Anti-corruption

Anti-corruption (or anticorruption) comprises activities that oppose or inhibit corruption. Just as corruption takes many forms, anti-corruption efforts vary in scope and in strategy.^[1] A general distinction between preventive and reactive measures is sometimes drawn. In such framework, investigative authorities and their attempts to unveil corrupt practices would be considered reactive, while education on the negative impact of corruption, or firm-internal compliance programs are classified as the former.

History

Early history

The

In ancient times, moral principles based on religious beliefs were common, as several major religions, such as Buddhism, Christianity, Hinduism, Islam, Judaism, Sikhism, and Taoism condemn corrupt conduct in their respective religious texts.^[5] The described legal and moral stances were exclusively addressing bribery but were not concerned with other aspects that are considered corruption in the 21st century. Embezzlement, cronyism, nepotism, and other strategies of gaining public assets by office holders were not yet constructed as unlawful or immoral, as positions of power were regarded a personal possession rather than an entrusted function. With the popularization of the concept of public interest and the development of a professional bureaucracy in the 19th century offices became perceived as trusteeships instead of property of the office holder, leading to legislation against and a negative perception of those additional forms of corruption.^[6] Especially in diplomacy and for international trade purposes, corruption remained a generally accepted phenomenon of the political and economic life throughout the 19th and big parts of the 20th century.^[7]

In contemporary society

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In the 1990s corruption was increasingly perceived to have a negative impact on

Since the 2000s, the discourse became broader in scope. It became more common to refer to corruption as a violation of human rights, which was also discussed by the responsible international bodies.^[13] Besides attempting to find a fitting description for corruption, the integration of corruption into a human rights-framework was also motivated by underlining the importance of corruption and educating people on its costs.^[14]

Legal framework

In national and in international legislation, there are laws interpreted as directed against corruption. The laws can stem from resolutions of international organizations, which are implemented by the national governments, who are ratifying those resolutions or be directly issued by the respective national

Laws against corruption are motivated by similar reasons that are generally motivating the existence of criminal law, as those laws are thought to, on the one hand, bring justice by holding individuals accountable for their wrongdoing, justice can be achieved by sanctioning those corrupted individuals, and potential criminals are deterred by having the consequences of their potential actions demonstrated to them.^[15]

International law

Approaching the fight against corruption in an international setting is often seen as preferential over addressing it exclusively in the context of the nation state. The reasons for such preference are multidimensional, ranging from the necessary international cooperation for tracing international corruption scandals,^[16] to the binding nature of international treaties, and the loss in relative competitiveness by outlawing an activity that remains legal in other countries.

OECD

The OECD Anti-Bribery Convention was the first large scale convention targeting an aspect of corruption, when it came in 1999 into force. Ratifying the convention obliges governments to implement it, which is monitored by the OECD Working Group on Bribery. The convention states that it shall be illegal bribing foreign public officials. The convention is currently signed by 43 countries. The scope of the convention is very limited, as it is only concerned with active bribing. It is hence more reduced than other treaties on restricting corruption, to increase – as the working group's chairman Mark Pieth explained – the influence on its specific target.^[17] Empirical research by Nathan Jensen and Edmund Malesky suggests that companies based in countries that ratified the convention, are less likely to pay bribes abroad.^[18] The results are not exclusively explainable by the regulatory mechanisms and potential sanctions triggered through this process but are equally influenced by less formal mechanisms, e.g. the peer reviews by officials from other signatories and the potentially resulting influences on the respective country's image.^[19] Groups like TI, however, also questioned whether the results of the process are sufficient, especially as a significant number of countries is not actively prosecuting cases of bribery.^[20]

United Nations

20 years before the OECD convention was ratified, the

Many other intergovernmental organizations are working on the reduction of corruption without issuing conventions binding for its members after ratification. Organizations that are active in this field include, but are not limited to, the World Bank (such as through its Independent Evaluation Group), the International Monetary Fund (IMF),^[26] and regional organizations like the Andean Community (within the framework of the Plan Andino de Lucha contra la Corrupción).^[27]

Regulations by continental organizations

Americas

The first convention adopted against corruption by a regional organization was the Organization of American States' (OAS) Inter-American Convention Against Corruption (IACAC). The convention, which targeted both active and passive bribing, came into force in 1997. It is currently ratified by all 34 active OAS-Member States.^[28][a]

Europe

In 1997 the European Union (EU) adopted the EU Convention against corruption involving officials, which makes it illegal to engage in corrupt activities with officials from the European Union's administrative staff, or with officials from any member state of the EU. It forces the signatories to outlaw both active and passive bribing which involves any aforementioned official. Liability for unlawful actions is extend to the heads of those entities, whose agents were bribing officials.^[29]

