Odious Debts

Developing countries are amateurs in the corruption game

Ken Frankel, Ottawa Citizen
March 13, 2007

Exporting countries are only paying lip service to the enforcement of anti-corruption laws, according to the results of a new Transparency International survey that rates the tendency of companies in the top 30 exporting countries to pay bribes abroad.

Corruption surveys usually find that governments in poorer countries, where legal and governance infrastructures are not as developed, are by and large perceived to be more corrupt than their counterparts in richer countries. But the new findings
from Transparency International indicate that everyone bribes abroad, and some more routinely than others, reports Ken Frankel for the Ottawa Citizen.

Two recent high-profile examples include corporate giants BAE Systems (British Aerospace) and Siemens (of Germany). Both are embroiled in highly publicized investigations involving bribes paid to win contracts in the developing world. Siemens is currently under investigation for US$543 million in suspicious payments made over seven years.

Meanwhile, BAE is fielding allegations of bribe paying in a number of countries, including one for US$1.93 billion to Saudi royalty to secure a $13.5-billion contract.

“Governments in the developed world have traditionally taken a laissez faire attitude toward foreign bribery,” writes Frankel. “Some even condoned it by permitting tax deductions for bribes paid abroad. They have seen no short-term political gain and a lot of potential loss in jeopardizing foreign contracts that bring income and jobs for companies
headquartered in their countries. They are already walking a fine line in a world where large companies increasingly show little allegiance to their home countries by either moving operations offshore or extracting fiscal and other concessions not to.”

Fear of prosecution does not appear to be curbing foreign-bribe paying, either, claims Frankel, who cites a 2004 World Bank study that suggests developed countries appear more virtuous only because they are more sophisticated bribers and influence peddlers.

“Until the developed countries put some skin in the game by keeping an eye on their rogue companies,” says Frankel, “there’s little hope of empowering reformers in the developing world or convincing them that the developed world is engaged in something more than an intramural game of hypocrisy.”

Ken Frankel is a Canadian-based attorney and commentator on international affairs.

www.canada.com/ottawacitizen/news/story.html?id=2859cb4d-97f4-494c-a622-d241c75d3eb5 [PDFver here]

Categories: Odious Debts

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