Bribery and Corruption:
Is Signing the OECD Convention Enough?
Word Count: 1645
Bribery and Corruption: Is Signing the OECD Convention Enough? Before the 1990’s, the conventional belief was that corruption in developing countries was practically inevitable and in some cases even desirable. However, a more in-depth investigation into this issue suggests that bribery and corruption can cause significant problems for all parties involved. For example, for suppliers of bribes such as corporations, it can cause many uncertainties since the quality and the price of their products are not the only factors considered in the transaction (Hamra, 2000). Therefore, corporations are not usually in favor of undertaking such business transactions because ultimately, they lead to higher expenses. The host county that receives the bribe can also suffer due to reduced growth, price distortion, low domestic and foreign investment, higher levels of poverty, unsafe products, damaging environmental practices, many human rights violations, and domestic conflicts. Considering all the above mentioned reasons, stakeholders including governments, corporations, nongovernmental organizations, the World Bank, and the International Monetary Fund, condemn corruption and bribery (Andrew, 2011). However, this paper will argue that even though such practices are condemned and counties may attempt to combat it by signing Anti-Bribery conventions, this will not be adequate until they begin to actively enforce it domestically. The Organization for Economic Cooperation and Development’s (OECD) Convention on bribery of foreign public officials in international business is composed of mainly developed nations, which account for almost 72% of the world’s gross national income and close to 61% of world trade. In 2010, Chile, Israel, Slovenia, and Estonia joined the OECD, while Russia and Columbia signed up in 2011. However, still a number of major countries such as China and India have yet to join. OECD’s mission is to “promote policies that will improve the economic and social wellbeing of people around the world” (Andrew, 2011). Although, as many as 38 countries have joined and implemented the conventions, only 14 signatories have punished bribery since the Anti-Bribery convention came into force in 1999. OECD’s Working Group on Bribery released a report stating that United States is the most active member in applying criminal sanctions on 58 individuals and 28 companies, followed by Hungary imposing penalties on 28 individuals, and South Korea on 16 individuals. The lowest numbers of successful prosecutions under the anti-bribery laws were made by Germany imposing penalties on 14 individuals, Italy imposing on 10, Japan on six, France on four, and the United Kingdom on three. Prior to the enforcement of the convention for some developed countries, bribery was so common that payments made to foreign officials was in fact tax-deductible. Since the convention came into force, 24 signatory countries have not been very active in pursuing and penalizing neither companies nor individuals. This suggests that the convention, even when implemented, does not have any force on its own, unless the countries proactively enforce the rules domestically to fight corruption (Evans, 2001). Russia is one of the signatories of the Anti-Bribery convention; however, a recent example involving a prominent multinational corporation called IKEA, has shed light onto corruption still occurring in the country. IKEA is one of the largest foreign investors in Russia and has plowed nearly $4 billion into the economy since opening its first store in 2000. Per Kaufmann, who is IKEA’s country manager in Russia, said that the decision to put a hold on all new investment in Russia was “due to the unpredictability of the administrative processes in some regions”. Although, the statement does not explicitly state so, but the company officials...
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