‘STUNNING LEVEL’ OF BRIBERY TAKING PLACE IN BOTH DEVELOPED, DEVELOPING COUNTRIES, SECOND COMMITTEE PANEL DISCUSSION TOLD

Fifty-eighth General Assembly

Second Committee

Panel Discussion on

 “Corporate Responsibility”

‘STUNNING LEVEL’ OF BRIBERY TAKING PLACE IN BOTH DEVELOPED, DEVELOPING COUNTRIES,

SECOND COMMITTEE PANEL DISCUSSION TOLD

Need for Greater Transparency in Awarding of Government Contracts Stressed

A stunning level of bribery was taking place in international business in Organization of Economic Cooperation and Development (OECD) countries and developing countries alike, a Transparency International official told a Second Committee (Economic and Financial) panel discussion this afternoon.

Bribes were impeding development with multinational companies and public officials too often concerned with the amount of the bribe, rather than the damage they caused, Transparency International Managing Director Nancy Boswell told the panel, which was chaired by Second Committee Chairman Iftekhar Chowdhury, and organized by the Department for Economic and Social Affairs (DESA) and the United Nations Conference on Trade and Development (UNCTAD).

Greater transparency in the government contract awarding process would likely cut down on bribery, she continued, adding that efforts were being made to require companies to publish what they paid out, and governments what they received.  Moreover, the recent monetary scandals in the United States in the 1990s illustrated that corruption was not just a problem in developing countries, but also widespread in the industrialized world.

Enery Quinones, Head of the Anti-Corruption Division of the Organization for Economic Cooperation and Development (OECD) Directorate for Financial and Fiscal Affairs, said an OECD report, “No Longer Business as Usual,” detailed the widespread and common practice of bribing public officials.  Through such cosy relationships, officials accepted cash in exchange for approving corporate tax breaks benefiting the bribers.

Increasingly, international lawmakers were cracking down, she said, creating strict domestic and international regulatory frameworks to combat and prevent bribery and corruption at the regional and international level.  A common thread among all anti-corruption measures was that they established broad jurisdictional reach and obliged Governments to criminalize bribery and other corrupt practices; impose criminal, administrative and civil sanctions; confiscate criminal proceeds, and set up monitoring and public scrutiny mechanisms.

Peter Utting, Acting Deputy Director and Research Coordinator on Corporate Social Responsibility of the United Nations Research Institute for Social Responsibility (UNRISD), said many high-profile companies in the last decade had responded to civil society and consumer pressures for corporate social responsibility or ethical behaviour, with several hundred of the 64,000 transnational corporations worldwide adopting codes of corporate conduct.  Initially, the act was more of a public relations exercise, but more recent multi-stakeholder initiatives like the Fair Labor Association and the Global Compact had been set up to impose more rigorous standards. 

Companies picked and chose codes of conduct, often regarding responsible environmental management, but failed to address labour and trade union rights, he added.  Nor did they apply rules to their suppliers, creating double standards.  UNRISD had noted major development problems in Brazil, South Africa, India, the Philippines and Mexico, where codes of conduct were lax regarding subcontracting, consumption patterns, tax avoidance, transfer pricing and financial flows within corporate structures.

Mrs. Halima Embarek Warzazi, Chairperson of the fifty-fifth session of the Subcommission on the Promotion and Protection of Human Rights, said the Subcommission had carried out a study on globalization and its effects on human rights, which criticized multinationals for sidestepping local laws in countries where they were operating.  Some 51 per cent of global wealth was in the hands of multinationals, which were seriously threatening nations’ right to self-determination and full sovereignty over their resources.

The Subcommission had created a working group that had been negotiating with governments and various sectors of society to establish a set of norms on businesses’ responsibility to respect social and economic rights, which would be submitted to the Human Rights Commission at its next session.  The norms included respect for international law, protection of human rights, respect for numerous United Nations conventions, and adoption of all dispositions protecting consumers and the environment.  The document also states that multinationals must provide rapid reparations to individuals and communities in the event of violations of norms.

During the ensuing discussion, representatives asked about the creation of an international monitoring mechanism for the repatriation of stolen assets.  Ms. Quinones said that was difficult and expensive to put into practice, and the North-South split on the issue was obvious.

However, she continued, a compromise had been reached and incorporated into the OECD text that would indeed have some force.  Pressure that countries put upon one another was the most effective method for ensuring repatriation, she said, adding that the United Nations would provide a forum to address the grievances of signatories of the proposed convention against corruption.

Other delegates asked about the criteria being used to rank countries in the international corporate transparency index.  Ms. Zucker Boswell said Transparency International had conducted surveys on countries’ business practices, in which applicants were asked, for example, if they’d been pressured by public officials to give bribes for business-related activities.

She conceded that the index was viewed as one-sided and was quick to harshly judge developing nations’ business practices and climates.  As a result, a bribe index had been created, which addressed the likelihood of multinational companies to pay bribes when conducting business in foreign markets.  This made corruption a two-way street, with both officials demanding bribes and multinational corporations paying them at fault.

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