Foreign Bribery Enforcement Hasn’t Dented Practice, Report Says

By Alan Katz

Efforts to crack down on foreign bribery have failed to stem the practice as a proportion of global trade, despite some high-profile anti-corruption cases, according to a report by Transparency International.

Only about a quarter of the world’s exports come from countries with active law enforcement efforts against international corruption, the anti-graft group wrote in the report. While it noted improvement in eight countries, including Brazil, Israel and Italy, enforcement declined in four others.

The group also examined China, India, Hong Kong and Singapore for the first time and categorized them as doing little or nothing to stop their companies from bribing officials outside their borders.

“Global trade has been expanding exponentially, and therefore opportunities for corruption rise,” Gillian Dell, the report’s author, said. “There is danger of a race to the bottom with countries emerging as export leaders that are doing nothing at all.”

Several big international bribery cases have been resolved since the organization’s last report was released in 2015. They include a $2.6 billion settlement in 2016 by construction company Odebrecht SA for paying bribes to officials at the Brazilian oil company Petrobras, and a $585 million resolution this year against French bank Societe Generale for bribes paid through a broker to secure investments from Libyan state institutions.

In all, the countries that Transparency International rated as having active or moderate enforcement — a list that includes the U.S. — represented about the same share of world exports as in 2015.

“We had hoped that there would be some dramatic changes,” Dell said. Instead, “we still see huge amounts of straight-ahead foreign bribery, in procurement, license granting and other areas, that is helping to keep people impoverished.”

Canada and Finland are among the four countries with declining enforcement levels, according to Transparency International. Canada hasn’t sustained its anti-bribery push since 2015, Dell said, when police there charged SNC-Lavalin Group with attempted bribery related to construction projects in Libya. Finland is a concern because it had a 100 percent acquittal rate in foreign-bribery cases and a lack of specialized prosecutors, Dell said.

China has criminalized foreign bribery, abut Dell said she was unaware of any enforcement. “China is the world’s leading exporter, so what they do affects the global marketplace,” she said

The U.S. charged a former Hong Kong cabinet minister last year of trying to bribe African government officials to win business for a Chinese energy company. The description of the company matches that of CEFC China Energy Co.

© 2018 Bloomberg L.P