Bribing officials ‘is a first world problem’

The shady world of corrupt government and ruthless companies bribing them to win lucrative contracts is normally associated with the third world.

But the first detailed report on the practice, just produced by the OECD, has produced some “eye popping surprises”, according to the body’s head, Angel Gurria, involving 15 of the G20, the world’s richest countries.

It reveals that first world companies are bribing first world state and semi-state officials and politicians to win public contracts, and the corruption goes right to the top.

It dispels the myth that corruption mainly involves third world countries, although it does support the belief that the extractive industries, such as oil and minerals, are among the single biggest culprits.

The sums involved can be huge — up to a third of the company’s profits in some cases — and are often paid into special companies set up in tax havens by the corrupt bribe-taker.

In more than half the cases, senior management was involved and in one of every eight cases the head of the company knew and colluded with the bribery. “This debunks the ‘rogue employee’ myth” said Mr Gurria.

But the Paris-based body says that its findings are just a sample as this kind of corruption is so well hidden. They looked at the 427 cases prosecuted by 41 governments over the past 15 years.

The four biggest sectors involved were the extractive industries followed by construction, transportation and storage, followed by information and communication.

More than a quarter of the bribes went to employees of state-owned enterprises, followed by customs officials. Those working in governments’ biggest spending departments, such as health, came next followed by those in defence who make decisions about buying armaments.

In more than half the cases examined, the bribes were paid by companies to win lucrative public procurement contracts. Customs and tax officials were on the receiving end too, being paid to give customs clearance or give preferential tax treatment.

In most of the cases that involved bribing foreign officials, agents were used as go-betweens, who were working either in sales, marketing, distributing or as brokers.

Mr Gurria called for tougher penalties for the guilty, better oversight of transactions and greater protection for whistle blowers.

A big number of cases came to light because companies themselves reported them. But the report noted that financial intelligence units, tax authorities and embassies were the source of very few cases, even though their roles regularly exposed them to bribery allegations.

The total fines amounted to around €4bn and the longest sentence was for 13 years jail.

Most of the cases — 128 — were in the USA where they make settlements. US assistant attorney general, Leslie Caldwell, said the settlements are made public, they impose behavioural changes, that a court cannot do, and if those involved do not comply, the state can still prosecute.

Ireland was not among the EU countries listed as having prosecuted a bribery case. An EU report earlier this year found that one in four businesses in Ireland believed that corruption among state bodies prevented them winning contracts for goods and services.