of bribery is just as important as the who and what. Here is a summary of the report’s findings regarding these questions, as well as some key takeaways to bolster the effectiveness of your ethics and compliance training program.
4. How are bribes being paid?
The majority of bribes are facilitated by an agent or intermediary. The report defines an intermediary is a “conduit for goods or services offered by a supplier to a consumer… the intermediary can act as a conduit for legitimate economic activities, illegitimate bribery payments, or a combination of both… Both natural and legal persons, such as consulting firms or joint ventures are included.” 71% of bribery cases reviewed for the report involved an intermediary. OECD Figure 16 provides a breakdown of each type of intermediary, included to the right.
As you can see from Figure 16, agents and corporate vehicles are the most likely conduits for bribery. Agents are defined as “sales and marketing agents, distributors and brokers.” Corporate vehicles include subsidiaries, local consulting firms, companies with offshore financial ventures or tax havens and companies established by either the person receiving or giving the bribe. Netflix is one company that is currently experiencing the pains of a rogue, now-former employee, Michael Kail, former vice president of IT operations, who set up a consulting company called Unix Mercenary to funnel kickbacks he received from vendors.
5. Where are bribes being paid?
It might come as a surprise, but of the 427 cases of bribery examined in the OECD Foreign Bribery Report, nearly half were paid to public officials in countries ranking “very high” and “high” on human development – not to officials in developing countries. Some of the countries ranking “very high” and “high” on human development might already be on our radar as bribery hot spots – like Qatar and China. But what about Norway, Germany, Canada, France and Spain? These countries also fall into the “very high” and “high” categories of human development on the UN’s Human Development Index.
We need to reassess which countries we consider high risk for bribery and corruption, as the OECD Foreign Bribery Report findings show that bribes might be occurring in places we wouldn’t have initially considered high risk.
6. Where are the bribers being punished?
Currently the U.S. holds the most sanctions for bribery schemes at 128; Germany is a distant second at 26. Does this mean that the U.S. and Germany are countries with high bribery risks? Not necessarily – just because sanctions are carried out in a country does not mean the parties involved are citizens and/or companies native to that country. Expansive jurisdiction allows countries to investigate and prosecute both foreigners and nationals guilty of bribery.
7. Why are the bribes being paid?
Based on the cases of bribery reviewed for the OECD Foreign Bribery Report, 57% of all bribes were paid to obtain public contracts. This was followed by customs clearance at 12%, favorable tax treatment at 6% and other preferential treatment at 7%.
This probably isn’t new or comforting information for you. Paying bribes to win contracts is not a new concept – and facilitation payments to clear customs? It’s the same story. However, these findings reinforce that because these scenarios are common, we need to highlight them in our ethics and compliance training. While it may be clear to the compliance department why bribes are being paid, employees in the field, if not trained on likely situations, may not know how to react to potential business partners or public officials soliciting bribes. Providing these statistics to employees, as well as providing anti-bribery training that covers how to respond to bribe solicitations, will help mitigate your risk of unethical conduct and litigation.
Final Takeaways
Now that we’ve reviewed all seven questions answered by the OECD Foreign Bribery Report we know the who, what, how, where and why of bribery. We know that we need to be cognizant of who we hire and promote to levels of high authority in our companies, because those are the individuals that are paying and authorizing bribes. Also, now that we know that bribes aren’t necessarily paid from developed countries to developing countries, OECD recommends focusing risk assessments on the context of the transaction instead of the country of the transaction. Interested in reading the full report and OECD recommendations? Check it out here.
According to Ernst and Young’s ‘Navigating today’s complex business risks Europe, Middle East, India and Africa Fraud Survey 2013,’ half of workers surveyed across Europe, the Middle East, Africa and India believe bribery and corruption will help them survive a recession by giving them an immediate source of monetary gain. Perhaps the greatest challenge compliance professionals face in combating bribery and corruption today is the vast array of misconceptions around bribery and corruption. I would like to think that most people are aware that bribery is wrong. Yet, despite knowing that it’s wrong, it seems that it’s often seen as a necessary evil that guarantees survival. But thinking that bribery will improve your economic condition is like thinking that smoking will make you live longer.
“Illicit Financial Flows, including corruption, bribery, theft and tax evasion, cost developing countries US $1.26 trillion per year, which is equivalent to the economies of Switzerland, South Africa and Belgium combined. This amount of money could LIFT the 1.4 billion people living on less than $1.25 a day above this threshold for at least SIX years.”
Bribery has a similar impact on business. Knowledge of the incident(s) never has to go public for serious damage to occur, according to a recent study by Harvard Business School’s Paul M. Healy and George Serafeim. The study measured the impact of bribery on corporate performance across four dimensions of competitiveness: business relations, interaction with regulators, public reputation and employee morale.
Employees that had experienced bribery responded to survey questions put forth by Healy and Serafeim; the majority reported that employee morale was the largest factor impacted by an instance of bribery. This is significant – Sirota Consultancy has found that high morale companies are some of the best performing companies, averaging a 15.1% increase in stock price year-over-year. Companies with low morale report just a 4.1% improvement year-over-year.
Why am I so focused on this? When I read the preface to the OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials by OECD Secretary-General, Angel Gurría, I had an “ah-ha” moment. It happened when I read the very first sentence: “Corruption, and the perception of corruption, erodes trust in governments, businesses and markets. In the aftermath of the greatest financial crisis of our time, we need to rebuild that trust more than ever before.” It was then that I realized there’s more to bribery and corruption prevention than just putting the right controls in place to cover your backside (though you should certainly do that also). There is a larger picture to consider – trust in the government, economic stability, the loss of innovation and competitiveness in business that bribery destroys.
The OECD Foreign Bribery Report is a valuable resource that will help us get there by offering insights into bribery and corruption that compliance officers should accommodate in their ethics and compliance training programs. The report specifically looks at 7 key questions that we can use to enhance our programs.
