Study: Corporate Bribery and Corruption Grease the Gears of Global Capitalism
The Organization for Economic Cooperation and Development reports that large multinational corporations, led by top managers, are behind majority of documented bribery cases
by Sarah Lazare
from Common Dreams
Large multinational corporations are behind the majority of documented bribes worldwide, with most payers and takers hailing from rich nations, according to a study released Tuesday by the 34-nation Organization for Economic Cooperation and Development (OECD).
The report, which evaluated data obtained from 427 bribery offense cases spanning the past 15 years, found that 57 percent of all bribes examined involved corporate efforts to obtain public contracts—mostly in western, more developed states. Customs and defense officials accounted for a significant proportion of bribe recipients, at 11% and 6% respectively.
According to the study, the average bribe amounts to 10.9% of the total value of the transaction, with the average payout calculated at nearly $14 million for the cases reviewed.
Regarding the impact such bribery is having on business and governance, the report states: "The true social cost of corruption cannot be measured by the amount of bribes paid or even the amount of state property stolen. Rather, it is the loss of output due to the misallocation of resources, distortions of incentives and other inefficiencies caused by corruption that represent its real cost to society."
When it comes to corporate bribes, the analysis found that these instances are generally not committed by lone low-ranking individuals. According to the report, 53 percent of known bribery cases directly involved high-level corporate managers or CEOs. “Most international bribes are paid by large companies, usually with the knowledge of senior management,” the study states.
Almost two-thirds of bribery cases occurred in just four sectors, the report revealed. The highest proportion of bribes occur in the extractive industries—such as fossil fuels and other mining activities— and account for 19 percent of all bribery cases. This was followed by the construction, transportation and storage, and information and communication sectors.
However, the report states that, due to the complex and secretive nature of global corruption, its findings are just "the tip of the iceberg."
Bankers Who Commit Fraud, Like Murderers, Are Supposed to Go to Jail
by Dean Baker
by Beat the Press
'Individuals are profiting by breaking the law. The point is make sure that these individuals pay a steep personal price.'
Wow, some things are really hard for elite media types to understand. In his column in the Washington Post, Richard Cohen struggles with how we should punish bankers who commit crimes like manipulating foreign exchange rates (or Libor rates, or pass on fraudulent mortgages in mortgage backed securities, or don't follow the law in foreclosing on homes etc.).
Cohen calmly tells readers that criminal prosecutions of public companies are not the answer, pointing out that the prosecution of Arthur Andersen over its role in perpetuating the Enron left 30,000 people on the street, most of whom had nothing to do with Enron. Cohen's understanding of economics is a bit weak (most of these people quickly found other jobs), but more importantly he is utterly clueless about the issue at hand.
Individuals are profiting by breaking the law. The point is make sure that these individuals pay a steep personal price. This is especially important for this sort of white collar crime because it is so difficult to detect and prosecute. For every case of price manipulation that gets exposed, there are almost certainly dozens that go undetected.
This means that when you get the goods on a perp, you go for the gold -- or the jail cell. We want bankers to know that if they break the law to make themselves even richer than they would otherwise be, they will spend lots of time behind bars if they get caught. This would be a real deterrent, unlike the risk that their employer might face some sort of penalty.
Why is it so hard for elite types to understand putting bankers in jail?
© 2014 Center for Economic and Policy Research
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.
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