International corruption, by its very nature, is a complex and covert crime. Often perpetuated through a series of offshore transactions, intermediaries and sophisticated company structures: for all of these reasons, investigating its causes and effects is not a simple task.
Many actors are involved, usually in a number of different countries, consequently the crime can be subject to different legislations. Often the very nature of international corruption is a barrier to the application of national anti-corruption regulations.
The OECD has issued its first report into the breadth of international corruption and the measures taken to respond to it since the entrance into force of the Corruption of Foreign Public Officials Act in 1999.
The report analysed 427 cases of bribery and corruption occurring between February 1999 and June 2014, brought to light and challenged thanks to anti-corruption regulations that were extended after the entrance into force of the Act. The statistics showed that the sectors most affected are: extractive (19%), construction (15%), transport (15%), information and communication (10%) and manufacturing (8%).
Bribes were promised, offered or provided most frequently to employees of state enterprises (27%), followed by customs officials (11%), health officials (7%) and defence officials (6%).
Heads of State and Ministers were corrupted in 5% of cases but pocketed 11% of the total sum of bribes. More than half of the 427 cases involved public officials from developed economies (57%) contradicting the common conception that bribery is more common in developing countries. 6% of bribes were paid in order to obtain favourable tax treatment. In 41% of cases the company management were aware of the bribe and in 12% of cases the managing directors were directly involved.
Overall, one episode in every three came to light thanks to the company self-reporting, often in order to benefit from mitigated sanctions for voluntary disclosure; cooperation between law enforcement agencies in different countries (Mutual Legal Assistance) was responsible for the discovery of 13% of cases, while up to now there has been a scarce incidence of reports by whistleblowers or by investigative journalists (2% and 5% respectively). Information on the cases was collected from a variety of sources including: court decisions, the results of settlements available on the websites of the national law enforcement authorities; the information supplied by national authorities, open source research, Transparency International reports and the World Bank website.
Information from official judicial decisions or settlement agreements was preferred and represented the main source of data with 58% of cases. National authorities responsible for the application of anti-corruption regulations provided the information for 40% of the cases, while a tiny 2% of cases came from media investigations.
Concerning the fight against corruption, there has been a significant increase in sanctions since 2003 with a peak in 2010, followed by a slight decline probably due to other factors. The average time to complete an international anti-corruption trial increased over the years and today the median is over seven years. More time is required because corruption techniques have become more sophisticated and there is a tendency among companies and individuals to be less wiling to report cases of foreign corruption. The majority of international bribes are paid by large companies, while the smaller firms are more virtuous, even though it should be pointed out that there is less available data relating to the small firms. According to the information analysed by the OECD, on average the bribes corresponded to 10.9% of the total value of the transaction and to 34.5% of the profit.
The OECD report also analysed the intermediaries who perform a key role in the bribes and are involved in three out of four cases of foreign corruption. In 41% of cases these are sales or marketing agents, distributors or brokers, while in 35% of cases these are controlled companies situated offshore.
Edited by Nicholas Neiger
International corruption, by its very nature, is a complex and covert crime. Often perpetuated through a series of offshore transactions, intermediaries and sophisticated company structures: for all of these reasons, investigating its causes and effects is not a simple task.