1. Who is bribing? 2. Who is receiving the bribe? 3. What is the cost of the bribe? 4. How are bribes being paid? 5. Where are bribes being paid? 6. Where are the bribers being punished? 7. Why are the bribes being paid?
Let’s take a look at each of these in more detail.
1. Who is bribing?
The OECD Foreign Bribery Report provides us a profile of who is bribing. It’s composed of company size, company sector and level of employment. According to the report, bribes are most likely to originate in companies that have 250 or more employees (see OECD figure 8), with key business operations including: extractive, construction, transportation and storage and information and communication (see OECD figure 9) and by employees in senior management (see OECD figure 10).
2. Who is receiving the bribe?
Who is receiving the bribe is just as important to know as who is paying the bribe. This information can help you prepare your employees for improper solicitations – this is referred to as the “demand side” of a foreign bribery transaction. For example, according to the report, 27% of SOE (State-Owned Enterprise) officials solicited bribes. The report also gives a breakdown of who most bribes were paid to – perhaps not surprising, because they solicited the most bribes, but SOE officials also receive the most bribes, at 80.11% of all bribes paid. The second highest payment of bribes goes to Heads of State, but it is a distant second at only 6.97% of all bribes paid. See OECD Figure 12 to see the entire breakdown of who receives bribes.
3. What is the cost of the bribe?
At the beginning of this post I offered a few examples of the cost bribery can have on both the economy and a corporation. The cost of the bribe referred to in the OECD Foreign Bribery Report is the actual amount of the bribe paid. You might think that all bribes are of monumental value – and some are; the largest bribe paid at the time of the report’s release was $1.4 billion. Yet bribes don’t have to be, and often are not large; the smallest bribe to date was $13.17. You need a better way to identify possible bribery within your organization and you can do this by analyzing your transactions; specifically, you’ll want to be very familiar with the “transaction value.”
Your “transaction value” is just what it sounds like, the value of an entire transaction. Bribes are paid as a percentage of the transaction value. For example, in 29 cases examined in the report bribes paid accounted for less than 5% of the transaction value. In 18 cases, bribes paid accounted for 5-25% of the transaction value. The majority of bribery cases land in the same range as these 47 cases, where bribes paid are between 1% and 25% of the transaction value.
Where To Go From Here
The first three questions answered by the OECD Foreign Bribery Report offer a great starting point for evaluating the strength of your ethics and compliance training program and its ability to mitigate your risk of bribery. You can use the knowledge of who is most likely to pay bribes to assess your bribery risks. Do you have more than 250 employees? Are you in a high risk industry? Do you do business in the higher bribery risk geographical areas? Do senior managers who are at a higher risk for paying bribes have performance incentives tied to ethics and compliance? Evaluate your training program vis a vis the 7 questions presented in the OECD report and your company’s specific risks Does the training clearly address them? Does it engage your employees?
Knowing who is soliciting and receiving bribes is also powerful knowledge. Without this information we would be fighting blind. As OECD Secretary-General Angel Gurría points out, “The OECD Foreign Bribery Report brings us, for the first time, face to face with our foe.” Identifying high risk individuals can only help us in our fight against corruption. Only when we know the “enemy” can we inform our employees and train them in a manner that sufficiently prepares them to stand up to third-parties that might try to solicit bribes.
Finally, the third question covered by the OECD Foreign Bribery Report provides us with insights into what to look for from an accounting perspective. The report informs us that most bribes paid are up to 25% of the total transaction value. This is extremely helpful information when it comes to conducting your audits. Knowing what values to look for will help you zero in on possible bribes paid within your organization.
Stay tuned for my next blog post where I’ll cover the final four questions answered in the OECD Foreign Bribery Report. Check out the full report here.
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Our Third-Party Due Diligence Checklist, part of The Network’s Third-Party Risk Solution, provides a template for gathering critical information about existing and potential business partners that will help you evaluate potential risk and the appropriate response to that risk, such as additional due diligence, termination or contracting.
If there is one industry that needs an ethics overhaul, it has to be the financial industry. The list of transgressions continues to grow – AML/sanctions, LIBOR, Foreign Exchange Currency Cartels and Market Manipulations, Mortgage-Backed Securities, Foreign Bribery – when will it stop?
Look at a quick (and not exhaustive) list of bank settlements:
Bank of America $16 billion (mortgage-back securities); JP Morgan $13 billion (various violations); Citigroup $7 billion (mortgage-backed securities);
UBS $1.5 billion (LIBOR); Royal Bank of Scotland $612 million (LIBOR); Barclays $450 million (LIBOR); Lloyds $370 million (LIBOR)
JP Morgan, Citigroup, HSBC, Royal Bank of Scotland, UBS and Bank of America $4.3 billion (Foreign Exchange Manipulation)
Financial institutions have responded to this mess with technocrat solutions – let’s split compliance from legal and lets build up compliance departments. That is a good thing. But financial institutions have not taken much to heart. They are convinced that more compliance resources will do the trick.
What is missing from the financial institution equation is the heart – they are not yet convinced that more is needed. In fact, the solution for financial institutions is right before their eyes – on a silver platter. It is called “ethics.” It is not a hard concept nor is it one they should be afraid of. Ethics is the most effective compliance control that exists in the compliance toolkit.banksethics5
From my vantage point, ethics is the missing ingredient for financial institutions. Lets examine the benefits of elevating ethics to the C-Suite.
First, from a reputational standpoint, the best way to improve banks’ reputations is to indoctrinate senior leadership and boards with the culture of ethics. Bring ethics to C-Suite, have the person report directly to the Board, if necessary, and elevate the standing of the office of Chief Ethics Officer.
Second, communicate the ethics message daily and embrace the message as an essential aspect of the corporate fabric. Make sure that the CEO and senior leadership communicate daily a message of ethics.
