Most Global Bribes Are Paid By Large Firms, Usually With Senior Managers In The Know - OECD

Tom Burroughes

3 December 2014

Most international bribes are paid by large companies and the senior managers usually know of such misconduct, according to a report of the issue by Organisation for Economic Co-operation and Development.

The Paris-based group analysed bribery cases that it said equalled 10.9 per cent of the total transaction value on average and 34.5 per cent of the profits – or $13.8 million per bribe. Given the complexity of the issues, the OECD reckons these figures represent the “mere tip of the iceberg”.

In recent years, some jurisdictions, such as the UK, have sought to crack down on bribery through new legislation. Withers, the global law firm, has pointed out, for example, that UK anti-bribery laws can have international reach. (See here.)

The OECD Foreign Bribery Report analyses more than 400 cases worldwide involving companies or individuals from the 41 signatory countries to the OECD Anti-Bribery Convention who were involved in bribing foreign public officials. The cases took place between February 1999, when the Convention came into force, and June 2014.

Almost two-thirds of cases occurred in just four sectors: extractive (19 per cent); construction (15 per cent); transportation and storage (15 per cent); and information and communication (10 per cent).

Bribes were promised, offered or given most frequently to employees of state-owned enterprises (27 per cent), followed by customs officials (11 per cent), health officials (7 per cent) and defence officials (6 per cent). Heads of state and ministers were bribed in 5 per cent of cases but received 11 per cent of total bribes.

In most cases, bribes were paid to obtain public procurement contracts (57 per cent), followed by clearance of customs procedures (12 per cent). Some 6 per cent of bribes were to gain preferential tax treatment.

“Corruption undermines growth and development. The corrupt must be brought to justice,” OECD Secretary-General Angel Gurría said. “The prevention of business crime should be at the centre of corporate governance. At the same time, public procurement needs to become synonymous with integrity, transparency and accountability.”

The report also reveals that the time needed to conclude cases has increased over time, from around two years on average for cases concluded in 1999 to just over seven today.