Good News at Today's OECD Celebration Reply

TRACE received an early Christmas present today when the OECD announced a new recommendation on facilitation payments more closely aligned with TRACE’s longstanding position on this form of business bribery. The recommendation was made at the OECD’s celebration of “International Anti-Corruption Day” and the Tenth Anniversary of the Entry into Force of the OECD Anti-Bribery Convention. The OECD also used the forum to introduce its Initiative to Raise Global Awareness of Foreign Bribery.

This is a timely and welcome move by the OECD that brings the considerable problems associated with facilitation (or ‘grease’ or ‘expediting’ payments) in the international business arena into keener focus. Just like large commercial bribes, grease payments abuse the public trust and corrode corporate governance. Treating them as anything other than outright bribery muddies the compliance waters and adds confusion where there should be clarity. We are delighted to see the OECD take a stronger stance.

OECD Secretary-General Angel Gurría and U.S. Secretary of Commerce Gary Locke jointly unveiled the OECD’s new Recommendation for Further Combating Bribery of Foreign Public Officials via video-link from Washington, D.C. during the celebration, opened by remarks from U.S. Secretary of State Hillary Clinton.

TRACE has worked with companies for eight years to help them voluntarily end their reliance on facilitation payments. With management support, a clear message, careful planning and good internal controls, companies tell us avoiding this form of bribery is no more challenging than avoiding any other form – and the benefits are considerable. Of the companies that have moved away from reliance on these payments, none has reported a significant delay or disruption to their business.

Both the 2009 Facilitation Payments Survey Results and The High Cost of Small Bribes are available on the TRACE website. The High Cost of Small Bribes is available in English and French.

International Anti-Corruption Day Reply

December 9th marks the United Nations’ International Anti-Corruption Day. The OECD celebrates the 10th Anniversary of the Entry into Force of its Anti-Bribery Convention with, among other things, a new set of recommendations addressing the Convention. The OECD and UN both launch initiatives today to raise awareness of the cost of corruption. These efforts reinforce recent speeches by President Obama and Secretary of State Clinton that have called for reform in kleptocratic regimes and demanded greater transparency in resource-rich countries. Attitudes are shifting quickly against the grasping, thuggish greed that was once seen as regrettable, but unavoidable.

December 9th is also a good day to remember the more than 100 journalists who have, according to the Committee to Protect Journalists, Reporters Without Borders and others, been murdered worldwide over the same ten year period while investigating corruption. Anti-corruption efforts owe much to these reporters, without whom little would be known about the true extent of this global problem.

How Much Does Free Healthcare Cost? It Depends on Where You Live. Reply

A pressing question for any mother this winter is whether or not to get an H1N1 vaccine for her children. Julie Coleman of TRACE provides this comparison of “free” health care services.

For those of us in the United States, the decision to vaccinate turns on two basic factors: availability of the vaccine and a personal assessment of the risks and benefits of the vaccine. One factor we do not have to consider is price: the H1N1 vaccine is free thanks to the U.S. government. And here, because free means free, I took my children to a clinic where professional nurses administered the vaccine. The only cost I had to bear was dealing with three slightly cranky, but vaccinated, children who were only partially pacified with lollipops and stickers (also free).

Nevertheless, despite my best efforts at prevention, all three kids predictably fell ill several weeks later. Because I have health insurance, I was able to look at the co-pay on my insurance card and make another informed decision: I returned to the doctor, paid the co-pay, and had a few tests run. And, for the time being, I now have healthy children.

The scene is much different in Ukraine, as reported recently by The New York Times (Fragile Care Worsened Swine Flu in Ukraine). In Ukraine, health care is officially free. However, patients typically must pay cash bribes to doctors and nurses, who themselves are very poorly paid. Due to a number of factors, not the least of which is the unpredictability of the cost of medical care, people who fell sick this fall as flu descended in Ukraine avoided hospitalization until the need became dire. In short, people would not go to the hospital until “their lungs were so saturated with blood they could barely gasp.” The article in the Times profiles one patient – Galina, a 43 year old dentist and the mother of two – who went to the hospital only after her breathing became very labored. After a battery of tests – and about $4,300 in cash bribes paid by her family to doctors and nurses – Galina died.

Today, TRACE issued its fourth BRIBEline report on bribery patterns in Ukraine. Not surprisingly, the 2009 BRIBEline Ukraine Report supports the anecdotal evidence reported in The New York Times. Key BRIBEline findings include:

· 90% of all bribe solicitations in Ukraine were made by a government official (an employee of a state owned entity, a member of the police or the judiciary, or a city, state of local government official). Significantly, 43% of all bribe solicitations in Ukraine were made by employees of state-owned entities.

· Cash (or its equivalent) was demanded in 87% of the reported incidents of bribe demands in Ukraine.

· 82% of the bribe demands made in Ukraine were for amounts less than US$5,000, and a full 11% of all demands made were for amounts greater than $10,000.

· 66% of survey respondents reported that a bribe demand was recurring (i.e., a bribe was to be provided more than once).

· Nearly 60% of the Ukraine reports cited extortion as the primary purpose of the bribe demand.

The BRIBEline Ukraine report tracks very closely to Galina’s experience. In Ukraine, a government official, such as a doctor or nurse at a state-run hospital, is likely to repeatedly request a modest cash bribe (which requests quickly add up to a significant amount of money). In Ukraine, bribes are generally extortionate in nature, a particularly frightening experience when healthcare is at stake.

For Galina’s family, the incentive for succumbing to the bribe demand was overwhelming: to attempt to gain access to life-saving medical treatment for their mother. Sadly, these attempts by her family were futile, and serve as a distressing example of how bribery’s negative impact can be felt from large economic systems down through individual lives.

Australia Poised to Bring Foreign Bribery Prosecution Reply

On November 19, 2009, the Australian Federal Police (“AFP”) raided the Melbourne offices of Securency International Pty Ltd, as well as the homes of two Securency executives, in connection with an investigation into potential bribery of foreign officials in Vietnam, Nigeria and Malaysia, among other countries. Securency is a supplier of secure polymer substrate technology and other unique substrates used in the printing of banknotes and other security documents. The company was formed in 1996 as a joint venture between the Australia’s central bank, the Reserve Bank of Australia, and Innovia Films. The AFP investigation reportedly began following news reports published in May 2009 concerning alleged bribes made to Vietnamese government officials through a local agent in order to secure a contract in 2002 to supply polymer banknotes to the Vietnamese government. The UK Serious Fraud Office is also reportedly involved in the investigation, as two of Securency’s sales executives conducted much of their work from England. The investigations are ongoing at this time.

To read more about this and other international anti-bribery investigations and prosecutions, please visit the TRACE Compendium.