Russian, Chinese Companies ‘Most Likely’ To Offer Bribes

In a new report, the anticorruption group Transparency International (TI) says bribing public officials when doing business abroad is a regular occurrence.

According to a survey of 3,000 business executives from developed and developing countries, companies from Russia are seen as most likely to do that.

On November 2, the Berlin-based group released its 2011 “Bribe Payers Index,”  which ranks 28 leading international and regional exporting countries by the likelihood of their firms to bribe abroad.

Russia ranked 28th, scoring worse than China, Mexico, and India.

The report said it’s “of particular concern” that China and Russia are at the bottom of the index, adding: “Given the increasing global presence of businesses from these countries, bribery and corruption are likely to have a substantial impact on the societies in which they operate and on the ability of companies to compete fairly in these markets.”

It pointed out that foreign direct investment (FDI) flows alone amounted to $120 billion in 2010 for both countries, more than five times the value of FDI outflows from Brazil and India combined.

Dutch, Swiss, Belgians, Germans, and Japanese companies get the top scores.

But TI said not one of the 28 countries surveyed was perceived as “wholly clean of bribery” and few had made a major improvement since the last bribery index in 2008.

Criminalizing Foreign Bribery

Leaders of the group of 20 leading economies (G20) are set to discuss progress on an anticorruption action plan at a summit in Cannes, France, starting on November 3.

The progress report of the working group monitoring the action plan will recognize steps taken by China, Russia, Indonesia, and India in criminalizing foreign bribery.

Transparency International Chairwoman Huguette Labelle
​​Transparency International Chairwoman Huguette Labelle welcomed the report and called for swift implementation of the further anticorruption measures that the plan calls for.

Labelle said new legislation in G20 countries was “an opportunity to provide a fairer, more open global economy that creates the conditions for sustainable recovery and the stability of future growth.”

Legislation passed in Russia in May 2011 criminalizes foreign bribery with monetary sanctions for companies and individuals who bribe foreign public officials.

Elena Panfilova, director of Transparency International Russia’s anticorruption research and initiative center, said the new Russian legislation was a hopeful sign but she emphasized that there were “no islands of integrity in Russian public and business life.”

TI quoted international business leaders as reporting the widespread practice of companies paying bribes to public officials in order to win public tenders, avoid regulation, speed up government processes, or influence policy.

But according to the survey, the likelihood of bribes being paid from one private firm to another “is almost as high as bribery of public officials across all sectors.”

‘A Very Real Impact On Human Lives’

TI said this suggests that corruption is not only a concern for the public sector, but for the business sector as well, carrying major reputational and financial risks for the companies involved.

Labelle said: “Companies that fail to prevent bribery in their supply chains run the risk of being prosecuted for the actions of employees and business partners.”

The “Bribe Payers Index” also looked at the likelihood of firms in 19 specific sectors to engage in bribery and exert undue influence on governments.

Agriculture was considered the least bribe-prone, while public works and construction companies scored lowest in the survey.

TI stressed that corruption in these later sectors often compromised safety in public buildings, “which, as witnessed by the many deaths from earthquakes in highly corrupt countries, has a very real impact on human lives.”

The mining, oil and gas sectors, in which Russia is most active, were also very prone to bribery, the report said, adding that they were “characterized by high-value investment and significant government interaction and regulation, both of which provide opportunities and incentives for corruption.”

The report says bribery can be “disguised through offering clients gifts and corporate hospitality that are inappropriate in value.”

Russia came joint 154th out of 178 nations in Transparency’s 2010 index of public-sector corruption.

with agency reports

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