By Judy Greenwald, Crain News Service
PARIS (Dec. 4, 2014) — Most international bribes are paid by large companies, often with the knowledge of senior management, according to a report issued Dec. 2 by an international organization that is based upon an analysis of 400 cases worldwide.
The Paris-based Organization for Economic Co-operation and Development (OECD) said bribes in the analyzed cases equal 10.9 percent of the total transaction value, on average, and 34.5 percent of the profit, or the equivalent of $13.8 million per bribe, although “this is without doubt the mere tip of the iceberg.”
“Corruption undermines growth and development. The corrupt must be brought to justice,” said OECD Secretary-General Angel Gurría, in the statement. “The prevention of business crime should be at the center of corporate governance. At the same time, public procurement needs to become synonymous with integrity, transparency and accountability.”
The report is based on cases from 41 countries that took place between February 1999 and June 2014.
Bribes were promised, offered or given most frequently — 27 percent of the time — to employees of state-owned enterprises, followed by customs officials at 11 percent, health officials at 7 percent, and defense officials at 6 percent. Heads of state and ministers were bribed in 5 percent of cases but received 11 percent of total bribes, according to the analysis, the OECD said in its statement.
In 57 percent of the cases, bribes were paid to obtain public procurement contracts. In 41 percent of cases, management-level employees paid or authorized the bribe, while the company CEO was involved in 12 percent of cases.
Intermediaries were involved in three out of four foreign bribery cases, the OECD said. These intermediaries were agents, such local sales and marketing agents, distributors and brokers in 41 percent of cases, while another 35 percent were corporate vehicles, such as subsidiary companies, companies located in offshore financial centers or tax havens, or companies established under the beneficial ownership of the public official who received the bribes, according to the analysis.
Last month, a California clinical diagnostic and life sciences company agreed to pay $55 million to settle U.S. Securities and Exchange Commission and Department of Justice charges that it violated the Foreign Corrupt Practices Act when its subsidiaries made improper payments to foreign officials in Russia, Thailand and Vietnam to win business.
This report appeared on the website of Crain's Business Insurance magazine, a Chicago-based sister publication of Tire Business.