Tuesday, February 04, 2014

" 2 articles on corruption and briberies "

Dear All,
two interesting articles below showing efforts, and 
most probably transparency coming, at some point

4 - February - 2014

 Corruption costing European Union

 Corruption across the European Union’s 28 countries costs about 120 billion euros (US$164 billion) per year – a “breathtaking” sum equal to the EU’s entire annual budget, EU Home Affairs Commissioner Cecilia Malmstroem said Monday.

 Malmstroem said the actual figure could be even higher, despite the estimate amounting to a little less than one per cent of the bloc’s total economic output.

 “The extent of the problem in the EU is breathtaking,” Malmstroem wrote in an op-ed piece in Swedish newspaper Goeteborgs-Posten.

 “Corruption undermines faith in democratic institutions, drains the legal economy of resources and is a breeding ground for organised crime.” Presenting the European Commission report, the bloc’s first, Malmstroem emphasised the figure was “an estimation” and said the actual amount is “probably … much higher.” She called on member states to do more to stamp out the problem, saying: “The price of not acting is simply too high.” The report does not rank the countries as to the seriousness of the problem nor suggest legal remedies, with Malmstroem saying that could follow after talks with member states.

 But “one thing is very clear – there is no ‘corruption-free’ zone in Europe,” she said.

 While Malmstroem refused to point the finger at any particular country, the EU has had longstanding concerns about corruption in Bulgaria and Romania, especially over their use of EU funds, and both were put under a special monitoring mechanism when they joined the bloc in 2007.

 The report said that “fighting corruption has long been a priority for Bulgaria” but despite best efforts, the problem “remains widespread”.

 A poll found 84 per cent of Bulgarians agreed corruption is prevalent while last year there were large demonstrations against the government’s ties with wealthy oligarchs.

 Among possible steps, the Commission “suggests that Bulgaria should shield anti-corruption institutions from political influence and appoint their management in a transparent, merit-based procedure”, it said.

 In addition, the Commission “is suggesting that a code of ethics is adopted for members of the National Assembly”.

 “In Romania, both petty and political corruption remains a significant problem,” the report said, adding that efforts to address the issue have been inconsistent.

 The Commission suggested Romania should ensure truly independent corruption investigations and develop “comprehensive codes of conduct for elected officials”.

 A poll showed “a full 93 per cent of Romanians agree that corruption is widespread,” it said.

 Among the other member states, the report named Denmark and Finland as top performers, while in France it said that “corruption-related risks in the public procurement sector and in international business transactions have not been addressed.” Germany, the bloc’s largest economy, “is among the best countries of the EU. However, more can be done,” it said, suggesting it “would benefit from the introduction of strict penalties for corruption of elected officials.” Picking up on an issue attracting a lot of domestic attention, it also suggested Germany should develop a policy to deal with the “revolving door” phenomenon, where officials leave office to work for companies they may have recently helped. 

In her Swedish op-ed, Malmstroem said Sweden “is among the countries with the least problems”.

 She said research showed that one in 12 EU citizens had experienced corruption in the past year, while four out of 10 companies regard it as “an obstacle for doing business within the EU”.

 The report reviews how existing laws and policies work and suggests what further effort could be made.

 Malmstroem singled out public procurement, notably tenders for construction projects, as a major cause of concern.

 Graft watchdog Transparency International welcomed the report, saying it marks “an important step in the EU’s collective effort to scale up its anti-corruption efforts”.

 “It is a stark warning against complacency about corruption in any EU country,” it added.

 The report did not cover corruption in the EU’s own institutions, with the bloc’s finances reviewed by the separate Court of Auditors.

 Source : http://www.news.com.au/finance/money/breathtaking-corruption-costs-european-union-185-billion-a-year/story-e6frfmci-1226817307726

 30 - January - 2014

Wealthy Nations Preserve Bribery Loophole

 Anti-bribery experts were mostly upbeat when they met last month in Paris at the Organization of Economic Cooperation and Development (OECD) to celebrate 15 years of anti-corruption efforts. But the assembled experts agreed that work remains to be done. One of the most surprising challenges that the corruption fighters still confront: the resistance of a handful of wealthy nations, including the United States, Australia and South Korea, to abolishing one of the last legal exceptions to bribery bans. 

Facilitation payments – also known as “grease payments” – are small fees paid to low-level public officials for basic administrative tasks to which the payer is entitled. The money must be recorded by the company that makes them. While not prohibited under the OECD anti-bribery convention, the OECD encourages governments to “prohibit or discourage” such payments, calling them “corrosive” to economic development and the rule of law.

 Heeding this encouragement, more and more countries have joined the concert of nations that prohibit facilitation payments. Under the Bribery Act 2010, the UK’s Serious Fraud Office may criminally prosecute individuals and companies that use facilitation payments. In March 2013, Canada became the latest high-profile nation to declare war on grease payments, passing the Corruption of Foreign Public Officials Act. Out of 33 countries evaluated by the OECD, 25 report having no exemption for facilitation payments in their anti-bribery laws.

 Defenders of the exception argue that facilitation payments are a harmless necessity in countries where public officials earn meager salaries. The routine payments can be so small as to not be worth the attention and resources of national corruption watchdogs.

 “The reality is most bribery payments are not made where the payment is conceived of in a corporate boardroom,” said Mike Koehler, Assistant Professor Law at Southern Illinois University who founded and edits the blog FCPA Professor.

 Several wealthy nations continue to allow the practice.

 The USA permits facilitation payments the under Foreign Corrupt Practices Act, despite recent cases brought by the Securities and Exchange Commission (SEC) that found illegal bribes had been wrongly recorded as facilitation payments. In 2012, the SEC censured the Saudi subsidiary of an American pharmaceutical company for paying a customs official to release products from a port without permission.

 In Australia, a 2011 government-led public discussion on removing the exception has since lapsed silently – surprising some.

 “The whole tone of the consultation was that the Government was working to remove the exception,” said Mark Zirnsak, Director of the Justice and International Mission for the United Church’s Synod of Victoria and Tasmania.

 A number of small and large Australian businesses active in Asia, the Pacific and Africa made submissions opposing the change.

 “’Facilitation payments’ are necessary for QBE to operate in countries where governments simply do not have the resources to provide required routine government services and actions,” submitted global insurance giant QBE.

 Other companies, including large multinationals, have voluntarily prohibited facilitation payments.

 In October, New Zealand, which has not prosecuted any foreign bribery cases since 2001, was taken to task for “vague and ambiguous statutory language” that did little to discourage facilitation payments. South Korea, another country with low corporate prosecutions of foreign bribery, defends its use of the facilitation payment exception as “very narrow, and there is no confusion regarding its application”. 

Rachel Nicolson, Partner at Australian law firm Allens Linklaters and Director of the business-endorsed United National Global Compact Network board in Australia, said that the countries maintaining the facilitation payment exception are increasingly “out of step”.

 Opponents argue the exception confuses the distinction between legal and illegal payments and risks sending a message that it is “ok” to pay small bribes.

 “The reason it [the exception] exists is because for many years there was an understanding it was very difficult to get things done,” said Nicolson, “and a belief that those small payments would not be problematic.”

 But that has changed and “there is an increasing risk attached to making those payments overseas,” said Nicolson.

 Source : http://www.icij.org/blog/2014/01/wealthy-nations-preserve-bribery-loophole