INL Supports Global Anti-Corruption Efforts

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Photo Credit: Bureau of International Narcotics and Law Enforcement (INL)

CIPE Director of Multiregional Programs Anna Kompanek conducted the interview on June 29th at the Washington, D.C. office of the Bureau of International Narcotics and Law Enforcement (INL) division at the United States Department of State

Can you introduce yourself and state your role at the Bureau of International Narcotics and Law Enforcement (INL) division at the United States Department of State?

RL: I’m Robert Leventhal, Deputy Director of the Office of Anti-Crime Programs. I oversee teams working on issues such as anti-corruption, wildlife trafficking, international crime, as well as a global series of international law enforcement academies.

MT: My name is Marianne Toussaint, I am the Anti-Corruption Team Lead. I manage the team dedicated to anti-corruption affairs; it includes five team members and we focus on global and regional multilateral and foreign assistance programming and policy relating to anti-corruption.

Can you offer some examples of how INL works in the global anti-corruption space?  Read More...

Cost-Effective Online Anti-Corruption Compliance Training

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Making anti-corruption training widely accessible and scalable in this day and age often means taking it online. Most multinational companies have done exactly that to extend the reach of their training to employees and subsidiaries globally. Yet, few training resources exist for local companies in these countries who aspire to join global value chains. To help fill that gap, CIPE launched an interactive, online anti-corruption training course based on its Anti-Corruption Compliance guide for mid-sized companies in emerging markets. The training course is designed to teach executives and anti-corruption compliance and ethics officers how to identify, assess, and mitigate corruption risks in their companies. The course involves approximately 40 minutes of instruction and contains four interactive modules that test knowledge and understanding. While the course itself is free, upon conclusion users have the option to purchase a certificate of completion for a small fee.

This online course is designed especially with newly appointed compliance officers in mind.  Read More...

A Shift towards Mandatory Anti-Corruption Compliance?

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Photo Credit: Inside Reg

Private sector anti-corruption compliance is predominantly associated with corporate corruption prosecutions, sanctioning, and debarment, with some positive examples of voluntary integrity building, as in the case of Thailand. Companies, regardless of jurisdiction, are focused on compliance and the required due diligence under the United States (U.S.) Foreign Corrupt Practices Act (FCPA) and/ or the United Kingdom’s UK Bribery Act, especially those seeking access to projects funded by the World Bank and similar development agencies. For companies caught in corrupt practices, anti-corruption compliance programs (or lack thereof) have become a crucial factor for successful conclusion of criminal or debarment proceedings.

Private sector entities in emerging markets that wish to do business with multi-national corporations subject to U.S. or UK rules also have a vested interest in this topic as corruption risk management and due diligence is increasingly becoming a notable condition of contracting and procurement proceedings. However, globally anti-corruption compliance has yet to become a mandatory element of doing business, but this may be about to change.  Read More...

The Unsung Protagonists of Corruption in West Africa

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Photo Credit: Lattitude Canada, Wikimedia Commons

This post is based on a blog originally published on Corporate Compliance & Ethics Africa

It is a basic economic principle that a market exists because there is the concurrence of demand and supply or someone willing to buy and someone willing to sell goods or services. Similarly as it relates to bribing public officials for business advantage or other more egregious purposes, you must have someone willing to give the bribe and the public official willing to take a bribe.

Economists and private sector players propose that in West Africa, the demand side of corruption (public sector) has cultivated and nurtured a system where the private sector is coerced to partake in corruption in order to be successful. The result is an established system involving a series of illegal operations accompanying the actual demand and receiving of bribes (“kickbacks”, “favors”), creating an atmosphere within the private sector that undermines integrity.  Read More...

People-Planet-Probity

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Photo Credit: Wikimedia Commons (https://commons.wikimedia.org/wiki/File:KPK_Logo.svg)

For anyone with even a passing interest in anti-corruption issues, the headquarters of Indonesia’s Corruption Eradication Commission (KPK) is a sight to behold. Entering the lobby, visitors see a floor-to-ceiling glass wall, and just behind it sit journalists with a clear line of sight to view recently arrested government officials as they enter the KPK building for processing. Outside, three to four satellite TV news trucks are often parked, underscoring the symbiotic relationship between Indonesia’s free press and what is arguably the world’s most powerful anti-corruption agency.

Given the KPK’s authority in Indonesian society and its recent commitment to engage the private sector, Jakarta is an obvious destination for the Center for International Private Enterprise (CIPE) to test a new anti-corruption concept. For the integrated compliance pilot project to work, CIPE needs a country with a strong, independent body like the KPK, along with a dynamic economy, robust labor and environmental NGOs, reliance on labor-intensive agricultural exports, and a significant connection to global value chains.  Read More...