Since its launch in 2003, the

While bribing domestic officials was criminalized in most countries even before the ratification of international conventions and treaties,[37] many national law systems did not recognize bribing foreign officials, or more sophisticated methods of corruption, as illegal. Only after ratifying and implementing above mentioned conventions the illegal character of those offenses was fully recognized.^[38] Where legislation existed prior to the ratification of the OECD convention, the implementation resulted in an increased compliance with the legal framework.^[39]

Corruption is often addressed by specialized investigative or prosecution authorities, often labelled as anti-corruption agencies (ACA), that are tasked with varying duties and subject to varying degrees of independence from the respective government, regulations, and powers, depending on their role in the architecture of the respective national law enforcement system. One of the earliest precursors of such agencies is the anti-corruption commission of New York City, which was established in 1873.^[40] A surge in the numbers of national ACAs can be noted in the last decade of the 20th and the first decade of the 21st century.^[41]

Armenia

In 2019 Armenian Government approved Anti-Corruption Strategy and its implementation plan between 2019 and 2022.^[42] Under this strategy the three main directions will be the prevention of corruption, the corruption crimes investigation, anticorruption education and awareness of the corruption and anticorruption strategy. Even before adoption of Anti-Corruption Strategy and implementation plan, after 2018 Velvet Revolution, number of criminal investigation cases of corruption almost doubled in Armenia. As Prosecutor General's Office issued report says, the number of corruption investigations started by law enforcement agencies in the country during the first half of 2018 is more than double compared with the number of the criminal cases against corruption cases started during the first half of 2017. Out of the 786 cases initiated in the beginning of 2018 - 579 resulted in criminal cases. Starting from the first months of the anticorruption plan implementation, Armenia carried out actions in the fight against corruption - which was mainly directed to improve the investment environment of Armenia, and as a result economic indexes were improved.^[43]

Brazil

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Brazil's

Canada remained one of the last signatories of the OECD-convention on bribery that did not implement its national laws against bribes for foreign officials.^[45] While the Corruption of Foreign Public Officials Act (CFPOA) was passed in 1999, it was often not used to prosecute foreign bribery by Canadian companies, as the bill had a provision that the act of bribery had to have a "real and substantial link" with Canada. Such provision was canceled in 2013 by the Bill S-14 (also called Fighting Foreign Corruption Act). Additionally, Bill S-14 banned facilitation payments and increased the possible punishment for violating the CFPOA.^[46] An increase in the maximum prison sentence for bribery to 14 years was one of the increases in sanctioning.^[47] According to TI's report from 2014, Canada is moderately enforcing the OECD Convention against bribery.^[48]

China

In the wake of

The underlying legal regulations for the campaign is rooted in provisions of the Anti-Unfair Competition Law and the criminal law.

Georgia

From 2003 to 2012, Georgia moved from one of the ten most-corrupt countries based on Corruption Perceptions Index rankings to among the top third for clean government. Anti-corruption reforms implemented by president Mikheil Saakashvili resulted in the firing of all 16,000 traffic police officers in a single day, simplification of government bureaucracy, and university entrance based on standardized exams rather than interviews.^[51] Laws in Georgia that deal with corruption include Articles 332–342 of its Criminal Code, the Law of Georgia on the Conflict of Interests and Corruption in Public Service, Money Laundering Law, and Law of Georgia on the Conflict of Interests and Corruption in Public Service (Art. 20).^[52] The trajectory of Georgia from highly corrupt to much cleaner governance supports the notion that piecemeal anti-corruption reforms are less effective than anti-corruption initiatives with broad scope.^[53]

Japan

After signing the OECD-Convention on Combating Bribery of Foreign Public Officials,^[54] Japan implemented the Unfair Competition Prevention Act (UCPA) to comply with the convention. The law states that it is illegal to bribe foreign public officials. The individual who was offering the bribes and the company on whose behalf the bribes were offered may face negative consequences. The Company Act also enables the punishment of senior management if the payment was made possible by their negligence. Transparency International criticized Japan in 2014 for not enforcing the law, hence only complying to the convention on paper and providing no consequences to offenders.^[48] Nevertheless, a study conducted by Jensen and Malesky in 2017 provides empirical evidence that Japanese companies are less involved in bribery than companies based in other Asian countries that did not sign the convention.^[18]

