International bribery rife, but met with global enforcement

International bribery of public officials by multimillion dollar companies is rife, according to a University of Portsmouth bribery expert giving evidence to a parliamentary enquiry.

Dr Branislav Hock, in the University’s Institute of Criminal Justice Studies, is an expert in the effectiveness of foreign anti-corruption law.

He was called as an expert witness to a parliamentary committee on the Bribery Act 2010.

In his evidence, Dr Hock said corruption invites corruption; that there is a stark contrast in anti-corruption compliance between small and medium sized enterprises and large multinationals;  and that the OECD anti-bribery convention, which aimed to create a level playing field between corporations focusing on bribery in international business, was “the most effective anti-corruption treaty in history”, but bribery was still highly prevalent.

“It is a serious problem. There is still a lot of bribery, but it is very difficult to obtain data.

“First, there is the perception. We can look into the perception of corruption and bribery from the point of view of how the UK as a country is perceived, for example with regard to the Transparency International Corruption Perceptions Index. However, the problem is that if UK businesses, or other businesses from developed countries, bribe in developing countries, they usually bribe in countries that are the lowest-ranked on the perceptions index. So there might be a problem with these perception indexes, because bribery has a supply and demand side.

“Secondly, we can find out whether there is a lot of bribery by looking into cases. The problem there is whether, when we see more cases, it means that the criminal justice system is just working more effectively, or that bribery is increasing.

“It is useful to think about the third point: if you look into anti-trust enforcement you are looking into more developed enforcement regimes. Not all anti-trust cases are related to bribery, but as an example, the European Union has been enforcing anti-trust law since the late 1960s and we are still seeing billion Euro sanctions every year, even after 50 years, which suggests there must be a lot of bribery out there.”

He called on government to discriminate between large multinationals and small and medium sized enterprises in assessing what effect the Bribery Act has had on UK businesses.

He said: “There is a huge difference. Originally, the Bribery Act was meant to regulate large multinationals as a result of certain problems and enforcement issues.

“Most large multinationals already had to comply with US law before the Bribery Act was adopted, so it is nothing too new for large multinationals. What is new, however, is that the Bribery Act and its enforcement is an exemplification of a more multilateral enforcement regime. It is not only the US that is enforcing law on anti-corruption; many more countries, including the Netherlands, the United Kingdom and Brazil for instance, are now enforcing it.

“These large multinationals often face multiple overlapping enforcement actions. That is the main effect of the Bribery Act: Large multinationals need to take into account that, if they engage in bribery, they are likely to face multiple enforcement actions coming from many countries.

“When it comes to small and medium-sized enterprises, this is very new. There are all these issues relating to adequate procedures, failure to prevent bribery, the necessity to implement effective compliance programmes. If the Bribery Act is enforced against small and medium-sized enterprises, the impact is potentially huge. The government should support small and medium-sized enterprises in their effort to comply with the Act, for example by supporting research on appropriate standard of compliance.”

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