Third, demonstrate a commitment to ethics in the conduct of the bank’s business. Do not just ask the question of whether a deal or new product line will result in profits – ask the harder question – “Is this a business we should be conducting?” Is it something we should be offering and does it make economic sense?
Fourth, implement ethics-related policies and procedures throughout the bank. Each bank should adopt: a statement of values that puts ethics at the top of the list; a revised code of conduct supporting the ethics message; and meaningful ethics performance evaluation factors that have teeth and reward high performance on ethics issues.
banksethics4Finally, banks need to show that they will constantly monitor, evaluate and redress any culture deficiencies through regular culture and ethics assessments.
Sometimes life presents us with profound grasps of the obvious. When you look at the train wreck of bank performance in the compliance area, there is no need to scratch your head to come up with solutions – a real commitment to an ethical culture is what banks need, and they need to do so now.
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Washington DC –(ENEWSPF)—December 29, 2014. New reports show that the Ebola-affected countries of Liberia, Guinea and Sierra Leone lose an average of $1.4 billion each year to corruption, debt payments and tax evasion. Global Financial Integrity (GFI) calculates the three countries lost about $1.3 billion per year to corruption and tax evasion in the decade leading up to the Ebola outbreak. New World Bank data indicates the countries spent over $80 million on debt payments in 2013, the year the outbreak began. According to the World Bank, the countries spent a total of $270 million on public health in 2012.
"Debt, corruption and tax evasion are part of why people die in West Africa," stated Eric LeCompte, Executive Director of Jubilee USA, a religious development coalition. "The money was there to contain Ebola and save more people from preventable diseases."
Guinea, where the outbreak began, spent more on debt payments in 2012 than it spent on public health. Guinea spent $207 million on debt payments in 2013 and 2012. According to the Financial Times, the three countries owe the International Monetary Fund (IMF) nearly $480 million. Sierra Leone spent $2.3 million paying off debts since the IMF announced a debt relief plan in November and will spend nearly $2 million more before the end of the year. The three countries accrued much of their current debt burden during civil wars, dictatorships and one-party rule. US Treasury Secretary Jacob Lew brought Jubilee USA's plan for debt relief to the November G20 meetings held in Brisbane, Australia. The G20 made a financing commitment to the three Ebola affected countries of 300 million dollars in debt relief, grants and new loans. The IMF could announce the financing plan as early as January.
"Winning debt relief and stopping tax evasion provide long term monies for healthcare and development," said LeCompte, who serves on United Nations Expert Groups that address debt and illicit finance. "More people die from preventable diseases annually in these countries than from Ebola."
According to GFI, developing countries lose nearly $1 trillion each year to illicit flows. From 2003 - 2012, Liberia lost more than $900 million annually on average, while Guinea lost more than $300 million. In 2013, the G8 signed a joint declaration calling on the international community to curb corruption and corporate tax avoidance. This past August, during the White House Africa Summit, the Obama Administration announced a committee to make recommendations to address these outflows.
"There's broad consensus that we need to keep money from flowing out of developing economies," added LeCompte. "There's so much the international community can do."
Jubilee USA Network is an alliance of more than 75 US organizations and 400 faith communities working with 50 Jubilee global partners. Jubilee's mission is to build an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org
When the G20 summit, comprised of the world’s 20 strongest developed and emerging economies, was held this month in Brisbane, Australia, how to deal with worldwide corruption was a key focal point.
But in the view of many working to curb corruption, a final communique put out by G20 nations fell short of expectations and failed to fully address systemic corruption problems.
That’s the reaction by a number of transparency and good-governance groups who say an important opportunity to “fix the system” was squandered.
“The G20 passed up a golden opportunity to begin tackling this global scourge by curbing the abuse of anonymous companies, and instituting public country-by-country reporting for multinational corporations,” said Raymond Baker, president of the Washington-based group Global Financial Integrity.
Open letter seeing action
Ahead of the summit, Baker, along with the heads of Transparency International, the U.N. Convention Against Corruption Coalition, Oxfam, CARE, Amnesty International, and numerous other good-governance groups and NGOs, published an open a letter to the G20 calling on its member nations to act quickly.
“You, the leaders of the world’s largest economies, must make the global financial system serve its citizens,” the letter said. “As long as there are places in the global financial system where illicit financial flows can find a safe harbor, and there are people to help hide these funds, there will be millions more around the world who will suffer.”
The letter asked the G20 to target “people to help hide these funds” by the use of anonymous shell corporations. One G20 member where such shell corporations abound is the United States, where incorporations are done state-by-state, and where many of its states have weak or nonexistent laws regarding identification of who controls them.
Ahead of the summit, there were concerns that China would block implementation of so called “Beneficial Ownership” action plans – based on a statement by Beijing that this topic was only “still under discussion.”
But at the Brisbane meeting, China put no roadblocks in the way of the G20 issuing its communique.
“Countries should have a definition of ‘beneficial owner’ that captures the natural person(s) [real people] who ultimately owns or controls the legal person or legal arrangement,” the G20 statement said.
“Countries should ensure that competent authorities [including law enforcement and prosecutorial authorities, tax authorities, and financial intelligence units] have timely access to adequate, accurate, and current information regarding ... beneficial ownership," the statement continued.
The G20 statement said nations could create central registries of beneficial owners of corporate entities and can also address this issue through laws and regulations requiring financial institutions to verify the identity of those who control corporations.
Lack of 'any new ideas'
This position taken by the G20 breaks no new ground, according to some good-governance groups.
“While we welcome the G20’s focus on the problems that anonymous companies cause, the principles [set forth in the G20 post-summit communique on Beneficial Ownership] do not actually present any new ideas or policies for curbing them,” said Joshua Simmons, the policy counsel for Global Financial Integrity.
“In the past year, the European Parliament, the United Kingdom and Denmark have all moved toward implementing public registries of company ownership, setting a new benchmark for financial transparency. We’re disappointed in the G20 for declining the opportunity to meet that benchmark," Simmons said.
