The private sector plays a pivotal role in fighting corruption worldwide. Transparency International's

496 Pages·2009·1.63 MB·English

The private sector plays a pivotal role in fi ghting corruption worldwide. Transparency
International’s Global Corruption Report 2009 documents in unique detail the many corruption
risks for businesses, ranging from small entrepreneurs in Sub-Saharan Africa to multinationals
from Europe and North America. More than 75 experts examine the scale, scope and devastat-
ing consequences of a wide range of corruption issues, including bribery and policy capture,
corporate fraud, cartels, corruption in supply chains and transnational transactions, emerging
challenges for carbon trading markets, sovereign wealth funds and growing economic centres,
such as Brazil, China and India.
The Global Corruption Report 2009 also discusses the most promising tools to tackle corruption
in business, identifi es pressing areas for reform and outlines how companies, governments,
investors, consumers and other stakeholders can contribute to raising corporate integrity
and meeting the challenges that corruption poses to sustainable economic growth and
development.
Transparency International (TI) is the global civil society organisation leading the fi ght against
corruption. Through more than ninety chapters worldwide and an international secretariat
in Berlin, Germany, TI raises awareness of the damaging effects of corruption and works with
partners in government, business and civil society to develop and implement effective meas-
ures to tackle it. For more information go to www.transparency.org.

