The Fight Against Corruption Goes Global: The Year Protestors Said Enough

February 23, 2012

Foreign Affairs:

2011 was a turning point in the fight against corruption. Around the world, protest after protest had one common denominator: outrage at some form of corruption. In the Middle East, people took to the streets to oust political elites who had been building vast personal wealth while depriving citizens of the most basic necessities. Israel, too, saw its first mass middle-class economic protests ever. In India, meanwhile, the social activist Anna Hazare led several hunger strikes in a campaign against graft. And Chinese citizens staged protests against corruption. Following seemingly fraudulent parliamentary elections in December, Russia also saw an unprecedented middle-class movement mobilized against the existing establishment. Even in the United States and Western Europe, citizens rallied against unemployment, corporate greed, and inequality.

As any student of history knows, corruption is an age-old problem. Attempts to solve it date back centuries, but the modern, more global battle started in 1977, when the United States first enacted the U.S. Foreign Corrupt Practices Act (FCPA). It was passed in response to a series of defense industry scandals involving the business practices of such firms as General Electric, Lockheed Martin, and McDonnell Douglas in Asia, Europe, and the Middle East. And for the first time in history, a law purported to be applicable beyond U.S. borders.

Before the FCPA, efforts against public corruption had been narrowly focused — they were national or local — and enacted piecemeal, routinely targeting only smaller acts of corruption. Rarely, if ever, did the United States cooperate with other countries to root out systemic inequity.

For decades after it passed, even the FCPA was not particularly widely enforced. U.S. companies despised it, because, they argued, it placed them at a competitive disadvantage with foreign companies. Non-U.S. businesses and governments reviled it, too, because the United States’ claim of having jurisdiction on foreign territories seemed a violation of basic sovereignty.

But two long-standing pressures converged in the late 1980s and early 1990s. One pressure came from the U.S. government, which represented the frustrations of American companies that were long unhappy with their relative disadvantage compared to companies in other countries that were free from the “shackles” of the FCPA. The other pressure came from the increasingly empowered nongovernmental organization (NGO) community. It was best embodied by Transparency International, which was established in 1989 to combat corruption worldwide. So, in 1997, the Organization for Economic Cooperation and Development launched the Anti-Bribery Convention, an agreement aimed at leveling the anticorruption playing field by encouraging many nations to adopt laws similar to the FCPA forbidding the bribery of foreign officials, and 29 member nations signed on.

As of today, 38 countries (the original 29 members plus nine more, including Argentina, Brazil, and Israel) have enacted FCPA-like laws. In the last ten years, Germany and France, which had previously not only allowed their companies to offer bribes to foreign officials to gain or retain new business in foreign markets but also to claim tax deductions for them, finally outlawed both practices.

Recently, the U.S. government also got more serious about corruption. Under President Barack Obama, the U.S. Justice Department has been implementing an unprecedented international anti-bribery campaign and has focused much more on enforcing the FCPA at home. In the 35 years since the agreement was signed, the DOJ’s criminal division has never been busier. The past year saw the most ever criminal penalties handed down in international bribery-related cases, with well over $1 billion in fines. Today, the department has more 150 open anti-bribery investigations. This is compared to an average of five to ten annually in the past decade.

Last year, the United Kingdom adopted the most daring and broadest FCPA-like law to date: the U.K. Bribery Act. It criminalized not only official but also unofficial, international commercial bribery and imposed strict liability on senior executives who overlook bribery performed by their organizations.

Even quasi-democratic and authoritarian regimes have begun to join or entertain joining the OECD convention. The Russian Federation just signed the agreement in February this year. In May 2011, it became illegal in China to bribe foreign officials. To be sure, China has had an erratic track record on corruption — sometimes it ignores graft, and sometimes it executes individuals found guilty of it. But the regime’s latest effort is at least partly a genuine effort, partly lip service to domestic pressure, and partly a way to gain full acceptance into the international economic community, especially the World Trade Organization.

Civil society has been instrumental in the development of all of these international anticorruption efforts as well. Over the past two decades, Transparency International has gathered indispensable anticorruption data and developed many tools, such as the Corruption Perceptions Index, Bribe Payers Index, and Global Corruption Barometer, to track cases and provide practical insights. Companies, governments, and the research and NGO communities have widely adopted these tools to help develop their respective anti corruption programs and laws…

Read it all.

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One Response to “The Fight Against Corruption Goes Global: The Year Protestors Said Enough”

  1. nicholaspopov Says:

    The corruption can be effectively minimized only by the device of government itself.
    “The new democratic governance system can minimize eternal problems of the power such as corruption, infringement of rights and freedom under the imperfect legislation, etc. They are solved by cross check of several competing parties within the multi-polar democratic government: any blunders of the contender raises the rest participants’ chances for survival in the power. Therewith the mutual competition of several competitors is more objective and constantly active motivation for fight against corruption etc. than the whim of any one ‘National Leader’ or of a separate citizens.”
    Nevertheless, the fight against corruption is impossible without the help of conscious citizens.

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