World’s “least corrupt” nations fail to police bribery abroad

Several countries that earned squeaky-clean marks for lack of corruption from the European Commission and the influential NGO Transparency International have poor records of policing corporate bribery overseas.

Countries praised this week by the European Commission for experiencing little or no corruption at home are failing to stop their own companies paying bribes overseas, raising concerns that the squeaky-clean reputations enjoyed by much of Scandinavia and northern Europe may be tarnished by a different standard of conduct abroad.

On Monday, the European Union Commissioner for Home Affairs, Cecilia Malmström, released the Union’s first EU Anti-Corruption Report. It reported that that Denmark, Finland, Luxembourg and Sweden had the lowest experiences of bribery in the European Union, with less than 1% of respondents in those countries expecting to pay a bribe. These countries also earn stellar marks from Transparency International, whose widely cited Corruption Perceptions Index ranks them among the most upright nations in the world.

Yet media investigations, criminal prosecutions and successive reports by the Organization for Economic Cooperation and Development (OECD), reveal that the same countries rarely prosecute and fine domestically-registered and even state-controlled companies suspected of paying bribes in across Asia, Africa, South America and Europe.  

This disparity has raised concerns that the sunshine in European nations lauded for their transparency may not extend beyond their shores – and that some of the most influential organizations that are measuring corruption may only be telling half the story. 

“They haven’t looked at all at the supply side of corruption,” John Christensen, the director of Tax Justice Network, an advocacy group that campaigns against financial secrecy, said of rankings such as the Corruption Perceptions Index. “Bribery takes two to tango.”

Here are four countries whose sterling reputations for integrity at home don’t always take into account their more troubled records overseas: 

Denmark

Since Denmark debuted at number two in Transparency International’s annual Corruption Perceptions Index when it began in 1995, the country has always ranked among the top four least corrupt countries in the world. Denmark reached the top spot eight times, including the most recent Index in 2013. The Index reflects the level of perception of corruption within the public sector. 

Yet the OECD recently told Denmark it had “serious concerns about the lack of enforcement of the foreign bribery offence.” Denmark, the OECD said, is not “sufficiently proactive” in combatting foreign bribery despite allegations throughout Europe, Asia and Africa.

It noted that none of the 13 allegations of foreign bribery had resulted in prosecution for foreign bribery and, of those, “several were closed without adequate investigation or sufficient efforts to secure foreign evidence.”

According to Transparency International, which “demoted” Denmark in its most recent report on bribery and corruption, only $1.8 million has been imposed in fines, received from the company Bukkehave Corporation A/S, which breached UN embargo relating to the Oil-for-Food programme in Iraq. In another case, a Danish pharmaceutical company settled out of court after allegations it bribed Dutch United Nations contractors in the Democratic Republic of Congo for a contract worth $143 million.

“It is simply not their area of priority,” Knut Godfredsen, Chair of Transparency International – Denmark, told ICIJ, referring to prosecution agencies.

Finland

“Finnish citizens do not come across corruption in their daily life,” according to a separate EU report released this week. 

Yet the country is home to a string of companies accused of bribery from Slovenia to Kenya. Last year the OECD was so concerned about the country’s failure to implement 12 of the 19 recommendations to improve its foreign bribery framework that it wrote to the Finnish Prime Minister.

In March 2013, a Finnish court dismissed allegations of bribery against Wärtsilä Finland Oy, which denied the charges. A former senior manager at Wärtsilä was convicted of bribery in Kenya to secure a tender to build a power plant. In a separate case two months later, a district court dismissed disputed allegations made against executives of a global healthcare monitor provider and its subsidiary in Costa Rica.

Ongoing allegations of bribery by the Finnish state-controlled arms company Patria Oy continue play out in Croatia and Slovenia. Courts cleared the company and a number of its senior executives in Egypt last year and upheld lesser accounting offences, according to Transparency International.

Luxembourg

Luxembourg, the European microstate famous for its low taxation and opaque $3 trillion financial sector, was chastised by the OECD in August for ignoring one-third of the OECD’s recommendations to improve its anti-bribery framework. 

Although Luxembourg had increased awareness of its anti-bribery laws, the OECD found that “not a single measure has been taken to modify the legal or criminal policy framework in order to rectify the gaps identified in the foreign bribery offence”. 

Sweden

In launching the EU’s corruption report on Monday, the Commissioner Cecilia Malmström, said Sweden “is undoubtedly one of the countries with the least problems with corruption, and other EU countries should learn from Sweden’s solutions.”

Yet while less than 1% of Swedes – who enjoy a top-10 ranking according to GDP per capita – may have encountered bribery at home, those living in other countries have found Swedish companies more than willing to bribe their way to power and fortune.  

In 2012, Sweden was rocked by an investigation that revealed that the telecommunications giant TeliaSonera had funneled over $350 million to a company it allegedly knew to be a front for the daughter of the president of Uzbekistan. After a Swedish court first ruled that it had no jurisdiction over the bribery charge, successful prosecution followed and the company dismissed its Chief Financial Officer and other senior employees.

Before the TeliaSonera scandal broke, the OECD had criticized Sweden for not prosecuting a single foreign bribery allegation in more than eight years despite “several allegations reported by the media.”In the OECD’s opinion, the lack of prosecution “signals that something is not working in Sweden’s framework for detecting, investigation and prosecuting foreign bribery.” 

“I think foreign bribery remains a fairly big problem,” Elisabeth Eklund, an anti-corruption specialist and Partner at Stockholm-based firm Delphi, told ICIJ. “The police and the prosecution haven’t been very interested in digging into these issues.”

 

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