The Toronto Star
July 18, 2001
We are pure. They are corrupt. We live by the rule of law. They live by the code of connections or cronyism. We, as a consequence, are rich, thoroughly deservedly, while they, equally deservedly, are poor. All of that exaggerates reality, but it isn’t that far from the way we view the world. Our creed: Out of purity comes profits. For over a decade now, with the United States in the lead, industrial nations have been trying to extend our way of doing business—legally binding contracts, transparency, impartial courts—to the rest of the world.
When East Asia went into a financial crash in 1998 and 1999, the almost universal analysis was that these countries had brought it on themselves by “crony capitalism” or the cozy working arrangements between politicians and corporate leaders who got special favors in return for kickbacks. (A minority analysis held that the real problem was that our banks grossly overlent to countries trying to grow too fast.) Since then, both the World Bank and the International Monetary Fund have refused to grant loans to companies with a record of corruption. The anti-corruption campaign’s biggest success occurred about two years ago when the Organization for Economic Cooperation and Development (OECD), the Paris-based club of wealthy nations, convinced its 29 members to sign on to an Anti-Bribery Convention. The treaty has flaws. It provides a legal loophole for bribery of public officials. It doesn’t prohibit signatory nations from accepting as a tax-deductible business expense bribes paid by companies. But once the treaty comes into full effect, it will cover countries that account for almost three-quarters of global trade. The rule of law will be globally triumphant, for corporations at least.
Not quite. For one thing, it’s never been self-evident that corruption prevents economic development. Certainly, not absolutely so. According to Berlin-based Transparency International, the world’s most corrupt country is Bangladesh. It’s in terrible shape. The least corrupt, Finland, is doing fine. But lots of countries that rank high on the corruption scale, such as China, Thailand, and Malaysia, are also doing fine. Indonesia was booming until four years ago, and its present troubles are more political than economic.
Most OECD nations already have laws that prohibit the commission of a crime, such as bribery, abroad. Canada does. But there’s never been a single court case brought against a Canadian company. Here’s the rub. We profit from corruption. The losers are the people in the Third World countries, not their leaders. Hence, the contradiction between our fine words on battling corruption and our deeds—those of our corporations, that is to say.
In the year May 1, 2000, to April 30, 2001, it’s reported reliably that contracts worth US$37 billion were probably affected by the bribery of foreign officials. Of these suspect contracts, more than 70 percent involved companies in the OECD member states that signed the much heralded Anti-Bribery Convention. A U.S. Senate inquiry has recently recorded that once bribes are given to Third World officials, their most likely resting place is in the banks of First World nations. Which makes us accessories to the crimes. So it seems that nothing is going to change.
In fact, change is happening, not in the countries that do the preaching, but in those that are preached at—especially in the small African nation of Lesotho, where Lesotho’s attorney general has brought a suit against a dozen Western engineering companies for bribery. Lesotho’s action is extraordinarily courageous, much more courageous than the World Bank’s. When the bribery allegations first became public, the bank suggested that no action be taken for fear the construction scheme might have to be canceled.