But others, such as Transparency International Australia, see the G20’s statement differently.
“G20 leaders have taken a concrete step to make it harder for the world’s corrupt to hide, with the adoption in Brisbane of new G20 High Level Principles on Beneficial Ownership Transparency,” the group said in a statement. “In 2011, the World Bank found shell companies were used in 70 percent of grand corruption cases over the last 30 years.”
But the group also pointed out what it considers to be a flaw in the G20 line - not making corporate owners and controllers publicly visible.
“We still maintain that the most efficient and effective way to share this crucial information is through public registers in all G20 countries,” said Maggie Murphy, a senior advocate for the group.
“Major countries including the USA, Germany and Australia still need to honor their existing commitments to clamp down. But the moral and political mandate for action has now been lifted to a new level," Murphy said.
It’s getting harder for Teodoro Nguema Obiang Mangue to keep getting away with it.
The son of the long-serving president of Equatorial Guinea has been forced by the US government to forfeit his cliff-top Malibu mansion, a rare Ferrari and several life-size Michael Jackson statues, all said by the US Department of Justice to have been purchased with proceeds of corruption.
The settlement, announced on 10 October, follows the French government’s sale last year of a fleet of luxury sports cars seized from Nguema Obiang as part of a money-laundering investigation, including Bugattis, Ferraris and Maseratis.
In their 10-year investigation of Nguema Obiang, US officials documented a three-country shopping spree of more than US$100 million, according to the Wall Street Journal. The Department of Justice went after US$70.8 million in US assets – and will recover about half of that from the man whose official government salary was less than US$100,000, according to the Department of Justice case.
Last week’s settlement was the first US legal action of any kind to target the family of a sitting head of state. When the assets are sold, US$20 million will be given to a charitable organisation for the benefit of the people of Equatorial Guinea and another US$10.3 million will be forfeited to the United States for the same purpose, according to the Justice Department.
To put this in context, US$30 million could fund more than half of the UN development programme for Equatorial Guinea for five years.
It is not full justice for the victims – the people of Equatorial Guinea – but it is a step in that direction.
The agreement also provides that if certain of Nguema Obiang’s other assets – including a Gulfstream Jet and a Michael Jackson crystal-studded glove (pictured above) – are ever brought into the United States, they are subject to seizure and forfeiture, the Open Society Justice Initiative said.
“It shows that the United States will take action against the proceeds of corruption, even when it involves those with close political and economic ties to Washington,” said Ken Hurwitz of the Open Society Justice Initiative. Most of the country’s oil and gas is pumped by US companies, Open Society said.
So how did Nguema Obiang buy all that real estate and luxury goods?
A 2010 Senate investigation alleged that various facilitators – including lawyers, real estate agents, and others – set up shell companies in the US. The Associated Press reported that investigators believe Nguema Obiang funnelled funds through those companies, allowing him to amass a fortune of over US$300 million worth of assets.
That’s why Transparency International is calling for public registries of company owners that reveal who owns, controls and ultimately benefits from every company (its “beneficial owners”). Currently that information is secret in almost every country in the world.
Secondly, we need both national and global action to better regulate the sale and transfer of real estate and luxury goods. Any suspicious transaction – if a government official on a civil service salary, for example, has the cash to buy a penthouse flat – must be reported and investigated. We need to make it impossible for people to live a luxury lifestyle funded by illicit or laundered money.
Finally, Transparency International wants corrupt individuals to be prevented from travelling around the world to enjoy the proceeds of corruption in other countries. Just this week, the US government refused to allow several Hungarians to enter the US because it said they had been involved in corruption.
Transparency International is calling for clear and transparent criteria for denial of entry procedures imposed by governments to reduce possible abuse or political manipulation.
Taken together, these measures will make it harder for the corrupt to launder their stolen cash internationally.
Nguema Obiang’s troubles are not over. French financial prosecutors in March filed preliminary charges of alleged money-laundering connected to real estate, luxury cars, art and other property in France as part of a larger suit involving properties owned by leaders of Equatorial Guinea, Gabon and the Republic of Congo. In Spain, in 2009, an investigation was launched into alleged money-laundering by more in the Obiang family – including Equatorial Guinea’s President Teodoro Obiang Nguema.
KRII-KROTOASA RESEARCH-INTENSIVE INSTITUTE 's insight:
News of the arrest of 11 people, including high-ranking public officials, on suspicions of corruption in the issuing of so-called golden visas rocked Portugal this weekend. Officials stand accused of having taken bribes to supply residency permits to preferred millionaire foreign “investors”, revealing just one of the many problems with “Golden Visa” programmes that must be fixed.
Those arrested and held for questioning during the weekend include the heads of the immigration authority and the institute for public registries, as well as the top civil servants in both the Environment and Justice ministries. Some of the accused were also involved with companies selling consultancy services for those seeking golden visas.
Portugal’s golden visa policy provides a one-year residency permit for those who either transfer one million euros (US$1.25 million) to a Portuguese bank, bring a business to Portugal that employs 10 people, or buy property valued at more than 500,000 euros (US$625,000). It’s a system that breeds corruption and is wide open for abuse.
On Sunday the storm hit the government head-on, with the Minister of the Interior announcing his resignation in order to protect “the authority of the state”. In addition to the Interior Ministry’s responsibilities for the golden visa programme, the minister happened to be partner in a law firm with one of those arrested.
Although neither the law firm nor the minister are under suspicion of involvement in the affair, the link highlighted the problem of numerous conflicts of interest raised in a new lobbying report from Transparência e Integridade, Associação Cívica (TIAC), TI’s Portuguese partner.
Immediately, the media tried to put the arrests into context, and the country quickly realised we really know nothing about the golden visas programme or how it works. Those arrested are suspected of cutting corners and getting kickbacks to issue residency permits or, to put it more plainly, facilitating the business of facilitation. The fact is golden visas are a problem in themselves.
