businessanticorruption

"It is a criminal offence for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries to a foreign public official or an official of a public international organization, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties, in order to obtain or retain business or other undue advantage in relation to the conduct of international business."

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Bribery

Definition from the OECD Convention: "To offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage."

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Corruption

Although there are several conventions dealing with corruption and bribery there is no single globally accepted definition of corruption and bribery.

Corruption is defined by Transparency International, the leading international NGO in fighting corruption, as "The misuse of entrusted power for personal gains."

The main forms of corruption are bribery, embezzlement, fraud and extortion.

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Debarment/Blacklisting

Exclusion from public contracting including public procurements.

The use of debarment instruments is growing world wide. Debarment is considered by authorities to be an effective preventive instrument. Debarment is an administrative sanction (not criminal).

Recently, the European Union adopted a new procurement directive which makes debarment of companies and persons convicted guilty of bribery compulsory all over the European Union. See Other Anti-Corruption Initiatives.

Debarment procedures are also found in several international financial institutions and most national states with procurement laws.

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Demand Side/Passive Bribery

Definition from UNCAC Art. 16: "The solicitation or acceptance by a foreign public official or an official of a public international organisation, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties."

Typical forms of demand side bribery are often related to:

Denial of goods (look for more specific analysis in Country Profiles)
Denial of services (look for more specific analysis in Country Profiles)
Access to utilities
Access to licences
Legal sanctions
Physical threats
Lost opportunities

See also facilitation payments.

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Donations

A donation is understood as a monetary or non monetary gift to a fund or cause, typically for charitable reasons.

Donations to charities or to political parties are not directly covered by the OECD Convention (see Grey Area Questions) Many companies cover the use of donations in their code of conduct.

It is clear that if a donation is given with the purpose of giving a company an undue advantage, it will be considered as bribery by most authorities.

Most countries have national rules for party financing, including rules for disclosure. Many companies cover the use of donations in their code of conduct.

There are numerous examples of companies being confronted with demands of donations and political party contributions. It is common practice in many countries that political parties ask for donations. Such demands can be seen as extortion. It can be difficult, and in most situations impossible, to prove that this is the case. Therefore it is important that a company has a clear policy regarding donations.

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Facilitation Payments

Facilitation payments is a form of bribery made with the purpose of expediting or facilitating the performance by a public official for a routine governmental action and not to obtain or retain business or any other improper advantage.

The facilitation payment is typically demanded by low level and low income officials in order to obtain levels of service that one would officially be entitled to without such payment.

A distinction is generally made between facilitation payments and outright bribery and corruption. In many countries it may be considered normal to provide small unofficial payments under certain circumstances, although this practice is illegal in most countries.

Facilitation payments is one of the unsettled questions in the OECD Convention, meaning that they are not covered by the Convention:

"Small 'facilitation' payments do not constitute payments made 'to obtain or retain business or other improper advantage' within the meaning of paragraph 1 and, accordingly, are also not an offence. Such payments, which, in some countries, are made to induce public officials to perform their functions, such as issuing licences or permits, are generally illegal in the foreign country concerned."

It should be noted that some countries i.e. the United Kingdom and Germany have made facilitation payments abroad illegal. Other countries like the United States do not prohibit facilitation payments abroad, and have no upper limit to these payments.

The UNCAC prohibits facilitation payments.

The legal status of facilitation payments differ from country to country, see Country Profiles.

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Gifts

Gifts are not directly covered by the OECD Convention (see Grey Area Questions).

Many companies cover the use of gifts in their code of conduct. The general tendency is that companies state that gifts should be identifiable and only of nominal value if given in the name of the company. Some companies also state that they will not accept gifts to employees, and that employees must not accept gifts, apart from small gifts in special situations like anniversaries.

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Grey Area Questions

See section on Grey Area Questions.

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Improper Advantages

Refers to something to which the company or person concerned was not clearly entitled, for example an operating permit for a factory which fails to meet the statutory requirements.

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Petty Corruption

Refers to the everyday corruption taking place at the implementation end of politics, where public officials meet the public. Sometimes it is referred to as 'routine' corruption, whereby for instance private importers of goods pay bribes to obtain a speedy completion of routine customs procedures, or whereby import goods with high customs duty and excise rates are classified as goods with lower rates. Petty corruption is also described as 'survival' corruption; a form of corruption which is pursued by junior or mid-level revenue officers who may be grossly underpaid and who depend on relatively small but illegal rents to feed and house their families and pay for education.

The distinction between petty corruption and facilitation payments is difficult to draw in practice. Theoretically, the difference is that petty corruption gives the person paying a bribe an undue advantage whereas a facilitation payment only gives access to a service that would otherwise be provided without the payment. Generally, both practices are illegal.

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Recovery of Assets

Recovery of criminal assets derived from bribery.

The UNCAC is the first global convention which establishes a total framework for asset recovery. This framework comprises a.o. a set of rules for financial institutions known as "know your customer", a set of articles related to court action, including civil action, confiscation and the freezing and seizure of assets.

Other provisions address the recovery of property under individual states' domestic laws and through international cooperation on confiscation. The aim is to encourage states to ensure that domestic law permits courts to order those who have committed offences established under the UNCAC to pay compensation or damages to states that have been harmed by those offences.

Further measures cover the freezing or seizure of property in a requested state, once a request has been made There is also a positive obligation placed on the requested state to take measures to identify, trace and freeze or seize the proceeds of crime.

See Transparency International's comments on this aspect of the UNCAC.

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Subsidiaries

Corrupt practices conducted by a subsidiary company located in another country than the parent company.

The OECD Convention does not expressly address the parent-subsidiary issue however, bribes paid by a subsidiary may be subject to prosecution in the state where the parent company is based "when the offence is committed in whole or in part in its territory."

Bribes paid by a subsidiary may also be subject to prosecution in the state where the parent company is located if that state utilizes nationality jurisdiction and its nationals are involved. This possibility exists when parent companies place their own nationals in responsible positions in their foreign subsidiaries - a common practice (see the ICC Handbook: Fighting Corruption - A Corporate Practices Manual, p.54).

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Supply Side/Active Bribery

UNCAC Art. 15: "The promise, offering or giving to a foreign public official or an official of a public international organization, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties, in order to obtain or retain business or other undue advantage in relation to the conduct of international business."

The typical forms of supply side bribery, apart from direct payments, are:

Gifts and travels
Various donations and contributions to political parties