Squeezing the sleazy -The politics of corruption

Dec  2012 | PRAGUE | The Economist 

Global anti-corruption efforts are growing in scope and clout. This year is set to be the best yet

IMPUNITY and euphemism used to be daunting obstacles for graft-busters. Not any more. International efforts are bearing fruit. New laws have raised the cost of wrongdoing. Financial markets are punishing corrupt companies. Most encouraging, activists have growing clout not only in high-profile cases but at grassroots level, where the internet helps to highlight instances of “quiet” (low-level) corruption.

The big international bodies dealing with corruption are making progress. A working group set up in 2010 by the G20 (the world’s largest economies) has done more than many observers expected, particularly in drawing up rules on seizure of corrupt assets and denial of visas to corrupt officials. Unlike the United Nations Convention Against Corruption, the G20 is not so far split between keen sleazebusters and countries like Russia and China. Another body, the Paris-based Financial Action Task Force, will start a fourth round of monitoring member states next year, chiefly for effectiveness in implementing anti-money-laundering laws.

Such efforts are “steady, slow boring stuff”, but still important, says Robert Palmer of Global Witness, a campaigning group. He notes that international discussions no longer tiptoe round the word “corruption”. A culture of denial has given way to at least lip-service to the cause.

The anti-graft laws of national governments are making progress too. America’s Foreign Corrupt Practices Act and Britain’s Bribery Act impose potentially savage penalties on firms that do business by sleazy means. That includes having weak in-house anti-corruption policies. The results are mixed. At a conference earlier this month in Prague organised by the Brookings Institution, an American think-tank, Thomas Firestone of the Moscow office of Baker & McKenzie, a law firm, said foreign managers trying to penalise bribery with dismissal face tough Russian laws that hamper such firings. Perversely, the most corrupt employees can thus gain hefty severance payments. Such clashes between local and international laws abound.

Market pressure is growing too. The International Corporate Governance Network brings together institutional investors with $18 trillion under management. It scrutinises companies for compliance with anti-corruption principles. So far 70 firms have signed up to the Extractive Industries Transparency Initiative, which aims to make natural-resource companies publish what they pay to governments. America’s Securities and Exchange Commission has backed similar rules. Campaigners say murk around such payments costs poor countries billions of dollars.

Businesses say they like the way clean government creates a level playing-field. In a corrupt country, “you are only as good as your last bribe”, said one executive at the Prague conference. For years, data were scanty: campaigners relied heavily on the corruption-perceptions index published by Transparency International, an anti-sleaze group. But the 58 countries that support the American-backed Open Government Partnership are committed to providing data about the way public money is spent. That helps to highlight wasteful (and corrupt) government procurement.

Specific campaigns have worked too. Congress has just passed a law blocking the visas and freezing the assets of 60 Russian officials implicated in the death in prison of Sergei Magnitsky, a whistle-blowing lawyer who had uncovered a $230m fraud. His client, Bill Browder, a financier who is campaigning to avenge him, wants Europe to follow America’s lead.

Lower-profile efforts are spreading too. Not In My Country, a web-based campaign in Uganda, encourages students to report instances of corruption—such as teachers demanding sex for higher grades. Next year it will launch a mobile app for people wanting to upload audio recordings of extortion attempts. Janaagraha, a Bangalore-based group, runs ipaidabribe.com, which has recorded thousands of bribes paid or sought; “heat maps” plot instances of corruption. Similar websites operate in Pakistan, Kenya, Liberia and Indonesia. They help even the humble to fight back.

Tricks of the trade

Given the scale of the problem, nobody is claiming victory. Laws are one thing, enforcement quite another. Public pressure may not create political will among decision-makers. Anti-corruption laws can be politicised and used for partisan purposes. Some countries think that the whole cause is a disguise for Western meddling and hypocrisy. But on December 9th campaigners celebrated International Anti-Corruption Day with a spring in their step.

from the Economist print edition | International


About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

One Response to Squeezing the sleazy -The politics of corruption

  1. E. Kotroniàs says:

    Unfortunately it is too late. We nave lost the western worldwide unger the insistance of the economy of the profit and the continous corruption. There is no way to recover, the decline in favour of the far East economies is without arrest.

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