In Portugal and several other European Union countries such investment incentives exist under the guise of helping attract foreign investment to overcome a huge financial and fiscal crisis. The flipside is the lack of an overarching EU regulation on this. There is a lack of even basic due diligence on the beneficiaries of these visas or the origin of the money that comes with them. Governments open their arms and shut their eyes.
Furthermore, there are serious questions as to whether these sometimes dubious money flows benefit the real economy? Are the beneficiaries really investing money, or simply parking it in local banks?
In Portugal, for instance, reports tell us that criminal authorities have been investigating the golden visa programme for over a year now – which is astounding if you consider the golden visa programme has only been in place for two years!
And who are these people anyway? The simple answer is, we don’t know, as was highlighted in another case that surfaced a few months ago when a Chinese citizen enjoying a preferred residency permit in Portugal was arrested on an Interpol warrant for fraud charges in China. It’s increasingly hard to say if, throughout Europe, golden visa programmes are effective foreign investment mechanisms, or simply money laundering techniques.
With this in mind we make the following recommendations.
Governments should:
Align denial of entry procedures with “investor programmes” of countries to ensure policy coherence and to prevent them from becoming a backdoor for the corrupt.
Revise thresholds and time periods upwards for securing residency through payment schemes while ensuring coherence among programmes.
Avoid fast-tracking the granting of citizenship through higher investment amounts.
Ensure “investor programmes” develop a commonly agreed “integrity” criteria and due diligence process to issue residency permits.
This is crucial for EU member states and others countries that use single visa programmes.
Criteria would draw on “know your customer” principles used by financial and other institutions.
Provide for sufficient oversight and whistleblowing channels to prevent and flag wrong-doing or other abuses in programmes.
This same weekend, the leaders of the G20 agreed to tighten the rules on the transparency of cross-border money flows, namely by making it easier to identify the beneficial owners of shell companies. It’s a start, but it’s still far from a fix, as we’re finding out. Transparency International wants to make sure the corrupt stop hiding their dirty deals and we finally have the tools and the global commitment to unmask the corrupt.
KRII-KROTOASA RESEARCH-INTENSIVE INSTITUTE 's insight:
This week, the Organisation for Economic Cooperation and Development (OECD) published a ground-breaking report that dissects the massive and mostly hidden phenomenon of transnational corruption. Looking at more than 400 bribery cases across 41 countries that amounted to US$13.8 million per bribe, the report gives a glimpse inside the shadowy world of corrupt practices by companies doing business abroad by analysing documents not accessible to anyone but to the OECD Working Group on Bribery.
The OECD Foreign Bribery Report comes from an organisation that reviews how the most developed countries implement an anti-bribery treaty that obliges governments to prosecute companies and employees that bribe abroad. It’s full of bad news.
The main findings confirm what Transparency International has said for the last decade: rich countries are exporting corruption, not only their products and services. More than half of the OECD Convention countries fail to crack down on foreign bribery committed by their companies. Those that do enforce the rules do so unevenly and investigate and prosecute at a rate far less than expected given their large share of world exports and criminal justice resources.
The OECD’s key findings are shocking:
One-fifth of bribes were paid or offered to officials in countries with “very high human development” – that is rich countries perceived to be less corrupt in Transparency International’s Corruption Perceptions Index. “These include 24 out of the 41 member countries of the OECD Working Group on Bribery and 15 out of the 19 member countries of the G20,” the report says.
In 41 per cent of cases, it was managers who paid or authorised the bribe. In 12 per cent, it was the company CEOs involved! That means that in over half of the foreign bribery cases, company leadership knew about the bribery or even actively took part in it. So much for the usual excuse that some low-level staff member was a “loose cannon” acting on his or her own initiative.
On the bribe-receiving side, 2 per cent of the cases involved greasing the palms of heads of states and 3 per cent of them enriched ministers.
In 25 per cent of foreign bribery cases, the illicit money was channelled through shadowy secret companies. The report lists the ways law enforcement was tricked by “… subsidiary companies, local consulting firms, companies located in offshore financial centres or tax havens or companies established under the beneficial ownership of either the public official who received the bribes or the individual or entity that paying the bribes”.
These hundreds of cases over a 15-year period represent just the tip of the cross-border bribery iceberg of schemes that allow corrupt business people to unfairly win contracts or gain access to new markets. The inescapable conclusion is that there must be many more high-level public officials and senior-level employees of companies who are involved in grand corruption and get away with it.
Transparency International has been calling for the end of company ownership secrecy that allows stolen monies to be smuggled across borders in its Unmask the Corrupt campaign. These are some of the ways that cross-border bribery can be fought successfully:
Since many of the G20 and OECD countries are also the main havens for illicit financial flows from industrialising countries, secret intermediary companies should be made transparent by all countries publishing details on their real, human owners;
Efforts to investigate and prosecute foreign bribery should be adequately resourced with staffing and funding for bringing corruption criminals to justice; and
Foreign bribery should be prosecuted and punished anywhere, by any country committed to fighting corruption, even beyond its borders. The largest exporters share responsibility for promoting honesty in global trade.
There is no comforting conclusion in either Transparency International’s or the OECD’s reports. Both are based on hard facts showing that the majority of developed countries that could have ended the impunity enjoyed by the corrupt were complicit or complacent about foreign bribery over the last 15 years. It’s time to stop the corrupt from hiding their identities and illicit activities. It’s time to demand a change.
At the end of 2014, OECD released its first ever Foreign Bribery Report. The report is an analysis of the crime of bribery. We learn about who is bribing, who is receiving the bribe, what the cost of the bribe is, how bribes are being paid, where bribes are being paid, where the bribers are being punished and why the bribes are being paid. It seems that the OECD’s Foreign Bribery Report reveals the need for more targeted and in-depth anti bribery training. Acknowledging the importance of this information in analyzing your own anti-bribery initiatives, The Network has created an infographic to highlight the key insights from the report. These insights may help you further fine tune your anti bribery training to the specific risks your employees face.
