Enforcement of OECD Anti-Bribery Convention - Ireland not doing enough: new report

Dublin, 26 June 2006 – Ireland is not living up to its international obligations to combat corruption according to a Progress Report on the implementation of the OECD Anti-Bribery Convention issued by Transparency International (TI) today. Since Irish law on foreign bribery came into effect in 2001, no investigations or prosecutions have taken place and little, if anything, has been done to inform the public that the bribery of a foreign public official is a crime.

It is illegal for companies or individuals to bribe a public official overseas and those found guilty can be sentenced to ten years in prison and an unlimited fine. In spite of this and Ireland’s significant share of the world export market, the report shows that no effort has been made to inform either Irish companies or Irish-based multinationals of the law on foreign bribery.

The report however also highlights loopholes in the law on foreign bribery. An Garda Síochána and Director of Public Prosecutions will only bring a prosecution against an individual or company if part of the crime was committed in Ireland. The authorities will not therefore prosecute Irish nationals or companies if no evidence is found of the offence in Ireland.

Additionally, the study finds that there is no compulsion on Irish companies to protect anyone who reports a corrupt transaction. It recommends that whistleblower legislation be enacted to address this weakness.

Of the nine categories examining Ireland's success at implementing and enforcing the Convention, four were found to be ”Unsatifactory” and four were “Unclear”. Only one was deemed "Satisfactory".

“The law on foreign bribery in Ireland sends out the message that it is wrong to bribe here but OK to bribe elsewhere. This amounts to gross hypocrisy and a moral and legal double standard’, says John Devitt, acting CEO of TI Ireland. ‘The law must be changed as a matter of urgency”.

While TI point out that Government plans to publish legislation tying up these loopholes sometime this year, enactment and enforcement of that law will be key to changing behaviour. Continued OECD monitoring of the Convention will also be vital to maintain pressure on governments to enforce the law on bribery. They are also calling on the Government to ratify the United Nations Convention on Corruption, which will strengthen domestic law on bribery and corruption, by mid November.

In the past year alone, five foreign bribery allegations have been levelled at Irish companies and nationals, yet the study’s author was unable to find out whether any investigations had taken place. In one case, not covered in the report but published in October 2005, an Irish national is alleged to have managed a multi-million dollar bribe to officials in Azerbaijan’s state-run oil agency. He is now under indictment in the US for his part in the fraud. He could not have been prosecuted in Ireland because of the statutory limits highlighted by TI.

Three Irish companies are also alleged to have paid bribes to Saddam Hussein’s regime during the UN Oil for Food programme, while another, one of Ireland’s biggest companies, is accused of having paid a $1 million bribe to a former government minister in Poland during the 1990’s.

Bribery is not a victimless crime

The scale of the bribery problem is reflected in World Bank figures that estimate that US$1 trillion paid annually in bribes worldwide. The amount paid in bribes is equivalent to over twenty times the amount OECD countries provide in international aid every year. “Corruption and bribery is a huge criminal enterprise and it can have a devastating impact on countries with weak rule of law and low per capita incomes. It inflates the cost and lowers the quality of much needed public services including health and education. It also diverts aid and state assets from the people of the developing world to corrupt officials, business and criminal networks worldwide” says Devitt

Research by the World Bank and others has shown that countries that tackle bribery and corruption can boost national incomes and significantly reduce the effects of poverty such as the incidence of child mortality and preventable diseases such as Aids and Malaria. “Developing countries can not do this by themselves, Ireland and other wealthy nations need to stamp out bribery and money laundering by their own companies if the developing world is to make any headway.”

Call for Government Action

Transparency International is calling on the Irish Government to:

1. Support continued monitoring of enforcement of the OECD Convention on Bribery and the resources needed to continue this work.
2. Expedite the publication of the Criminal Justice (Miscellaneous Provisions) Bill to address any legal uncertainties over extraterritorial jurisdiction and legal personalities liable to prosecution under the Prevention of Corruption Acts as identified by the OECD Working Group on Bribery and Transparency International in the Prevention of Corruption Acts.
3. Provide the necessary resources to An Garda Síochána and Director for Public Prosecutions to investigate and prosecute the foreign bribery offence. A centralised unit similar to that announced in the UK last week by Prime Minister Tony Blair, and already operating in thirteen other OECD member countries, would also be desirable.
4. Undertake a sustained information programme to educate all relevant government officials and Irish-based enterprises (including Multi-National Corporations) of their moral and legal responsibilities in relation to domestic and international law on bribery. Such a programme should be coordinated with the active input of a number of Government departments and agencies, including but not limited to the Department of Justice, Department of Enterprise, Trade and Employment, the Department of Finance, the Department of Foreign Affairs/Irish Aid, and Enterprise Ireland; together with An Garda Síochána, Irish business organisations and civil society.
5. Revisit the need for Whistleblower or Protected/Public Interest Disclosure Legislation. Current legal safeguards in Ireland for those wishing to report corrupt acts are inadequate and should be addressed through overarching legislation as a matter of urgency.
6. Provide for separate annual Garda statistics on the Foreign Bribery Offence under the Fraud Headline Offence (Group 9).
7. Secure Ireland’s ratification of the United Nations Convention against Corruption by 14 November 2006. If Ireland has not ratified the Convention by this date, her representatives at the Conference of State Parties will not be eligible to take a full and productive role in decisions about follow-up on the Convention.

Business also has a part to play

Bribery is bad for business and the economy more generally. It artificially raises the price of goods and services, drives honest companies out of business, and reduces investment in productive sectors of the economy.

Over €2 billion is lost to Irish business through fraud and corruption every year according to a 2005 study published by Dublin Chamber of Commerce and RSM Robson Rhodes. In spite of this, only 36 per cent of Irish businesses encourage internal whistleblowing compared to 88 per cent in the United Kingdom. Only 51 per cent of Irish boards admitted to even discussing the risk of economic crime.

TI are encouraging Irish businesses to:

1. Implement anti-bribery policies and programmes so that they can comply with domestic and international law.
2. Protect whistleblowers who report corruption in good faith. The reporting of bribery and corruption will protect business.

About TI and the Author

The Irish section of the TI Progress Report was completed by Diarmuid Griffin, a law lecturer at the National University of Galway. Ireland makes its debut in the report for the first time this year.

TI Ireland is the Irish chapter of Transparency International, a non-governmental organisation, dedicated to fighting corruption in government and business worldwide.

TI Ireland was launched in 2004 and since March 2006 has been based at the School of Business, Trinity College Dublin. Its Board includes people from business, civil society and politics.

The chapter will publish a National Integrity System Country Study on Ireland later this year which will assess the ability of the state, business community and civil society to detect and prevent corruption. The study will be led by Elaine Byrne at the University of Limerick and is funded by the Department of Justice, Equality and Law Reform.

TI Ireland is currently funded by membership and the Joseph Rowntree Charitable Trust, a UK based philanthropic group which recently announced a further grant of €70,000 over two years to TI Ireland.