Beware of exported corruption: Now is the time to act
That corruption is a global problem and no country is immune from it is commonplace wisdom and no big news. What has drawn global attention recently, and needs to be restated in Bangladesh, is that corruption is being indiscriminately exported and the world's leading exporting countries are brazenly failing to enforce action against foreign bribery. This is what the Transparency International (TI) report launched on 13 October, 2020 on "Exporting Corruption: Assessing Enforcement of the OECD Anti-Bribery Convention" alerts the international community to.
The report rates the performance of 47 leading global exporters – including 43 that are parties to the Organisation for Economic Co-operation and Development's Anti-Bribery Convention. It shows that more than 20 years after the convention was adopted, countries that account for nearly half of global exports have failed to punish foreign bribery.
Only four countries – the United States, the United Kingdom, Switzerland, and Israel – actively enforce committed actions against foreign bribery. Nine countries – Germany, France, Italy, Spain, Australia, Brazil, Sweden, Norway, and Portugal – are moderate enforcers. Fifteen countries – the Netherlands, Canada, Austria, Denmark, South Africa, Argentina, Chile, Greece, Colombia, Lithuania, New Zealand, Slovenia, Costa Rica, Estonia, and Latvia – have been ranked as limited enforcers.
The worst performers are nineteen countries found to be making little or no effort in enforcing action against foreign bribery. They are: China, Japan, South Korea, Hong Kong, India, Mexico, Ireland, Russia, Belgium, Singapore, Poland, Turkey, the Czech Republic, Luxembourg, Hungary, Finland, Slovakia, Peru, and Bulgaria.
Overall, the report shows that enforcement of foreign bribery laws is shockingly low among most OECD countries, with 34 countries ranked in the category of limited, low or no enforcement. These countries make up about 46% of global exports.
Corruption is essentially a home-grown cancer, most acutely confronted in developing countries like Bangladesh which was once ranked for five successive years (2001-5) at the very bottom of the global list of worst affected countries as per Corruption Perceptions Index (CPI).
We have overcome the agonies of being at the very bottom, but still remain ranked as low as 14th in 2019. We are the second lowest in South Asia, only better than Afghanistan. While concern about corruption is undoubtedly high, too often it has been ignored that corruption is an international problem which is systematically exacerbated by external actors through bribery in international trade and investment.
Corruption does remain a key challenge against development and social change in Bangladesh, a country widely regarded as a development dilemma. According to many socio-economic indicators – like GDP and HDI – Bangladesh has been performing commendably for over two decades, though it is also widely believed that the country's cost of corruption is 2-3% of GDP.
The country has been performing poorly in terms of nearly every governance indicator, including the: Rule of Law Index, Regulatory Quality Index, Government Effectiveness Index, Political Stability Index, Voice and Accountability Index, Press Freedom Index, Political Rights Index, and Civil Liberties Index. Furthermore, Bangladesh is among countries that are losing substantially in terms of money laundering, as conservative estimates put the amount of annual illicit transfers out of the country at over $10 billion, most of which is done through misinvoicing in foreign trade.
This is why the timing of the TI report is so important for Bangladesh. The country's leading foreign trade partners are among those categorised by the TI report to have been dismally failing to enforce committed action against foreign bribery. Notably, the biggest global exporters are showing the worst track records of compliance with their own pledges against foreign bribery. As already mentioned, the poorest performers include: China, Japan, India, Hong Kong, South Korea, Singapore, the Netherlands, Canada, and Mexico – many of whom are Bangladesh's largest trade and investment partners.
The study, conducted bi-annually by the TI Secretariat in Berlin, shows that only a few of the world's biggest exporters are actively investigating and punishing companies paying bribes abroad. China – the world's largest exporter and Bangladesh's most important trade and investment partner – has failed to open a single investigation into foreign bribery between 2016 and 2019, though Chinese companies have been allegedly involved in multiple scandals and investigations by other countries including, reportedly, at least one in Bangladesh.
Two other non-OECD major exporters, which are also among top trade partners of Bangladesh Hong Kong and India, did not open a single foreign bribery investigation from 2016 to 2019. Singapore, yet another important economic partner of Bangladesh, despite being ironically ranked very high in terms of CPI, opened only one investigation and concluded one case with sanctions in the past four years.
Foreign bribery has enormous consequences at both the payer's and recipient's end. It provides unfair advantages to the bribe-payer, corrupts the recipient party and restricts the space for competition. In the end, it not only compromises both the content and quality of the imported items, but also deepens and widens corruption in the importing country.
Bangladesh's risks of losses of various types – especially increased money laundering in this situation – are quite obvious, especially because the bulk of money laundering takes place through collusive manipulation of invoices related to foreign trade. The government, foreign trade entities and other stakeholders must take rigorous corruption prevention measures in foreign trade and investment without delay. Concrete actions against foreign bribery must be taken by exporting countries consistent with their commitments under the United Nations Convention against Corruption (UNCAC) and OECD Anti-Bribery Convention.
Bangladesh has already been struggling desperately with deep-rooted corruption from within. The problem has always been, and will in all likelihood, be further exacerbated by corrupt practices of foreign entities at a time when Bangladesh badly needs to expand foreign trade and investment. Time is running out for the government and other stakeholders to mainstream anti-corruption practices in all sorts of business and investment dealings with foreign entities, the opportunities for which have been amply created by the UNCAC, of which Bangladesh, like most of its leading trade partners, is a state party.
Dr Iftekharuzzaman is Executive Director, Transparency International Bangladesh.