A 2007 Sri Lankan stamp commemorates International Anti-Corruption Day
When the UN General Assembly came together ten years ago in New York and adopted the United Nations Convention against Corruption (UNCAC), it also chose to designate December 9 as International Anti-Corruption Day to raise awareness of corruption and the worldwide struggle against it. How far we’ve come over the last decade!
Today, UNCAC has 140 signatories and more governments are enforcing national anti-bribery laws than ever before. Alongside increased enforcement and new laws, there has also been a sustained push to make governments themselves more transparent. The success of open data initiatives, the increasing trend for governments to publish contracts in the extractive industry and the passage of new freedom of information laws in dozens of countries over the last few years have made government officials more accountable for their actions and created an exciting new expectation of government transparency as a political and cultural ideal.
Multinational corporations and financial institutions have also made combatting corruption a boardroom priority in their business dealings. Today, implementation of robust anti-bribery compliance controls has become an established norm, and every year more and more companies are coming together to share best practices and benchmark strategies for better anti-bribery compliance success.
We realize of course that there is still much work to be done, and that it would be impossible to deny that corruption is endemic to many parts of the world. We were reminded of this fact just this week by Transparency International’s latest Corruption Perception Index, in which two thirds of countries scored poorly. From the streets of Brazil to those of Bulgaria, grassroots protests and civil unrest mark continued dissatisfaction with government corruption, which robs millions of the world’s poorest citizens of proper access to health, education and other basic government services.
Looking back at the last ten years, however, there is reason for modest optimism. Significant improvements have come from all sides- from government, from business and from civil society. Corruption may still be thriving, but at the very least it is more openly discussed than ever before. December 9th marks a day to think about what’s worked, what hasn’t worked and what lessons we’ve learned over the past decade. Hopefully in another 10 years we’ll be able to look back and once again be amazed at just how far we’ve come.
Bangladesh’s garment industry is reportedly worth $20 billion, making it the world’s second largest among exporters of textiles. Last week, the government passed a new law to increase the minimum wage of garment workers by 77% (equivalent to roughly $68 per month). The law is aimed at quieting some of the unrest in the industry, which attracted increased worldwide scrutiny two years ago after a factory fire in Tazreen took the lives of 117 people, mostly women and children. An ensuing investigation found lax compliance with fire safety regulations endemic at garment factories throughout the country. This past spring, tragedy struck again when a factory located at Rana Plaza in Dhaka collapsed, leaving over 400 garment workers dead.
Understandably, improving the safety and health of workers in the industry has become a top priority for Bangladeshi’s government. But while increasing wages may provide temporary relief, the real problem may lie with rampant corruption among local government officials. According to an article published last spring by the New York Times, resident businessman Sohel Rana, the owner of the Rana Plaza factories, used illegal drug money to grease the palms of political allies who gave him dubious construction permits and other licenses without insisting on the necessary safeguards. In an article titled Deconstructing Corruption published last year by the International Bar Association’s magazine Global Insight, author Maria Shahid notes that “many state-funded construction projects are carried out by ‘construction mafias’ consisting of groups of fraudulent public officials, materials’ suppliers, politicians and construction contractors.” The practical effects can be deadly, with poorly constructed buildings and roads leading to mass deaths.
Corruption is not just endemic to the construction industry either. According to Transparency International’s Global Corruption Barometer, 40% of Bangladeshis reported having paid a bribe last year, with 44% having paid a bribe for a land service, 33% for a registry or permit service and 10% for a tax service. Seemingly simple tasks like paying bills, obtaining permits, getting electricity, or registering property in Bangladesh are often steeped in local corruption. One report by the World Bank found that obtaining zoning clearance in Bangladesh by the books takes on average 2 to 3 months longer than if a bribe is paid.
If Bangladesh wants to truly clean up the garment industry, then, it will need to address the underlying challenge posed by corruption. More…
Due to the Thanksgiving holiday, TRACE Blog is posting its monthly poll a bit early. Vote below for which story you think deserves the top spot!
- French corruption reforms enacted: The French National Assembly voted on November 5 to pass a new law against fiscal fraud and corporate tax evasion. Among other things, the new law imposes heavier penalties in cases of corruption and misuse of company assets. Late last month, France created the new Central Office for fighting against Corruption and Financial Offences, which will target white collar crime, tax fraud and bribery and money laundering offenses.
- DOJ and SEC predict more FCPA settlements by year’s end: At last week’s American Conference Institute’s International FCPA Conference, Charles Duross, deputy chief of the FCPA unit of the DOJ Criminal Division’s Fraud Section, said that the government had a large number of open FCPA investigations. He also predicted some potentially major criminal actions involving significant penalties that might be announced before year’s end. Judging by yesterday’s announcement of the Weatherford settlement, looks like he was right!
- SEC enters into its first DPA with an individual: Last Spring, the SEC announced its first non-prosecution agreement (NPA) with Ralph Lauren for FCPA misconduct. This month, the SEC announced its first deferred prosecution agreement (DPA) with an individual, Scott Herckis, a former hedge fund manager, who alerted the SEC to significant investor fraud at Connecticut-based Heppelwhite Fund LP.
- Supreme Court hears whistleblower case – Earlier this month, the US Supreme Court heard oral arguments in the case of Lawson v. FMR LLC. The justices will have to answer the question of whether the whistleblower provisions of the Sarbanes-Oxley Act protect employees of a privately held contractor or subcontractor of a public company. Read more about what was said at oral arguments here.
- Corruption trials against several high-profile individuals continue – Several big name corruption cases were splashed across headlines worldwide this month. Among them is the UK trial of Victor Dahdaleh, the Canadian-British businessman who is accused of paying bribes of £38 million to a senior member of the Bahraini Royal Family. The trial of Germany’s former president, Christian Wulff, also began this month. Mr. Wulff is accused of receiving certain loans and benefits from wealthy friends, such as travel invitations. Also on trial is Bernie Ecclestone, the former owner of Formula One racing, who was cross-examined this month for his involvement in making an improper payment of $44 million to a German banker in 2006 in order to facilitate the sale of a 47% stake in the sport. Israel’s top rabbi Yona Metzger was arrested for his involvement in an alleged money laundering scheme, and a senior official at a state-run Omani oil company, Juma Al Hinai, went on trial for allegedly accepting bribes from a local oil company.
Vote after the jump More…
Deferred prosecution agreements (DPAs) continue to be a hotly contested aspect of corporate settlements in white collar investigations. In a new White Paper entitled Private Settlements, Public Concerns: Judicial Scrutiny of Deferred Prosecution Agreements, TRACE looks at the increased supervisory role of federal judges in overseeing the approval of these agreements and looks at what that may mean for the negotiation of DPAs in the future.
Click on the following link to download the full report.