OECD: countries must do more to fight corruption

OECD Secretary General Angel Gurría

Most countries are not meeting their international commitments to fight bribery and corruption in business, according to a report released by the OECD on 20 April.

While the OECD Anti Bribery Convention has been in force since 1999, only 13 countries have sanctioned either an individual or a company. In 2010, only five countries sanctioned individuals or companies, according to the annual report by the OECD's Working Group on Bribery.

OECD Secretary General Angel Gurría was quoted on the OECD website as saying, “Despite some progress in the past year, we need to see clearer signs that all countries are committing the political leadership and resources that effective enforcement requires.”

“The US and Germany continue to set the benchmark in the fight against corruption that more countries must follow. It's encouraging that France, Switzerland and the UK were active last year in sanctioning bribery,” he added.

According to the report, the US imposed penalties on eight individuals and 11 companies in 2010, which Germany imposed penalties on three individuals. The UK penalised two individuals, and France and Italy penalised one each.

Gurría reiterated his message at a conference cohosted by the French G20 Presidency and OECD in Paris on 27-28th April. The G20 has placed the issue of corruption high on its agenda, and in November 2010, it adopted an ambitious Anti Corruption Action Plan in its meeting in Seoul, South Korea.

The Action plan calls for the development of closer ties between buinesses and governments, and a G20 business task force was put in place with about 100 CEOs.

The World Economic Forum has also agreed to support the French G20 Presidency in its fight against international corruption. Its Partnering Against Corruption Initiative (PACI), a global anti corruption initiative, will engage G20- based companies in its activities.

A number of major countries have yet to sign up to the OECD Anti Bribery Convention, including Russia, China and India. Russia said in early 2009 that it wanted to join the convention, and recently passed a new anti bribery bill through its lower house. China criminalised foreign bribery in February 2011 and a bill has been presented to the India parliament to prohibit bribes to foreign public officials.

Sources: OECD, Wall Street Journal, TrustLaw, CFO Innovation

For more information, please see the Menas ACCS website, here.

Businesses unprepared for UK Bribery Act: poll

While 78 per cent of respondents who participated in a Deloitte webcast poll said they anticipated greater global anti corruption enforcement in the next year, 73 per cent said they were not familiar with provisions in the UK Bribery Act, due to come into effect on 1st July 2011, according to a report released by the global accounting firm on 20th April.

More than 1,000 business professionals from a variety of industries and countries were polled by Deloitte during a webcast on “US Foreign Corrupt Practices Act Compliance in BRIC Countries (Brazil, Russia, India and China)” earlier this year.

The head of Deloitte's Foreign Corrupt Practices Act (FCPA) consulting services practice, Joe Zier said “When we saw these results, our eyebrows went up a bit.”

"It's surprising and a little troubling."

When asked whether they had an effective anti-bribery programme in place, less than a quarter (24 per cent) of respondents replied in the affirmative. 34 per cent indicated that their programmes could be improved upon, nineteen per cent admitted that their compliance programmes were ineffective, and 21 per cent said that they didn't know.

"Businesses have less than three months to revise their anti bribery compliance programmes and retrain their employees before the UK Bribery Act becomes enforceable on July 1," Zier said.



Deloitte's Joe Zier



"Some companies began work early to prepare for compliance. Going forward, organisations should focus on expanding their anti corruption programmes beyond FCPA to fully address the new Bribery Act 2010 provisions."

Until now, most global companies have tailored their anti bribery and anti corruption compliance programmes to the FCPA, the US anti corruption law. The UK Bribery Act differs from the FCPA in a number of ways and so will require organisations with links to Britain to adjust their procedures.

The UK act covers the public and - unlike the FCPA - the private sector, it does not make an exception for facilitation payments, and it holds companies responsible for failing to prevent bribery, rather than just for endorsing it.

Zier said that some of the more challenging aspects of the UK law will be the risk assessment and due diligence requirements for third parties.

"Companies need to be vigilant of where their potential risks lie and investigate them fully to identify new exposures," Zier said.

"Now is the time for boards, chief executives and senior management to get together and refresh their anti corruption compliance programmes to ensure that 'business as usual' today isn't a UK Bribery Act violation in July."