United Kingdom

The United Kingdom was a founding member of the OECD working group on bribery and ratified the Anti-Bribery Convention, but faced significant problems in complying to its findings and the convention.^[55] It was severely affected by the Al-Yamamah arms deal, in which the British company BAE Systems faced allegations of having bribed members of the Saudi royal family to facilitate an arms deal. British prosecution of BAE Systems was stopped after an intervention by then Prime Minister Tony Blair, which caused the OECD working group to criticize the British anti-corruption laws and investigations.^{[citation needed]}

The

Transparency International stated in 2014 that the United Kingdom fully complied to the OECD Convention against Bribery.[48]

United States

Already at the foundation of the

The TI's last report on enforcement of the OECD Convention against bribery published in 2014 concluded that the United States are complying with the convention.[48]

In 2011 the

Values education is believed to be a possible tool to teach about the negative effects of corruption and to create resilience against acting in a corrupt manner, when the possibility of doing so arises.^[65] Another stream of thought on corruption prevention is connected to the economist Robert Klitgaard, who developed an economic theory of corruption that explains the occurrence of corrupt behavior by producing higher gains than the assumed punishment it might provoke. Klitgaard accordingly argues for approaching this rational by increasing the costs of corruption for those involved by making fines more likely and more severe.

Good governance

As corruption incidences often happen in the interaction between representatives of private sector companies and public officials, a meaningful step against corruption can be taken inside of public administrations.^[1] The concept of good governance can accordingly be applied to increase the integrity of administrations, decreasing hence the likelihood that officials will agree on engaging in corrupt behavior.^[66] Transparency is one aspect of good governance.^[67] Transparency initiatives can help to detect corruption and hold corrupt officials and politicians accountable.^[68]

Another aspect of good governance as a tool to combat corruption lies in the creation of trust toward state institutions. Gong Ting and Xiao Hanyu for instance argue that citizens, who have a positive perception of state institutions are more likely to report corruption-related incidents than those, who express lower levels of trust.^[69]

Sanctions

Even though sanctions seem to be underwritten by a legal framework, their application often lies outside of a state-sponsored legal system since they are frequently applied by multilateral development banks (MDBs), state agencies, and other organizations, which implement those sanctions not through applying laws, but by relying on their internal bylaws. World Bank, even though reluctant in the 20th century to use sanctions,^[70] turned into a major source of this specific kind of applying anti-corruption measures.^[71] the involved MDBs are typically applying an administrative process that includes judicial elements, when a suspicion about corruption in regard to the granted projects surfaces. In case of identifying a sanctionable behavior, the respective authority can issue a debarment or milder forms, e.g. mandatory monitoring of the business conduct or the payment of fines.^[72]

Public sector procurement

Excluding companies with a track record of corruption from bidding for contracts, is another form of sanctioning that can be applied by procurement agencies to ensure compliance to external and internal anti-corruption rules.^[73] This aspect is of specific importance, as public procurement is both in volume and frequency especially vulnerable for corruption. In addition to setting incentives for companies to comply with anti-corruption standards by threatening their exclusion from future contracts, the internal compliance to anti-corruption rules by the procurement agency has central importance. Such step should according to anti-corruption scholars Adam Graycar and Tim Prenzler include precisely and unambiguously worded rules, a functional protection and support of whistleblowers, and a system that notifies supervisors early about the potential dangers of conflicts of interest or corruption-related incidents.^[74]

Civil society

Michael Johnston, among others, argued that

Taking into consideration that precise and comprehensive definitions of corrupt actions are lacking, the legal perspective is structurally incapable of efficiently ruling out corruption. Combined with a significant variety in national laws, frequently changing regulations, and ambiguously worded laws, it is argued that non-state actors are needed to complement the fight against corruption and structure it in a more holistic way.[40]

Ensuring transparency

An example for a more inclusive approach to combating corruption that goes beyond the framework set by lawmakers and the foremost role taken by representatives of the civil society is the monitoring of governments, politicians, public officials, and others to increase transparency. Other means to this end might include pressure campaigns against certain organizations, institutions, or companies.^[77] Investigative journalism is another way of identifying potentially corrupt dealings by officials. Such monitoring is often combined with reporting about it, in order to create publicity for the observed misbehavior. Those mechanisms are hence increasing the price of corrupt acts, by making them public and negatively impacting the image of the involved official. One example for such strategy of combating corruption by exposing corrupt individuals is the Albanian television show Fiks Fare that repeatedly reported on corruption by airing segments filmed with hidden cameras, in which officials are accepting bribes.^[78]

