EXPORTING CORRUPTION PROGRESS REPORT 2013: ASSESSING ENFORCEMENT OF THE OECD CONVENTION ON COMBATING FOREIGN BRIBERY Transparency International is the global civil society organisation leading the fight against corruption. Through more than 90 chapters worldwide and an international secretariat in Berlin, we raise awareness of the damaging effects of corruption and work with partners in government, business and civil society to develop and implement effective measures to tackle it. Authors: Fritz Hei mann, Sophia Coles, Gillian Dell, Ádám Földes, Kelly McCarthy and Angela Reitmaier www.transparency.org Every effort has been made to verify the accuracy of the information contained in this report. All information was believed to be correct as of July 2013. Nevertheless, Transparency International cannot accept responsibility for the consequences of its use for other purposes or in other contexts. ISBN: 978-3-943497-43-4 Cover photo: © istockphoto/xyno Printed on 100% recycled paper. © 2013 Transparency International. All rights reserved. TABLE OF CONTENTS FOREWORD 2 I. INTRODUCTION 3 II. CONCLUSIONS 4 III. RECOMMENDATIONS 8 IV. COUNTRY REPORTS 12 V. CASE STUDIES 90 APPENDICES 104 APPENDIX A – CHANGES IN METHODOLOGY 104 APPENDIX B – NATIONAL EXPERTS 106 APPENDIX C – QUESTIONNAIRE 110 FOREWORD Professor Mark Pieth of Switzerland will step down as chair of the OECD Working Group on Bribery at the end of 2013, a position he has held since the Working Group was organized in the early 1990s. He led the negotiations which resulted in the adoption of the OECD Anti-Bribery Convention in December 1997. After the Convention went into effect, Professor Pieth presided over the follow- up monitoring process to promote implementation by the Parties. The rigorous country reviews conducted by the Working Group are widely regarded as the gold standard for treaty monitoring. On this occasion, Transparency International pays tribute to Professor Pieth’s outstanding leadership, dedication and perseverance, pressing even the most reluctant governments to take action. Transparency International commends the selection of Drago Kos of Slovenia as the new chair of the Working Group beginning in January 2014. His previous work as president of GRECO, the Council of Europe’s anti-corruption organisation, and as head of Slovenia’s anti-corruption agency demonstrates the capabilities needed to move the Convention forward. 2 TRANSPARENCY INTERNA TIONAL I. INTRODUCTION This is the ninth annual progress report on OECD Anti-Bribery Convention enforcement by Transparency International, the global coalition against corruption. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, adopted in 1997, requires each signatory country to make foreign bribery a crime for which individuals and enterprises are responsible. The Convention is a key instrument for curbing the export of corruption globally because the 40 signatory countries are responsible for approximately two-thirds of world exports and almost 90 per cent of total foreign direct investment outflows. The OECD Working Group on Bribery, which represents the 40 Parties to the Convention, conducts a follow-up monitoring programme under which 9-10 countries are reviewed each year. Transparency International’s annual report on foreign bribery enforcement presents an independent assessment on the status of enforcement in all of the 40 Parties to the Convention, including Russia and Colombia, where the Convention entered into force in 2012 and 2013, respectively. The OECD Working Group on Bribery also publishes data on enforcement by the Parties in its annual reports. Results of the two reports are basically similar – both indicate that in half of the countries there is little or no enforcement against foreign bribery and show that Germany, the United Kingdom and the United States have the most active enforcement. In this progress report on enforcement of the OECD Anti-Bribery Convention, Transparency International introduces a revised methodology. The revisions, which are explained in detail in Appendix A, are intended to provide a more up-to-date assessment of the status of enforcement by the Parties and a more refined system of classification. ORGANISATION OF THE REPORT The second section provides Transparency International’s overall conclusions and includes a chart providing detailed statistical data. The third section covers recommendations. The fourth section contains country reports on each of the 40 Parties, based on the responses from experts primarily from Transparency International chapters in all the OECD signatory countries. These country reports cover recent foreign bribery cases and investigations, and deal with such issues as access to