Sources: Deloitte, Law.com, MSN Money, TrustLaw

For more information, please see the Menas ACCS website, here.

Russian parliament approves huge jump in fines for bribery

A new anti corruption bill, sponsored by Russia's President Dmitry Medvedev, has been approved by the lower house of the Russian parliament on Tuesday 19th April.

The fine for conviction relating to the offer or promise of mediation in bribe-taking, including the physical handing over of the bribe, will increase to up to 100 times the amount of the bribe given or taken. The fine can range from 25,000 to 500 million rubles (US$880 to US$18 million), and can be combined with a work ban of up to three years.

The bill is part of Medvedev's anti-corruption drive, which has so far yeilded few practical results, according to Russia's RIA Novosti. In January, the Russian interior minister Rashid Nurgaliyev said the number of corruption-related crimes involving top government officials and large bribes increased 100 per cent in 2010 year on year.

While the new law aims to bring Russia closer to international standards in fighting corruption, many have criticised it. The bill provides for a jail sentence as an alternative to a fine, which some say leaves the law open to interpretation and therefore abuse. RIA Novosti says some have suggested the size of bribes might also grow as a result.

The majority of people convicted of bribery in Russia are caught receiving small bribes. According to the presidential envoy to the State Duma (Parliament), Garry Minkh, over 60 per cent of people convicted of bribery in 2010 received a bribe of under 25,000 rubles (US$880).

Transparency International consistently rates Russia as one of the most corrupt countries in the world. In 2010, it placed the country 156th out of 178 in its Corruption Perceptions Index.

In a recent visit to Russia, US Vice President Joe Biden encouraged Russia to fight its "endemic corruption", to implement the rule of law and improve the investment climate.

"Investors are looking for assurances that the legal system treats them fairly and acts on their concerns swiftly," Mr Biden said.

Sources: RIA Novosti, Rossiyskaya Gazeta, BBC News

For more information, see the Menas ACCS website, here.

Citibank Indonesia hit by corruption scandal

Indonesian authorities launched a money laundering investigation at Citibank on Monday 18th April, amid allegations that several public officials had accounts with suspiciously large balances at the bank.

This investigation is connected to another corruption scandal at Citibank, involving one of its of high value client managers. Inong Malinda, aka Malinda Dee, is alleged to have embezzled at least Indonesian Rp 17 billion (US$2 million) from Citibank customers and laundered the money through material purchases, such as luxury cars, and an investment company.

At the moment, three victims have filed a report with the police, but more are expected to come forward. It is believed that the scheme was carried out by a team, and a police spokesperson, Irein Anton Bachrul Alam said they have so far questioned ten Citibank employees.

Citibank has confirmed that all those involved have been fired and that the victims' money will be placed. “We will replace all the money lost by customers due to these illegal transactions in timely manner” Citibank's Country Head of Corporate Affairs Ditta Amahorseya said.

Indonesia's anti money laundering agency, the Financial Transaction Reports and Analysis Center (PPATK) is leading the investigation. Chairman Yunus Husein said on Friday 15th April, "The watchdog wants to verify indications that public officials are laundering their money at the bank. That's why, as of Monday, we will deploy our investigators to look into the bank's accounts."

Yunus said the PPATK would be investigating Citibank's compliance with the Money Laundering Law, which includes a requirement to exercise due diligence on “politically exposed” customers, such as public officials.

The PPATK found indications that public officials were among Malinda's clients in Citibank's Citigold programme, which requires customers to have a balance of at least Indonesian Rp 500 million (US $60,000).

“There are indications that there was a public official who had at least Rp 2 billion [US$230,000] at Citibank. We should be suspicious about the source of his money,” said a source at PPATK who declined to be named.

Under existing regulations, banks and financial institutions are required to tell the PPATK about suspicious transactions worth more than Rp 500 million, particularly those related to the accounts of public officials and their families.

Over 50 officials who were clients of Malinda are suspected of being linked wih the fraud case, according to PPATK officials.

Transparency International ranks Indonesia 110th in the world in terms of corruption, making it one of the most corrupt countries in the world. It is ranked 20th in the Asia Pacific region.

Sources: Jakarta Post, Jakarta Updates, Transparency International

For more information, see the Menas ACCS website, here.