Book Description

Within the last decade there has been a concerted effort from a number of sources to control the pervasive and persistent problem of corruption among the international business community. Corruption undermines democracy and development, fundamentally distorts public policy, discourages investment, leads to the misallocation of resources, discriminates against the poor, and destroys public confidence in democratic government. Despite the enhanced global awareness of the corrosive effects of corruption within the political, economic, and social spheres, there are as yet no clear, definitive indications that the occurrence of corruption has been reduced. A recent Gallup poll commissioned by Transparency International (TI) found that thirty-three percent of the 779 multinational executives surveyed believe that the problem of corruption in the business world is worsening. Commenting on the Gallup Poll survey, TI's Chairman, Peter Eigen, said “[t]he data provides a disturbing picture of the degree to which leading exporting countries are perceived to be using corrupt practices.” In a statement made in 1999, David Aaron, Undersecretary of Commerce for International Trade, noted that “there is a huge amount of money at stake. Just last year, there have been allegations of foreign bribery in 55 contracts worth $37 billion.” Subsequent to the initial passage, in 1977, of the U.S. Foreign Corrupt Practices Act (FCPA) there have been several significant developments, such as the adoption of the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention) and the inception of active non-governmental organizations like Transparency International (TI). Despite these developments, current evidence of extensive business corruption shows that critical gaps still remain in the mechanisms used to fight corruption. Closing these gaps will require the heightened awareness of and increased cooperation among diverse entities. First, there must be a means to establish leverage over the public sector procurement process. Second, cultural attitudes toward corruption must be modified. Other necessary strategic components are grassroots initiatives within developing nations, which are the homes of many of the bribe-takers, to mobilize civil society and the private sector. Cooperation among all involved entities - government officials, legislatures, multilateral development institutions, industry, trade unions, and civil society in both developing and industrialized nations - will be necessary to eliminate global business corruption. In this paper the authors (1) discuss why the emerging global economy creates an environment that requires integrity in the marketplace; (2) demonstrate the inability of purely legislative measures to eradicate corruption; (3) summarize the nature and costs, both social and economic, of business corruption; (4) describe current anti-corruption initiatives by the industrialized nations; (5) review grassroots initiatives to combat corruption by non-governmental organizations; (6) analyze the role of multilateral development banks in tying aid to meeting anti-corruption requirements; (7) evaluate current anti-corruption agendas emanating from developing countries; and (8) recommend a strategy to unite the diverse entities necessary to a successful campaign against corruption. This article focuses primarly on business entities within industrialized countries who bribe government officials in developing nations, but corrupt acts also occur between business entities in industrialized countries and government officials in developed nations. However, corruption is not as common between companies in developing nations and the government officials in developed countries, presumably because their current economic relationship does not provide the opportunity.