Earlier this month, the Organisation for Economic Co-operation and Development (OECD) released the most comprehensive report ever compiled on the bribery of foreign officials. The report looked at 427 such cases since 1999 in 17 countries. Some of the results were surprising. Fifty-three percent of the cases of bribery took place with the knowledge or consent of corporate managers and executives. Other findings were predictable. The energy, mining, and construction industries are most likely to be corrupt. To put the report’s findings in perspective, CIPE’s Frank Brown spoke with Drago Kos, a Slovenian national who is the Chairman of the OECD’s Working Group on Bribery in International Business Transactions. He is an authority on worldwide corruption issues and trends, not only in the 41 countries that are a party to the OECD Anti-Bribery Convention, but also in Eastern Europe and Afghanistan.
What does this report tell us that previous such surveys, studies, and analyses have not?
This is the first time that the phenomenon of foreign bribery has been analyzed on the basis of hard data, including convictions, settlements, and OECD Working Group on Bribery country reports. This is extremely important since the report enables us to compare between this, hard-data analysis and the results of previous analyses and perceptions, showing us the real characteristics and trends in the area of foreign bribery and enabling us to modify some of the old theories.
How, if at all, will the report’s findings impact what you do? Are there lessons in the report that you will take into account as you guide the work of the OECD Working Group on Bribery in International Business Transactions.
In the introduction to the report it is stated: “This report has been prepared with the aim of assisting the OECD Working Group on Bribery….” Indeed, the findings of the report are already taken into account in the preparations for the next, fourth phase of monitoring of our 41 member states, which will deal with detection of foreign bribery offences, enforcement, the liability of legal persons, and where we will try to reduce the biggest threats as identified by the report.
The report found that most bribes are from corporations in developed countries and are being paid to officials in developed countries. How do you interpret this finding?
This was really a big surprise. Until now, the overwhelming majority of experts, including myself, thought that bribes usually go to officials in developing countries. These countries were the focus and the target of anti-corruption activities. Obviously, we will have to change this perspective and start planning measures for public officials in developed countries, too.
How do you interpret the fact that the report found that in 53 percent of cases, corporate management or CEOs played a role in bribe-making? Does this tell us more about the business integrity climate within corporations or just about the realities of doing business?
It is both. It is reality and a sign of an unfortunate corporate climate. It is obvious that the majority of decisions related to bribery of foreign public officials are taken at the highest levels in companies and not – as perceived before the publication of the report – at the level of mid- or even low-level management. “Tone from the top” obviously does not have only positive but also negative consequences. I am afraid that we will have to start some of our activities all over again since there had been a general opinion that at least the top managers had understood the risks of foreign bribery offences and the importance of a sound corporate integrity. This opinion has now been proven to be wrong and a change of our focus is urgently needed.
Of the cases examined, the single biggest cause for an investigation being launched was self-reporting – 31 percent. Is this a cause for celebration? Or is it more of a reflection of law enforcement’s limited resources and reliance on violators to come forward?
It is not so much reflection of law enforcement’s limited resources as of the consequences of companies’ conscious and genuine decisions to come forward and expose themselves. And here – at least for me – is the biggest mystery: Why did companies make those decisions? What is the decisive element which influenced them to do it and submit themselves to serious investigations? When this will be clear, we will have to spread the idea and try to convince the remaining 69 percent of companies to come forward in the cases of identified bribery offences. In such a way, a collective front will be built, which will be much stronger than any law enforcement action. Of course, we will never reach 100 percent but the higher the percentage, the better the business climate!