information on enforcement and inadequacies in the legal framework and enforcement system. The fifth section provides case studies in four important sectors: energy, health, defence and telecommunications. Appendix A describes the methodology of the report, Appendix B lists the names of Transparency International’s national experts and Appendix C shows the questionnaire prepared by Transparency International, which was submitted to the experts selected by Transparency International chapters. As in years past, this report is based on information provided by national experts in each reporting country (Appendix B) responding to a questionnaire (Appendix C). The experts interviewed national law enforcement authorities and drew on country review reports from the OECD Working Group on Bribery, Council of Europe Group of States against corruption (GRECO), Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption (MESICIC) and the UN Convention against Corruption (UNCAC) Review Mechanism, as well as media reports. EXPORTING CORRUPTION – OECD PROGRESS REPORT 2013 3 II. CONCLUSIONS CLASSIFICATION OF COUNTRIES Based on reports by Transparency International experts and application of the new methodology, we have arrived at the following classification of foreign bribery enforcement in OECD Anti-Bribery Convention countries: Active Enforcement: Four countries with 26.2 per cent of world exports: United States, Germany, United Kingdom, and Switzerland. Moderate Enforcement: Four countries with 6.1 per cent of world exports: Italy, Australia, Austria and Finland. Limited Enforcement: Ten countries with 11.3 per cent of world exports: France, Canada, Sweden, Norway, Denmark, Hungary, South Africa, Argentina, Portugal and Bulgaria. Little or No Enforcement: Twenty countries with 26.9 per cent of world exports: Japan, Netherlands, Korea (South), Russia, Spain, Belgium, Mexico, Brazil, Ireland, Poland, Turkey, Czech Republic, Luxembourg, Chile, Israel, Slovak Republic, Greece, Slovenia, New Zealand and Estonia. The data on which these conclusions are based is shown in the tables on the following pages. (Countries above are listed in order of their share of world exports.) 4 TRANSPARENCY INTERNA TIONAL COMMENTS ON CLASSIFICATIONS The enforcement status as described in this report differs considerably from that of the 2012 report. This results primarily from changes in methodology under which countries receive credit only for the past four year’s enforcement (2009-2012) and not for all enforcement dating back to their adoption of the Convention (see Appendix A). As the 2009-2012 period was impacted by the worldwide recession, enforcement in many countries appears to have been reduced during the recession. • The Active Enforcement category has decreased from seven countries with 27.5 per cent of world exports in 2012 to four countries with 26.2 per cent of world exports in 2013. Enforcement levels in Germany, Switzerland, the UK and the US have remained robust. o Demotion of Italy to Moderate Enforcement reflects unavailability of recent data on enforcement. o Demotion of Norway and Denmark to Limited Enforcement reflects reduced enforcement activity in the last four years. • The Moderate Enforcement category has decreased from 12 countries with 24.8 per cent of world exports in 2012 to four countries with 6.1 per cent of world exports in 2013. o The decrease is affected by the establishment of a new Limited Enforcement category. The change was made because the previous Moderate Enforcement category was considered too broad. • The new Limited Enforcement category includes ten countries with 11.3 per cent of world exports. o Two were demoted from Active Enforcement, Norway and Denmark. o Four countries were in Moderate Enforcement in 2012, France, Canada, Sweden and Argentina. o Three countries Bulgaria, Hungary and Portugal have improved to Limited Enforcement from Little Enforcement in 2012. o South Africa improved from No Enforcement to Limited Enforcement. This is undoubtedly influenced by the change in methodology, which recognises actual shares in world exports, thereby providing fairer eligibility thresholds for smaller exporters. • The Little or No Enforcement category combines separate categories for Little Enforcement and No Enforcement in 2012. The differences between the two categories were immaterial. The combined category includes twenty countries with 26.9 per cent of world exports. o Five countries, Belgium, Japan, Netherlands, South Korea and Spain, were in the Moderate Enforcement category in 2012. They were demoted because they had less enforcement in the 2009-2012 period than in prior years. o Seven countries were in Little Enforcement, seven were in No Enforcement and one