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[Corruption in global business has been around for a very long time. Until recently it was regarded as a fact of life and nobody seemed to be too concerned about it. In fact, economic theory preached that the payment of bribes and other forms of corruption were good for international business because they were a way of overcoming barriers to business in some countries. Therefore, those who were willing to pay bribes obtained a competitive advantage over their business rivals who were not willing to do so. There was a view that corruption was entrenched in some cultures and so one had to come to terms with it if one wanted to do business in those cultures. The result of these views was that corruption was left to thrive in international business. From 1977 the United States began to take action against its businesses and citizens to counter corruption; however, it remained a ‘lone ranger’ and some believed that its businesses consequently lost their competitiveness relative to the businesses that paid bribes. Today a paradigm shift is occurring all over the world. Corruption in global business is a big issue and there is a concerted international effort to tackle it head on. There are initiatives in both the public and private spheres that aim to minimise, if not eliminate, corruption altogether.]
The world is currently witnessing a paradigm shift in attitudes towards corruption in global business. Not long ago a blind eye was turned to corruption in international business transactions. Indeed, there was a view in certain quarters that corruption was good for international business because it reflected the cultures of certain countries. Today the winds of change are decisively and powerfully blowing against those views. A concerted international effort is under way to raise awareness about corruption and to implement strategies to minimise it substantially, if not eliminate it altogether.
It is the purpose of this article to analyse these developments critically. The article starts by looking at the ‘old world’ view which created an environment in which corruption thrived in international business. In the second part, the article looks at the causes of change in our attitudes toward corruption in the global business arena. Thirdly, the article studies the international initiatives currently being undertaken to tackle the issue. Australia’s contribution to this international effort is given special consideration. Finally, the article critically discusses the delicate matter of gift-giving and its implications for the fight against corruption in global business.
We seem to be suddenly waking up to the issue of corruption in global business. However, it would be a mistake to assume that this is a problem of recent origin. On the contrary, it would appear that corruption in international business has a long history. As has been observed, ‘many corporations have been paying bribes around the world for decades.’[1]
In fact, it was not long ago that economic theory held that bribes and other forms of corruption were good for international business. It was argued that paying bribes and other forms of corruption were legitimate means of overcoming the barriers that some countries had imposed against entry into their markets. Therefore, the argument went, companies which were willing to grease the right palms in order to overcome those barriers obtained a competitive advantage over businesses that were not willing to ‘soil their hands’, so to speak.[2] Some economists even developed models which sought to demonstrate the efficiency benefits that could be derived by companies giving bribes.[3]
Particularly in relation to developing countries it was argued that, if corruption was used ‘appropriately’, it could lead to economic growth and so assist national development. From the perspective of foreign investors, corruption was regarded not only as effective, but also as a necessary strategy to win business in developing countries. This view appeared to have gained strong ground in Asia, where corruption in business practice became widespread in some countries until the Asian financial crisis hit in 1997. A correlation was seen to exist between the spectacular economic growth rates which the tiger economies were achieving and the practice of corruption in business. Specifically, countries like Thailand and Indonesia were held up as providing empirical evidence of countries that were achieving economic growth despite high levels of corruption — or even because of corruption.[4]
Providing further credence to the view that corruption could contribute to economic growth in developing countries was a study conducted by researchers at Chulalongkorn University in Bangkok.[5] The results indicated that between 1993 and 1995 six major illegal activities[6] associated with corruption contributed a phenomenal US$24 to US$32 billion to the Thai economy. This amount represented 8 to 13 per cent of Thailand’s GDP.[7]
Discussing corruption in developing countries inevitably raises the question of whether or not corruption is rooted in culture. This is because it is common knowledge that corruption in business is not restricted to Asia, but rather, it is a feature common to many developing countries.[8] Of course, the degree of corruption varies from country to country. In some countries one experiences corruption, albeit of the low-grade variety, at the first point of entry into the country. One discovers that, in order to get a smooth clearance through immigration and customs, some small payment to the officials concerned is expected or else one could be subjected to frustrating delays.
Is corruption, then, culturally based? There is a view in certain quarters that corruption has its roots deeply embedded in culture and that the reason why it appears to be a common feature of developing countries is that the cultures of those countries display common characteristics. For example, Short has noted that:
It used to be commonplace for people to talk as though corruption was embedded immutably in the culture of many countries, especially poor ones. There was an assumption that corruption was an unavoidable part of international business and that grease payments were necessary to get things done.[9]
The following cultural characteristics have been identified as common to the most corrupt places:
It is immediately striking that these cultural characteristics are common to most, if not all, developing countries. The extent of the existence of those characteristics may vary from country to country, and even within the same country there may be marked variations; however, by and large, most developing countries exhibit the identified cultural characteristics that, according to Gesteland, would make them susceptible to corrupt business practices.
The view that corruption is widespread in certain countries because it is sanctioned by culture has, however, recently been strongly disputed.[11] It has been pointed out that there appears to be no country in the world where corruption is lawful.[12] On the contrary, it appears that corruption is illegal in every country. Some countries may enforce their laws more vigorously than others. There may be various reasons for the differences in approach, but it should not be presumed that culture is causative of a less vigorous approach to eliminating corruption. If a culture sanctions a particular type of conduct, but its parliament passes a law to the contrary, it becomes the responsibility of government to ensure that the parliament’s will is obeyed. So long as the law remains in force and it is not being enforced, the issues become the effectiveness of the law and the commitment of the law enforcement agencies in the country to implementing the law. It is not a case of the culture prevailing over the law. Hence, the view that corruption is sanctioned by some cultures has been dismissed as a myth. Empirical work demonstrates that corruption, particularly bribery, is considered objectionable everywhere: ‘Every major religion or school of moral thought, including Buddhism, Christianity, Confucianism, Hinduism, Islam, Judaism, Sikhism, and Taoism, specifically condemns bribery.’[13]
Thus, whilst it can scarcely be disputed that there is widespread corruption in some countries, the view that this is rooted in the culture of those countries is now being seriously challenged. For example, Judge John Noonan Jr of Berkeley, California conducted a study of bribery and concluded that ‘it is often the Westerner with ethnocentric prejudice who supposes that a modern Asian or African society does not regard the act of bribery as shameful in the way Westerners regard it.’[14] Similarly, Dr Frene Ginwalla, Speaker of the South African Parliament, has noted ‘international corruption is often tacitly supported and actively encouraged by Western countries’.[15] She concluded that ‘attributing corruption to our [African] cultures is both arrogant and racist, as well as convenient and self-serving.’[16]
When discussing corruption in global business, some people tend to overlook the general international context of the subject, focusing only on developing countries. That corruption is widespread in some developing countries does not need to be laboured here. However, corruption has been able to thrive in global business because there has been a general international environment which has favoured it. The attitudes of developed countries, international organisations and others,[17] combined with the lax approach of some developing countries to law enforcement, created a general culture of corruption in global business. Bribes were supplied largely by multinational corporations from developed countries to recipients in developing countries. Some key international organisations saw it happening but ignored it because combating corruption was not a part of their functions.[18] It was a combination of these attitudes that resulted in corruption gaining strong ground in certain countries. As long as business was booming it was argued that there was no need to investigate corruption too closely. What happened in certain parts of Asia prior to the 1997–98 financial crisis is now a classic case on point.[19]
In particular, it should be pointed out that, until recently, the tax laws of most developed, industrialised countries allowed for the tax deductibility of bribes given by their companies in transactions abroad as legitimate business expenses. Countries like France, Germany, Canada and Australia, to name only a few, permitted this practice.[20] This meant that, whilst it might have been illegal for a company to engage in a corrupt practice at home, the same company was allowed to gain a tax benefit from doing the same thing overseas. What could be more encouraging for a company to engage in a practice than that the practice attracted tax benefits? A consequence of these legislative regimes was that they effectively permitted companies doing business abroad to engage in widespread corruption.
As a general proposition, the law is not likely to permit expenses which are incurred in the course of illegal activities to be claimed as tax deductions. However, the practice of allowing tax deductibility for bribes given overseas, which existed in many developed countries until the late 1990s, no doubt created a duplicitous situation within their laws. Because the criminal law prohibited corruption at home, but the tax law permitted deductibility for the same act committed abroad, corruption abroad was indirectly sanctioned.
As was stated earlier, some international organisations seem to have contributed to the emergence of this international culture of corruption of which multinational corporations made full use. In particular, key international economic organisations such as the World Bank and the International Monetary Fund (‘IMF’) seemed unconcerned about the prevalence of corruption in global business. As far as they were concerned, corruption was a political issue and therefore fell outside the scope of their operations.[21] Thus, the World Bank and the IMF felt that it was the responsibility of governments to deal with the issue of corruption, despite experiencing it themselves in their work. Yet these same governments were permitting their companies to gain tax deductions for bribes given in the course of their international business transactions.
