More than 7,000 participants across the globe spent the week (Nov. 30 to Dec. 5, 2020), virtually listening to 500 anti-corruption experts at the International Anti-Corruption Conference (IACC) in Seoul, South Korea. Their theme: Designing 2030-Truth, Trust &Transparency; ensuring that the fight against corruption is at the centre of the post-pandemic world.
According to The Week in Corruption (Transparency International Newsletter dated Dec. 4, 2020) the heads of international development organisations sounded the alarm at the opening plenary. They highlighted the economic and social costs of corruption during a global health emergency.
Before the pandemic, the global economy already lost US$3.6 trillion every year due to corruption, depriving educational and healthcare programmes of badly needed funds. Now world governments have mobilised US$10 trillion in COVID-19 recovery and stimulus packages, but sometimes without sufficient safeguards against corruption and graft.
Meanwhile, more than 1,800 women and men have already contacted Transparency International's worldwide network of Advocacy and Legal Advice Centres (ALACs) to report corruption and seek assistance for issues related to COVID-19. These reports show how corruption is increasing the burden on healthcare systems and impeding people's access to treatment and personal protective equipment (PPE).
Healthcare workers are being forced to work in unsafe hospitals while corruption networks profit from government contracts and the unlawful and questionable sales of medical supplies. In some cases, patients must pay bribes for PPE and COVID-19 tests.
To counteract corruption in the health system, the TI (How corruption is making people sick-healthcare workers around the world report a rise in corruption during Covid-19- a TI blog published on Sept. 14, 2020) has called on governments to:
Issue clear, transparent, and public guidelines for health care workers and public servants on managing the COVID-19 response.
Include reporting mechanisms and maintain transparency around decision-making, procurement, and expenditures on the COVID-19 response.
Investigate all cases of corruption reported to the authorities and sanction all instances of wrongdoing.
Protect citizens who step forward to report wrongdoing and investigate their claims.
Whilst there have been concerted efforts at the international level to ensure there is equitable distribution of an eventual vaccine between countries through the COVAX facility, many countries have not fully developed equitable and transparent distribution plans.
According to Jonathan Cushing, Head of Projects at Transparency International Health Initiative (Vaccinating against corruption? 13 November 2020) TI's work in several countries monitoring procurements made in response to COVID-19 has already exposed corruption risks: In Kenya, TI raised concerns over the inflation in prices of drugs and PPE in the COVID-19 response; and in Bangladesh TI flagged the problem of ruling party committee involvement in the COVID-19 relief response - where a significant section of local level political leaders and activists are being reportedly found to be involved in widespread corruption of various types including embezzlement, hoarding and misappropriation of relief goods. These issues are not restricted to low and middle income countries with weaker health systems. In the UK, lucrative procurement contracts were reportedly awarded to dubious companies, some with government connections.
Pakistan has also suffered over the last 18 months from hoarding and smuggling of essential food items and a steep rise in prices of medicines, mainly of life saving nature.
The recently marketed vaccine is likely to have a globally high 'street value', making government supplies an attractive target for theft and diversion unless adequate safeguards are built into supply chains. Strong surveillance and oversight mechanisms will be needed to ensure that falsified and substandard vaccines do not get into circulation. Even when vaccines do make it to public hospitals and clinics, opportunities for corruption at the point of delivery, such as under-the-table payments, abound.
In another corruption-related development (Transparency International EU reveals the murky tax affairs of Europe's biggest banks-blog by Nuri Syed Corser, dated 27 October, 2020), new research suggests widespread use of tax havens and profit shifting by European banks. Among the 39 EU and UK banks looked at in the study, 31 were using low-tax or zero-tax havens, while 29 of them appeared to be declaring high profits in countries where they did not actually employ any staff. These 'ghost operations' may indicate that banks are shifting their profits to reduce their tax bill. Several banks discussed in the research were implicated in the recent FinCEN scandal, which alleged their involvement in moving dirty money across the globe.
