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Inaction in China, Hong Kong, India against foreign bribery, related money laundering

Reproduced below is the executive summary of the “Exporting Corruption Progress Report 2020: Assessing Enforcement of the OECD Anti-Bribery Convention”, with Gillian Dell as lead author, published by Transparency International, a global movement with the claimed vision of having a world in which government, business, civil society and the daily lives of people are free of corruption:
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Bribery of foreign public officials has huge costs and consequences for countries across the globe and those costs have become more severe during the COVID-19 pandemic. With so many cases of foreign bribery occurring in health care, we cannot afford for corruption to cost any additional lives.
Transparency International’s 2020 report, Exporting Corruption, rates the performance of 47 leading global exporters, including 43 countries that are signatories to the Organisation for Economic Cooperation and Development (OECD) Anti-Bribery Convention, in cracking down on bribery of foreign public officials by companies operating abroad.
The report shows how well – or poorly – countries are following the rules. More than 20 years after the Convention was adopted, most countries still have a long way to go in meeting their obligations. In fact, active enforcement has significantly decreased since our last report in 2018.

Top cases of foreign bribery

More than a decade ago, increased enforcement against foreign bribery, especially in the United States, exposed egregious, multi-country bribery schemes of companies like Siemens and BAE Systems to the detriment of the people in the countries affected. Enforcement uncovered large-scale bribery of highlevel officials by companies like Halliburton, enabling them to win major infrastructure projects. These cases sent shockwaves worldwide. Yet, despite these scandals, bribery continues to be used by companies from major exporting countries to win business in foreign markets.1 In recent years, multinationals like Airbus, Ericsson, Odebrecht, Rolls Royce and many more have been caught redhanded in systematic and widespread bribery schemes. Corruption in international business transactions undermines government institutions, misdirects public resources, and slows economic and social development. It distorts cross-border investment, deters fair competition in international trade and discriminates against small and medium-sized enterprises.

Foreign bribery during COVID-19

Those costs have increased during the COVID-19 pandemic. The pervasive cross-border corruption in health care will cost additional lives unless robustly countered. But the dangers of corruption during COVID-19 go beyond the health sector. Triggered by the pandemic, a global economic crisis is also depleting public treasuries. Wasting precious public resources on corruptionfuelled deals with unscrupulous companies and intermediaries is even more deadly and damaging than before. As companies’ profits shrink, the temptation will grow for them to win business in foreign markets at any cost and by any means. The states where multinationals are headquartered may hold back foreign bribery enforcement on short-sighted economic grounds. The need for robust foreign bribery enforcement is as urgent today as when the OECD Anti-Bribery Convention was first adopted in 1997. Now more than ever, we need stronger foreign bribery enforcement and international cooperation and coordination.

About the report

Exporting Corruption is an independent assessment of the enforcement of the OECD Anti-Bribery Convention (short for OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions), which requires parties to criminalise bribery of foreign public officials and introduce related measures. This is the thirteenth edition of the report. Country implementation of the Convention is monitored in successive phases by the OECD Working Group on Bribery (OECD WGB), which is made up of representatives of the 44 signatories to the OECD Anti-Bribery Convention. The reviews also cover implementation of the 2009 Recommendation of the OECD Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions (2009 Recommendation). The 2009 Recommendation is being updated by the OECD WGB.

Classification

The report classifies countries into four enforcement categories: Active, Moderate, Limited and Little or no Enforcement.
Countries are scored based on enforcement performance at different stages, namely the number of investigations commenced, cases opened and cases concluded with sanctions over a four-year period (2016-2019).
Different weights are assigned according to the stages of enforcement and the significance of cases.
Country share of world exports is also factored in.
The report covers 43 of the 44 parties to the Convention. Iceland is not included, due to its small share of global exports. In addition, the report assesses foreign bribery enforcement in China, Hong Kong SAR, India and Singapore. While not part of the OECD Convention, China is the world’s leading exporter, with nearly 11 per cent of global exports. The others are also major exporters, each with a share of approximately 2 per cent of global trade.
All four countries are also signatories of the UN Convention against Corruption (UNCAC), which requires countries to criminalise foreign bribery. The analysis of Hong Kong SAR is separate from China, as it is an autonomous territory, with a different legal system and its export data is compiled separately. The OECD Convention was adopted in 1997 to address the fact that:
“Bribery is a widespread phenomenon in international business transactions…which raises serious moral and political concerns, undermines good governance and economic development, and distorts international competitive conditions.”

OECD Convention preamble

The report assesses enforcement performance and highlights key gaps in information about enforcement, as well as slow country progress in introducing central public beneficial ownership registers, a crucial tool for detecting, investigating and preventing foreign bribery and related money laundering. In addition, the report examines the critical issues of victims’ compensation, international cooperation, parent-subsidiary liability and country performance in improving legal frameworks and enforcement systems to address foreign bribery.

