Norway

Norway Corruption Report

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Snapshot

Norway_249x173.jpgNorway ranks among the least corrupt countries in the world, and business is conducted with a high level of transparency. Corruption does not represent a constraint to trade or investment, and administrative corruption and petty bribery are almost non-existent. The Norwegian Penal Code criminalises active and passive bribery, trading in influencefraud, extortion, breach of trust and money laundering. It applies to anyone who is registered in Norway and carries a penalty of up to 10 years' imprisonment, even if the act is committed abroad. A company can be held criminally liable for corruption offences committed by individuals acting on its behalf.Facilitation paymentsare prohibited, and gifts and hospitality can be considered illegal depending on their value, the intent and benefit obtained. These practices, however, very rarely occur. Law enforcement activities and the legal framework for combating corruption are very strong, and anti-corruption laws are enforced. There are no reports of official impunity. Norway’s economic crime-fighting unit, Økokrim, has proven itself effective in investigating and prosecuting corruption in Norway and, to some extent, abroad.

December 2015
GAN Integrity

Judicial System

European_Commission.svg.pngThe Norwegian judicial system enjoys high levels of public trust and has a long-standing reputation of independence, competence and integrity (FER 2014). It is considered efficient both in protecting property rights and in enforcing commercial contracts (ICS 2015). Businesses experience the judicial system as independent and as effective in settling disputes (GCR 2015-2016). Public polls reveal that bribes and abuse are almost never experienced when dealing within the judiciary (European Commission, Feb. 2014), and very few citizens believe that the judicial system is corrupt (GCB 2013).

Police

Corruption within the police is not a problem in Norway, and the government has effective mechanisms to investigate and prosecute corruption among police officials (HRR 2014). The reliability of police services to protect companies from crime is considered very high (GCR 2015-2016). Norway’s local police districts investigate less complex cases of corruption, while large cases of economic crime are handled by a special police and prosecuting unit, Økokrim. A public survey suggests that corruption is very rare in the country's police services (GCB 2013).

Public Services

Companies are very unlikely to encounter corruption when interacting with the public administration or when obtaining public services in Norway. Companies report that it can be somewhat burdensome to deal with government administrative requirements (permits, licences, reporting, etc.), but bribery payments almost never occur when obtaining public utilities, business permits or licences (GCR 2015-2016). Almost one-third of surveyed citizens believe that bribery and abuse are widespread among officials issuing business permits, but none report to have paid bribes to officials in this sector (European Commission, Feb. 2014).

In one foreign corruption case, it was revealed that Vimpelcom, a company partly owned by the Norwegian telecommunication company Telenor, paid USD 25 million in bribes to obtain operating licences in Uzbekistan. The bribes were transferred through a subsidiary, Takilant Limited (The Local, Nov. 2014). Following the case, Jon Frederik Baksaas, chief executive of Telenor, resigned from the board to eliminate any conflicts of interests during investigations. A hearing on the case will be held in the Norwegian Parliament in January 2016 (Financial Times, Jan. 2015). Telenor's chairman Svein Aaser has resigned following a dispute with the Norwegian government over the scandal (Reuters, Oct. 2015).

Land Administration

Norway's legal system protects and facilitates all aspects of property rights (ICS 2015), and corruption is not a concern in this sector (GCB 2013). Norway has a number of land consolidation courts which decide both on the division of land (mainly for agricultural purposes) and on real estate disputes. Registering property is significantly less time-consuming and less costly than the average of OECD countries (DB 2015).

Tax Administration

The Norwegian tax administration is not perceived as corrupt (GCB 2013). The tax authorities have been active in a number of initiatives to counter tax crimes in the private sector and to enhance international cooperation (OECD 2013). Norwegian law explicitly prohibits the tax deductibility of bribes. A business survey reveals that two thirds of companies believe there is a high chance of being caught by the tax authorities for tax fraud or tax evasion (KRISINO 2013).

Customs Administration

Corruption at the Norwegian borders is not a problem for importing and exporting, and the transparency and efficiency of the border administration is very high (GETR 2014). Irregular payments in relation to exports and imports very rarely occur (GETR 2014). See the Norwegian Customs Service for information on customs regulations.