"The questionable practices highlighted by our research are still escaping full public scrutiny," said Elena Gaita, senior policy officer at Transparency International EU. "For instance, in the last five years, HSBC reported €1.59 billion of profits in Saudi Arabia, despite not having a single employee in the country. Likewise, Deutsche Bank made €418 million from its Maltese operation, which has been unstaffed since 2016. European economies are on their knees because of the pandemic, so it's now more important than ever that banks and other multinational companies are seen to pay their fair share of tax."
Since 2015, EU banks have been required to publish country-by-country reports of their profits, taxes and number of employees for every jurisdiction in which they operate. The banking and extractives sectors are the only industries that are subject to such regulations.
The researchers analysed five years' worth of these reports and used the data to build an online platform, the Corporate Tax Tracker, which will enable closer public scrutiny of major banks.
Since 2000, big corruption scandals sent shockwaves worldwide prompting public outrage and calls for increased enforcement against foreign bribery. Previously, foreign bribery was considered just another cost of doing business. It was barely investigated, to the detriment of the citizens of the affected countries.
Money lost to foreign bribery wastes millions of dollars that would otherwise go towards essential, and often lifesaving services, like healthcare and education.
Equally troubling, foreign bribery damages people's trust in their government, which once lost, is hard to rebuild.
In the long run, corruption in international business transactions is also bad news for national and global economies.
It impedes cross-border investment, deters fair competition in international trade and discriminates against small and medium size companies.
Yet, companies from major exporting countries continue to use bribery to win business in foreign markets while many governments choose to turn a blind eye. Though the list is long but the cases of five mega corporations are illustrative:
Today (The companies that export corruption- Five foreign bribery cases that should change the way we do business-report, dated13 October 2020), we look back at some of the most recent cases of foreign bribery cited in the 2020 Exporting Corruption report that expose the extent of corporate corruption.
In 2020, the world saw the largest foreign bribery resolution to date, as Airbus, a global provider of civilians and military aircraft based in France, agreed to pay nearly US$4 billion in combined penalties to the U.S., France, and United Kingdom to resolve foreign bribery charges. France played a huge role in holding the company to account, thanks to a recent law that helped reform their anti-corruption legal framework.
The investigations into Odebrecht, the construction company at the heart of the scandal, initiated in Brazil have effectively unraveled corrupt networks, recovering unprecedented amounts of public resources and prosecuting powerful individuals, many of whom have confessed to their crimes. It revealed both domestic and foreign bribery.
In 2018, the water conglomerate, Inter-American Water and Utility Society (Inass) was fined 5 billion Colombian pesos (US$1.8 million) over charges of foreign bribery, as the Superintendency of Corporations stated that the firm allegedly either paid or offered bribes to public officials in Ecuador in 2016.
In Belgium, in May 2020, Congolese citizens applied to be partie civile in a long-running corruption and money-laundering investigation by Belgian prosecutors of Semlex, a passport printing company operating in several countries in Africa, and the subject of two reports by Reuters. The deal made with Semlex increased the price of passports in the Democratic Republic of Congo (DRC) from US$100 to US$185, US$60 of which seems to go to an obscure Gulf company owned by a close relative of DRC's President Joseph Kabila, according to Reuter's reporting.
Two intermediaries are on trial in relation to a tender awarded by Ukrainian state enterprise NNEGC Energoatom to Czech company Skoda JS A.S. for the supply of equipment for nuclear power stations, that according to some reports, seem to suggest a relation to the tender and payments from Skoda JS A.S. transferred to former MP Mykola Martynenko.
The Czech company is a subsidiary of Netherlands-registered OMZ B.V. which is part of the Russian OMZ Group (Uralmash-Izhora Group) which is in turn owned or controlled by Russia's state-owned Gazprombank. This case surfaces in a tense geopolitical context and illustrates Russia's efforts to keeps its energetic dominance over Ukraine.
Copyright Business Recorder, 2020
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