How Countries Can Overcome Challenges to Enforcing Anti-Corruption Laws

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Photo Credit: CIPE

This podcast was originally posted on CIPE’s Development Blog

OECD’s Drago Kos says passing anti-corruption laws is much easier than enforcing them in most countries. Kos, who chairs the OECD’s Working Group on Bribery, was the guest of CIPE’s “Democracy That Delivers” podcast on January 2, where he discussed the difficulties many nations face when implementing anti-corruption measures. He candidly confirms that it is fairly obvious which OECD countries neglect to enforce anti-bribery conventions, especially abroad. Governments may refuse to act but it’s hardly believable that those country’s companies have never once bribed a foreign public official. Kos shares new details about groundbreaking work the OECD is doing to help foreign governments implement anti-corruption policies, fight poverty, and restore confidence in local markets. The OECD is short for Organisation for Economic Co-operation and Development, has 35 member countries worldwide and works closely with international businesses.

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Will 2018 be the year Mexico starts to tackle its corruption problem?

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Photo credit: GINNETTE RIQUELME / REUTERS

Mexico’s economy did not do particularly well in 2017. In fact, the economic slowdown raises important questions about what politicians throughout the country should be promising in the upcoming July elections and to whom they should feel most accountable. Like much of the Americas this year, corruption will be a major deciding factor at the polls in Mexico. The recent article in Foreign Policy, Corruption is Mexico’s Original Sin written by Luis Rubio not only describes a deeply embedded patronage system of corruption but offers little hope for reform, save for a massive judicial overhaul.

Rubio suggests that despite impressive efforts by anti-corruption activists, Mexican civil society is unlikely to witness Brazil inspired upheaval in their political system; for many years Mexico focused on growing its economy, while Brazil took time to reform its judiciary. Outgoing President Pena Nieto, of longtime ruling party PRI, has earned low approval ratings and widespread contempt due to rampant corruption at the federal and local levels, malfeasance by him and his wife, allegations of espionage, and extreme negligence – particularly in regards to the murder rate of civilians and members of the mediaRead More...

Happy Birthday to the FCPA and OECD Anti-Bribery Convention

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Photo Credit: http://riadzany.blogspot.com/2013_08_01_archive.html

Forty years ago, President Jimmy Carter signed into law a novel statute called the U.S. Foreign Corrupt Practices Act (FCPA). It was the first-ever such statute in the world to govern business conduct abroad and address corruption violations involving bribery of foreign government officials. While the enforcement was initially slow, over time the FCPA gained prominence and became one of the most powerful forces to shape the new global norm: corruption is no longer an acceptable part of doing business.

The landmark corruption case against Siemens brought under the FCPA in 2008 resulted in a record-setting $1.6 billion in fines in the U.S. and Germany. Siemens has since cleaned up its act and put in place an impressive compliance program that not only encompasses the company’s employees but also extends to its suppliers and business partners around the world. This case clearly demonstrated that the key value of the FCPA enforcement is not just penalizing companies for past wrongdoings but incentivizing them to better prevent and detect corruption going forward.  Read More...

The Dilemma of Corporate Governance and Business Ethics in Sudan

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Photo Credit: CIPE

Decades of conflict, civil war, and the secession of South Sudan in 2011, combined with the slump in global oil prices, have had a profound effect on Sudan’s economy and developmental progress. As the country attempts to emerge from conflict and integrate into the global economy following the lifting of sanctions, it must continue to navigate institutional challenges and steady itself in the aftermath of multiple economic shocks. With reduced international investment and a private sector that faces complex obstacles, fighting corruption is paramount to a successful transition and an imperative for future growth.

To this end, CIPE and its local partner, Al Oula, launched an anti-corruption initiative to support the private sector in mitigating corruption at the firm level while engaging in advocacy to promote transparency and limit opportunities for illicit behavior. Dirdeiry M. Ahmed, Ph.D., a passionate advocate for effective, sustainable development in Sudan, delivered a speech at the initiative’s inaugural summit to call attention to the challenges facing the business community in Sudan.  Read More...

Local Businesses can Bolster Moldova’s Anti-Corruption Efforts

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In 2014, Moldova suffered a massive corruption scandal involving dubious loans that led to the disappearance of $1 billion, or 12% of the country’s GDP, from its banking system. The scandal forced the central bank to issue $870 million in emergency loans to the three implicated banks in order to prevent economic collapse. Prominent politicians and business people were involved. The scandal ignited popular anger and triggered street protests. While it may be difficult to see a silver lining in this bleak turn of events, one positive outcome may be this: the scandal of this magnitude was a wake-up call for Moldovans to build better safeguards against future abuses and renew commitment to address corruption at all levels.

Although Moldova has adopted laws to align its anti-money laundering legislation with the European Union rules, other major reforms must still take place at the national level. Importantly, though, efforts to combat corruption must extend beyond the public sector and involve building integrity mechanisms in the private sector as well.  Read More...