Corruption is a fact of life in global business, and has been for a very long time. Until recently, a number of circumstances combined to create an international environment conducive to corruption in business. Bribes were supplied largely by companies from developed countries seeking business opportunities in developing countries. They gained tax deductions at home for this legitimate business expense. Some people have held the view that corruption is part of the culture of some countries. In the past this has been used as justification for ‘joining’ them in engaging in corrupt activities. It was a case of ‘when in Rome, do as the Romans do’. There is no dispute that corruption is widespread in some countries; however, there is no longer a general consensus that corruption is sanctioned by these cultures. Indeed, the view that corruption is sanctioned by some cultures is now being seriously questioned.[22]
The rhyming term, ‘corruption eruption’, has been coined to describe the almost sudden explosion of the corruption debate.[23] As already noted, until recently the question of corruption in global business was non-contentious. Corruption was accepted as part of life in the international business arena. Many states tacitly permitted their nationals to engage in corruption abroad, and it was argued that those who were willing to engage in corruption obtained a competitive edge over their rivals. The one glaring exception was the United States, which enacted legislation in 1977 but has remained a ‘lone ranger’ until now.[24]
There is evidence to show that some developed countries strongly resisted attempts by the US to bring the issue to prominence through open debate and to take action against corruption.[25] For example, former President Jimmy Carter, who championed the enactment of the US legislation, was ridiculed as a ‘do-gooder’ who did not understand the realities of global business.[26] Specifically, Japan and some European countries were unco-operative in relation to earlier attempts to tackle the issue. Perhaps most illuminating in this context was the position taken by Germany. Joachim Grünewald, the German Secretary of State for Finance, argued that payments made by German firms to win business in other countries should not be considered corrupt because they were ‘marketing costs’ rather than bribes. Grünewald maintained that prohibition of such payments ‘would damage German firms in the international market and threaten jobs’.[27]
It is against this background of official inertia and resistance that the corruption debate has erupted. Some commentators have referred to 1995 as ‘the year of corruption’.[28] In that year corruption in global business came out of the woodwork and into the open. It has since become a big issue. Particularly in the last two years or so, the issue has gathered momentum and this is likely to continue well into the 21st century. There are a number of reasons behind this paradigm shift in attitudes towards corruption in global business. Before considering these, however, attention should be focused on the size of the problem.
There is some debate as to whether the ‘corruption eruption’ reflects an increase and spread of the problem of corruption in global business or whether it is merely a reflection of a growing awareness of a situation that already existed. Some people argue that all that has happened is that people are now becoming aware of the issue and, as they talk about it, what was previously swept under the carpet is surfacing.[29] From this perspective, there is really nothing new.
On the other side of the debate are those who contend that corruption in global business is indeed on the increase and getting worse. They point to the fact that the huge increase in global trade and investment in recent years has provided ample opportunities for corruption to occur in international business transactions.[30] Research conducted by Transparency International supports the view that there appears to have been an increase in corruption in recent times.[31]
Whichever view is correct, there seems to be general agreement that corruption in global business is a serious problem today. However, by its very nature it is an extremely difficult task to ascertain the size of the problem. Most reports and commentaries tend to focus on bribery,[32] which is only part of the problem. Even then, some of the figures which have been put forward must raise alarm.
According to unconfirmed estimates, bribery in global business transactions would be in the order of US$80 billion a year, a figure most observers believe to be a gross underestimate.[33] Estimates from other sources can be combined to gain a reasonable approximation of the size of the problem. On 17 March 1995 Le Monde reported that a confidential government report had estimated that French companies paid bribes abroad amounting to FRF10 billion in 1994 alone.[34] German companies were estimated to have paid bribes in their foreign operations of over US$3 billion in 1996 alone.[35]
According to Transparency International, corrupt payments account for about 10 to 20 per cent of all global business transactions.[36] This estimate can be put into perspective when it is considered that more than one trillion US dollars worth of infrastructure projects are planned for Asia, Latin America and the Middle East in the near future.[37] Other helpful estimates have been made in other countries. Hong Kong businesspeople estimate that bribes account for about five per cent of the cost of conducting business in China.[38] The cost is estimated to be up to 20 per cent in Russia and even higher in Indonesia.[39]
While quantifying the size of corruption in global business is essentially an exercise in ‘guesstimation’, any one of the estimates given here by itself suggests that the problem is not one to be easily dismissed. When all the estimates are considered together, it becomes clear that corruption is a huge international problem. Moreover, one gets the impression that corruption is widespread geographically and is not confined to particular parts of the world.
Reference has already been made to some possible benign effects of corruption. The Chulalongkorn University study mentioned above[40] found that corruption made a not insignificant contribution to the Thai economy and, specifically, it generated jobs in some sectors of the national economy. These findings may also have general application to other developing countries, especially those at the lower end of the economic spectrum. Reference was made earlier to the economic school of thought which held that bribery removed trade barriers and provided a competitive advantage to business.[41]
Another benign effect of corruption which is often discussed in the literature is that corrupt payments supplement the income of workers whose wages are so low that they can hardly rely on them to support their families.[42] This is particularly true of petty corruption in the form of ‘grease payments’ made to low-ranking government officials (although this also applies to the commercial sector) to ‘motivate’ them to perform their usual duties. The reasoning here is that these officials are not being asked to do anything illegal or improper; the payment simply ensures that they apply speed and diligence to their duties to avoid what is otherwise a slow pace of work. This practice has been described as follows: ‘In some respects, this is an informal ‘user pays’ mechanism, whereby the users of government services top up government workers’ salaries — those who use the service, pay for it.’[43] It is, therefore, not surprising that poorly paid jobs in the police, immigration, customs and tax departments of some developing countries receive a disproportionately large number of applications for employment.[44] At any rate, several studies have found a direct correlation between poverty and corruption.[45]
If the aforementioned arguments can be considered ‘positive’ effects of corruption, they are far outweighed by the negative effects. On the economic front, corruption has a number of harmful effects on the economies of both the corrupter and the corrupted. First, few would dispute that corruption reduces official government revenues. As people bribe their way through government processes, they are able to avoid the payment of tax and other charges which should have gone to government revenue.[46] Second, transaction costs for the corrupter increase as a consequence of corruption. This becomes an additional cost to its business operation which the corrupter would try to recoup from somewhere else, such as through inflated prices or through the tax deduction of business expenses in its home country.[47] For example, German officials have estimated that the German economy loses DM50 billion per year as a consequence of inflated contract prices and loses additional tax revenue as a consequence of bribes.[48]
Third, it has been shown that there is a direct correlation between the levels of corruption and foreign investment. Where there is marked corruption in a country, foreign investment tends to decrease, which in turn leads to slower economic growth.[49] In the first half of 1996 Vietnam suffered a sharp drop (48 per cent) in foreign investment, which has been attributed in part to marked levels of corruption in that country.[50] On the other hand, the absence or low levels of corruption encourages foreign investment, which in turn leads to greater economic growth.
Fourth, corruption distorts global business generally because transactions are not made on the basis of supply and demand and the efficient allocation of resources.[51] Development projects, which may be vital to a country’s economic progress, could suffer as funds are diverted elsewhere. Those providing the development assistance may become frustrated and in the end may reduce or cut off their assistance. At the end of the day, it is the country as a whole which suffers and, in particular, the poor in the society.[52] As the recent histories of Nigeria, Indonesia and the Democratic Republic of Congo (formerly Zaire) have demonstrated, when corruption becomes pervasive, it can bring a country to its economic knees.[53]
Fifth, corruption has harmful effects on the social and administrative systems of a country.[54] As far as the latter is concerned, corruption undermines the effectiveness and efficiency of a government’s administrative machinery. For example, those responsible for issuing licences and permits may deliberately slow down the wheel of public administration so as to create an environment conducive to obtaining more ‘kickbacks’. Confidence in, and respect for, public services are eroded when corruption becomes a feature of a government’s administrative system.[55] Corruption can also create serious social problems.[56] When a perception is created that only some people are benefiting from the national wealth, because they are placed in ‘strategic positions’ in their jobs that provide them opportunities to accept corrupt payments, this no doubt leads to feelings of inequity and resentment. Over time, as this resentment builds up, it can ignite a national uprising of one kind or another, as recent events in the Democratic Republic of Congo, Nigeria, Indonesia and Russia have demonstrated.
