While the United States has earned top marks for combating cross-border corruption, significant weaknesses persist in the federal government’s enforcement system, according to a new report by anti-corruption civil society organization Transparency International.
With contributions from the Project On Government Oversight (POGO) as the U.S. country expert, Transparency International this week released Exporting Corruption 2020: Assessing Enforcement of the OECD Anti-Bribery Convention, its thirteenth report tracking worldwide enforcement of a key international anti-corruption measure. Adopted in 1997, the Organization for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions requires signatory countries to criminalize bribery of foreign public officials.
Foreign bribery is a global problem with serious consequences for people in the affected countries. It undermines development, distorts markets, imposes an unnecessary burden on taxpayers, and erodes the rule of law.
The worldwide economic crisis caused by the COVID-19 pandemic makes international bribery an even more serious threat. As the pandemic continues to wreak havoc on corporate profits and public treasuries, the temptation to offer and accept bribes will likely grow. It’s now literally a matter of life or death.
“The pervasive cross-border corruption in health care will cost additional lives unless robustly countered,” the report states. “Wasting precious public resources on corruption-fuelled deals with unscrupulous companies and intermediaries is even more deadly and damaging than before.”
As the U.S. country expert, POGO used our nearly 40 years of experience investigating government and corporate corruption to help compile enforcement data and propose reforms.
The report tracked developments in 43 OECD member countries—and non-member countries China, Hong Kong, India, and Singapore—from 2016 to 2019. Of the 47 countries, it found that only four, including the United States, are actively investigating and prosecuting companies and individuals who bribe foreign officials in order to obtain contracts, licenses, and other government concessions. By contrast, the 2018 report—the last one produced—ranked seven countries in the highest enforcement category.
An astounding 34 countries, accounting for nearly half of all global exports, are graded as having either “limited” or “little or no” enforcement of cross-border corruption. The biggest global exporters with the worst track records are Canada, China, Hong Kong, India, Japan, Mexico, the Netherlands, and South Korea.
Overall, Transparency International found little progress since 2018. Improvement in six countries was offset by decline in four other countries. Most countries, including the United States, still have deficiencies in their enforcement systems, such as lack of public information on beneficial ownership (the individuals who actually own and benefit financially from companies) and weak whistleblower protections.
The U.S. continues to lead the signatory countries in combating foreign bribery. From 2016 to 2019, the Justice Department and the Securities and Exchange Commission levied billions of dollars in penalties on, and obtained guilty pleas from, companies and individuals in 130 foreign bribery cases. Notable cases resolved during this period involved Walmart, Ericsson, Deutsche Bank, and GlaxoSmithKline.
The report also highlights two key weaknesses in the United States’ enforcement system. First, the U.S. (along with every other surveyed country) lacks a centralized and public beneficial ownership registry of companies and trusts. The lack of a registry hampers efforts to crack down on many forms of domestic and international corruption. Second, whistleblower protections are inadequate. Whistleblower protection laws have loopholes, the offices responsible for enforcing the laws do not always have the staffing, resources, or even the desire to do so, and retaliation against whistleblowers remains all-too common.
A third, less serious, deficiency is a lack of transparency in certain stages of the enforcement process. The Justice Department and Securities and Exchange Commission publish almost no information about foreign bribery investigations or the reasons they close investigations and cases without taking enforcement action.
Exporting Corruption 2020 shows that the OECD’s goal of creating a level playing field for global trade still remains out of reach. Foreign bribery and related offenses like money laundering, tax evasion, and fraud remain widespread problems. Fortunately, the report offers recommendations as to how governments can strengthen their enforcement systems by improving transparency, accountability, and cross-border cooperation.
The full report is available on Transparency International’s website.