Public Procurement

Public procurement corruption is not a problem in Norway, but some cases have been exposed in the municipalities. Norway has established legal conditions under EU procurement directives for mandatory exclusion of procurers who have been convicted for financial crimes and corruption; however, a national debarment register has not been established (OECD 2013). The Auditor General has warned about breaches of the legislative framework, and local authorities have been criticised for not imposing sufficient ethical demands on procurers (NISA 2012). Companies report that bribery is almost never needed to win contracts (NTCBR 2013), and that procurement officials are very unlikely to show favouritism when deciding upon contracts (GCR 2015-2016). Some companies, primarily from the transport, hospitality and construction industries, claim to know about price-fixing and collusion activities within their industry (KRISINO 2015). Despite the low occurrence of corruption, companies should still ensure proper due diligence procedures are in place to eliminate the risk of corruption in Norway's procurement process. 

Natural Resources

Corruption does not hinder business in Norway's resource industries. Very few corruption cases have come to light in the oil industry since the 1990s, while larger cases have mostly involved Norwegian companies operating abroad. Foreign oil companies report there is no discrimination in the award of petroleum exploration and development blocks (ICS 2015). Norway is a fully compliant member of the Extractive Industry Transparency Initiative (EITI), which promotes the transparent publication of revenues and expenses from extractive industries. As a member of the Open Government Partnership, the Norwegian government has also committed itself to improving transparency in the management of oil and gas resources.

In a foreign bribery case, the Norwegian-based fertilizer company Yara International was found guilty of corruption and bribery, and was fined the largest corporate fine in Norwegian history of USD 48 million. Yara had entered into a joint venture with the National Oil Corporation of Libya and the Libyan Investment Authority, creating the Libyan Norwegian Fertiliser Co (Lifeco). During the formation of Lifeco, Yara and Yara’s Swiss affiliates approved several illicit transactions, including the transfer of USD 1.5 million into the Swiss account of the Libyan Oil Minister, Shukri Ghanem. The bribes were masked by overpaying for the fertilizer bought from Libya. Four people involved in the scam have been indicted on criminal charges in Norway, including Yara’s lawyer and former top executive who received a three-year prison sentence (Whistleblower Justice Network).

Legislation

The Norwegian Penal Code criminalises active and passive bribery, fraud, trading in influence, extortion, breach of trust and money laundering. It applies to Norwegian public officials, companies, citizens, foreign companies and citizens who are registered in Norway, regardless of whether the offence is committed in the country or abroad. A company can be held criminally liable for corruption offences committed by individuals acting on their behalf, and it can be sanctioned with fines. Indirect bribery through intermediaries and the use of facilitation payments are also criminalised, although exemptions may be made for facilitation payments paid to obtain services of which a person is legally entitled. Gifts and hospitality can be considered illegal depending on the value, intent and benefit obtained. The Penal Code distinguishes between acts of ‘corruption’ and ‘gross corruption’. In deciding if the corruption is ‘gross’, importance is placed on whether the act involves a breach of office, the size of the economic gain, and whether false accounting information has been prepared. Gross corruption carries penalties of up to 10 years' imprisonment, while sanctions for ordinary corruption and trading in influence range from fines of up to three years’ imprisonment. Other corruption-related laws include the Anti-Money Laundering and Terrorist Financing Act, which establish financial reporting obligations primarily in the financial sector. The Norwegian Labour Law guarantees whistleblower protection to employees in all positions in both the public and private sectors, and the Political Parties Act provides the legal basis for monitoring political financing. The implementation of the EU Procurement Directives in Norway has also established conditions for mandatory exclusion of economic operators who have been convicted of financial crimes, including corruption. 

Norway is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC), the Council of Europe’s Civil and Criminal Law Conventions against Corruption and the Group of States Against Corruption(GRECO). Both law enforcement and the legal framework for combating corruption in Norway are considered very strong (NISA 2012). Norway's efforts in cracking down on corruption and bribery committed by Norwegian companies abroad have been limited (Transparency International, Feb. 2015). Access the Lexadin World Law Guide for a collection of legislation in Norway.

Civil Society

Norway has a large selection of media sources, and opinions are diverse, especially when seen in relation to the size of the population. Norway has one of the highest newspaper readerships in the world, distributing more than 200 newspapers with a diversity of opinions (FotP 2015). The media plays an important role in setting the agenda for public debate, and several corruption cases have been uncovered by journalists and the media in recent years. It has also been a key player in disclosing corrupt behaviour among public officials and other actors, and increasing public awareness on corruption (NISA 2012). Norway's media environment is considered 'free' (FotP 2015).

Norway's civil society is diverse and is categorised by a large degree of participation (FitW 2015). Civil society organisations (CSOs) are subject to very little regulation by law, and state subsidies amount to a relatively small proportion of their income. CSOs often voice criticism against public authorities without repercussion and can influence political debate (NISA 2012). Some CSOs work on anti-corruption issues and are active in the anti-corruption debate.

Sources

Topics: Europe & Central Asia