Global Policy, Corruption, Economic Crimes, Fronting, Whistleblowers

This book features the results of a stocktaking exercise of business integrity and anti-bribery policies for 20 countries in Africa. It is the result of a collaborative initiative between the OECD and the African Development Bank.

Countries covered: Benin, Burkina Faso, Cameroon, Ethiopia, Ghana, Kenya, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Tanzania, Uganda and Zambia.

Contents

Executive summary

Introduction

Chapter 1. International and African regional initiatives to combat bribery of public officials in business transactions

Chapter 2. Bribery and related offences

Chapter 3. Prevention, detection, investigation and prosecution of bribery

Chapter 4. Business integrity

Chapter 5. Participation of civil society and the role of the media

Chapter 6. Recommendations

Annex A. Status of ratifications of OECD anti-bribery convention, African Union anti-corruption convention, and UNCAC by the 20 African countries

Annex B. Details on international and African regional initiatives to combat bribery of public officials

Annex C. Criminalisation of bribery and public procurement laws: relevant laws and applicable provisions in the 20 African countries

Annex D. The establishment of specialised anti-corruption agencies and other relevant bodies in the 20 African countries

Annex E. Accounting and auditing standards in the 20 African countries

The OECD Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective. It is the first and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction. The 34 OECD member countries and seven non-member countries - Argentina, Brazil, Bulgaria, Colombia, Latvia, Russia, and South Africa - have adopted this Convention (Entry into force  and OECD Anti-Bribery Convention: Status of Ratification).

This booklet contains the official text and commentaries of the 1997 Convention, the 2009 Recommendation of the Council for Further Combating Bribery, the 2009 Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials and other related instruments:

• English 
• French
   

Unofficial translations*:

• Arabic
• Chinese 
• Spanish

* Please note these unofficial translations do not yet include the May 2011 updates to the OECD Guidelines for Multinational Enterprises section on combating bribery, bribe solicitation and extortion.

The Convention itself establishes an open-ended, peer-driven monitoring mechanism to ensure the thorough implementation of the international obligations that countries have taken on under the Convention. This monitoring is carried out by the OECD Working Group on Bribery which is composed of members of all State Parties. The country monitoring reports contain recommendations formed from rigorous examinations of each country.

Making Sure That Bribes Don’t Pay

17/12/2012 - This editorial by Mark Pieth and Huguette Labelle marking the 15th anniversary of the signature of the OECD Anti-Bribery Convention, calls on Parties to the OECD's Anti-Bribery Convention to step up enforcement of their anti-bribery laws.

The States Parties to the OECD Anti-Bribery Convention have agreed to put in place new measures that will reinforce their efforts to prevent, detect and investigate foreign bribery with the adoption of the OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions.

The OECD Working Group on Bribery in International Business Transactions (Working Group) is responsible for monitoring the implementation and enforcement of the OECD Anti-Bribery Convention, the 2009 Recommendation and related instruments. The Working Group is made up of representatives from the 41 States Parties to the Convention and meets four times per year in Paris.

• 2009 Recommendation on Tax Measures for Further Combating Bribery of Foreign Public Officials in International Business Transactions
• OECD Recommendation on Bribery and Officially Supported Export Credits
• 1996 Recommendation on Anti-Corruption Proposals for Bilateral Aid Procurement
• OECD Guidelines for Multinational Enterprises

In most countries, education is the largest or second largest recipient of public funds, and employs the greatest number of public servants. In some cases, such as in Ethiopia and Indonesia, public spending on education exceeds a quarter of all public expen- ditures.10 In low-income countries, public expenditures on education are especially significant compared to other public budget items. Expressed as a percentage of their total GDP, they are commonly twice as high as those on public health, and four times higher than military expenditures.11

Even with small GDPs, education budgets represent high percentages of public funds – for example, US$59 million in Haiti and US$104 million in Sudan in 2006.12 Education is frequently the sector that has the greatest funds being disbursed to the greatest number of recipients at multiple levels, and therefore it is at great risk of leakage. Corruption risks are particularly dire when public funds are filtered through multiple administrative layers, and pass through the hands of a series of actors with little accountability.

This is true in many developing nations, with education expenditures tending to go out in small amounts across locations spread over large distances, which exacerbates the problem of weak monitoring systems.13 The costs of education are not simply those carried by the public but also those incurred by families and individuals who choose to enrol their children in tutoring, private schools or other forms of instruction outside the public system. Private forms of education abound in many parts of the world, both rich and poor.