Embed This Infographic into Your Blog or Website
Copy and paste this code: <a href="http://www.tnwinc.com/products-services/ethics-compliance-elearning/"><img src="https://tnwinc-thenetworkinc.netdna-ssl.com/wp-content/uploads/2015/01/INFOGRAPHIC-A-Profile-Of-Bribery-01.06.15.png?723aee" alt="oecd-foreign-bribery-report-infographic-anti-bribery-training" width="100%" /></a><br /><a href="http://www.tnwinc.com/" target="_blank">By The Network Inc., the leader in providing integrated ethics, risk and compliance solutions</a>
For More Information About Anti Bribery Training, Check Out These Resources:
Tool: Anti Bribery Program Checklist Did you know that, according to the World Bank Institute, 1 in 4 individuals admitted to paying a bribe last year? The Network’s Anti-Bribery Checklist will help you evaluate and mitigate your compliance risk to find out if one of them is working for you – before you become the subject of a government investigation.
Whitepaper: Code of Conduct – The Foundation of Your FCPA Compliance Program The foundation of an effective FCPA compliance program is your Code of Conduct. It outlines the standards, behaviors and procedures that promote your organizational culture and encourage “ethical conduct” and a commitment to complying with the FCPA. In this whitepaper, FCPA expert Tom Fox looks at how to build and maintain a Code of Conduct – through documentation, training and regular updating – that can drive ethical business and reduce your FCPA liability.
eBook | New Risks, Strategies in the Fight Against Corruption This Compliance Week e-Book, co-sponsored by BDO and The Network, examines the risks posed by bribery and corruption and how organizations are dealing with the issues. In this eBook, you will learn how technology solutions work to protect organizations and detect problems, how companies are using their internal audit function to fight against corruption and bribery, and what the specific guidelines for high-risk geographies are.
A massive corruption scandal has enveloped Petrobras, Brazil’s flagship petroleum company
On January 1, 2011, Dilma Rousseff became the first female President of Brazil and hand-picked successor of out-going President Luiz Inácio Lula da Silva. On handing over the presidency, Lula enumerated with pride the social and economic advances that occurred during his eight years in office — the creation of 15 million jobs, expansion of the Bolsa Familia, (an income support received by 13 million families), and a 67 percent increase in the minimum salary. These measures, along with robust economic growth, lifted 28 million people out of poverty.
In spite of the rhetoric of his left-leaning Workers Party, Lula’s administrations had continued the “conservative” macroeconomic policies of the previous Cardoso administration and Brazil had benefited from the rapid growth of the Chinese economy, which raised prices of its agricultural and mineral products on world markets. In his farewell address, Lula highlighted the enormous economic potential of the recently discovered Pre-Sal offshore oil field, and its promise of making Brazil one of the top ten oil producers in the world. Development of these fields would require more than US$200-billion in investment. Lula left office with an 80 percent approval rating, and would have undoubtedly been re-elected for a third term if the Brazilian constitution had not restricted him from running again. Many observers felt that Brazil had entered a period of sustained economic growth.
In January of this year as Dilma begins her second term in office, many Brazilians believe the dream of continuous economic and social advances has become a nightmare. A massive corruption scandal has enveloped Petrobras, Brazil’s flagship petroleum company that is 64 percent owned by the Brazilian government. Investigations by the Brazilian Justice Department revealed that the directors of Petrobras received kickbacks, totalling more than $100-million from 23 construction companies. More than 28 politicians have been linked to the bribery scandal, and many more names will likely be revealed in the coming months. Related
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The scandal has immense implications for Brazil. Petrobras has been responsible for more than 10 percent of total Brazilian investment. The company’s auditor, PwC, has refused to sign new financial statements until the full extent and implications of the scandal are revealed. The failure to issue financial statements has raised the possibility of a technical default on Petrobras’ $53.6-billion foreign debt. Aurelius Capital Management, one of the so-called “vulture funds” that has held up the payment of Argentina’s debt to the majority of its foreign bond holders, has now started to circle around Petrobras’ debt. The pension fund of Providence Rode Island has launched a class action suit against the directors of Petrobras for compensation for the over-valuation of the bonds it bought. At the same time, the fall in international oil prices will reduce Petrobras’ cash flow, and if prices remain in the $50 to $60 range, the viability of the Pre-Sal projects will be in doubt.
Although Brazil has a history of government corruption, 2014 had seen the imprisonment of the key figures in the Mensalão “Big Monthly” payments scandal in 2003 that enveloped key figures in the Lulu administration. After more than 10 years, powerful politicians and party officials involved were finally serving prison sentences, and the impunity that Brazilian political figures have traditional enjoyed seems to be gone. But the Petrobras scandal is much more serious than the Mensalão, both because of its impact on key sectors of the economy and because it involves foreign bond and shareholders in Petrobras, as well as foreign companies that were allegedly involved in the kickbacks.
The Petrobras scandal is the entirely predictable result of the interventionist economic policies adopted by the Lula-Dilma governments. With regard to the Pre-Sal, these policies mandated Petrobras as the sole operator and imposed a 30 percent local content requirement on equipment and construction associated with the development. This limited competition for contracts to Brazilian suppliers inflated costs and allowed Brazilian companies to form a bidding cartel, enabling the Petrobras directors to demand bribes for awarding contracts.
Petrobras’ problems have come at a time when growth in the Brazilian economy has stalled because of the decline in resource prices. For example, the price of iron ore, a major export, has fallen by 47 percent this year and shares in Vale have declined by over 37 percent. Economic growth over the past decade has been driven by a boom in consumer spending, as lower and middle income classes received higher incomes and a decline in interest rates allowed them to purchase consumer durables. The resulting increase in consumer debt levels combined with a slowing economy has brought the consumer spending boom to an end.
