Why Bribery Is Not A Just Developing World Problem

The Swiss subsidiary of German printing press manufacturer Koenig & Bauer has been fined for contravening Swiss corruption laws. The company faced a penalty of CHF35 million fine ($35 million) after it admitted to failing prevent bribery overseas.

The particulars of the case relate to orders in Brazil, Kazakhstan, Morocco and Nigeria.

Although the prosecution relates to bribes paid abroad, it’s important to recognize that they originated from a Lausanne-based company. Switzerland has often been considered as a paradigm of anti-corruption campaigning virtue.

In Transparency International’s recent Corruption Perceptions Index, the country was ranked fifth and has been commonly regarded as offering one of the most robust anti-corruption regimes in the world. Its authorities were swift in acting in concert with US prosecutors in tackling corruption in FIFA, based in Zurich.

That said, the nation’s secretive banking laws have been criticised as offering an asylum for laundered overseas assets. Global Witness, an NGO, recently published a report into the role of banks in the West in enabling corruption in some of the poorest countries. The financial sector, the authors allege, provides a system for a powerful local elite to systematically pilfer resources from world’s most impoverished people. Many of these allegations reference banks based in Switzerland.

When a large overseas scandal emerges, we frequently see the finger-prints of professional service firms that are headquartered in the world’s cleanest economies.

For instance, when this blog looked into the practices of Singapore-based companies, we found that there was evidence of corruption in their foreign operations. There were a number of examples of Singapore companies involved in cases of corruption in neighboring Malaysia, which is only a short drive away. The most dramatic of which is the 1MDM scandal, that has rocked the entire Malaysian political establishment. These episodes occurred despite the island state’s squeaky-clean reputation as a ‘corruption-free’ and an exemplar for many other countries looking to irradiate bureaucratic foul play.

Others have pointed at the West’s big property bubbles (London, Miami, New York, etc.) as elaborate money laundering mechanisms. A mafia expert memorably described London as ‘the most corrupt place on earth’.

The discourse around corruption has unfairly stigmatized developing nations. Countries such as Nigeria are practically synonymous with the word. Such a reputation affects business decisions. Cumulatively, this has an economic impact.

If we look at TI’s corruption map, it paints the poorest countries a deep red, indicating ‘high corruption risk’, whereas Western states are colored in more relaxing yellow hues. The investment community use indicators such as this to direct financial flows. The procurement and supply chain profession incorporates these dates directly into corporate sourcing plans.

Yet, the impression that these ranking tables give – as valuable as they undoubtedly are – is that corruption exists primarily as a third-world phenomenon. Yet, corruption can only exist if it is enabled by a helpful Western lawyer or accountant that has the skills and contacts to bury stolen assets.

Even Switzerland, as we see in this case, can host companies that are corrupt. And it is the professional support in the West that enables and perpetuates the regimes of corruption that prevents the world’s poorest from escaping poverty.

— source forbes.com by Jonathan Webb

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