Company managers at heart of corporate bribery, finds OECDJanuary 2015
At the start of December last year, the Organization for Economic Cooperation and Development (OECD) released its first-ever analysis of global anti-bribery activities.
The OECD looked at 427 cases, of which 263 were against individuals and 164 were against entities. “The prevention of business crime should be at the centre of corporate governance,” said OECD Secretary-General Angel Gurría, in a statement coinciding with the release.
The OECD found that one in three corruption cases were voluntarily disclosed by the companies involved, after their own internal audits.
Due diligence, prior to M&A, uncovered about 28%. Local law enforcement uncovered 13%, investigative journalism revealed 5%, while 2% were uncovered by whistleblowers. Of all countries, the USA was by far the most active enforcer of anti-bribery law.
Bribery was not simply due to rogue employees, senior managers and directors were often involved, according to the report. In 41% of the 427 cases, management-level employees paid or authorized bribes, while chief executives were involved in 12% of cases, the OECD said.
Three quarters of cases involved intermediaries. In 41% of cases, these were agents, distributors or brokers.
However, 35% of intermediaries were corporate vehicles, such as subsidiary companies, offshore companies, companies in tax havens, or companies established under the beneficial ownership of the public official who received the bribes.
In more than half of the cases - 57 % - bribes were paid to get a contract for public procurement. A further 12% were to gain customs clearance, and 6% were for tax breaks.
More than a quarter of the bribe recipients were employees of state-owned or -controlled companies, or of public entities.
Anti-bribery enforcement steadily increased after 2005, hit a peak in 2011 (with 78 cases concluded that year), dropped considerably in 2012 and levelled off through the end of 2013, the OECD found.
Nearly 70% of the cases were resolved by settlements, often involving a civil or a criminal fine. Across all the cases, corporate penalties totalled €1.8 bn. Prison sentences were handed down on 80 individuals, the OECD found.
The OECD warned that corruption could be getting more sophisticated, with the time taken to prosecute rising from around two years in 1999 to seven today. This could also be a sign of those accused of bribery being less willing to settle than in the past, it said.
Already a member? click here to login