Closely related to this last point is the potential for corruption to undermine the democratic process.[57] This is especially true of grand corruption, in which senior government officials and ministers (and even the head of state) slice off fixed percentages of every sizeable business transaction. Feelings of alienation are bound to arise when the perception is created that the country’s leaders do not really care about citizens and probity in government, but rather that they are only interested in amassing personal wealth.[58] Corruption allegations have led to the downfall of a number of political leaders around the globe in recent times. Prominent among them are President Suharto of Indonesia, Prime Ministers P V Narasimha Rao of India and Benazir Bhutto of Pakistan, as well as Bhutto’s successor, Nawaz Sharif. Corruption allegations also led to the imprisonment of former South Korean Presidents Roh Tae Woo and Chun Doo Hwan.[59]
In 1977 the US blazed the trail by enacting legislation to combat corruption in global business. Under the Carter Administration the US Congress passed the Foreign Corrupt Practices Act of 1977.[60] This was after a series of revelations about US corporations making corrupt payments to foreign government officials to win business, which was not only damaging to the image of the US abroad, but also undermined public confidence at home.[61] Perhaps the most dramatic were revelations of payments made by Lockheed Corporation, which eventually resulted in the downfall of the governments of Italy, Holland and Japan. But it later came to light that corporations such as Exxon (US$56.7 million) and Northrop (US$30.7 million) and over four hundred other US corporations, including 117 Fortune 500 companies, had made corrupt payments in their global business transactions.[62]
The FCPA, in its original version, had two broad strategies. First, it created stringent new accounting and reporting standards which US corporations had to meet. They were required to keep accurate records and to disclose all payments made, thus discouraging the payment of bribes.[63] Secondly, the FCPA contained anti-bribery provisions. In particular, s 103 made it unlawful for a US entity to pay a bribe to a foreign official, or attempt to do so, for the purpose of winning or retaining business. The provision applied whether the act was done directly or indirectly. Penalties for violations were in the form of fines of up to US$1 million for corporations and fines of up to US$10 000 and imprisonment for up to five years for individuals.[64]
The Carter Administration had hoped that its legislation would be seen as a model to be followed across the world. However, the legislation was severely criticised both domestically and abroad. Outside the US the initiative was criticised as ‘misguided American moralism’[65] and was ignored. Many developed countries, which the US had hoped would follow its lead, continued to allow the tax deductibility of bribes as business expenses. At home the legislation was criticised as unnecessary and ineffective. The lack of enforcement action taken under the legislation in the years following its enactment gave credence to the criticisms that it was ineffective. In its first decade of existence only 23 prosecutions were launched by both the Securities and Exchange Commission and the Department of Justice, the two bodies responsible for enforcing the legislation.[66]
In the 1980s numerous attempts were made to amend the FCPA. Eventually this was achieved through the Omnibus Trade and Competitiveness Act of 1988.[67] Substantive and technical amendments were made to the FCPA by this Act. One notable change was the exemption for routine government action. The original version of the Act had provided an exemption for payments to foreign officials performing essentially ‘ministerial or clerical’ duties. This was considered ambiguous, creating confusion for the business community. The 1988 amendments clarified the position by exempting payments made by a US business overseas for the purpose of having a ‘routine government action’ performed. The amendments also substantially increased the penalties for violation. A corporation became liable for a fine of up to US$2 million (previously, it was US$1 million) and a natural person became liable for fines of up to US$100 000 (previously US$10 000). The term of imprisonment was not changed; it remained five years.[68]
The amendments breathed new life into the FCPA, but prosecutions were still few and far between. For example, in 1989 Young & Rubicam, an advertising firm, pleaded guilty to a felony in connection with a contract with the Tourist Board of Jamaica by which the agency had used a former Jamaican Minister of Tourism to funnel money through to the current minister. The firm agreed to pay fines of US$500 000 in settlement.[69] Another example involved Vitusa, a US company that had a contract for the sale of powdered milk to a Dominican Republic company. Vitusa pleaded guilty over the payment of what it termed ‘service fees’ to an agent. In settlement, a two year probation was imposed on the company’s president and personal and corporate fines of US$20 000 were also imposed.[70]
Criticisms of the FCPA continued into the 1990s. As late as 1997 some people were calling for its removal from the statute books. In particular, one scholar, Salbu, argued forcefully for the Act’s repeal, taking the position that ‘[b]ribery has continued to thrive during nearly two decades of the legislation’s existence, and prosecutions have been rare.’[71] He continued:
While the FCPA appears to have had little effect in reducing global corruption, it has yielded untoward side effects. Because of the FCPA’s vagueness and the complexity of the international context in which it operates, the FCPA has a chilling effect on legitimate transactions. Moreover, the FCPA engenders worldwide hostility for its insupportable invasiveness into local sovereign autonomy. Finally, because the nuances of varying practices around the world must be understood in their cultural context, the FCPA’s bluntness subjects Congress’ efforts to justifiable charges of ethnocentrism and moral imperialism.
Accordingly, Congress should abolish the FCPA, and the United States should cease efforts to persuade other nations to enact their own versions of the FCPA.[72]
The US did not respond to the call, but remained the ‘lone ranger’, fighting against corruption in global business whilst its competitors continued to allow the tax deductibility of bribes as a business expense. US authorities were attacked for making their country’s businesses uncompetitive in the global marketplace.[73] However, there is some dispute about whether the US actually became competitively disadvantaged. US companies found creative ways to be competitive in the global marketplace without having to engage in outright corruption. For example, IBM donated US$25 million in hardware and software to 20 Chinese universities, whilst Union Texas Petroleum Holdings Inc of Houston entered into a joint venture with the Government of Pakistan that involved the US company offering to spend more than US$200 000 annually to train government personnel.[74] Nevertheless, US officials calculated that, in a one year period between April 1994 and May 1995, its companies lost approximately 100 overseas contracts worth US$45 billion because of the corrupt practices of other bidders.[75] A further US$20 billion was lost in the first half of 1996.[76] Even if the amount lost by the US is no more than half of this figure, over a period of more than two decades, it represents a substantial loss of business to other countries.
As a result, there was pressure from within the US to end its isolation and to ‘level the playing field’, either by repealing its legislation or getting other countries to adopt similar legislation. Furthermore, criticism continued to be directed at the small number of prosecutions under the US legislation. Consequently, the US had to step up its efforts to get other countries to join it in the fight against corruption in global business.
International attitudes towards corruption generally began to change in the early 1990s. A combination of factors can account for this shift. Upon taking office the Clinton Administration effected a significant change in US policy. It adopted a two-pronged attack on corruption in global business — increased enforcement at home and the gathering of international support for a united approach.
The mid-1990s saw more vigorous enforcement of the FCPA by the two agencies that are responsible for its enforcement. In 1995 Lockheed Corporation was charged with paying US$1 million to an Egyptian official to facilitate the sale of aircraft to Egypt. Lockheed Corporation pleaded guilty and was fined US$24.8 million, a figure representing double the amount it made on the transaction. One of the corporation’s executives pleaded guilty while another fled to Syria. He was subsequently deported and returned to the US after negotiations between the US and Syrian governments.[77] He was fined US$125 000 and jailed for 18 months, thus becoming the first person to be jailed under the Act.[78] Lockheed Corporation was also investigated by a federal grand jury over alleged corrupt payments to the Korean Government on the sale of some military aircraft.[79] In 1996 IBM and Boeing were also investigated for possible violations of the FCPA concerning payments they made to officials in Argentina and the Bahamas respectively.[80]
In the same year the Securities and Exchange Commission indicated its intention to be more vigorous in its enforcement actions. It ended a 10 year hiatus when it brought civil proceedings against Montedison SpA for bribes paid to officials in Italy.[81] The following year another civil action was brought against Triton Energy Corporation and two of its employees. It was alleged that the company had used its Indonesian business agent to bribe Indonesian government officials. As part of a settlement, the company paid a fine of US$300 000 and the two employees were fined US$50 000 and US$30 000.[82]
The second prong of Clinton’s approach was to galvanise international support against corruption in global business. In 1988, when the Congress amended the FCPA, it requested the US President to enter into discussions with the Organisation for Economic Co-operation and Development (‘OECD’) with a view to winning its support on the issue.[83]
A very important strategy in Clinton’s approach was to shift the basis of the issue from a moral foundation to an economic one. When the Carter Administration first began the campaign against corruption it was couched in terms of ethics, no doubt influenced by the revelations of the use of ‘slush funds’ during the Watergate hearings.[84] The campaign was presented as a moral issue: a good thing for business and for all, and therefore worth fighting for. This approach put the US at odds with other countries, who saw the US as taking the high moral ground. Among other things, the US was criticised for ‘arrogance’ and ‘cultural imperialism’.[85] Not only did this make it difficult for the allies of the US, such as the OECD members, to embrace the campaign, it also made it difficult for them to sell such a campaign to the developing world.[86] Countries such as the United Kingdom, France, Germany and Japan strongly resisted the push by the US.[87]
The following statement of Lord Young, former head of Cable and Wireless and formerly Secretary of State for Trade and Industry for the United Kingdom, may be regarded as representing the dilemma in which these countries found themselves:
Now when you’re talking about kickbacks, you’re talking about something that’s illegal in this country, and that of course you wouldn’t dream of doing ... but there are parts of the world I’ve been to where we all know it happens, and if you want to be in business, you have to do [sic].[88]
The flip side of this difficulty was that the developed countries left themselves open to charges of moral hypocrisy in that the bulk of the companies that gave the bribes came from developed countries. Further, they were allowing tax deductions for precisely the same payments when made abroad.
Consequently, the Clinton Administration switched from the moral argument to the economic one.[89] This proved to be a masterstroke. Corruption is now openly debated and the negative effects it has on the economy are being demonstrated. The issue has therefore caught the attention not only of business executives and political leaders across the world, but also that of international economic organisations and other stakeholders. As it has been poignantly observed:
The rethinking of corruption in economic terms has enabled researchers to engage in research on the transaction costs of bribery and corruption, analyzing the impact of corruption in terms that lenders, businesses, and policymakers can understand and use. One recent study, by Shang-Jin Wei of Harvard University, analyzed the cost of corruption in terms of a tax on foreign investment and business and found that moving from a country with a low level of corruption, such as Singapore, to a country with the level of corruption of Mexico had the equivalent effect of a 20% tax on foreign business.[90]
The first breakthrough for the US came in 1994 when the Council of the OECD adopted an Anti-Bribery Recommendation.[91] It was recommended that ‘[m]ember countries take effective measures to deter, prevent and combat the bribery of foreign public officials in connection with international business transactions.’[92] The US pushed for this Recommendation to be legally binding, but once again Japan and the European countries opposed this.[93] The US was not, however, deterred. In 1995 its Trade Representative, Charlene Barshefsky, indicated that the US intended to campaign more aggressively for the major trading nations to adopt anti-corruption legislation similar to its own.[94]
The other key player in the campaign to raise awareness of corruption in global business and to galvanise international action against it has been Transparency International.[95] Established in Berlin in 1993 as a non-governmental organisation along similar lines to Amnesty International, Transparency International has been at the forefront in the campaign against corruption. Although it is not the only organisation currently campaigning against corruption in the world, it would appear that Transparency International is the only one whose sole objective is to curb corruption both at the national and international levels.[96] Transparency International has adopted both a holistic and a proactive approach to the task of raising awareness about corruption. Central to its operations is the network of National Chapters which it has established around the world. At present there are over 75, from Argentina to Zimbabwe, with many more in the process of formation. These National Chapters bring together coalitions of people with integrity and a commitment to fighting against corruption in government, business and civil society.[97]
Transparency International does not adopt an investigative, journalistic approach to its work whereby individual cases of corruption are exposed. Rather, its focus is on prevention and reforming systems.[98] Adhering to strict principles,[99] Transparency International assists its National Chapters to design and implement effective integrity systems. The collection, analysis and dissemination of information about corruption are also key elements of the activities of the organisation.
