Many governments failing to tackle companies' foreign graft-report

By Magdalena Mis

LONDON, Oct 23 (Thomson Reuters Foundation) - Only four countries are actively investigating and prosecuting companies that bribe foreign officials to win contracts, Transparency International (TI) said in a report published on Thursday.

More than half the 41 nations that signed a major anti-bribery convention requiring them to make foreign bribery a crime, are failing to crack down on it, among them Japan, South Korea and The Netherlands, all major exporters, it said.

"Most of the governments lack the political will to go after those companies that are based in their countries, pay taxes there, give jobs there and are at the same time bribing abroad", Adam Foldes, one of the report's authors and a TI advocacy adviser, told the Thomson Reuters Foundation.

The four nations leading the way in the anti-bribery drive are the United States, Germany, Britain and Switzerland, the global anti-corruption group said in its 10th annual report.

One of the reasons why cross-border bribery still thrives is that investigators often lack the resources to track the payments involved, it said.

"Lack of political will means that law enforcement authorities often don't have sufficient resources (to curb foreign graft)," Foldes said.

"When they have to prioritize what kind of criminal offences they want to investigate and prosecute, it's an additional difficulty because foreign bribery cases are quite complex and difficult to investigate as they happen abroad," he said.

The Organisation for Economic Cooperation and Development (OECD) anti-bribery convention is a key instrument for making global trade fair, because the signatories are responsible for about two-thirds of world exports and almost 90 percent of foreign direct investment, TI said.

The report, analysing progress in combating foreign graft, said that doing business through bribery is damaging for global development as contracts do not go to the best suppliers, prices are inflated to cover illegitimate payments, taxes are not collected and environmental requirements are often not met.

"These damages are visible in many cases in developing countries where there are not enough funds for creating new jobs or for education", said Foldes.

But bribing can also hurt businesses themselves.

"In the long run these companies which can gain business abroad only by bribing will get weaker and less competitive. If their products were good enough they wouldn't need bribery," said Foldes.

Unless all countries that still lag behind meet their commitments under the convention, it will not reach its goal of creating corruption-free global trade, the report said.

"Each of these countries ... (could) ... step up their enforcement efforts, put a bit more money into foreign bribery enforcement and provide support to their law enforcement. These authorities are all capable of doing this work, they are just not doing it", Foldes said.

Only two countries, Canada and New Zealand, have improved their efforts to combat corporate graft since last year, while Bulgaria and Denmark regressed.

New rules that would require companies to reveal their real owners when registering are needed more than enforcement, because money laundering through secret ownership would make it even more difficult to stop foreign bribery, the report said.

(Reporting By Magdalena Mis; Editing by Tim Pearce)