Simultaneously, the government’s finances have moved from surpluses to a deficit as revenues have stagnated while government’s spending has increased rapidly, especially in the 2014 election year. For 2015, the government has announced measures to reduce spending and increase taxes that will further decelerate the economy. Much of the investment in the economy has been financed through subsidized loans through the Brazilian national development bank, BNDES, but this has contributed to the increase in public sector gross debt from 54.3 percent of GDP in 2011 to 63 percent in 2014.
Brazilians are awakening in 2015 from the Lula dream, to a political and economic nightmare.
Bev Dahlby is a Professor at The School of Public Policy at the University of Calgary. Facebook Find Financial Post on Facebook
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Here's a major highlights of statements by President Goodluck Jonathan attacking his opponent, General Muhammadu Buhari, during the Lagos PDP campaign in Lagos.
The final two months of 2014 saw a surge of positive news for civil society whose collaborative and consolidated efforts over recent years to push for greater corporate transparency measures are now seeing the light.
CBI is investigating a larger conspiracy where I-T officials, chartered accountants and businessmen joined hands to settle I-T investigations against companies/individuals for payment of huge amounts in bribe.
The FBI is stepping up efforts against international corruption, creating new squads to search for cases of bribery that are rooted overseas but reach to the United States, law enforcement officials said.
Iran’s Revolutionary Guards Corps is a ’corrupt’ institution with excessive powers that make ’more dangerous than useful’, an Iranian website has claimed.
This was in response to a question posed by Congress of the People leader Mosiuoa Lekota, who asked him what government was doing to combat corruption in comparison to the scale on which China was fighting corruption.
Reducing corruption was one of the critical goals for the next five years and the government was implementing “one of the most comprehensive anti-corruption strategies in the world”, Zuma said.
An anti-corruption interministerial committee was supported by the anti-corruption task team constituting various government agencies which were dedicated to fighting corruption.
“All these agencies have been asked to pool their intellectual, financial, investigative and other forms of resources in order to deal comprehensively with the scourge of corruption in the public and private sectors,” he said.
The Asset Forfeiture Unit of the National Prosecuting Authority had seized more assets accumulated through criminal activity than ever before.
Zuma added that the office of the chief procurement officer had been established to focus on the state's procurement processes.
“For far too long weaknesses in the state procurement processes have been exploited in order to commit corruption.”
The government was reviewing legislation that dealt with corruption in order to effectively fight it.
Zuma said these measures had already bore fruit. Currently 945 persons were being investigated by the anti-corruption task team, 228 of whom were officials or ex-officials.
Of these, 23 senior officials were being prosecuted, he said.
The G20 nations, comprising the world’s largest economies, met in mid-November in Brisbane, Australia, and came up with an action plan on how to fight corruption.
The G20 nations, comprising the world’s largest economies, met in mid-November in Brisbane, Australia, and came up with an action plan on how to fight corruption.
The plan is an outgrowth of what happened in 2010 when G20 leaders created the “Anti-Corruption Working Group” at a summit in Toronto.
The push at the 2014 Brisbane meeting was for member nations to pass laws compelling corporations to identify who owns and controls them – the “beneficial owners.” It fell short of demanding that these persons and entities be known to the public as well as regulatory authorities. That has drawn criticism from some “good governance” groups, including Global Financial Integrity.
Ahead of the summit, some observers voiced concerns that China would block action regarding identifying corporate owners. China’s use of “inducements” has been well known, especially in Africa, where the Asian giant has employed cash and other means to gain access to raw materials it needs to feed its industrial production.
“The Chinese people are generally far less concerned about foreign bribery than domestic bribery,” said Andrew Spalding, a law professor at the University of Richmond. “As the developed world increasingly enforces foreign bribery rules, this puts them at a competitive disadvantage in developing countries, especially in Africa. China knows that it can exploit this.”
By the summit’s end, though, China made no attempt to block the action plan or suppress use of the word “bribery.”
“G20 countries recognize that bribery imposes a heavy price on both international business and society as a whole,” the action plan document said. “Combatting bribery remains an important priority for the G20 growth agenda, including by helping to level the playing field for business, and giving the private sector the confidence it needs to invest…G20 countries also commit to comprehensively and effectively criminalize bribery - as well as the solicitation of bribes - and enforce such laws through civil and criminal actions.”
The plan also addressed what it calls “high risk sectors” where corruption can invade legitimate market activity. The plan notes one area it calls “the extractive sector” – the mining and collection of raw materials from iron ore to timber.
“For companies in any of these industries, it is the areas of interaction between private and public sectors which are most likely to generate opportunities for corruption – for example, public procurement and customs,” wrote Brook Horowitz in the FCPA Blog, which focuses on corruption.
“Effectively preventing and combating corruption in these high-risk sectors is essential to create an environment conducive to investment, and to ensure critical assets and resources are not diverted away from economic growth and development,” the plan said.
Public sector transparency and integrity is also a focus of the G20 plan. They are essential for “preventing the misuse or diversion of public funds and conflicts of interest, which can have a significant negative impact on economic growth and development,” the plan said.
Public official immunity – meaning persons in office are not prosecuted while in those positions – is a practice seen in many countries. It has been widely criticized by good governance groups as a means by which elected officials can engage in criminal activities such as corruption and get away with it – at least during their terms.
The Action Plan also calls on the private sector to adopt transparent and accountable standards of corporate behavior. It calls on G20 countries to institute and step up “developing anti-corruption education and training for business – and by examining best practices for encouraging businesses to implement robust compliance programs and self-report breaches of corruption laws.”
Another section calls for G20 members to approach the anti-corruption fight globally as well as within each state’s borders. The plan says they must “commit to helping to end impunity for corruption offenses, by working together to investigate and prosecute [offenders], to recover the proceeds of such offenses, and to deny entry and safe haven to corrupt officials and those who corrupt them – including mutual legal assistance and extradition consistent with the UNCAC [United Nations Convention Against Corruption]”
Greg Thompson, with Transparency International Australia, says now that the words of the 2014 G20 Summit have been put to paper, it’s time to carry them out.
