Corruption and markets March 14th 2013 Dr Robert Barrington Executive Director Transparency International UK
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Agenda • • • • • •
Transparency International What is corruption? Where does it happen? Corruption and companies Global trends Discussion
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Transparency International
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Transparency International
• Founded in 1993 • Chapters in over 90 countries • Specialist anti-corruption NGO
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TI National Chapters around the world
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Transparency International’s approach • Zero tolerance • Policy changes are built on sound research • The legal framework is usually a necessary first step • Corruption has victims • Any bribery embeds corruption in the system • But…pragmatic towards individual cases • Fighting corruption often requires collective action to achieve systemic change
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TI definition of corruption ‘Corruption is the abuse of entrusted power for private gain’
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How does bribe-paying happen? Grand corruption Off-sets
large bribes
Facilitation payments
Benefits & perks to relatives
Employing of relatives
Gifts
Hospitality
Bribery
Education & Training projects
Political donations
In-kind help & support
Charitable contributions
Enhanced commission
Agents
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Victims of corruption • $100 of development funding in Chad • how much reaches the local health clinic? » » » »
$75? $50? $5? $1? [source: Paul Collier – The Bottom Billion]
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How extensive is bribe-paying? • Annual sum paid globally in bribes each year: • • • •
£100 million? $1 billion? $100 billion? $1 trillion?
[Source: World Bank Institute 2004] 10
Where does it happen?
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Corruption Perceptions Index 2012
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Corruption Perceptions Index
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How extensive is bribe-paying? Global Corruption Barometer
[Transparency International 2010]
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Corruption in the UK
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Corruption and companies
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Eurobarometer • 26,856 EU citizens polled in September 2011 • 67% believe that corruption is part of their country's business culture (88% of respondents in Greece, Italy and Cyprus).
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Bribe payers’ Index
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Ranks 28 of world’s leading economies by perceived likelihood of companies to pay bribes abroad Survey of 3,000 business executives
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Which country’s companies pay bribes?
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TRAC report
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TRAC report
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TRAC report • Survey of 105 companies globally • Data to Oct 2011, publicly-available data • Scored in 3 categories • Statoil highest performing company • Chinese and Japanese lowest performing • Financial sector perform below average • Several companies score well on anti-corruption systems • Poor scores across the board on country-by-country reporting
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Global trends
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Corruption - not just bribery • Money laundering • Other corrupt behaviours… • • • • •
Lobbying? Political financing? Facilitating abusive tax avoidance? Mis-selling? Exceeding society’s licence to operate?
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Global trends Rise of civil society – India, China, MENA • Social media – open data • Corporate transparency – Dodd-Frank, EU Directive • Tax – secrecy jurisdictions • Money laundering • Government action – G8, G20, OGP, UNCAC
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Global trends
The moral relativism that traditionally infects multinationals in hot, corrupt countries is going out of style. Jonathan Guthrie, Financial Times HSBC exits Panama
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Discussion • Are emerging market companies more corrupt? • Can an ethical company compete with a bribe-paying company? • Is there such a thing as good corruption?
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www.transparency.org
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