Transparency International also publishes a National Integrity Source Book,[100] which contains examples of best practice and practical steps for achieving it. Although the organisation’s objective of curbing corruption is not restricted to global business, it has been working closely with business to develop ‘Islands of Integrity’ under which companies and countries pledge not to engage in corruption in their business dealings.[101] In April 2000 it was announced that Transparency International would work with Australian companies to conduct ‘business integrity audits’. The aim of the independent audits is to ascertain that employees have not engaged in corrupt practices in their attempts to win international business.[102] In the same vein a pilot project, the National Integrity Systems Audit, is to be developed to subject government institutions to transparency and accountability procedures. It will be tested first in Queensland.[103]
As discussed in the last part of this article,[104] Transparency International has also been working closely with key international economic institutions such as the World Bank and the IMF. However, Transparency International has perhaps become famous around the world through its publication of two corruption indices: the Bribe Payers Index, which relates to leading exporters who pay bribes; and the Corruption Perceptions Index, which relates to the perceptions of the degree of corruption in a country as seen by business people, risk analysts and members of the general public.[105] Of particular interest, they show the countries considered most corrupt when it comes to doing business. The latest Corruption Perceptions Index has Azerbaijan, Indonesia, Nigeria and Cameroon at the very bottom of the ladder, signifying that these countries are perceived as the most corrupt.[106] The publication of the indices has had a huge impact.[107]
The year 1996 marked a watershed in the fight against corruption in global business. The Organisation of American States (‘OAS’) made the first multilateral move to tackle corruption in its hemisphere. On 29 March 1996, 21 members of the OAS signed the Inter-American Convention against Corruption at Caracas, Venezuela.[108] The preamble states that the signatories are ‘convinced that corruption undermines the legitimacy of public institutions and strikes at society, moral order and justice, as well as at the comprehensive development of peoples’.
The Inter-American Convention has twin purposes. Firstly, it aims to promote and strengthen the development of mechanisms for the prevention, detection and eradication of corruption. Secondly, it aims to promote and facilitate co-operation amongst the signatories for the purpose of ensuring that effective measures are in place to achieve the overall aim of eradicating corruption in the Americas.[109] The Inter-American Convention places a duty on signatories to criminalise both domestic and transnational bribery.[110] The former duty covers both the giver and recipient of a bribe, whereas the latter duty targets the giver alone. In addition, signatories have a duty to criminalise illicit enrichment; however, this applies only to the recipient.[111] Illicit enrichment is defined as a significant increase in the assets of a government official which he or she cannot reasonably explain in relation to his or her lawful earnings.[112]
Implementation of the Inter-American Convention has been slow due to lack of resources and the foot-dragging of some of the signatories.[113] Nevertheless, there is little doubt that the adoption of the Inter-American Convention is an important milestone in the campaign against corruption in global business.
The second important development to take place in 1996 was the recommendation issued by the Council of the OECD on 11 April, asking members who still allowed the tax deductibility of bribes to foreign public officials to re-examine the practice with a view to abandoning it.[114] Although the recommendation was not binding, it represented a significant development because, as has already been seen, allowing the tax deductibility of bribes served as an incentive to bribe-givers, who invariably came from the industrialised countries. The effect of the practice was that it increased the cost of global business transactions; however, it also made the developed countries vulnerable to attacks of moral hypocrisy in their attempts to raise awareness of corruption.
The third major development in 1996 occurred within the United Nations. On 16 December the General Assembly passed two resolutions on corruption. Resolution 51/59[115] dealt with action to be taken against corruption and contained an International Code of Conduct for Public Officials.[116] Resolution 51/191[117] contained the United Nations Declaration against Corruption and Bribery in International Commercial Transactions.[118] It recognised that
effective efforts at all levels to combat and avoid corruption and bribery in all countries are essential elements of an improved international business environment, that they enhance fairness and competitiveness in international commercial transactions and form a critical part of promoting transparent and accountable governance, economic and social development and environmental protection in all countries, and that such efforts are especially pressing in the increasingly competitive globalized international economy.[119]
The Declaration called on all UN members to take concrete steps to combat corruption in all its forms. Specifically, the UN called on its members to enact legislation to make the bribery of foreign public officials illegal and to end the tax deductibility of bribes. The Declaration also called for transparency in international commercial transactions through the development of accounting standards and business codes. Although the resolutions are not binding on members, the fact that they were adopted without a vote shows clearly the general consensus in the UN on the matter and the resolve of countries to take concrete action to combat corruption.[120]
Perhaps the most significant step in the efforts to combat corruption in global business was taken on 17 December 1997 in Paris, when members of the OECD signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.[121] In addition to the 29 OECD members who signed the OECD Convention, five non-members have signed: Argentina, Brazil, Bulgaria, Chile and the Slovak Republic. The OECD Convention came into effect on 15 February 1999. The significance of the signing of the OECD Convention is obvious. Since the OECD members comprise the leading trading nations of the world, it is from these countries that the transnational corporations which pay the bulk of the bribes in global business emanate. Getting them to agree to the making of the OECD Convention was therefore a significant achievement. Specifically in relation to the Americas, the making of the OECD Convention is seen as giving a boost to the implementation of the Inter-American Convention. Since the US, Canada, Mexico, Chile, Argentina and Brazil are signatories to both conventions, it is believed that their actions in implementing the OECD Convention will have a beneficial influence on the implementation process of the Inter-American Convention.[122]
Signatories to the OECD Convention have undertaken to enact legislation in their countries to criminalise the bribing of foreign public officials in relation to the performance of their duties.[123] Article 1(1) of the Convention states:
Each Party shall take such measures as may be necessary to establish that it is a criminal offence under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business.
The OECD Convention targets the ‘supply side’ of bribery. The aim is to stamp out ‘active corruption’ rather than ‘passive corruption’ and so the target is the person or entity giving the bribe, or promising to do so, rather than the person receiving it.[124] This is logical given that the OECD members are the largest exporters of global trade and investment and, as it has already been suggested, the bulk of the bribery money comes from them. Moreover, the OECD Convention targets ‘grand corruption’ rather than ‘petty corruption’. To this end, the OECD Convention follows the lead of the FCPA in exempting small ‘facilitation’ or ‘grease’ payments from its scope. The OECD Convention also provides for co-operation and mutual assistance between signatories in investigations and prosecution of offenders. This extends to the extradition of offenders.[125] An important element of the OECD Convention is the provision for co-operation in monitoring the full implementation of the OECD Convention.[126] Although it is acknowledged that the successful implementation of the OECD Convention will not be easy,[127] considerable progress has been made within a relatively short period of time and all the indicators point to its successful implementation in the future.
Of the 34 signatories to the OECD Convention, 22 countries had implemented it into their domestic laws by 31 August 2000: Australia, Austria, Belgium, Bulgaria, Canada, Czech Republic, Finland, France, Germany, Greece, Hungary, Iceland, Japan, Korea, Mexico, Norway, Slovak Republic, Spain, Sweden, Switzerland, the United Kingdom and the US.[128] The OECD Convention does not stipulate that countries adopt a specific legislative model. Rather, each country has been left with the discretion to ‘take such measures as may be necessary’ to implement the terms of the OECD Convention. However, Australia’s approach can be taken to be fairly representative.
On 7 December 1998 Australia signed the OECD Convention. On 31 March 1999 Australia implemented the 1996 OECD recommendation against allowing the tax deductibility of bribes to foreign officials as business expenses. On that day the Taxation Laws Amendment Act (No 3) 1999 (Cth) received royal assent to become effective from 1 July 1999. Prior to that time Australia, like most of the developed world, allowed bribes paid by its companies in the course of their international operations to be claimed against tax payable as business expenses. In passing, the observation may be made that it is surprising that it took Australia some three years to implement that recommendation.
Australia chose to implement the OECD Convention not by way of a new piece of legislation, but rather by way of an amendment to the federal Criminal Code. The Criminal Code (Bribery of Foreign Public Officials) Bill 1999 (Cth) was introduced into Federal Parliament on 10 March 1999. In his second reading speech the federal Attorney-General stated:
It is important that Australia should support the OECD’s initiative to combat the bribery of foreign public officials and take a principled stand against corruption. While I am sure we would all agree it will not completely solve the problem of corruption, implementation of the convention will reduce it and provide a strong statement about Australia’s values and our confidence in the soundness of those values.
