Active enforcement against foreign bribery remains on a downward trajectory, dropping to its lowest level since 2009, according to Transparency International’s report, Exporting Corruption, published this month.
The report surveys the foreign bribery enforcement performance of 47 leading global exporting nations between 2018 and 2021, representing almost 85% of all global exports.
There are four enforcement categories: active, moderate, limited and little or no enforcement. Countries are given weighted scores for the number of investigations started, charges filed to commence cases and cases concluded with sanctions, with the highest score given for concluding a major case with substantial sanctions.
Only the US and Switzerland fall into the category of active enforcement, a classification that indicates “a major deterrent to foreign bribery”, the report says. In the last four years the number of countries with limited or little to no enforcement against foreign bribery rose from 34 to 38 – representing just over half of global exports.
Explaining that the pandemic likely had a “significant impact on enforcement performance and company compliance”, the report says that “the present global environment carries risks of a declining commitment to foreign bribery enforcement” and while enforcement is expected to increase in 2022 or 2023, “this remains to be seen”.
“Even in countries that do enforce, foreign bribery continues to be treated as a victimless crime,” says Gillian Dell, head of conventions at Transparency International and lead author of the report.
“This means states whose companies commit crimes abroad fill their treasuries with multimillion dollar penalties while victims are left to bear the cost.”
The report includes 43 of the 44 signatories to the OECD anti-bribery convention – excluding Iceland, due to its small share of international trade – as well as China, the world’s leading exporter, Hong Kong, India and Singapore.
Although the latter four are not OECD members, they are signatories to the UN Convention against Corruption, which requires countries to criminalise foreign bribery. None of them opened any investigations or commenced cases between 2018 and 2021, though Hong Kong and Singapore each concluded two cases with sanctions.
Latvia and Peru improved their enforcement measures, though together they make up just 0.3% of global exports, while nine countries declined in their level of enforcement, including the UK, which represents 3.4% of global exports. Both the UK and Israel dropped from active to moderate enforcement compared to 2020 levels.
The US totals 9.8% of exports globally and opened 48 investigations, commenced 163 cases and concluded 145 cases with sanctions, while Switzerland, representing 2% of global exports, opened 39 investigations, commenced two cases and concluded 11 cases with sanctions.
“The cases in countries that do engage in enforcement reveal that companies, company employees, agents and facilitators involved in foreign bribery transactions come from almost every country assessed,” the report notes.
Delia Ferreira Rubio, chair of Transparency International, adds that “corrupt transnational networks of businesses and their enablers leave a trail of harm – pushing out competitors, bypassing regulations and draining public budgets of resources. With rampant bribery in foreign public markets, illicit profits are secured at the expense of economic development, democracy and human rights.”
The threshold for each enforcement category is determined by a country’s share of world exports, based on the premise “that the prevalence of foreign bribery is roughly in proportion to export activities and that exporting countries can be compared”.
For example, a country with a 2% share of world exports would need to score 80 points to be classed as an active enforcer, while a country with 1% requires only 40 points.
Measures suggested to improve enforcement include addressing weaknesses in legal systems, such as a lack of beneficial ownership transparency and whistleblower protection, introducing victims’ compensation as a standard practice and enforcement against banks and insurance brokers facilitating foreign bribery.