Leaders of the G-20 Summit last week vowed to share information and improve international collaboration to fight bribery and corruption, which is likely to significantly intensify the anti-corruption enforcement environment for multinational companies.
The G20 Anti-Corruption Working Group stressed in a recent progress report that it is up to companies and government alike to root out corruption. "Corruption distorts markets, undermines fair competition, deters investors and misdirects revenues and profits," the working group stated in the progress report. "Business, civil society and government can collaborate to promote awareness and implementation of the highest codes of conduct against corrupt practices."
In order to improve its effectiveness in combating bribery and corruption, the working group said that it has adopted the “G20 Guiding Principles on Enforcement of the Foreign Bribery Offense” as well as the “Guiding Principles to Combat Solicitation.”
Both these principles identify effective measures for detecting, investigating, prosecuting, and sanctioning bribery offenses, “and also provide a reference for countries wishing to step up their actions against solicitation, including in partnership with the private sector,” the working group stated. “We will promote these principles in our national governments and with our business communities.”
To remove incentives for corruption, G20 governments have supported measures to stop money laundering; to identify those who are the true owners and controllers of legal entities and arrangements (beneficial ownership); and to recover illicitly obtained assets hidden abroad.
“Corruption knows no borders, and corrupt individuals and entities often exploit borders to hide from prosecution,” the working group stated. “Consequently, G20 governments are adopting measures to help each other bring such individuals to justice.”
The working group, for example, established a network of contact points in each G20 government “to enable authorities to share information, and to identify and deny entry to our countries of corrupt officials,” the progress report stated.
The working group also stated that it has reviewed the status of the United Nations Office on Drugs and Crime (UNODC) database of legal instruments for Mutual Legal Assistance (MLA) and will update national information as needed to ensure the database remains current and useful. It further adopted G20 High-Level Principles on MLA, developed with the support of the OECD and UNODC.
The working group is also assessing how to improve transparency in sectors most vulnerable to corruption, particularly in the extraction and construction industries. “Given the important role which the extractive sector plays in supporting growth and development in many G20 countries, transparency is essential to ensure that citizens can hold their governments accountable for the way revenues from their natural resources are used,” the working group stated.
To help strengthen a global culture of intolerance, the working group is re-examining the education and training programs it uses to raise awareness of corruption “and instil values of integrity, honesty, and fairness.” Specifically, the working group said it will be promoting awareness of UNODC's educational and training tools within the G20 nations.
Tax Evasion Crackdown
The working group also said that it will continue to work in close collaboration with the Financial Action Task Force (FATF), and welcomed the FATF's ongoing work to ensure implementation of its revised standards to combat money laundering and terrorist financing. The working group plans to hold a joint meeting with the FATF in the fall to further this information-sharing and collaboration.
“Leveraging anti-money laundering or countering the financing of terrorism measures to fight corruption will remain a significant area of growing cooperation between anti-corruption experts of the G-20 and FATF as well as increasing cooperation against tax crimes, addressing the risks posed by tax havens,” stated the working group.
Global Financial Integrity, a Washington, D.C.-based watchdog group that promotes transparency in the international financial arena, hailed the move as a major advancement in the fight against tax evasion. “This is really a sea change,” Heather Lowe, legal counsel and director of government affairs for GFI, said in a prepared statement. “Four or five years ago, the idea of automatically exchanging tax information wasn't even on the table.”
Lowe expressed disappointment, however, in the G20 declaration's omission of a time-frame to include developing countries in such a system. “The G20 must commit to including developing countries in the committee tasked with drafting the treaty, ensuring that its terms are both beneficial to and implementable by developing countries,” she said. “This commitment can't wait until the next finance minister's meeting in February.”
More to Come
The working group's two-year action plan for 2013 and 2014 comprises over 35 work elements, addressing relevant international conventions, as well as legislation and other measures. Such measures include renewed plans on how to:
- Combat foreign bribery and solicitation;
- Prevent money laundering;
- Deny entry and safe haven to corrupt officials;
- Recover assets derived from corruption;
- Strengthen international cooperation, including facilitating mutual legal assistance in the investigation and prosecution of corruption offenses;
- Strengthen whistle blower protections;
- Promote the independence of anti-corruption authorities; and
- Prevent corruption in the public sector, international organizations and business.
Over the next couple of years and beyond, companies can expect that the working group will continue to advance its existing commitments as it pushes toward tougher efforts in its fight against global fight corruption.