Essays and Reports

Germany and Japan block new anti-bribery guidelines for export credit agencies

Odious Debts Online

February 24, 2006


Anti-bribery watchdog Probe International calls OECD guidelines “paper tiger” anyway.

Germany and Japan are challenging efforts to tighten anti-corruption
guidelines covering companies supported by official export credit
agencies.

The bribery controls contained in the Draft Action 2005 Action Statement on Measures to Deter Bribery,
being drawn up by the Organisation for Economic Co-operation and
Development (OECD), were expected to be agreed next month after the
release of a weaker action statement issued more than five years ago.

However, objections by Germany, Japan and a number of smaller countries
have raised fears that a final decision on new anti-bribery rules could
be delayed. According to a report by the Financial Times (www.ft.com), Germany and Japan are arguing that the OECD’s tougher rules are too bureaucratic.

But their stance could prove embarrassing, as both countries supported
the decision by the Group of Eight (G-8) industrialised nations at the
Gleneagles summit last July to ensure that export guarantees are not
used in projects where companies pay bribes, reports the Times.

In a report published by the BBC (news.bbc.co.uk),
Germany said it opposed plans to require agents representing exporting
companies in countries to disclose their identity when seeking export
credits or guarantees. Agents, who act as consultants for exporting
companies, are sometimes suspected of passing on bribes in order to
facilitate deals.

But, says the German submission, “it is highly questionable whether their revelation is a proper tool for detecting bribery.”

Japanese officials agree and argue that “excessive responsibilities or roles” should not be imposed on export credit agencies.

The global graft watchdog, Transparency International, is also
skeptical about the effectiveness of the measure because, it argues,
bribers have become ever more imaginative in finding ways to pay bribes
and those determined to bribe will not be deterred by the potential
threat of having to reveal agents’ commissions. They will find other
channels.

Patricia Adams, the executive director of the Canadian-based trade and
aid watchdog, Probe International, agrees with TI. Ms. Adams, who
followed the 2002 conviction of Canadian engineering giant Acres
International in Lesotho for using an agent to bribe one of that
country’s officials to win a lucrative dam-building contract, said:

“I always ask myself if new anti-corruption measures would have stopped
Acres from bribing Mr. Sole through its agent, Mr. Bam, who, as
Canada’s Honorary Consul in Lesotho, enjoyed the confidence of the
Canadian government and its Crown agencies, and who set up a devilishly
inscrutable bribe payment route through a Swiss bank account. I have to
say that the OECD enhanced action statement would not have raised any
red flags whatsoever.

“It seems to me that the bribe givers and bribe takers are several
steps ahead of the anti-bribe bureaucrats,” said Ms. Adams. “The real
test of countries’ commitments to slay corruption will not be a ‘paper
tiger’, like the OECD’s new action statement, but the enforcement of
existing national laws to catch and punish bribers, to make the cost of
bribing higher than the benefit”, she added.

Meanwhile, ECA-Watch, a coalition of anti-bribery groups, yesterday
urged the OECD to disqualify companies convicted of foreign bribery
from receiving publicly subsidized export credits. In a briefing paper and letter,
they noted that “no OECD Member State reviewed so far has taken the
step, proposed under Article 3 of the OECD Anti-bribery Convention, of
imposing administrative sanctions in the form of temporary or permanent
exclusion from export credit support, on any sort of automatic basis.”

Even the OECD’s own examiners who have been investigating each member
country’s implementation of the OECD Convention to combat bribery of
foreign officials agree with the NGOs about the importance of raising
the cost of bribery, arguing that the “threat of suspension or refusal
of coverage, or the risk of seeing their names on a blacklist, would be
powerful deterrents for companies dependent on exports.”

In fact, says Probe International’s Patricia Adams, with the exception
of the U.S., few countries have shown much mettle for enforcing their
new laws against bribing foreign officials. When they do, she says,
“that’s when we will see a real drop in the incidence of bribery in
international projects.”

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