Global Corruption
Report 2009
Corruption and the Private Sector
TRANSPARENCY
INTERNATIONAL
the global coalition against corruption
CAMBRIDGE UNIVERSITY PRESS
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi
Cambridge University Press
The Edinburgh Building, Cambridge CB2 8RU, UK
Published in the United States of America by Cambridge University Press, New York
www.cambridge.org
Information on this title: www.cambridge.org/9780521132404
© Transparency International 2009
This publication is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.
First published 2009
Printed in the United Kingdom at the University Press, Cambridge
A catalogue record for this publication is available from the British Library
ISBN 978-0-521-13240-4
ISSN 1749-3161
Cambridge University Press has no responsibility for the persistence or
accuracy of URLs for external or third-party internet websites referred to
in this book, and does not guarantee that any content on such
websites is, or will remain, accurate or appropriate.
Edited by Dieter Zinnbauer, Rebecca Dobson and Krina Despota
Every effort has been made to verify the accuracy of the information contained in this report, including
allegations. All information was believed to be correct as of January 2009. Nevertheless, Transparency
International cannot guarantee the accuracy and the completeness of the contents. Nor can Transparency
International accept responsibility for the consequences of its use for other purposes or in other contents.
Contributions to the Global Corruption Report 2009 by authors external to Transparency International do not
necessarily refl ect the view of Transparency International or its national chapters.
Contents
Illustrations xi
Contributors xiii
Preface xvii
Huguette Labelle
Foreword 1 – Tackling corruption in business: profi table and feasible xix
N. R. Narayana Murthy
Foreword 2 – The role of the private sector in fi ghting corruption:
essential for meeting local and global governance challenges xx
Jomo Kwame Sundaram
Acknowledgements xxii
Executive summary xxiv
Transparency International
Part one: Corruption and the private sector
1 Introducing corruption and the private sector
The scale and challenge of private sector corruption 3
Transparency International
Beyond profi ts and rules: the moral case for business to fi ght corruption
globally 11
Georges Enderle
2 Understanding the dynamics: examining the different types of business
corruption
Corruption inside the enterprise: corporate fraud and confl icts of interest 13
Dante Mendes Aldrighi
Corruption in the value chain: private-to-private and private-to-public corruption 19
David Hess
Small and medium enterprises: challenges in combating corruption 24
Elaine Burns
v
vi Contents
Corruption in market competition: collusion and cartels 26
Pradeep S. Mehta
Corrupting the rules of the game: from legitimate lobbying to capturing
regulations and policies 32
Dieter Zinnbauer
Corporate lobbying’s new frontier: from infl uencing policy-making to
shaping public debate 39
David Miller
View from the inside – Markets for carbon credits to fi ght climate
change: addressing corruption risks proactively 41
Jørund Buen and Axel Michaelowa
3 The international dimension: corruption in a globalising and diverse economy
Laying the foundations for sound and sustainable development:
strengthening corporate integrity in weak governance zones 46
Georg Huber-Grabenwarter and Frédéric Boehm
Corruption and bribery in the extractive industries 54
Gavin Hayman
Foreign direct investment and global supply chains: do they spread or dilute
corporate integrity? 57
Transparency International
Strengthening compliance and integrity in the supply chain: what comes
next? 63
Ayesha Barenblat and Tara Rangarajan
When China goes shopping abroad: new pressure for corporate integrity? 67
Deborah A. Bräutigam
Risky interstices: transfer pricing and global tax management 70
Sol Picciotto
Where public and private merge: privatisation and corruption 75
John Nellis
4 Tackling corruption effectively: from corporate commitment to accountability
View from the inside – Robust anti-corruption programmes in a
high-performance with high integrity global company 81
Ben W. Heineman, Jr.
The living business code: improving corporate integrity and reducing
corruption from the inside 83
Muel Kaptein
Contents vii
From confl ict to alignment of interests: structuring internal corporate
governance to minimise corruption risks 88
Dante Mendes Aldrighi
New centres of economic power: new challenges and priorities for fi ghting
corruption? Corporate governance and corporate integrity in India 97
Vikramaditya Khanna
From voluntary commitments to responsible conduct: making codes and
standards effective and credible 99
Alan Knight
The role of investors in strengthening corporate integrity and responsibility 105
Dieter Zinnbauer
View from the inside – How investors can boost anti-corruption efforts 110
Hans-Christoph Hirt and Jennifer Walmsley
Sovereign wealth funds: a challenge for governance and transparency 112
Pierre Habbard
Shedding more light on the transparency and accountability of sovereign
wealth funds: ranking exercises 115
Transparency International
5 Towards a comprehensive business integrity system: checks and balances
in the business environment
The public rules for private enterprise: corporate anti-corruption legislation in
comparative and international perspective 116
Indira Carr
From rules to enforcement: regulators’ resources and enforcement action 123
Transparency International
Smart enforcement: trends and innovations for monitoring, investigating
and prosecuting corporate corruption 127
Cristie Ford
Gatekeeping corporate integrity: the role of accountants, auditors and rating
agencies 131
Transparency International
Seeding corporate integrity: the challenges to accounting and auditing in Nigeria 136
Elewechi Okike
Financial institutions and the fi ght against corruption 138
Gretta Fenner
viii Contents
Leveraging consumer power for corporate integrity 145
Oscar Lanza
NGOs and corporate integrity: the tempo of effective action accelerates 149
Frank Vogl
View from the inside – Shining the light on corporate wrongdoing: the role
of business journalism 154
Rob Evans
Tackling corruption risks in the defence sector: an example for collective
action 156
Mark Pyman
Part two: Country reports
6 Country perspectives on corruption and the private sector
Introduction 163
Rebecca Dobson
6.1 Africa and the Middle East
Burundi 166
Cameroon 170
Ethiopia 176
Ghana 180
Kenya 184
Lebanon 189
Morocco 195
Nigeria 200
Rwanda 204
Zimbabwe 207
6.2 Americas
Argentina 212
Chile 217
Colombia 221
Nicaragua 227
Paraguay 230
Trinidad and Tobago 234
United States 238
Venezuela 243
Contents ix
6.3 Asia and the Pacifi c
Bangladesh 247
China 253
India 258
Indonesia 262
Japan 267
Malaysia 271
Nepal 276
Pakistan 280
Papua New Guinea 285
Philippines 290
South Korea 295
Sri Lanka 300
6.4 Europe and Central Asia
Armenia 305
Austria 310
Bosnia and Herzegovina 314
Finland 319
France 324
Germany 331
Greece 338
Hungary 343
Israel 348
Lithuania 352
Poland 357
Romania 362
Russia 368
Spain 372
Switzerland 377
United Kingdom 382
Part three: Research
Introduction 391
Robin Hodess
x Contents
7 Macro-perspective and micro-insights into the scale of corruption:
focus on business
Corruption Perceptions Index 2008 395
Johann Graf Lambsdorff
Bribe Payers Index 2008 402
Juanita Riaño
Corruption and post-confl ict peace-building 406
Susan Rose-Ackerman
Public and private sector corruption in central and south-east Europe 409
Kristóf Gosztonyi and John Bray
Corruption and the informal sector in sub-Saharan Africa 412
Emmanuelle Lavallée and François Roubaud
Institutional determinants of corruption by Maghrebian fi rms 416
Clara Delavallade
8 Strengthening corporate integrity: empirical studies of disclosure,
rule diffusion and enforcement
Transparency in reporting on anti-corruption measures: a survey of
corporate practices 419
Susan Côté-Freeman
Revenue transparency of oil and gas companies 423
Juanita Olaya
A mixed picture: assessing the enforcement of the OECD Anti-Bribery
Convention 426
Gillian Dell
Laws against bribery abroad are effective in deterring investments in corrupt
countries 429
Alvaro Cuervo-Cazurra
Public and private enforcement of securities laws: resource-based evidence 431
Howell E. Jackson and Mark J. Roe
Law and the market: the impact of enforcement 433
John C. Coffee, Jr.
The corporate governance role of the media: evidence from Russia 436
Alexander Dyck, Natalya Volchkova and Luigi Zingales
Index 439