Global anti-corruption compliance trends
03 December 2019 08:33
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This year is the 20th anniversary of the implementation of the OECD’s Anti-Bribery Convention. So, we went to Paris to meet Patrick Moulette, Head of the OECD Anti-Corruption Division. He explained that the global spread of negotiated settlements, particularly Deferred Prosecution Agreements, prompted the OECD to recently launch a new study into DPAs. He warned that recent challenges to globalization must not be allowed to stop international cooperation to fight corruption.
What is the main trend you see for anti-corruption compliance in 2019?
“The overall trend is that corruption remains a global threat and maybe it has become even more on the top of the international agenda, it is the number one issue. I think in all countries in the world there is a corruption issue and you can see it in the light of the recent elections in some countries.”
Tell us about a trend in anti-corruption enforcement?
“The use of negotiated settlements to resolve foreign bribery cases is a major trend. It has really grown - the OECD published its Foreign Bribery Report at the end of 2014 which found that 69% of the bribery cases were concluded on the basis of such a settlement. This trend will only increase—it is now developing in Europe, for example with Sapin II in France.”
“Negotiated settlements did not really exist to this extent when the OECD Anti-Bribery Convention was adopted so we need to draw the lessons from this historical evolution—for example, whether negotiated settlements are more effective, why are they used, what are the safeguards.”
“We plan to launch a cross-country study on the use of settlements. With this study, we will have a unique picture of the situation. It should open the way for recommendations for countries and the private sector.
For example, we know that settlements need to be transparent. It is very important for the public at large to know what its conditions were.”
What is the overall trend in global anti-bribery and corruption legislation?
“Since the adoption of the OECD Anti-Bribery Convention in 1997 and its implementation in 1999, the trend has without any doubt been towards stronger legislation and measures. What is really changing is enforcement and the actual results and there are more and more cases. But almost half of the countries who signed the Convention have still not concluded a case of foreign bribery, so this is still a matter of concern. Progress is slow but sometimes there are waves of improvement, like if there has been an international commitment in the context of the G20 or OECD which boosts reforms.”
“But there are now challenges coming from those who question the benefits of globalization. To fight corruption effectively, the response needs to be global and if this is put into question, the fight will be less efficient than it has been so far.”
Are countries increasingly working together to tackle corruption?
“In all the treaties, whether it is the OECD or the UN, there are provisions to ensure that countries provide each other with information about cases of corruption. Good international cooperation is fundamental to tackling corruption because there is not a single corruption case which stays in a given country—even domestic corruption cases have international ramifications, and it’s even more true for bribery in international business transactions. There are some interesting recent cases which show increasing evidence of international cooperation, for example the agreement in the Odebrecht case reached by the U.S., Switzerland and Brazil which led to the biggest international settlement. But maybe there are not enough examples of this scale.”
“A bigger issue than what these treaties say is how they work in practice. In the OECD Working Group on Bribery, there is a special group of law enforcement officials - prosecutors, judges and police—who meet separately twice a year for confidential meetings in which they discuss trends and cases. This has been a very helpful development, even though it is only 44 countries who signed the OECD Anti-Bribery Convention so we cannot solve all the world’s corruption issues. Having networks of prosecutors is an important factor for good and effective mutual legal assistance, and more of these have been developed in Eastern Europe and Central Asia and in Asia-Pacific and, as of October 2018, a new one bringing together 14 countries in Latin America has been established.”
How is technology affecting the fight against bribery and corruption?
“The question for us is whether new technologies are a corruption risk or a remedy, and I think they are both. The anti-corruption community is lagging behind the criminals and we need to do more work to look at trends like virtual currencies being used for bribery or money laundering. The trends in criminal activities emerge at first and it usually takes some time before the community of regulators and policymakers becomes fully cognizant and then addresses the issue. Indeed, new technology and corruption will be the main topic of the OECD Global Forum on Anti-Corruption and Integrity.”
“Technology is obviously a welcome tool and it should be used more and more. New blockchain technologies can help as a remedy by monitoring the situation and securing information that law enforcement agencies need to share. New technologies like Artificial Intelligence can also help. But a human judgement is still important and necessary in some cases. Technology helps you to access the first flow of information more easily and quickly but at some point, you cannot avoid the need to use the brain’s thoughts, feelings and sensitivity. We should not rely on automatic and virtual solutions alone to solve the problem of corruption.
What role does the private sector have in combating corruption?
“The private sector should be seen not only as a problem but as part of the solution to tackling bribery and corruption. Business definitely has a key role to play and we are seeing that more and more companies want to be part of the solution.”
“Corruption risks are higher in specific sectors than others, for example it is higher in the areas of infrastructure, communication and natural resources, so we should encourage companies to develop guidance or collective action which prevent and fight corruption within a sector. We are already seeing examples of this and there is big potential here.”
“It is always important to keep in mind that there are various types of companies and the multinationals are obviously at a different level than SMEs. Multinationals can assist SMEs because the latter also face important corruption risks—it is not the case that because you are small you do not face the same risk of corruption, in some cases it is quite the opposite. It is the duty of the multinationals to help other companies because they need the SMEs in the global supply chain. We know that multinationals can afford services from major law firms and it is easier for them to be equipped with the right compliance programs and resources. SMEs do not necessarily have those resources.”
What advice do you have for CEOs looking to put in place better ABC measures?
“The main message is let’s not rely on an automatic approach, ticking the boxes of meeting regulatory requirements around anti-corruption, which is something that is done in some companies. Instead, companies should treat anti-bribery and corruption as an overall cultural issue, rather than being too automatic or mechanical.”
How do corruption risks vary by country?
“Here there are preconceived ideas and then the reality. One of the conclusions of the OECD’s 2014 Report on Foreign Bribery was that bribery does not only take place from the north to the south but most of the time it is between countries with high to very-high levels of human development.”
“Unfortunately, some of the major economies and members of the G20 like China, India and Indonesia have not signed the Anti-Bribery Convention so they are outside this environment where there are high standards and a robust evaluation system to ensure effective implementation. This is a real issue, not only for these countries themselves, but also worldwide given the importance of their economy.”
What is being done to tackle hidden beneficial ownership?
“There has been a recent trend towards the development and adoption of standards around the issue of beneficial ownership by fora including the OECD, FATF and G20. But there remain issues in the implementation of these standards. Law enforcement authorities still have huge difficulties in finding out who is the beneficial owner of a company and where the illegal money has actually gone. We see it from the feedback we get from law enforcement officials. Despite recent progress, the issue has not been fully solved and maybe the rules need to be refined to help the authorities access information and share it with their counterparts in the same country or other countries.”
What role does the media have to play in exposing bribery and corruption in 2019?
“The media has a key role to play. The OECD recently produced a report on investigative journalism which shows that the role of the media in detecting bribery is a clear trend. We are counting on journalists to reveal cases or at least to mention allegations of bribery and then, if law enforcement does their job, they will look at the information, compile the press articles and draw some conclusions. It has become a key source in the detection of corruption cases.”
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