There is good business sense, as much as morality, in introducing this legislation. Bribery distorts attempts at international competitive bidding, bribes themselves are non-productive and are therefore paid from profits and bribes distort trade in that contracts are not based on merit and can lead to production of poor quality goods and services. In the aid context, bribery can lead to a very poor selection of projects, and this can in turn lead to diversion of resources away from areas of greatest need.[129]
The Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 (Cth) received royal assent on 17 June 1999. It came into force on 18 December 1999, at the same time as Australia’s ratification of the OECD Convention became effective. The Act amended the federal Criminal Code Act 1995 (Cth) by adding Chapter 4, entitled ‘The Integrity and Security of the International Community and Foreign Governments’. Section 70.2 creates a new offence of bribing a foreign public official. According to s 70.2(1), it is an offence to provide, offer to provide or arrange for a benefit to be offered to a person if the benefit is not legitimately due to that person and the offer is made to influence a foreign public official to obtain or retain business or grant to the bribe giver a business advantage.[130] The offence carries a maximum of 10 years imprisonment.[131]
Section 70.3 contains a defence. This applies where the alleged conduct is sanctioned by the law in the foreign public official’s country. There is also a defence against a charge for facilitation payments made for a routine government action. This defence, contained in s 70.4, applies only if the value of the benefit was of a minor nature and ‘the person’s conduct was engaged in for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature’. Furthermore, a record must be made of the payment as soon as practicable thereafter and the record must be kept.[132]
As can be seen, the facilitation payments defence is based on the FCPA. As the aim of the OECD Convention, and therefore the Australian legislation, is to arrest grand corruption, it is understandable that it provides a defence for facilitation or grease payments; however, this is also a realistic recognition of the fact that payment of foreign public officials in order to secure routine government performance is entrenched in many developing countries.[133] Whilst it may be illegal in most countries, the reality is that refusal to make such a payment can result in some detriment to one’s business. For example, where goods need clearance from customs and undue delay could harm one’s business, it is not hard to find justification for making the payment. An even clearer situation is where the goods in customs are perishable.
The OECD Convention and the Australian legislation (like the FCPA) recognise that it would be unrealistic totally to ban facilitation or grease payments. It would be far better to have a provision that is workable and can be enforced, rather than have one which looks good on the statute books but is totally unenforceable. The Australian legislature has chosen the former. By limiting the defence in s 70.4 to benefits of a minor nature made for the purposes of securing routine government action of a minor nature, and by having further stringent record-keeping requirements, the potential for abusing the use of facilitation payments is significantly reduced. Having said that, there could still be difficulties in some cases. An interesting example is where an Australian company pays a foreign government official A$10 000 in order to accept its tender for a major development project worth over A$100 million. The payment is being made because the Australian company is late in the submission of its bid (in the last days before the deadline) and wants to ensure that its application is actually processed. It should be stressed that the foreign official is not being asked to do anything other than ensure that the application is duly accepted and included with the others. Will this be an acceptable facilitation payment? The amount of A$10 000 by itself is not of a minor nature but, in the context of the A$100 million, perhaps it is not that huge after all. There is no easy answer to this problem and surely the courts will have the opportunity in due course to set some guidelines.
Finally, the legislation finds jurisdiction on the basis of nationality and place of incorporation, but not on the basis of residency or business operations where the conduct occurs outside Australia.[134] Thus, the legislation will apply to conduct which occurs wholly or partly within Australia or wholly or partly on board an Australian aircraft or ship. Where the conduct occurs wholly outside Australia, prosecutions may be brought only against Australian citizens or bodies corporate that have been incorporated in Australia. In the case of Australian residents who are not citizens, the written consent of the federal Attorney-General is required before a prosecution may be instituted.[135] Australia adopted this approach because it is of the view that foreign countries should bear the responsibility for the actions of their citizens and businesses for any corrupt conduct which takes place outside Australia.[136]
In addition to the efforts already discussed, many other organisations are working hard in their own spheres to contribute to the global effort to combat corruption. Only some key contributions are noted here.
As was stated earlier,[137] until recently such venerable international financial organisations as the World Bank and the IMF ignored the issue of corruption in global business. To them it was seen as a political issue which fell outside the scope of their operations. In the words of James Wolfensohn, President of the World Bank, ‘corruption was seen as a political not an economic issue — off limits to all but political organizations.’[138]
Today, the winds of change are blowing across these same organisations. They are at the forefront in the fight against corruption. The World Bank began to change its position in 1995 with the appointment of James Wolfensohn as President. He made fighting corruption his top priority in 1996 when he declared ‘corruption an intolerable cancer’.[139] The following year he invited Transparency International to assist the World Bank in developing a comprehensive program to combat corruption.[140] The World Bank has since put in place a number of policies to ensure transparency and to fight corruption.[141] For example, the World Bank now aims to ensure integrity in the projects it funds by insisting on proper financial management and internal controls from the design stage of the project through to its implementation. Another initiative of the World Bank is to provide assistance to countries in their anti-corruption drives. This includes assistance with reforming public sector institutions, such as tax and customs administration, government procurement and auditing arrangements. An amount of US$5 billion has been earmarked by the Bank specifically for this initiative.[142]
Further, the World Bank now has stringent new guidelines on procurement.[143] A new anti-corruption clause requires ‘Borrowers ... as well as bidders/Suppliers/Contractors under Bank-financed contracts, [to] observe the highest standard of ethics during the procurement and execution of such contracts.’[144] Unannounced audits are carried out on projects and if evidence of corruption is found, the World Bank may suspend the loan facility or cancel the project altogether. Under this policy the Bank may also ban firms that are found to be corrupt from future tendering of its projects.[145] To boost the World Bank’s policies further, Transparency International has been urging potential bidders of World Bank contracts to sign an ‘Integrity Pact’ under which they pledge to refrain from engaging in corrupt practices.[146]
The World Bank is already demonstrating that it is not engaging in empty rhetoric, but rather that it is very serious about fighting corruption in its operations. In 1999 two companies, Case Technology, based in the United Kingdom and Nepostel, based in the Netherlands, which were bidding for a telecommunications network for the Central Bank of Turkmenistan, were removed from the World Bank’s consultancy list.[147] However, when it comes to countries which are experiencing severe financial problems, the World Bank has been careful not to take action that might result in economic chaos in the country. For example, when it came to light that World Bank funds given to Indonesia had been diverted to Bank Bali, the World Bank issued strong warnings to Indonesia rather than cutting off funding altogether. Similar action has been taken in respect of Russia, where corruption is endemic.[148]
The World Bank’s sister organisation, the IMF, has adopted a similar approach.[149] In 1997 the IMF implemented ‘The Role of the IMF in Governance Issues — Guidance Note’.[150] The guidelines adopt ‘a more proactive approach in advocating policies and the development of institutions and administrative systems that aim to eliminate the opportunity for rent-seeking, corruption, and fraudulent activity’.[151] The IMF adopted a Code of Good Practices on Fiscal Transparency — Declaration on Principles on 16 April 1998.[152] It is the belief of the IMF that ‘[f]iscal transparency would make a major contribution to the cause of good governance.’[153] A number of developing countries, including Kenya, have had their assistance suspended by the IMF because of concerns over corruption.[154] When the IMF bailed out South Korea and Indonesia in 1997 and 1998 respectively, the IMF imposed the conditions that these countries restructure their economies and aim for greater transparency in their business transactions.[155] The IMF demonstrated its seriousness to Jakarta in April 2000 when it denied Indonesia some US$660 million in soft loans until the country makes progress against corruption. As a result, Indonesia has decided to step up its efforts to combat corruption and, among other things, it plans to set up a special investigation team to tackle corruption at senior levels in the government, civil service and the judiciary. It also plans to import judges on an ad hoc basis from the Netherlands.[156]
Other organisations are also playing important roles in raising awareness of corruption in global business and in helping to develop strategies to combat it. For example, the International Chamber of Commerce in Paris has been promoting transparency in global business to international organisations, governments and corporations. In 1996 it revised its Rules of Conduct on Extortion and Bribery in International Business Transactions, totally prohibiting extortion and bribery in global business.[157]
Gift-giving is an entrenched part of some cultures and comes in a variety of forms. In some societies a gift is given almost as a matter of course in appreciation for some act done. Gifts may also be given at certain times of the year, such as national festivals or similar important occasions. Whereas in the former case the gift is given ex post facto and as a direct consequence of an act performed, in the latter case the gift is given without reference to any particular act.
The question raised by gift-giving in the context of combating corruption in global business is: Where does one draw the line? Does the mere giving of a gift encourage corruption? What about gifts given in response to some previous act or service rendered? Can it lead to corruption? Then there is the more difficult question of the quantum of the gift. Is a large gift given on the occasion of a national festival just a gift? Or does it suggest that some future reciprocity would be expected? These are some of the many questions which arise in this area.
In 1996 the Thai Deputy Minister of the Interior reportedly called publicly on his staff to accept any money offered to them because ‘[t]his is part of traditional Thai culture’.[158] A statement such as this is open to a variety of interpretations. There are some who would read the statement as indicating nothing more than that there exists a customary practice of gift-giving in Thailand. On the other hand, there are those who might interpret the statement as encouraging the acceptance of bribes. Even for those who accept the first interpretation, the question which arises is when does legitimate, customary gift-giving end and how does one tell when the gift-giving has gone beyond the legitimate?