‘Pay by Results’ in International Aid Sparks Questions about Private Sector Compliance

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Photo Credit: Peter Linke (via Flickr)

There is an ongoing debate regarding ‘pay by results’ in the international aid community. The pay by results (PbR) model is one in which aid recipient governments only receive donor funds upon achieving an agreed upon outcome – number of schools built, children inoculated, etc. For example, if the goal is to build sustainable road infrastructure, then the donor funds will only be released upon completion of the project, following an independent audit that the road meets all necessary standards. The idea is that this would shift incentives away from corruption – a government official is less likely to select the cheapest contractor offering a kick back if a poorly constructed road will not lead to payment by the donor aid agency.

This potentially sector-altering shift in development aid is largely in response to the perception that much of aid funding is lost to corruptionRead More...

Cleaning Up the Skies

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Photo Credit: Janak Raja via Flickr

Throughout its forty plus year history, European aircraft and defense group Airbus has been no stranger to controversy. Whether it was the long-running investigation into alleged corruption in an Airbus subsidiary operating in Saudi Arabia or an insider trading investigation involving company shares, scandal seems to follow Airbus, no matter what endeavors the company pursues. However, the latest corruption probe involving the European defense group might be the case that finally forces reforms throughout the Airbus Group.

In August 2016, the UK’s top anti-corruption watchdog, the Serious Fraud Office (SFO), opened a formal investigation against Airbus into allegations of fraud, bribery and corruption in France, Germany and the UK. The investigation is related to irregularities involving third party consultants and the sale of passenger jets overseas. According to the UK’s 2010 Bribery Act, “the bribery risks associated with reliance on a third party agent representing a commercial organization in negotiations with foreign public officials may be assessed as significant and accordingly require much more in the way of procedures to mitigate those risks”.  Read More...

Third Parties don’t have to be the “Third Rail” of International Development

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Photo Credit: Richard Masoner via Flickr

Third parties lie at the heart of corporate compliance risks as 90% of FCPA cases involve external intermediaries. A third party is any person or entity that is not a direct hire or main party to a transaction – typically a contractor or an out-sourced service provider. Examples of third party misdeeds in international aid flows often become stories of national interest, propelling conversations about the efficacy of international development to the point that it is becoming a political third rail. That said, the same practices that mitigate third party risks for multi-national firms are applicable to the international development sector as well. As a result, third parties do not have to be the third rail for donor governments and international development charities and private enterprises.

As in any industry, firms and organizations working in international development cannot directly control the actions of third parties.  Read More...

Open Data: An Innovative Approach to Anti-Corruption Compliance in Brazil

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Photo Credit: Micklefield Grade 4 (https://micklefieldgrade4.wikispaces.com/around+the+world)

Anti-corruption compliance remains a big challenge in Brazil, as corruption is embedded throughout Brazilian society, weakening government institutions and the economy as a whole. Brazil currently ranks 79th out of 168 countries in Transparency International’s Corruption Perceptions Index. In the private sector, “the majority of businesses surveyed as part of the Global Competitiveness Report believe that the diversion of public funds to companies, individuals, or groups due to corruption occurs frequently in (Brazil).” According to the 2015-2016 report, “corruption scandals have undermined trust in both private and public institutions.” In addition, “the 2009 World Bank/IFC Enterprise survey reports that nearly 70 percent of surveyed companies perceive corruption as an “major constraint” for doing business in Brazil.”

In 2015, as part of the Group of Twenty (G-20), Brazil agreed on a set of G-20 Anti-Corruption Open Data Principles. These principles aim to make crucial data open to the public, so “civil society can monitor things like the use of public resources including how taxes are spent and how contracts are awarded.” In turn, this open data can play a significant role in combatting corruption, as it would make it easier to hold governments and the private sector to account for their actions.  Read More...

The FIFA Scandal: What We Can Learn about Ethics and Compliance

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Photo Credit: Wikimedia Commons (https://commons.wikimedia.org/wiki/File:Uruguay)

Soccer (or “football” depending on your geographic orientation) is often referred to as the “beautiful game.” Of late, as recently as this month, the sport has become a bit less beautiful. The Fédération Internationale de Football Association (known as FIFA), the international governing body of soccer, has been embroiled in a corruption scandal that has rocked the organization to its core.

It began in May 2015. Fourteen FIFA officials were arrested and indicted in connection with an investigation by the US Federal Bureau of Investigation (FBI) and US Justice Department into wire fraud, racketeering and money laundering, spanning a period of 24 years. That December, 16 more officials, including two FIFA vice-presidents, were arrested on similar corruption charges. Since then, the events snowballed into a full-blown scandal, with longtime FIFA President Sepp Blatter and other top officials banned from FIFA activities. The investigation into FIFA has revealed a toxic culture of unethical behavior, non-compliance and corruption that started from the top and trickled down to every facet of the organization.  Read More...