Thursday, December 10, 2009

The End of Corruption?

I just attended a breakfast meeting with U.S. Secretary of Commerce Gary Locke and Angel Gurria, Secretary General of the Organization for Economic Co-operation and Development. The meeting was sponsored by Transparency International and focused on the need to continue reducing global corruption.

Several thoughts stand out:

Globally, corruption is estimated to comprise between five and twenty percent of contract amounts. There are two major kinds of payments in the corruption context: One consists of paying a foreign government (official) to do something they should not be doing (letting a contract on special terms….). The second is to pay someone to do something they are supposed to do (facilitating payments). It’s the first type of payment that really matters in terms of distortion. This is not a victimless crime. Such corruption causes reduction of competition, lessening of quality, increases in prices and the deprivation of those who lose out on goods, services or funding. Poor countries suffer the most from bribery schemes, because they have few if any alternatives. That is what makes rules against corruption so important because they help equalize the playing field and let all capable players participate.

There remains much work to be done, but over the last ten years the extent of corruption has been reduced. 38 countries are now participating in the OECD rules which combat bribery of foreign public officials.

Two questions though: Should rules across borders be the same, particularly when it comes to the allocation of expenses and the treatment of family members? Is there any role for cultural differences? Is there a realistic level of how low we can expect to drive this pernicious waste – either in absolute figures (down from the annual $1 trillion that Transparency International estimates) or down to, say, less than three percent of contract value? Also, what should the punishment be, should there be a statute of limitations for prosecution, and who should be given any disgorgement of ill gotten proceeds: The party whose money was misappropriated or the one that did not receive the benefits to which it was entitled?

1 comment:

  1. A good starting point might be for countries NOT to support their businesspersons getting in legal trouble overseas - if the 'get out of the country quick' option is closed local law enforcement could be much more effective. Admittedly it is a risk given the low effectiveness of law enforement in highly corrupt countries - may be is is just a smear compaign by teh competitor.