Key findings

1. Active enforcement is down significantly. Only four countries actively enforce against foreign bribery, which represents 16.5 per cent of global exports, a decrease of more than onethird (39 per cent) since 2018.
2. Moderate enforcement has more than doubled. Nine countries moderately enforce against foreign bribery, more than double the four countries in 2018. This represents an increase in share of world exports from 3.8 per cent to 20.2 per cent since 2018.
3. No country is immune to exporting foreign bribery. Nearly every country has companies, employees, agents, intermediaries and facilitators involved in foreign bribery or related money laundering.
4. Most countries fail to publish adequate enforcement information. Most countries do not publish national statistics on foreign bribery enforcement. Courts often do not publish judgements and information on non-trial resolutions is frequently inadequate.
5. Lack of public information on beneficial ownership hinders enforcement. Results show very slow progress in establishing central public beneficial ownership registers of companies and trusts. Such registers are key to prevention, detection and investigation of foreign bribery.
6. Compensation of victims is rare. The countries, groups and individuals harmed by foreign bribery rarely receive compensation, and most confiscated proceeds of foreign bribery wind up in the state treasuries of the countries exporting corruption.
7. International cooperation is increasing, but significant obstacles remain. Insufficient or incompatible legal frameworks, limited resources and expertise, lack of coordination, jurisdictional competition and long delays hinder progress in international cooperation.
8. Weaknesses in legal frameworks and enforcement systems persist. Despite some improvements, significant weaknesses in laws and institutions hamper enforcement in nearly every country. Problems include weak or nonexistent whistleblower protection, low sanctions, inadequate training of enforcement officials, insufficient resources and limited independence of enforcement authorities.
9. Major non-OECD Convention exporters still fail to enforce. There is inaction in China, Hong Kong SAR and India against foreign bribery and related money laundering. Singapore has taken only small steps.

Recommendations

Countries must do more to enforce against foreign bribery, including those that are signatories to the OECD Anti-Bribery Convention, as well as other major global exporters. Key measures to improve enforcement include:
1. Ensure transparency of enforcement information. Countries should publish up-todate statistics on all stages of foreign bribery enforcement as well as on mutual legal assistance (MLA) requests. They should also publish court judgements and extensive information on non-trial resolutions, as called for by the OECD WGB. Publicly available statistics are key to determining how the enforcement system is functioning, and case information is crucial for assessing effectiveness and fairness. The OECD WGB should update its 2009 Recommendation to include a recommendation on transparency of enforcement information, carry out a horizontal assessment of the issue across all parties and develop guidance for countries.
2. Expand the OECD WGB’s annual report and create a public database of enforcement information. The OECD WGB’s annual enforcement data should include updated year-on-year data on all stages of foreign bribery enforcement and cover new developments and challenges. Given its special access to statistical data and case information, the OECD WGB should also create a public database of foreign bribery enforcement information to assist law enforcement efforts across countries, victims’ claims, and investigative work by journalists and civil society activists.
3. Improve beneficial ownership transparency. To enhance prevention, detection and investigation of foreign bribery, countries should establish public central registers containing beneficial ownership information on companies and trusts and introduce sanctions for individuals and companies that do not comply. The OECD WGB should update its 2009 Recommendation to include a recommendation on this subject and assess performance in country reviews.
4. Introduce victims’ compensation as standard practice. The OECD WGB should develop guidelines to assist exporting countries in granting compensation to victims in foreign bribery cases and countries should implement them. These should include timely notice to victims, recognition of a broad class of victims and wide range of harms, the possibility of claims by non-state victims and their representatives, and standards for the transparent and accountable return of assets. The OECD WGB should update its 2009 Recommendation accordingly and OECD WGB country reviews should evaluate country compensation arrangements.
5. Improve international cooperation. Major global exporters should improve their legal frameworks, invest the necessary resources and build the required expertise for international cooperation. They should respond to MLA requests in a timely fashion and use joint investigation teams for crossborder investigations. They should also engage early with the affected countries. The OECD WGB should conduct a horizontal assessment of MLA performance and coordination of multijurisdictional cases and settlements, in collaboration with the UN Office on Drugs and Crime (UNODC) and other relevant bodies.
6. Improve and expand international structures for cooperation. The OECD WGB should facilitate discussions on expanding existing regional and international structures and bodies or creating new ones to improve international cooperation in enforcement. The International Anti-Corruption Coordination Centre, Eurojust and the European Public Prosecutor’s Office all provide examples to build on.
7. Explore increased liability of parent companies for subsidiaries. The OECD WGB and individual countries should conduct an indepth review of established law and practice in this area. To help improve anti-corruption compliance, they should consider introducing parent company responsibility for taking adequate measures to prevent foreign bribery and related money laundering in all subsidiaries and controlled entities. At a minimum, they should require that ownership chains are declared in foreign bribery cases.
8. Address weaknesses in laws and enforcement systems and call out noncompliance. Countries should address weaknesses hindering enforcement, including relating to money laundering, accounting offences and confiscation. They should discuss the results of OECD WGB reviews with national stakeholders and present plans to address shortcomings. The OECD WGB should continue to conduct follow-up, make public statements and carry out high-level visits to countries that fail to enforce laws against foreign bribery and implement OECD WGB recommendations. It should coordinate with other anti-corruption review mechanisms, such as the UNCAC Implementation Review Mechanism and the Council of Europe’s Group of States against Corruption (GRECO), as well as the Financial Action Task Force, to point out country inadequacies. It should also consider, as a last resort, a series of steps towards suspending members that persistently fail to pursue foreign bribery allegations over a period of years.
9. Establish high standards for non-trial resolutions. Countries should ensure that non-trial resolutions meet standards of transparency, accountability and due process, with clear guidelines and judicial review. Nontrial resolutions should provide effective, proportionate and dissuasive sanctions and  those who paid and received the bribes should be named in the published documents. The OECD WGB should include a new recommendation on non-trial resolutions in its revisions to the 2009.
10. Enlist wide support to promote foreign bribery enforcement in non-OECD Convention countries. The OECD WGB and member countries should raise enforcement issues with respect to non-OECD Convention countries at the UN, G20 and in other international forums. This should include issues on both the supply and demand side.

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