Because gift-giving is an entrenched practice in some societies, this has been interpreted to mean that those societies are corrupt. For example, the Chinese have been accused of being ‘promiscuously corrupt in their business practices’ because of the culture of gift-giving.[159] Whilst it is acknowledged that corruption is endemic in China, it has been forcefully argued that gift-giving is not to blame because it is only part of a big picture of guanxi (‘belonging to a network of relationships’).[160] One commentator explains as follows:
For Chinese, gift giving is a natural dynamic of any relationship: it shows a relationship is valued and is a means of expressing respect and honor for the other person. Gifts express good will and gratitude and, in many ways, can be considered a dynamic form of ‘social contracting.’[161]
In Africa, where the culture of gift-giving has also been blamed for corruption, this type of argument has been refuted strongly. General Olesegun Obasanjo, currently President of Nigeria, makes the following powerful argument:
I shudder at how an integral aspect of our culture could be taken as the basis for rationalizing otherwise despicable behavior. In the African concept of appreciation and hospitality, the gift is usually a token. It is not demanded. The value is usually in the spirit rather than in the material worth. It is usually done in the open, and never in secret. Where it is excessive, it becomes an embarrassment and it is returned. If anything, corruption has perverted and destroyed this aspect of our culture.[162]
However, there is no doubt that the well-meaning practice of gift-giving can be abused by corrupt minds. The best evidence of this can be found in South Korea. The gift-giving practice of ttokkap (‘rice-cake expenses’) has ancient origins but has come to be associated with Korean Thanksgiving and New Year’s Day. Ttokkap is meant to be given as a token gift, as a sign of hospitality and gratitude. It has equivalents in many Asian countries.[163] However, former Presidents Chun Doo Hwan and Roh Tae Woo were found to have received ttokkap from over a dozen chaebol (‘Korean business conglomerates’) heads over several years ranging from US$5 million to US$18.8 million each. Over the period the payments amounted to US$638 million between the two presidents. The Korean courts developed a comprehensive bribe theory and came to the conclusion that the payments received by these ex-presidents went well beyond the accepted limits of the customary practice and therefore amounted to bribery.[164]
What the Korean case in particular demonstrates is that it is essential to make a distinction between gift-giving, which is culturally acceptable and which is not made to influence a business decision whether immediately or in the future, and a ‘gift’ which is a disguised form of bribery. Some people have argued that because gift-giving is entrenched in many cultures and because it is often difficult to distinguish between legitimate and illegitimate gift-giving, it is not worth attempting to criminalise corrupt practices in such societies. For example, it has been contended that
a broad spectrum of gifts and social favors, ranging from lavish offerings to routine hospitality, can be traded with a wide variety of motives, so complicating the task of winnowing the innocent from the corrupt as to render the effort futile.[165]
Whilst it may be difficult for an outsider to distinguish between gift-giving which falls within socially acceptable parameters and that which does not, for those familiar with the culture this may not be difficult at all. The particular culture may have its own norms to regulate the boundaries of social behaviour, including the practice of gift-giving. Indeed, as the argument by President Obasanjo indicates, African culture eschews ‘excessive’ gift-giving.[166] Similarly, it has been pointed out that within Chinese culture there are ‘moral parameters to distinguish morally proper gift giving from bribery and corruption’.[167] The Korean case perhaps also demonstrates that people who are familiar with the culture in which they are dealing can tell the difference between what is culturally acceptable and what is not. Therefore, any difficulty likely to be faced by a foreigner can hardly be a justification for not enacting legislation to curb unlawful activities.[168]
In this context, reference should be made to s 70.2(1) of the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 (Cth), which makes it illegal to bribe a foreign public official. Sub-sections (2) and (3) state that in working out if a benefit or a business advantage ‘is not legitimately due’ to a person in a particular situation, the following are to be disregarded:
This means that a person or body corporate charged with committing an offence of bribing a foreign public official cannot use cultural practice as a defence. It is interesting to contrast this with the facilitation payments defence contained in s 70.4, which is silent on the matter. Consequently, if any use can be made at all of cultural practice as a defence, it is probably in the context of facilitation payments. The difference in approach of the legislature reflects the seriousness with which bribing a foreign public official to gain some business advantage or benefit is viewed. All the same, one has to be careful not to confuse a practice that has developed in the public sector over time with a practice that is actually sanctioned by a culture. The two are not necessarily synonymous.
Corruption in global business has existed for a very long time, perhaps as long as there has been trade between nations. Until the mid-1990s the issue was virtually ignored in international business discourse. In fact, there were those who endorsed corruption in global business because in certain countries it was an effective way of overcoming obstacles to business transactions. For over 20 years the US fought single-handedly to get the issue of corruption in global business onto the international political agenda without any success. However, its persistence has at last paid off handsomely. Today corruption is very much on the agenda of all countries. It is being talked about and debated openly. Concerted efforts are being made to combat corruption not only by governmental organisations such as the OECD and the OAS but also by non-governmental organisations like Transparency International. Economic institutions such as the World Bank and the IMF are also playing key roles in changing community attitudes towards corruption in global business.
Although these organisations, and others, are playing important roles in the fight against corruption, the OECD Convention and the Inter-American Convention have the most far-reaching scope. Whether the signatories to these conventions will faithfully implement and enforce the terms of the conventions remains to be seen. Not long ago the efforts of the US were derided as futile because corruption was so entrenched in global business that some people felt it could not be changed. Even some of the closest allies of the US turned the other way when the issue was raised. One commentator has stated it elegantly: ‘Conventional wisdom dictated that attempting to change business practices was the equivalent of Don Quixote tilting at windmills.’[169]
Today the winds of change are blowing furiously in the other direction. The mere fact that the two conventions were actually signed is a very important achievement. The OECD Convention, which is the more significant of the two, has been receiving steady acceptance. As at 31 August 2000, some 22 countries had implemented the OECD Convention into their domestic laws.[170] The OECD’s monitoring procedure is being vigorously applied to ensure that these countries are abiding by their commitments under the OECD Convention. To date a number of countries, including Australia, the United Kingdom, Greece, Hungary, Iceland and Japan have been scrutinised.[171]
The international community as a whole should reap the benefits of transparent global business transactions as more and more countries take concrete action against corruption. In the end there will be a level playing field, in which competitiveness in global business will no longer be based on a willingness to engage in corruption to the detriment of those who value integrity and transparency. It will be an entirely different ball game!
[*] PhD (University of Sydney); Barrister and Solicitor of the Supreme Courts of ACT, Ghana and Victoria; Solicitor of the Supreme Court of NSW and the High Court of Australia.
[1] Frank Vogel, ‘The Supply Side of Global Bribery’ (1998) 35(2) Finance & Development 30, 33.
[2] Barbara Parker, Globalization and Business Practice: Managing across Boundaries (1998) 440; John Brademas and Fritz Heimann, ‘Tackling International Corruption: No Longer Taboo’ (1998) 77(5) Foreign Affairs 17, 17.
[3] Some of the leading models are discussed in Vito Tanzi, ‘Corruption around the World: Causes, Consequences, Scope, and Cures’ (1998) 45 IMF Staff Papers 559, 578, 581–2.
[4] Ibid 578.
[5] Pasuk Phongpaichit, Sungsidh Piriyarangsan and Nualnoi Treerat, Guns, Girls, Gambling, Ganja: Thailand’s Illegal Economy and Public Policy (1998). See also Darrell Mahoney et al, International Business: A Managerial Perspective (1998) 343.
[6] Other illegal activities mentioned are drug trafficking, contraband arms trading, smuggling of diesel oil, trafficking in women for prostitution, certain forms of gambling and trafficking in human labour.
[7] Phongpaichit, Piriyarangsan and Treerat, above n 5.
[8] See, eg, Richard Gesteland, Cross-Cultural Business Behavior (1996) 94.
[9] Clare Short, ‘All Out War against Corruption’ (1999) 243 African Business 24, 24. See also Gesteland, who asserts that bribery is sanctioned by some cultures: ibid 91.
[10] Gesteland, above n 8, 97–8. Gesteland discusses the term ‘polychronic’ at 101.
[11] Beverley Earle, ‘The United States’ Foreign Corrupt Practices Act and the OECD Anti-Bribery Recommendation: When Moral Suasion Won’t Work, Try the Money Argument’ (1996) 14 Dickinson Journal of International Law 207, 223.
[12] ‘That bribes have to be paid secretly everywhere, and that officials receiving bribes have to resign in disgrace if the bribe is disclosed, makes clear that bribery violates the moral standards of the South and the East, just as it does in the West’: Fritz Heimann, ‘Should Foreign Bribery Be a Crime?’ in Jeremy Pope (ed), National Integrity Systems: The TI Source Book (1996) pt C ch I(9), cited in Philip Nichols, ‘Regulating Transnational Bribery in Times of Globalization and Fragmentation’ (1999) 24 Yale Journal of International Law 257, 278.
[13] Nichols, above n 12, 278.
[14] Judge John Noonan Jr, Bribes (1984) 703.
[15] Quoted in Anver Versi, ‘On Corruption and Corrupters’ (1996) 215 African Business 7, 7.
[16] Ibid.
[17] Such as the prevailing economic theory which preached that corruption was good for international business.
[18] See below n 21 and accompanying text.
[19] See above nn 4–7 and accompanying text.
[20] See, eg, Versi, above n 15, 7.
[21] James Wolfensohn, ‘Corruption Impedes Development — and Hurts the Poor’ (1998) 25(4) International Journal of Government Auditing 1, 1; Brademas and Heimann, above n 2, 20; Susan Rose-Ackerman, ‘The Role of the World Bank in Controlling Corruption’ (1997) 29 Law and Policy in International Business 93, 93.
[22] Another dimension of this issue is considered in the context of gift-giving in below Part V.
[23] Philippe Pierros and Christian Hudson, ‘The Hard Graft of Tackling Corruption in International Business Transactions’ (1998) 32(2) Journal of World Trade 77, 79.
[24] This is explained in below Part IV.
[25] Earlier attempts by Transparency International to discuss the matter with officials in some European countries were rebuffed. See Frank Vogel, above n 1, 31. See also Steven Salbu, ‘Bribery in the Global Market: A Critical Analysis of the Foreign Corrupt Practices Act’ (1997) 54 Washington & Lee Law Review 229, 262. For more information about Transparency International, see below nn 95–107 and accompanying text.
[26] Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 209.
[27] Frederick Stüdemann, ‘A Land Where Bribes Are Tax-Deductible’, European (London, England), 17 June 1994, 3 cited in ibid 234. Similarly, former British Cabinet Minister, Lord Young (now Chair of Cable and Wireless) was reported to have argued that ‘bribery abroad was “good” for job creation at home’, according to Dr Frene Ginwalla, Speaker of the South African Parliament: quoted in Versi, above n 15, 7.