Saudi Arabia Anti-Corruption Crackdown: How will it Affect the Country’s Future?

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Photo Credit: Outernationalist

On November 4, 2017, Saudi Arabia launched an anti-corruption campaign aimed to tackle the various corruption problems throughout the Kingdom. King Salman bin Abdulaziz issued a royal order to establish the anti-corruption committee and appointed Crown Prince Mohammed bin Salman as the leader of the initiative.

It appears that the goal of this crackdown is to eradicate corruption at all levels of government, and so far it has demonstrated considerable momentum. Since the issuance, 208 individuals have been called in for questioning, and seven of them have been released without charge. According to a list obtained by CNN, 17 prominent figures have been arrested; including Prince Alwaleed bin Talal, the billionaire businessman of Kingdom Holding, the formal head of the royal court Khaled Al-Tuwaijri, Saudi media mogul Waleed Al-Ibrahim, and Prince Turki bin Nasser. Three ministers were removed from their positions, and 10 former ministers were detained.  Read More...

Canada Outlaws Facilitation Payments

Photo Credit: Four Season Canuck

On October 31, 2017, the Government of Canada amended its anti-corruption law to explicitly bar facilitation payments. This move is part of an ongoing effort by Canadian authorities to tighten its anti-corruption regulations.

The aggressive move to improve both Canada’s legal regime and its enforcement of anti-corruption stems from several significant developments in 2011. In March of that year, Canada was shamed by the Organization for Economic Cooperation and Development (OECD), which criticized Canada for its relatively weak framework and limited enforcement actions in combatting foreign corruption. In October of that year, the Government of Quebec appointed the “Charbonneau Commission”, which uncovered significant governance lapses and corruption in the contracting of public works in the province.

Since that time, tolerance for corruption in Canada and for improper dealings by Canadian firms abroad have steadily diminished. The Corruption of Foreign Public Officials Act (CFPOA), which was passed in 1999, bars bribery of foreign public officials when the act occurs wholly or partially in Canada.  Read More...

Paradise Papers Show Need to Close Beneficial Owner Loopholes

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Photo Credit: ICIJ

The Paradise Papers are the result of another impressive investigation of thousands of leaked documents from the Bahamian law firm, Appleby. The extent of offshore holdings is likely to bring about scrutiny on corporate excesses as well as additional pressure on governments to reign in tax haven jurisdictions and lax incorporation laws. Only a few days after the Paradise Papers were released, Transparency International put out a report, Hiding in Plain Sight which exposes hundreds of companies established in the U.K. for the purpose of helping launder corrupt and kleptocratic spoils. Interestingly, the United Kingdom and perhaps more surprisingly the Ukraine, have been applauded for their efforts to increase transparency around beneficial ownership. Transparency of corporate ownership structures is the common missing ingredient in understanding who ultimately holds the purse strings. This leak demonstrates that law firms rather than law enforcement, government or the public know quite a bit about illicit capital flows and at times abet these financial crimes that undermine public confidence in rule of law while exacerbating economic inequality.  Read More...

“Bribe, Swindle, or Steal”: After You Pay a Bribe Review

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Photo Credit: Momentum 

In May of 2017, TRACE launched the podcast “Bribe, Swindle or Steal”, hosted by TRACE President Alexandra Wrage. The podcast features interviews with professionals and luminaries in the field of financial crime including bribery, fraud, money-laundering, insider-training and sanctions. Tailored towards compliance professionals, “Bribe, Swindle or Steal” seeks to educate and entertain listeners on issues relating to corruption and compliance.

The episode “After You Pay a Bribe…” details former Unaoil executive Lindsey Mitchell’s account of being at the center of a bribery scandal involving the Monaco-based oil company. Unaoil wanted Mitchell, who had been working for the company since 2009, to win favor with Gaddafi regime officials so that their multinational clients could gain access to Libya’s oil. One evening in August 2009, Mitchell was called to a late-night meeting with a National Oil Company (NOC) official, who claimed that they could help Unaoil’s clients succeed in Libya in exchange for a bribe, which was between $10,000-$20,000.  Read More...

Working Together to Fight against Corruption

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Photo Credit: IMF (http://www.worldbank.org/en/programs/youth)

The International Monetary Fund (IMF) emphasized the importance of tackling corruption through its #fightcorruption seminar during the Annual Meeting on Sunday, October 15th. The discussion, led by Sean Hagan, the General Counsel at the IMF, highlighted that combating corruption is a vital component for sustaining economic stability, promoting inclusive growth, and maintaining security in society as well as certainty in the market.

The seminar addressed the diverse impact of corruption through the lens of the IMF and touched on lessons learned from effective efforts to combat illicit behavior.

Corruption is both a moral and an economic problem – in many countries, corruption is a major barrier to poverty reduction. Because corruption infiltrates every sector, it creates macro- and microeconomic ripples that manifest as everything from slow growth of gross domestic product (GDP) to a lack of capital or market access for small and medium-sized enterprises (SMEs).  Read More...