Bribery is generally recognized as a cancer that adds considerably to the cost of international projects.
November 4, 2011
by Mark Drake
Bribery and corruption are very much in the news. Massive political changes in Tunisia, Egypt and throughout much of the Middle East were caused in large part by corruption. It has become such a problem in India that a web site has been created to allow reluctant bribers to “name and shame” (www.Ipaidabribe.com).
Bribery is generally recognized as a cancer that adds considerably to the cost of international projects. Apart from this, many practices considered normal – even tax-deductible – a few years ago are now against the law. What advice is there for the global trader?
Let’s begin with the fountain of all bribery knowledge: Transparency International (www.transparency.org). This German-based international organization, headed up by Canada’s Huguette Labelle, has offices all over the world, and a very active branch office in Canada (www.transparency.ca).
TI is best known for its annual Bribery Perceptions Index (BPI). Users check any of 178 countries against an index varying from very clean (Canada, Scandinavia, Australia and New Zealand) to highly corrupt (Angola, Sudan, Myanmar). In between are many countries where there is clearly need for caution (Russia, Indonesia, many African countries, Mexico, India and China).
TI also publishes an index of Prime Bribers. In 2008 these included China, India and Russia, primarily in the area of public works and construction, oil and gas, manufacturing and mining.
TI Canada recently published a useful anti-bribery checklist that suggests corporations ask these questions:
• Policy. Is there an up-to-date formal, published policy stating zero tolerance of bribery and a clear commitment to obey anti-bribery laws worldwide?
• Implementation. Is there regular risk assessment and does the policy have detailed procedures/controls for donations, facilitation payments, gifts, hospitality and travel expenses? Is the leadership walking the talk, are managers responsible for carrying it out, is it applied throughout all operations, and has it been communicated to all stakeholders? Is training provided, is there a confidential channel for whistle blowers, and are internal financial controls adequate to ensure compliance?
• Monitoring. Are the control systems subject to regular review and audit are there sanctions in place to deal with incidents of bribery and is the program made public?
TI also publishes Business Principles for Counteracting Bribery, which provides a framework for companies to develop comprehensive anti-bribery programs.
Doing so is now reinforced by some compelling legislation.
The USA 1977 Foreign Corrupt Practices Act (FCPA) was followed by the 1999 OECD Convention on the Prevention of Bribery and Corruption in International Business, which 39 countries, including Canada ratified.
Essentially Bill S-21 makes it illegal for Canadian companies to bribe foreign public officials through loans, rewards, advantages or benefits for competitive advantage. Facilitation payments to officials performing routine duties (such as clearing goods through customs) are permitted under the Canadian legislation.
The penalties? For an indictable offence, up to 10 years in prison. For a summary conviction, a fine up to $50,000 and/or up to six months in prison.
Penalties for companies can be much higher. Niko Resources of Calgary has just been fined $9.5 million for bribing a minister in Bangladesh in direct contravention of the Canadian law.
In summary, it makes good business sense to have a clear anti-bribery policy in place, particularly when in countries on the low end of the TI index are involved, where a firm initial “no-bribe” decision avoids the risk of doing time in the local jail.
Mark Drake is former president of Electrovert Ltd. and the Canadian Exporters’ Association. E-mail email@example.com.