[28] See, eg, Tanzi, above n 3, 560.
[29] Eg Tanzi, above n 3, 560–1.
[30] Eg Nichols, above n 12, 272–3; Carolyn Hotchkiss, ‘The Sleeping Dog Stirs: New Signs of Life in Efforts to End Corruption in International Business’ (1998) 17 Journal of Public Policy & Marketing 108, 109–10.
[31] Transparency International, Annual Report 1995 (1995); Transparency International, Annual Report 1996 (1996); Transparency International, Annual Report 1997 (1997). These reports were cited in Pierros and Hudson, above n 23, 78. For more information about Transparency International, see below nn 95–107 and accompanying text.
[32] See, eg, Susan Rose-Ackerman, Corruption and Government: Causes, Consequences and Reform (1999).
[33] See Rex Zedalis, ‘How Does the New OECD Convention on Bribery Stack Up against the Foreign Corrupt Practices Act?’ (1998) 32(3) Journal of World Trade 167, 168. See also Organisation for Economic Co-Operation and Development Anti-Corruption Unit, Frequently Asked Questions (2000) Organisation for Economic Co-Operation and Development <http://www.oecd.org/daf/nocorruption/faq.htm> at 1 August 2000 (copy on file with author).
[34] Jacques Isnard, ‘Les commissions sur les ventes françaises à l’étranger ont atteint 10 milliards de francs en 1994’, Le Monde (Paris, France), 17 March 1995, 2 [trans: ‘Bribes on French Sales Overseas Reach 10 Billion Francs in 1994’] cited in Tanzi, above n 3, 563.
[35] See Tanzi, above n 3, 563, citing World Business, 4 March 1996.
[36] See, eg, Pierros and Hudson, above n 23, 78.
[37] Pierros and Hudson, above n 23, 78, citing former US Under-Secretary of Commerce for International Trade, Jeffrey Garten.
[38] Gesteland, above n 8, 93.
[39] Ibid.
[40] See above nn 5–7 and accompanying text.
[41] See above nn 2–4 and accompanying text.
[42] A detailed discussion of the relationship between the level of wages and corruption can be found in Tanzi, above n 3, 572–3. See also Bruce Zagaris and Shaila Ohri, ‘The Emergence of an International Enforcement Regime on Transnational Corruption in the Americas’ (1999) 30 Law and Policy in International Business 53, 53; Hotchkiss, above n 30, 111.
[43] Michael Backman, Asian Eclipse: Exposing the Dark Side of Business in Asia (1999) 28. See also Rose-Ackerman, ‘The Role of the World Bank’, above n 21, 93; Salbu, above n 25, 242.
[44] It has been commented that in Indonesia during the Suharto period, many positions in the bureaucracy were ‘effectively auctioned’ because junior officers had to share their bribery takings with their superiors: Backman, above n 43, 31. The tax administrations of countries such as Peru and Uganda were so plagued by corruption that they decided to get rid of them and start afresh: see Tanzi, above n 3, 568.
[45] Eg Gesteland, above n 8, 94; Tanzi, above n 3, 586.
[47] Ibid. See also Rose-Ackerman, Corruption and Government, above n 32.
[48] Brandon Mitchener, ‘Germany Says Business Bribes on the Rise’, The Wall Street Journal (New York, USA), 14 April 1997, 12, cited in Hotchkiss, above n 30, 110.
[49] ‘The negative association between corruption and investment, as well as growth, is significant in both a statistical and an economic sense’: Paulo Mauro, ‘Corruption and Growth’ (1995) 110 Quarterly Journal of Economics 681, 705. See also Pierros and Hudson, above n 23, 78; Wolfensohn, above n 21, 1.
[50] Barry O’Keefe, ‘Under the Table or Above-Board?’ (1997) 67(9) Australian Accountant 26, 26.
[51] A detailed discussion of the economic effects of corruption is contained in Tanzi, above n 3, 578–86. See also Salbu, above n 25, 249; Pierros and Hudson, above n 23, 78.
[52] Wolfensohn, above n 21, 1; Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 222; Short, above n 9, 25.
[53] Nichols, above n 12, 276. It has been argued that in the Asian financial crisis of 1997–98, a country’s ‘degree of collapse was in direct proportion to its level of cronyism, corruption, poor legal structures, poor corporate accountability, and general ethics’: Backman, above n 43, 4.
[56] Nichols, above n 12, 279.
[57] Ibid; Rose-Ackerman, ‘The Role of the World Bank’, above n 21, 93; Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 223; Short, above n 9, 25.
[58] The Asian financial crisis revealed that the countries in which corruption was rife also had weaker political and democratic systems. Indonesia provides the exemplar. See Backman, above n 43, 4–5.
[59] Brademas and Heimann, above n 2, 18; Hotchkiss, above n 30, 110; Joongi Kim and Jong Bum Kim, ‘Cultural Differences in the Crusade against International Bribery: Rice-Cake Expenses in Korea and the Foreign Corrupt Practices Act’ (1997) 6 Pacific Rim Law & Policy Journal 549, 567–8.
[60] Pub L No 95-213, 91 Stat 1494 (1977) (‘FCPA’).
[61] Some of the revelations first came out of the Watergate investigations. See Beverley Earle, ‘Foreign Corrupt Practices Act Amendments: The Omnibus Trade and Competitiveness Act’s Focus on Improving Investment Opportunities’ (1989) 37 Cleveland State Law Review 549, 550; Kim and Kim, above n 59, 571. For a background to the legislation, see United States v Blondek, 741 F Supp 116, 117–18 (ND Tex, 1990).
[62] US Securities and Exchange Commission, Questionable and Illegal Corporate Payments and Practices (1976), cited in Kim and Kim, above n 59, and Salbu, above n 25, 239.
[63] Earle, ‘Foreign Corrupt Practices Act Amendments’, above n 61, 550; Kim and Kim, above n 59, 572; Salbu, above n 25, 239.
[64] FCPA Pub L No 95-213 s 103, 91 Stat 1494, 1496 (1977). The penalty provisions in the FCPA amended the Securities Exchange Act of 1934 s 32, 15 USC s 78ff. See also Earle, ‘Foreign Corrupt Practices Act Amendments’, above n 61, 551; Salbu, above n 25, 242.
[65] Brademas and Heimann, above n 2, 17. Salbu refers to ‘moral imperialism’: Salbu, above n 25, 275–6. See also Hotchkiss, above n 30, 108, 111.
[66] Salbu, above n 25, 242–3, fn 87.
[67] Pub L No 100-418, 102 Stat 1107 (1988).
[68] Omnibus Trade and Competitiveness Act of 1988 Pub L No 100-418 s 5003(b), 102 Stat 1107, 1419 (1988). This amended the Securities Exchange Act of 1934 s 32(c), 15 USC s 78ff. See also Earle, ‘Foreign Corrupt Practices Act Amendments’, above n 61, 554–5.
[69] Salbu, above n 25, 236; Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 213.
[70] Salbu, above n 25, 237; Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 215. See also United States v Liebo, [1991] USCA8 55; 923 F 2d 1308 (8th Cir, 1991).
[72] Ibid.
[73] See, eg, Nichols, above n 12, 287.
[74] Parker, above n 2, 442. The competitiveness issue is critically analysed in Nichols above n 12, 288–90.
[75] Hotchkiss, above n 30, 110.
[76] Zedalis, above n 33, 168.
[77] Hotchkiss, above n 30, 110.
[78] Ibid; Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 212.
[80] Ibid.
[81] Hotchkiss, above n 30, 110.
[82] Ibid.
[83] Ibid 108; Kim and Kim, above n 59, 572; Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 224–5.
[84] Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11; Hotchkiss, above n 30, 111.
[85] Hotchkiss, above n 30, 108, 113.
[86] Ibid 111. Salbu argues that ‘the aggressive imposition of culture-specific values on other societies may engender resentment and hostility, potentially placing unnecessary strain on international relations’: Salbu, above n 25, 278.
[88] Joanna Pitman, ‘Treaty Spells Payback Time for Corrupt Businessmen’, The Times (London, United Kingdom), 11 June 1997, 29. This statement was made during an interview with the BBC in 1994.
[89] Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11. A detailed economic argument against bribery, or what Earle terms ‘bribonomics’, can be found in Part III of the article. See also Wolfensohn, above n 21, 1; Tanzi, above n 3, 578–86. However, we have been reminded that ‘[w]e delude ourselves if we think bribery to be purely economic conduct incapable of leading to fear, cruelty and humiliation’: Martin Davies, ‘Just (Don’t) Do It: Ethics and International Trade’ [1997] MelbULawRw 21; (1997) 21 Melbourne University Law Review 601, 614.
[90] Hotchkiss, above n 30, 111. See also Ayesha Qayyum, ‘New Anti-Bribery Treaty Analyzed’ (1998) 28 International Commercial Litigation 27, 28.
[91] OECD, Recommendation of the Council of the OECD on Bribery in International Business Transactions annexed to OECD, OECD Governments Agree to Combat Bribery, Press Release, SG/PRESS(94)36 (27 May 1994) 2; 33 ILM 1389, 1389.
[92] Ibid art 1.
[93] Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 225–6.
[95] Brademas and Heimann, above n 2, 20.
[96] Transparency International, Mission Statement (1997) <http://www.transparency.org/mission
.html> at 1 August 2000 (copy on file with author).
[97] Transparency International, National Chapters and Contacts (2000)<http://www.transparency
.org/organisation/chapters/> at 1 August 2000 (copy on file with author).