Education on corruption

Another sphere for engagement of civil society is the prevention by educating about the negative consequences of corruption and a strengthening of ethical values opposing corruption. Framing corruption as a moral issue used to be the predominant way of fighting it but lost importance in the 20th century as other approaches became more influential.^[79][80] The biggest organization in the field of civil societal opposition towards corruption is the globally active NGO Transparency International (TI).^[81] NGOs are also providing material to educate practitioners on anti-corruption. Examples for such publications are the rules and suggestions provided by the International Chamber of Commerce (ICC), the World Economic Forum (WEF), and TI.^[82] Persistent work by civil societal organizations can also go beyond establishing a knowledge about the negative impact of corruption and serve as way to build up political will to prosecute corruption and engage in counter-corruption measures.^[83]

Non-state actors in the field of asset recovery

One prominent field of activism for non-state actors (NSAs) is the area of

Instead of relying purely on deterrence, as suggested by Robert Klitgaard (see section on prevention), economists are pursuing the implementation of incentive structures that reward compliance and punish the non-fulfillment of compliance rules. By aligning the self-interest of the agent with the societal interest of avoiding corruption, a reduction in corruption can thus be achieved.^[85]

The field of compliance can generally be perceived as an internalization of external laws in order to avoid their fines. The adoption of laws like the FCPA and the UK Bribery Act of 2010^[86] strengthened the importance of concepts like compliance, as fines for corrupt behavior became more likely and there was a financial increase on these fines. When a company is sued because its employers engaged in corruption, a well-established compliance system can serve as proof that the organization attempted to avoid those acts of corruption. Accordingly, fines can be reduced, which incentivizes the implementation of an efficient compliance system.^[56] In 2012, the US-authorities decided not to prosecute Morgan Stanley in a case of bribery in China under FCPA-provisions due to its compliance program.^[47] This case demonstrates the relevance of the compliance approach.

Collective action

Anti-corruption collective action is a form of collective action with the aim of combatting corruption and bribery risks in public procurement. It is a collaborative anti-corruption activity that brings together representatives of the private sector, public sector and civil society. The idea stems from the academic analysis of the prisoner's dilemma in game theory and focuses on establishing rule-abiding practices that benefit every stakeholder, even if unilaterally each stakeholder might have an incentive to circumvent the specific anti-corruption rules. Transparency International first floated a predecessor to modern collective action initiatives in the 1990s with its concept of the Island of Integrity, now known as an integrity pact.^[87] According to Transparency International, "collective action is necessary where a problem cannot be solved by individual actors" and therefore requires stakeholders to build trust and share information and resources.^[88]

The World Bank Institute states that collective action "increases the impact and credibility of individual action, brings vulnerable individual players into an alliance of like-minded organizations and levels the playing field between competitors.^[89]

Anti-corruption collective action initiatives are varied in type, purpose and stakeholders but are usually targeted at the supply side of bribery.^[90] They often take the form of collectively agreed anti-corruption declarations or standard-setting initiatives such as an industry code of conduct. A prominent example is the Wolfsberg Group and in particular its Anti-Money Laundering Principles for Private Banking and Anti-Corruption Guidance, requiring the member banks to adhere to several principles directed against money laundering and corruption. The mechanism is designed to protect individual banks from any negative consequences of complying with the strict rules by collectively enforcing those regulations. The Wolfsberg Group in addition serves as a back-channel for communication between the compliance officers of the participating banks.^[91] The World Economic Forum's initiatives against corruption can also be seen in this framework.^[92] Other initiatives in the field of collective action include the Extractive Industries Transparency Initiative (EITI), Construction Sector Transparency Initiative/Infrastructure Transparency Initiative (CoST) and International Forum on Business Ethical Conduct (IFBEC).^[93] Collective action is included in the national anti-corruption statements of the UK,^[94] France,^[95] and Ghana,^[96] delivered at the International Anti-Corruption Conference 2018.

The

Another tangible outcome of the B20 meetings was the discussion (and implementation as a test case in Colombia) of the High Level Reporting Mechanism (HLRM), which aims to implement a form of ombudsman office in a high-level government position for companies to report possible bribery or corruption issues in public procurement tenders.^[98] As well as Colombia, the HLRM concept has been implemented in different ways in Argentina, Ukraine and Panama.^[99]

Implementation

Sylvie Bleker-van Eyk from

International Anti-Corruption Day has been annually observed on December 9 since the United Nations established it in 2003 to underline the importance of anti-corruption and provide visible sign for anti-corruption campaigns.^[104]

See also

• ISO 37001 Anti-bribery management systems
• Group of States Against Corruption
• International Anti-Corruption Academy
• International Anti-Corruption Day
• United Nations Convention against Corruption
• OECD Anti-Bribery Convention
• Preventing fraud in subsidies
• RepresentUs

Notes