A Global Economic and Moral Imperative

Fighting corruption is an economic necessity. It is also a moral imperative that needs to become a top legal priority around the world. There is no country on earth that is immune from this plague.
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In too many parts of the world, public corruption is still accepted as part of the cost of doing business.

This apathy is chipping away at the foundations of international trade.

Since 1994, according to the best data available, foreign government officials have allegedly been bribed to award at least 800 contracts worth about $450 billion. In the past year alone, United States companies are believed to have lost out on deals worth about $27 billion because they refused to play by corrupt rules and bribe foreign officials.

There is no country on earth that is immune from graft or public corruption. And those who offer a bribe are as complicit in public corruption as those government officials who accept it.

That's why, on Wednesday, International Anti-Corruption Day, the Organization for Economic Cooperation and Development (OECD) released a new Anti-Bribery Recommendation to mark the tenth anniversary of the OECD's Anti-Bribery Convention taking effect.

The Anti-Bribery Recommendation builds on substantial progress already made in the past decade. With measures to combat small facilitation payments, protect whistleblowers, and improve communication between public officials and law enforcement authorities, the new Recommendation improves our ability to prevent, detect and prosecute foreign bribery as a crime.

This will help take the fight against the bribery of foreign public officials into the next decade.

Our goal: to raise awareness of foreign bribery as a crime, to illustrate the negative impact of foreign bribery and to increase interest in anti-bribery measures for every country.

We know much is at stake. In the past 10 years, world trade in goods and services has grown 180 percent. So when the global economy starts firing on all cylinders again -- as it undoubtedly will -- competition for contracts and the pressure to pay bribes to win them, will increase.

And that will harm nascent economic growth and the improved quality of life such growth delivers for people around the globe.

Whether a company wins a contract should be based solely upon the quality of the company's idea and the effectiveness of its business plan, not upon which officials' palms were greased or by how much. Corruption stifles innovation and scares away legitimate investors. And without entrepreneurs and their funders, no economy can create sustainable well-paying jobs.

For developed exporting countries, corruption is a trade barrier to exports that blocks otherwise competitive companies from contracts that are only won through graft.

But poorer countries feel the effects of transnational bribery most acutely.

In countries where public corruption thrives, ordinary citizens pay the price.

It's no coincidence that the countries most synonymous with public corruption - Somalia, Myanmar and Sudan, to name a few - have some of the highest incidence of human suffering.

Developing countries are defrauded by public officials to the tune of about $40 billion a year, according to the World Bank. The real figures may be higher. That's money potentially diverted from purchasing food, medicine or needed supplies.

In the developing world, public corruption is most severe in the weapons trade and infrastructure sectors.

Earlier this year, Kellogg Brown & Root LLC, and its parent company, Halliburton, paid a $402 million criminal fine to the U.S. government after they paid or promised hundreds of millions of dollars in bribes to Nigerian officials to win contracts to build liquefied natural gas facilities. Instead of Nigerian citizens being able to reap a windfall from their country's natural resources and seeing funds that might go towards vital services, top Nigerian officials made off with millions in bribe money.

Sadly, this is not an isolated example. Last year, Siemens A.G., and three of its subsidiaries pled guilty to making corrupt payments to officials around the world, and agreed to pay U.S. and German regulators $1.6 billion.

But no sector is immune from corruption's pernicious effects. Take the case of water - the critical staple of human life.

Water provides 20 percent of the world's electricity, and through irrigation, provides 40 percent of the world's food requirement.

But in developing countries, households often pay a 30 percent corruption premium for water use.

Nations like El Salvador, Jamaica and Nicaragua spend about 10 percent of their national income on water while developed nations like the United States spend only about 3 percent of their income on water. This disparity is due in part to corruption.

These numbers are disheartening. And yet, progress is being made.

In past five years, the United States has brought 60 criminal cases under the U.S. Foreign Corrupt Practices Act, the statute outlawing bribery of foreign officials. This amounts to more cases than were brought in the previous 27 years combined, since the statute was passed in 1977.

And in the decade since the OECD Anti-Bribery Convention took effect, the 38 countries who are Parties to the Convention have made it illegal to bribe foreign public officials. This has directly resulted in the sanction of more than 150 individuals and companies for bribery and related offenses. There are currently nearly 250 more ongoing investigations of bribery allegations that could be covered by the Convention.

Finally, in Doha a few weeks ago, more than 100 countries, including the United States, built upon the 2003 U.N. Convention Against Corruption by pledging to adopt a monitoring mechanism to ensure countries are living up to their treaty obligations.

Still, much remains to be done.

Countries must enact laws making corporations liable for bribery of foreign public officials. Many OECD nations have yet to win a single criminal conviction for foreign bribery, even though they have had anti-bribery laws on their books for a decade.

Moreover, countries that do not have foreign bribery laws must enact and enforce them so that the economic playing field is leveled for everyone and does not favor those companies that freely bribe foreign officials.

Fighting corruption is an economic necessity. It is also a moral imperative. And it needs to become a top legal priority around the world.

On this week where we mark International Anti-Corruption Day, all of us must redouble our efforts to stop it.

Gary Locke is the current Commerce Secretary for the United States in the Obama administration. Angel Gurria is the current Secretary General of the Organization for Economic Co-operation and Development (OECD)

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