[98] Such as government and administrative machinery.
[99] The principles are:
Transparency International, Mission Statement, above n 96.
[100] Jeremy Pope (ed), National Integrity Systems: The TI Source Book (1996).
[101] Ecuador was used as a testing laboratory for the concept: see Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 232.
[102] Stephen Dabkrowski, ‘Australian Companies to Help Battle Bribery’, The West Australian (Perth), 13 April 2000, 45.
[103] Ibid.
[104] See below Part IV(E).
[105] Transparency International, 1999 Bribe Payers Index; 1999 Corruption Perceptions Index (1999) <http://www.transparency.org/documents/cpi/index.html> at 1 August 2000 (copy on file with author). Earlier versions of the Indexes can be found at the Internet Centre for Corruption Research, Göttingen University <http://www.gwdg.de/~uwvw/> .
[106] Transparency International, 1999 Bribe Payers Index; 1999 Corruption Perceptions Index, above n 105.
[107] Transparency International, Annual Report 1999 (1999) 12; available at <http://www.transparency.org/documents/annual-report/ar_99/pages/contents.htm> at 1 August 2000 (copy on file with author).
[108] Opened for signature 29 March 1996, KAV Series 5209, 35 ILM 724 (entered into force 6 March 1997) (‘Inter-American Convention’). In the previous year the Secretary-General of the OAS, Cesar Gavaria, had signalled the tough stand against corruption when he stated in his 1995 document, ‘A New Vision of the Organisation of American States’: ‘[C]orruption is a problem that seriously affects the legitimacy of democracy, distorts the economic system, and contributes to social disintegration’: cited in Zagaris and Ohri, above n 42, 55.
[109] Inter-American Convention, above n 108, art 2.
[110] Ibid arts 7 and 8.
[111] Ibid art 9.
[112] Ibid. For comments, see Zagaris and Ohri, above n 42, 56–7. See also Pierros and Hudson, above n 23, 86.
[113] Zagaris and Ohri, above n 42, 63.
[114] OECD, Recommendation of the Council on the Tax Deductibility of Bribes to Foreign Public Officials C(96)27/FINAL (1996); 35 ILM 1311. It should be noted that the OECD first put corruption on the agenda in 1989. Later, the OECD set itself two objectives: firstly, to fight corruption in global business and, secondly, to help level the playing field for all companies to compete. See OECD Anti-Corruption Unit, About Us (2000) OECD <http://www.oecd.org/daf/nocorruption/aboutus.htm> at 1 August 2000 (copy on file with author).
[115] Action against Corruption, GA Res 51/59, 51 UN GAOR (82nd plen mtg), UN Doc A/Res/51/59 (1997); 36 ILM 1039.
[116] Ibid Annex; 1041.
[117] Declaration against Corruption and Bribery in International Commercial Transactions, GA Res 51/191, 51 UN GAOR (86th plen mtg), UN Doc A/Res/51/191 (1997); 36 ILM 1043.
[118] Ibid Annex; 1046 (‘Declaration’).
[119] Ibid Preamble to the Declaration.
[120] It should be pointed out that the UN had made some previous attempts to address the issue, but had experienced little success due to a lack of support. See, eg, Measures against Corrupt Practices of Transnational and Other Corporations, Their Intermediaries and Others Involved, GA Res 3514 (XXX), 31 UN GAOR (2441st plen mtg), UN Doc A/Res/3514 (XXX) (1976); 15 ILM 180; and Outstanding Issues in the Draft Code of Conduct on Transnational Corporations: Report of the Secretariat, UN Doc E/C.10/1984/S/5 (1984); 23 ILM 602.
[121] Opened for signature 17 December 1997, [1999] ATS No 21, 37 ILM 1 (entered into force 15 February 1999) (‘OECD Convention’). Earlier, on 23 May 1997, the OECD had revised its 1994 Recommendation of the Council of the OECD on Bribery in International Business Transactions, above n 91: see OECD, Revised Recommendation of the Council on Combating Bribery in International Business Transactions C(97)123/FINAL (1997); 36 ILM 1016.
[122] Zagaris and Ohri, above n 42, 63.
[123] For an analysis of the OECD Convention, see Zedalis, above n 33; Qayyum, above n 90; Pierros and Hudson, above n 23, 92–9.
[124] See OECD Anti-Corruption Unit, ‘Commentaries on the Convention on Combating Bribery of Officials in International Business Transactions’ (1998) 37 International Legal Materials 8, 8.
[125] OECD Convention, above n 121, arts 9, 10.
[126] Ibid art 12. The monitoring process began in April 1999 with Germany, Norway and the US.
[127] Laurence Cockcroft, Implementation of the OECD Convention: The Conditions for Success (1999) Transparency International <http://www.transparency.org/documents/workpapers/
lc_oecd.html> at 1 August 2000 (copy on file with author).
[128] See OECD Anti-Corruption Unit, Steps Taken and Planned Future Actions by Each Participating Country to Ratify and Implement the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (2000) OECD <http://www.oecd.org/daf/nocorruption/annex2.htm> at 31 August 2000 (copy on file with author). As at 31 August 2000 Brazil and Turkey had ratified the OECD Convention, but were yet to adopt implementing legislation.
[129] Commonwealth, Parliamentary Debates, House of Representatives, 3 June 1999, 6044 (Daryl Williams, Attorney-General).
[130] The terms ‘benefit’, ‘business advantage’, ‘foreign public official’ and other terms are defined in s 70.1. For example, the term ‘benefit’ is defined to include ‘any advantage and is not limited to property’.
[131] By virtue of s 4B of the Crimes Act 1914 (Cth), a court may impose a fine instead of imprisonment or in addition to it.
[132] Section 70.4(3) sets out the required content of the record.
[133] The point has already been made that this is one of the benign effects of corruption, as such payments supplement the income of government officials in poor countries: see above nn 42–44 and accompanying text.
[134] OECD Convention, above n 121, art 4 allows for different approaches to the issue of extraterritoriality. The Canadian courts are likely to adopt the ‘real and substantial connection’ approach for corrupt practices which occur overseas: see Simon Chester and David Selley, ‘Giving Kickbacks the Boot’ (1999) 132 CA Magazine 20, 22. The civil code countries, however, are likely to base jurisdiction on nationality in accordance with existing practice: Cockcroft, above n 127.
[135] Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 (Cth) s 70.5.
[136] The Commonwealth Government’s response to the recommendations of the Joint Standing Committee on Treaties is summarised in Bills Digest No 176 1998–99: Criminal Code (Bribery of Foreign Public Officials) Bill 1999 (1999) Parliament of Australia <http://www.aph.gov.au/library/pubs/bd/1998-99/99bd176.htm> at 1 August 2000, [9]–[24] (copy on file with author).
[137] See above n 21 and accompanying text.
[138] Wolfensohn, above n 21, 1.
[139] Cited in Paul Sweeney, ‘The World Bank Battles the Cancer of Corruption’ (1999) 13 Global Finance 110, [5].
[140] Brademas and Heimann, above n 2, 20; Rose-Ackerman, ‘The Role of the World Bank’, above n 21, 93; Sweeney, above n 139.
[141] Wolfensohn, above n 21, 1–2.
[142] Sweeney, above n 139, [13].
[143] World Bank, Guidelines: Procurement under IBRD and IDA Credits (5th rev ed, 1999) World Bank Group <http://www.worldbank.org/html/opr/procure/procguid-ev3.doc> at 1 August 2000 (copy on file with author) cl 1.15.
[144] Ibid; see also O’Keefe, above n 50, 26.
[145] Zagaris and Ohri, above n 42, 78–81; Qayyum, above n 90, 28.
[146] Rose-Ackerman, ‘The Role of the World Bank’, above n 21, 104.
[147] Sweeney, above n 139, [13].
[148] Ibid [14].
[149] Tanzi, above n 3, 576; Brademas and Heimann, above n 2, 20; Pierros and Hudson, above n 23, 99–101.
[150] IMF, IMF Adopts Guidelines Regarding Governance Issues, News Brief, No 97/15 (4 August 1997) <http://www.imf.org/external/np/sec/nb/1997/nb9715.htm> at 1 August 2000 (copy on file with author) Annex.
[151] Zagaris and Ohri, above n 42, 82.
[152] IMF, Code of Good Practices on Fiscal Transparency — Declaration on Principles (1998). The Code is reproduced at (1998) 37 ILM 942.
[153] Ibid Preamble.
[154] Hotchkiss, above n 30, 113.
[156] Tim Dodd, ‘IMF Loan Delay Prompts Jakarta Corruption Effort’, The Australian Financial Review (Sydney), 4 April 2000, 12.
[157] International Chamber of Commerce, Extortion and Bribery in International Business Transactions: 1996 Revisions to the ICC Rules of Conduct (1996). The Revisions are reproduced at (1996) 35 ILM 1306.
[158] Hotchkiss, above n 30, 113.
[159] P Steidlmeier, ‘Gift Giving, Bribery and Corruption: Ethical Management of Business Relationships in China’ (1999) 20 Journal of Business Ethics 121, 121.
[160] Ibid 122.
[161] Ibid 124.
[162] Hotchkiss, above n 30, 113–14.
[163] Kim and Kim, above n 59, 561–2.
[164] Ibid 567–9.
[166] See above n 162 and accompanying text.
[167] Steidlmeier, above n 159, 121.
[168] Cf Nichols, above n 12, 295.
[169] Earle, ‘The United States’ Foreign Corrupt Practices Act’, above n 11, 209.
[170] OECD Anti-Corruption Unit, Steps Taken and Planned Future Actions, above n 128.
[171] Ibid.
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