“The devil,” he says “will now be in the detail of what every country – including Australia – does post-Brisbane to implement these actions.”
Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation. During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR). Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.
Five major banks pay fines for currency manipulation
On the eve of the Group of 20 Summit in Brisbane, Australia, a group of the world’s biggest banks have agreed to pay US$4.2 billion in fines to UK, US and Swiss authorities to settle charges that they fixed international currency markets over many years.
This agreement should underscore to the G20 leaders that they need to increase sharply cooperative actions to supervise the global operations of the world’s largest banks. The G20 has acted forcefully on banking regulation, and further key decisions on capital requirements for the biggest banks are set to be determined this weekend. But the G20 has failed to be equally compelling on banking supervision.
New capital, leverage and liquidity requirements on banks do not suffice to make the global financial system sound. No less important is firm banking supervision to ensure integrity in the culture that drives banks. Today, the culture of many institutions, judged by the many settlements of cases, is often characterised by corruption and unethical behaviour.
This is highlighted by the agreements with HSBC Holdings PLC, Royal Bank of Scotland PLC, UBS AG, Citigroup Inc. and J.P.Morgan Chase & Co., to pay fines for foreign exchange market manipulation. Some of these banks, as well as a number of others, are also being investigated for allegedly rigging international interest rates over many years. The detailed agreements were published by the Commodities Futures Trading Commission in the US, by the Financial Conduct Authority in the UK and by FINMA, the Swiss Financial Markets Authority. Additional banks are also under investigation by these authorities.
The statements by the authorities show that the banks abused their power to enrich themselves. The authorities said that they found, for example, that traders at the banks at times shared confidential customer information to fix deals and market trades. The customers lost, the bankers won.
There have been so many cases of banking malpractice and unethical behaviour in recent years that top bankers are the first to admit that public trust in banks is at an all-time low. They say they are concerned about this, but at the same time they ascribe the illicit activities on rogue employees. Not a single chief executive officer of a major bank has been fined or faced court trial as a result of the many diverse cases against banks on both sides of the Atlantic.
Many banks are instituting new practices to strengthen employee ethics training and boost risk management compliance. The problem is that such efforts are not bringing fundamental change to the culture in many banks that places profit maximisation above all other objectives. This is where greater banking supervision has a key role to play.
To be effective, supervisors need more resources, a stronger mandate and the skills to watch-dog the global banking system. Better supervision means staffing up the offices of banking authorities, with adequate compensation to secure top talent. It means funding more regulatory activities and training to be highly skilled and genuinely expert in the often highly complicated and technical areas of financial trading, such as in the foreign exchange markets.
This week, to be truly reforming the global banking system, the G20 should support governments taking these essential steps if corruption in banking is to be curbed. A bold statement by the G20 would be most helpful.
KRII-KROTOASA RESEARCH-INTENSIVE INSTITUTE 's insight:
The 2014 Corruption Perceptions Index scores of countries from Asia Pacific, the world’s fastest growing region, are a resounding message to leaders that, despite many public declarations and commitments, not enough is being done to fight corruption.
Out of the 28 Asia Pacific countries in the index, which account for nearly 61 per cent of the world’s population, the majority lag behind in their efforts in fighting corruption in the public sector, with 18 scoring less than 40 out of 100 (on a scale where 0 is highly corrupt and 100 very clean).
The Corruption Perceptions Index measures corruption in the public sector, which is accountable to the government. The persistent low scores ask a critical question to the leadership of Asian countries, which have full control of the conduct of its public services. This about the leadership.
For China and India, two countries where new leadership are pursuing anti-corruption drives, the index is a harsh reality check.
Corruption grows in China despite campaign
In 2014 we have heard a lot about government efforts to prosecute corruption, and corruption scandals in China. Its commitment to catch “tigers and flies” – public officials big and small – indicates the government is serious in its commitment. The government also recognised the needs for China’s international efforts, launching a “fox hunt” of officials overseas and withdrawing opposition to G20 anti-corruption measures.
However, China shows a downward trend in the index (with a score of 36) in comparison to last year (40), posing a hugely challenging question: how effective is a top-down approach when you don’t have transparency, accountable government and free media and civil society?
The recent prosecutions in China are largely seen as efforts to clamp down on political opponents of the regime as opposed to genuine anti-corruption commitments.
Given the penetration and impact of colossal corruption to every scale of state and society, the 2014 index score shows the need for a wide range of reforms, several of which are listed in this blog.
China’s attitude towards transparency and governance is important to the wider region, given its growing influence. If its spreads an economic model based on less transparency and accountability and excluding civil society, it will bode ill for the corruption fight in other countries too.
India’s score remains low
India’s vibrant democracy reveals the flip side of the coin. Despite the engagement, innovation and participation of vibrant civil society, media and people at large, corruption continues to be one of the country’s biggest challenges.
It reveals India’s bitter reality of political corruption: the inadequacy of structures of accountability and transparency to deter the corrupt and the access to such mechanisms by the people. The problem urges the conversion of political commitment to concrete action at the highest level of government. In May, a Transparency International report warned that India, along with other countries in South Asia, needs stronger law enforcement, corruption watchdogs and protection of whistleblowers.
Together with India (38) and China (36), the poor scores of other emerging markets in the region – such as Malaysia (52), Philippines and Thailand (both 38) and Indonesia (34) – indicate a general weak or ineffective leadership to counter corruption, posing threats for both sustainability of their economies and somewhat fragile democracies.
The Corruption Perceptions Index sends a message to countries at the crossroads: Myanmar (21) Afghanistan (12) and North Korea (8), grappling with the issue of fighting endemic corruption in their countries. All rank towards the bottom of the index. It sends a loud statement that leaders must create societies that are more systematically resistant to corruption. That means taking a more inclusive approach to fighting corruption.
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