They play an especially significant role in Asia, where supplementary tutoring is widespread and carries a high cost to families.14 For example, in Hong Kong, the supplementary education market at the secondary level that mimics the school system is worth US$255 million annually.15 In 2008 supplementary tutoring at all levels cost households in Singapore a total of US$680 million.16 The statistics are the most striking for South Korea, where household spending on private tutoring in 2006 amounted to about 80 per cent of public expenditures on primary and secondary education.17

When private expenditures on supplementary education are essential for success in schooling, there is an increased risk of perpetuating social disparities and corrupt practices. For example, teachers may disclose examination questions to students whom they tutor privately, as has been the case in some parts of Vietnam.18 Additionally, in the last decade the Education for All (EFA) framework19 has directed significant development aid to the provision of universal primary education, increasing the scale of funds subject to the risk of being diverted for the private gain of the gatekeepers of education at its multiple levels. By 2009 aid to basic education alone exceeded US$5.5 billion worldwide.20

Those receiving the most aid are often the least equipped to make sure that it meets its intended target, however. Scaling up to universal access requires a steady supply of well-trained teachers and educational professionals, as well as logistical networks cap- able of ensuring that educational delivery is supported and appropriately supervised. Over a decade after the adoption of the MDGs,21 corruption has been identified as a key impediment responsible for the fact that there has been insufficient progress towards achieving education for all.22 Impact of corruption in the education sector From the standpoint of social development, corruption in education is perhaps more insidious than in other sectors, because its victims are young people.23

There is a general agree- ment that corruption undercuts the investment made by a society in the education of its future citizens.24 The societal investment fails when some are allowed to succeed without merit, swelling the ranks of incompetent leaders and professionals; while others with intellectual capacity cannot realise their potential to learn not because they cannot master the

Public procurement refers to the acquisition by a government department or any government-owned institution of goods or services, ranging from bed sheets for hospitals and textbooks for schools to financial and legal services, as well as the commissioning of large-scale construction works, such as roads, bridges and airports. Public procurement refers to all the stages of the contracting process, covering the initial needs assessment, budget allocations and initial market research6 through to the preparation of the tender, evaluation of applications and award of contracts.

The contract implementation and administration (including the common practice of change orders), as well as auditing and evaluation, are also captured within the public procurement process. Major procurements such as water projects or large-scale construction works can involve numerous contract awards, forming a broader project cycle. Although processes vary from country to country and sector to sector, the procurement process can usually be broken down into four phases. 6

The contracting authority should undertake initial market research to as- sess whether exceptional circumstances exist (for example, a monopoly situation in the market), which may justify the use of “exceptional negoti- ated procedures”. Market research should be used as a basis to estimate the contract value. Corruption in public procurement Transparency International defines corruption as “the abuse of entrusted power for private gain”.7

“Private gain” must be interpreted widely to include gains accruing to the government official, his or her family members, close friends, political party, favourite charity, hometown or a corporate or other entity in which the official or the official’s family or close friends have a financial or social interest. Corruption in all its forms can arise in every phase of the procurement process outlined above, regardless of sector or scale. Corruption in the form of everyday abuse of entrusted power by low- and mid-level public officials occurs in smaller-scale procurements, such as purchasing office equipment or textbooks, or in local service delivery, such as hospital and school admissions.

At the other end of the scale, corrupt acts committed at a high level of government, which distort social or economic policies or the central functioning of the state, can occur in public works projects, procurement of large quantities of goods and privatisation projects. Political corruption also occurs when policies, institutions and rules of procedure in the allocation of resources are manipulated during the needs assessment and budget planning phases, for example. Financing by political decision-makers can also undermine the integrity of public procurement processes. Corruption can be initiated by the private sector (either directly or through agents and middlemen) – the supply side – or by a government official – the demand side.

The most obvious form of corruption associated with public procurement is bribery of government officials to obtain a favourable contract decision where no right or claim to such a decision exists. More subtle forms of corruption occur when bribes are used to manipulate budget allocations and project selection, even before the contracting process begins, through the manipulation of eligibility criteria in the tender documents, or having technical specifications that are biased and without merit. Bribes could take the form of gifts, money, favours, jobs for family members and donations to political parties or charities. 7 Transparency International,

IDENTIFICATION AND QUANTIFICATION OF THE PROCEEDS OF BRIBERY © OECD/IBRD/THE WORLD BANK 2012 Foreword Confiscation and recovery of the proceeds of bribery are key elements in the international framework to fight corruption. The two key international legal standards are the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention) and the 2005 UN Convention against Corruption (UNCAC). This study focuses on the identification and quantification of the proceeds of active bribery.

