Don’t forget corruption

Chair, OECD Working Group on Bribery in International Business Transactions

Mark Pieth ©OECD

The crisis should not divert attention from the fight against corruption.
Mark Pieth, Chair of the OECD Working Group on Bribery, talks to Lyndon Thompson about the need to keep the ball rolling.

Mark Pieth is the affable, soft-spoken chair of the OECD Working Group on Bribery. He has held the post for more than 20 years, during which time he also served on the committee charged with investigating the Iraq Oil-for- Food Programme and the Financial Action Task Force on Money Laundering, headquartered at the OECD in Paris, and most recently as an advisor on the Integrity Board of the World Bank.

As one who laid the foundation stones of the OECD Anti-Bribery Convention, Mr Pieth has worked tirelessly to see that countries enforce it. Much has been accomplished, he admits, but regrettably more than a few governments are lagging behind in their commitments. “There is a lot of talk,” he says, “both in the north and south. But this is no guarantee that talk will be followed by deeds.”

Part of the problem is the narrow view that both governments and citizens take of corruption. “Many people consider corruption a topic in itself. This is wrong. It affects all walks of life.” He warns that progress will be hindered if corruption is isolated from the broader question of regulation. “If you look at the developing world, high levels of corruption make it difficult to access such goods as health care and education. The step leading from this type of situation to a crisis is lack of regulation.”

Severe, endemic corruption is the malediction of developing countries—or so it is thought. But the financial crisis and the whirlwind of sovereign debt that threatens to engulf the euro has changed that attitude. A 2009 Eurobarometer survey found that 78% of Europeans believed corruption to be a major problem in their country. If that sentiment is accurate, how much is corruption to blame for the euro crisis?

“It’s no coincidence,” says Mr Pieth “that the southern half of Europe has been so affected by the crisis and also has an undisputedly higher corruption ratio. Greece is probably a good example. As acknowledged in the Eurobarometer survey, it is a high-corruption country. This has contributed, for instance, to a bad tax morality and the inability to raise taxes. There are certainly links between the two.” The former Greek prime minister would agree. In March of 2010, George Papandreou said that graft was one of the main causes of his country’s debt crisis. Between July and December of that same year, Transparency International estimated that bribes cost Greece €632 million. The corruption watchdog also found that 75% of Greeks thought corruption was on the rise and that, over the preceding 12 months, 18% of households had paid a bribe to a public service.

Mr Pieth is wary of making a scapegoat of the south or of placing it in a moral competition with the north. “In the north you have people saying the right thing but not acting.” Virtually all the OECD country reviews on corruption published in 2011 urged countries to toughen sanctions, such as imposing longer prison sentences on offenders, and to ensure that the statute of limitations gives authorities time enough to investigate a crime so that offenders end up in court; this last, according to Mr Pieth, has undermined the Italian judicial system. “Italy’s difficulty is its slow judicial system, due to all sorts of reasons, including the prime minister’s activities: Berlusconi has done everything to shorten the statute of limitation.”

Whether in the north or south, vital national interests are fertile soil for bad seeds. “Countries are very protective of their home-grown industries,” Mr Pieth says. “The military, mining and the like—these are considered so fundamental for the future that countries hold back their judiciaries. What I see, especially when considering the activities of companies active in Africa, is that access to raw materials leads to a reticence towards bringing people to court. The OECD is struggling to be equally tough on all countries to be sure that they apply these corruption rules [of the OECD Anti-Bribery Convention].”

He recalled a meeting with a minister of one EU country, which he supposed would be attended by some 50 business representatives. Instead, he entered a room packed with public officials, among whom a few businessmen had managed to squeeze in to give the meeting an air of legitimacy. His suspicions were further aroused at the airport, where a small fleet of planes belonging to an African country notorious for its corruption waited on the tarmac.

Despite months of stomach-wrenching turns in the euro, the crisis may have a positive effect on anti-corruption efforts. “The G20 was very positive,” Mr Pieth says of the G20 Summit in Cannes in November of 2011. “A lot of space was given to the problem of corruption, bringing in China and India, and going beyond the demand side to the supply side of corruption.” Indeed, G20 members cited eight major achievements in the fight against corruption since the 2010 G20 Summit in Seoul. These included Russia’s decision to join the OECD Anti-Bribery Convention, the entry into force in China of a law criminalising international corruption, the ratification by India of a UN Convention against Corruption (UNCAC), and the adoption in June 2011 of an anti-corruption package by the European Commission.

These are big steps, and they demonstrate governments’ awareness that corruption is no longer a crude affair of handing over envelopes in back alleys: it is sophisticated, well concealed and costlier than one had ever imagined. It flourishes whenever authorities drop their guard and wherever cynicism and impunity dictate the political climate. Mr Pieth cautions leaders against taking a narrow view of corruption.

“It must be understood that anti-corruption efforts are a part of regulation. If we configure this question so that it goes beyond corruption and if we manage to remind people of the big picture, then we have a chance.”

European Commission (2009), “Attitudes of Europeans towards Corruption”, Special Eurobarometer 325.

Bribery and corruption: www.oecd.org/corruption

Mark Pieth’s homepage: www.pieth.ch

See also: 

The UN Office of the Iraq Program Oil-for-Food

The Financial Action Task Force 

The United Nations Convention against Corruption

Transparency International 

©OECD Yearbook 2012




Economic data

GDP : +0.5%, Q4 2014
Employment rate: 65.9%, Q4 2014
Annual inflation : 0.57% Feb 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 7.022% Feb 2015
More moderate expansion ahead? Composite leading indicators
Updated: 23 Apr 2015

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