Ending bribery in business deals

By Wiwit Wirsatyo

JAKARTA (JP): As the 21st century approaches, nation states are hurriedly attempting to implement programs of massive and systematic reform to cope with the new paradigm of globalization, liberalization, transparency and accountability.

The reason for this end-of-century flurry of activity is the widely recognized fact that a more open, just, and competitive business environment is essential to take full advantage of the cross-border investment opportunities which have been unleased through late 20th century technological developments.

Democracy, democratization and good governance have become burning issues on the international agenda. The need for political stability, economic security and the rule of law are almost universally acknowledged as essential to progress and this near-consensus is driving efforts to rid economies of corruption and bribery.

The sensitive issue of bribery is discussed by Kimberly Ann Elliot in her recent Corruption and the Global Economy (1997). She revealed that bribery is considered acceptable behavior in many countries around the world.

Furthermore, in spite of their notorious reputations for corruption, a number of developing nations have enjoyed speedy and sustained rates of economic growth, with the fruits of this rising prosperity spread widely across the population.

In his authoritative book entitled The Sociology of Corruption (1975), Syed Hussein Alatas argued that in most cases the problem of corruption goes beyond an issue of plain illegality and hits at the basic values of honesty and integrity in the societies where bribery is considered acceptable.

Most countries have systematically developed laws to combat bribery and corruption in their own jurisdictions, but only a few have laws prohibiting bribery in international business transactions. The U.S. is one such country. Since the introduction of the 1977 Foreign Corrupt Practices Act, the U.S. has steadfastly pursued efforts to eradicate the scourge of bribery, and these endeavors are thought to have played a significant role in setting the much larger global movement for transparency and accountability into motion.

The world's major trading nations, led by the U.S., have stepped up efforts to obliterate bribery from business in all countries. For example, the United Nations (UN) in 1996 and the Organization for Economic Cooperation and Development (OECD) in 1997 both issued declarations against corruption. In March 1996 the Organization of American States (OAS) completed drafting the Inter-American Convention Against Corruption. The First Ministerial Conference of the World Trade Organization (WTO), held in Singapore in December 1996, discussed an interim arrangement to increase transparency and openness in government procurement and the World Bank and International Monetary Fund (IMF) have both announced substantive revisions to their guidelines which are intended to guard against corruption in procurement for projects which they fund.

The 1996 United Nations Declaration against Corruption and Bribery in International Commercial Transactions defines bribery as "the offer, promise or giving of any payment, gift or other advantage, soliciting, demanding, accepting or receiving directly or indirectly, by any private or public corporation or individual to any public official or elected representative of another country as undue consideration for performing or refraining from the performance of that officials or representatives duties in connection with international commercial transactions."

The declaration urges governments and companies "to develop and maintain accounting standards and practices that improve the transparency of international commercial transactions," and to "cooperate and afford one another the greatest possible assistance in connection with criminal investigations and other legal proceedings brought in respect of corruption, bribery and all related practices."

The declaration is more of a moral statement of intent than a set of strictly binding rules. It also specifies that any actions taken against corruption must fully respect national sovereignty and the territorial jurisdiction of other countries and be consistent with human rights and fundamental freedoms.

After a bruising diplomatic campaign and arduous negotiations, the 29 member states and five non-member states of the OECD finally agreed to the text of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions on Nov. 21, 1997. They also agreed to a motion obliging each signatory country to draft national laws which would uphold the terms of the convention by the end of this year.

The convention requires that member countries define what constitutes bribery of a foreign official in terms similar to those used in the U.S. Foreign Corrupt Practices Act. Those found guilty of bribing foreign officials must face the same punishments as those found guilty of bribing public officials in their own countries, and the profits from any bribe-induced transactions must be seized and confiscated.

This indicates a greater willingness on the part of both major trading nations and developing countries to systematically eradicate international corruption, the spread of which constitutes a major threat to accountability and transparency in the global economy.

The main aim of all these treaties and conventions is to level the business playing field, particularly in developing nations where the process of obtaining contracts is often thoroughly corrupt. Consequently inefficient operators frequently win bountiful and strategically important contracts at the expense of both local and foreign ventures in a better position to successfully implement the tendered projects.

One reason why successful foreign firms lose out on lucrative contracts is because their employees lack cultural awareness. This fact is said to be behind many of the misunderstandings which arise between companies and governments from industrialized and developing nations. There are also many other factors which go into deciding who wins what in the business sectors of many corrupt countries.

Some European business leaders tactfully argue that they need a certain degree of freedom to buy "influence" to offset the power of larger American competitors and the economic and diplomatic support which they frequently get from their national government. However, it seems the cost of "persuading" people in this way has risen exponentially with the expansion in global trade.

Any efforts to further global anti-bribery activities will only be effective if they are based on fixed principles such as those outlined by the United Nations. Furthermore, the principle must apply equally to all nations, large and small, rich and poor. Efforts should also pay close attention to the issues of national sovereignty, common interest and benefit, and an equitably sharing of responsibility.

It is clear that developing nations must take measures to put an end to the belief that bribery is an acceptable act. It is imperative that developing countries improve their human resources and modernize their attitudes regarding business ethics. A comprehensive international development program, including technical assistance based on a spirit of genuine partnership, would greatly help efforts to achieve this end.

In the light of the noble objectives of anti-bribery efforts, all nations should be alert to attempts to further hidden agendas under the banner of the campaign, particularly attempts to smuggle in new conditionality and protectionism to the development process. All nations should be aware that no single nation has the exclusive right to impose its own individual and unilateral concept or interpretation of the basic anti-bribery principle on other nations, or to level baseless accusations, or to preach moral lessons to others.

As we approach the next millennium, finding a way to proceed with development and international economic cooperation in a transparent an accountable way has emerged as the most crucial challenge faced by the international community. Anti-bribery activities should therefore be given the highest priority.

The writer is an international business observer who holds a Master of Law degree from the University of London (QMC).

Window A: It is clear that developing nations must take measures to put an end to the belief that bribery is an acceptable act. It is imperative that developing countries improve their human resources and modernize their attitudes regarding business ethics.