It was undertaken as a joint effort between the OECD Working Group on Bribery in International Business Transactions (Working Group) and the World Bank-UNODC Stolen Assets Recovery Initiative (StAR) in order to support countries' efforts to confiscate the proceeds of active bribery, which is required of Parties to both the OECD Anti-Bribery Convention and UNCAC. The final text, approved following a peer review process in the context of the StAR initiative, was discussed and adopted officially by the OECD Working Group on Bribery on 23 June 2011.

The study is intended to provide practitioners, legislators and policy makers with practical information on the technical issues of identification and quantification of proceeds of active bribery. It provides examples of how proceeds have been identified and quantified in different jurisdictions; we use mostly examples from cases that have actually occurred.

The Recommendation for Further Combating Bribery of Foreign Public Officials was released on 9 December 2009, when the OECD marked the tenth anniversary of the entry into force of the OECD Anti-Bribery Convention.

The Recommendation was adopted by the OECD in order to enhance the ability of the States Parties to the Anti-Bribery Convention to prevent, detect and investigate allegations of foreign bribery and includes the Good Practice Guidance on Internal Controls, Ethics and Compliance.

For more information about the Recommendation:

Full text of the 2009 Anti-Bribery Recommendation and the Good Practice Guidance (pdf)

Annex II of the Recommendation: Good Practice Guidance on Internal Controls, Ethics and Compliance (pdf)

March 2010 news release: OECD calls on businesses to step up their fight with the Good Practice Guidance

December 2009 news release: Governments agree to step up fight against bribery

Overview of the 2009 Anti-Bribery Recommendation (pdf)

DOCUMENTS AND LINKS

Text and implementation of the OECD Anti-Bribery Convention

Public consultation on the 2009 review of OECD anti-bribery instruments

We all know corruption is a problem, but how bad is it? For the Corruption Perceptions Index 2013, we ranked 177 countries and territories around the world on their perceived levels of public sector corruption. Here are the results. Scoring less than 50 out of 100, almost 70 per cent of countries are perceived to have a serious corruption problem. No country achieves a perfect score. How corrupt is your country? How to read the infographic Countries and territories in the Corruption Perceptions Index are scored and ranked. The colour indicates the level of perceived corruption and the size of the circle shows the percentage of countries that fall within the score range.

Countries are listed in order of rank going clockwise. AMERICAS 66% score below 50 Top: Canada Bottom: Haiti 50 ASIA PACIFIC 64% score below 50 Top: New Zealand Bottom: Afghanistan, Korea (North) 50 EASTERN EUROPE & CENTRAL ASIA 95% score below 50 Top: Turkey Bottom: Turkmenistan, Uzbekistan 50 EU & WESTERN EUROPE 23% score below 50 Top: Denmark Bottom: Greece 50 MIDDLE EAST & NORTH AFRICA 84% score below 50 Top: United Arab Emirates Bottom: Sudan 50 SUB-SAHARAN AFRICA 90% score below 50 Top: Botswana Bottom: Somalia 50 The percentage of countries worldwide that score less than 50 – indicating a serious corruption problem.

The Business Principles for Countering Bribery were originally developed through an extensive multi-stakeholder process involving companies, non-governmental organisations and trade unions, as a tool to assist enterprises to develop effective approaches to countering bribery in all aspects of their activities. Enterprises should develop and implement an anti-bribery programme as an expression of broader ethical values and corporate responsibility. But an anti-bribery programme must focus on effectively countering the risk of bribery.

Risk exposure may vary among different industries and specific companies, but no enterprise can be certain that it will be free of risk. Not only does an effective anti-bribery programme help mitigate this risk, it also strengthens reputation, builds the respect of employees, raises credibility with key stakeholders and supports an enterprise’s commitment to honest and responsible behaviour. The Business Principles aim to provide a framework that can assist enterprises in developing, benchmarking or strengthening their anti-bribery programmes. The Business Principles reflect a high, yet achievable standard of anti-bribery practice.

They apply to the bribery of public officials as well as private-to-private transactions. The Business Principles were originally published in 2003 and underwent a first revision in 2009. The 2013 revision is part of a periodic review process carried out with the input of the Steering Committee to ensure that the Business Principles remain current in light of changing anti-bribery laws and evolving corporate practice.

The primary focus on bribery is maintained in this edition, but the Business Principles now include clauses and revised language on topics such as risk assessment, conflicts of interest, cooperation with authorities, facilitation payments, lobbyists and communication and reporting, to reflect the importance of these matters in up-to-date anti-bribery practice and to achieve closer alignment with other leading codes and legal instruments such as the United Nations Convention Against Corruption. BRIBERY The offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust.