BURSA 14.09.2018

GEORGE MARINESCU (translated by Cosmin Ghidovean)
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     Globalization has also brought with it an unpleasant effect: cross-border corruption. According to the intermediate report Exporting Corruption for the year 2018, a document drawn up by the organization Transparency International, there is a practice among powerful foreign companies of bribing the public servants of another country when they want to enter the local market.
     The report is an independent assessment of the application of the Convention of the Organization for Cooperation and Economic Development (OCDE), which will ask the parties to ask for sanctions for the bribing of public civil servants and to introduce related measures. The convention is a key instrument for fighting corruption globally, because the 44 signatory countries account for approximately 65% of the world exports and over 75% of the total flows of direct foreign investments.
     The document also refers to the export of corruption from the powerful countries, but it only includes a few mentions to the import of corruption, to the final targets of the bribes paid by the foreign companies. Who are the importers of corruption? Developing countries and emerging markets, which also include Romania. Romania was not analyzed in that study concerning the exporters of corruption, because it is not yet a member of the OECD, it has just submitted its application for its admission in this international organization.
     The intermediate report for 2018 drawn up by Transparency International also evaluates the involvement of countries which are not OECD members: China, the special administrative region of Hong Kong, India and Singapore. They cover 18% of the total world exports. In the report, Hong Kong is covered separately, because it is an autonomous territory, with a different judicial system than China, and the data is separate from that of China.
     The document mentions that there are many losers and few winners when companies bribe foreign civil servants to win contracts for providing services or public works in other states. By prioritizing profits over principles, governments in the majority of big exporter countries fail to check and indict the companies that use the practice of bribing foreign civil servants.
     * Only 11 countries of the OCDE, interested in combating the export of corruption
     The report finds that out of the 44 members of the OECD, only 11 states have created organisms whose role is the reduction of this illegal practice, which is particularly used for obtaining mining rights, the major infrastructure projects, the acquisition of airplanes, helicopters, military equipment, medical equipment, drugs etc..
     One of the most shocking examples over the last few years is the massive bribing scheme implemented by Odebrecht, a Brazilian construction giant.
     The representatives of this company allocated 788 million dollars for the bribes paid to government officials and political parties in 12 countries.
     According to the authors of the report, the bribe paid by companies to civil servants in other countries has hugely negative consequences for the economies of the targeted countries. The money is wasted on transactions that are overvalued or provide no real benefits. The limited resources are redirected for the benefit of a few individuals, While the rest of the citizens do not benefit from vital public services, such as the access to potable water, safe roads or basic healthcare services.
     The report states that on a global level the competitors that offer better services lose in an unfair market, because some companies choose to engage in bribing, while others don't.
     That is why the OECD requires EU member states to investigate the suspicious cases of the penetration of some national companies on foreign markets. The goal of this investigation is to create a fair competitive environment for the world trade.
     The document comprises the analyses conducted for the 2014-2017 period and establishes sets that the states which took the best measures to fight the exporting of corruption are the US, Germany, Great Britain, Italy, Switzerland, Norway and Israel. Among the countries which aren't interested in the fact that companies on their territory are offering bribes for in order to enter foreign markets include China, India, Japan, South Korea, Singapore, Spain, Mexico, Russia, Turkey, Poland, Bulgaria, Denmark, the Czech Republic and others. In terms of the point of view of European countries that have passed weak measures to fight the export of corruption, countries include France, Austria and Hungary.
     * Airbus, the European company with the biggest problems
     Concerning France, the surprise is big, but the study is referring to two major cases of corruption export. One concerns Societe Generale, which has recently been required to pay to the US a fine of 500 million dollars for the failure to comply with the sanctions imposed to the Russian Federation.
     The second case concerns Airbus which, based on data presented by Transparency International, had paid various fees to public sector employees in eight countries: Germany, Austria, Great Britain, USA, Greece, Peru, Kazakhstan and Kuwait. For instance, according to the report from Transparency International, in February 2018, the German prosecutors of Munich have made unavailable 81.25 million Euros from the accounts of the German subsidiary of the Airbus company, Airbus Defense and Space GmbH, and have levied a fine of 250,000 Euros, in a case concerning the bribing of public servants who have approved the sale of 18 Eurofighter Typhoon Fighters aircraft in Austria, as well as the arrangement of the so-called "compensation transactions" of more than 4 billion Euros in favor of the Austrian partners. While the authorities have found no evidence to prove the offering and accepting of bribes, the German prosecutors have stated that Airbus could not pay over 100 million Euros concerning the offset operations conducted at two companies in Great Britain. These payments have avoided the internal audits and have been used for "unclear purposes", eventually leading to the sanctioning for negligence in the violation of obligations. The company accepted the bill, thus acknowledging its guilt. Concerning this contract, on the docket of the Austrian courts there is a dossier concerning the bribe offered to an employee of the Federal Ministry of Defense. In the indictment in question, drawn up in 2017, it is stated that Airbus Defense and Space GmbH has committed the offense of deliberate deceit and fraud, by unduly inflating the price for the 18 Eurofighter devices. The aircraft concern said that the accusations were unfounded, but the prosecution continues.
     Another important criminal case mentioned in the report drawn up by Transparency International which involves French company Airbus, concerns the acquisition of warships. In June 2017, prosecutors from the German city of Bremen reached an agreement with Atlas Elektronik - a joint-venture between Airbus and Thyssen Krupp - by which the group accepted to pay 48 million Euros for the illegalities in two contracts concluded in 2007 with the authorities of Greece and Peru. The German prosecutors claimed that Atlas Elektronik paid a Greek intermediary 13 million Euros in relation to the acquisition of submarines by the Greek army, and that suspicious payments were made in the case of the sale of torpedo ships to the Peruvian army.
     According to Transparency International, other cases which came to the attention of the prosecutors from various countries in connection to Airbus concern the sale by the French group of 150 aircraft to two airlines in China, by the commissions paid by various employees from Kazakhstan to acquire various satellites made by the company and the sale in Poland of 50 helicopters tip Caracal, for 3.7 billion dollars, an acquisition which, according to the claims by Polish prosecutors, was made by favoring the French company.
     Another eloquent case, according to the report, is that where the French company is being investigated by the anti-corruption prosecutors of Kuwait concerning the acquisition of helicopters, a contract amounting to over 1 billion dollars. The investigation was launched following an article published in a French magazine which mentioned the fact that an intermediary of that deal asked Airbus for a commission of 60 million Euros.
     * Odebrecht, the Brazilian company with the largest number of bribes for civil servants
     The report mentions that one of the most important cases of export of corruption is represented by multinational company Odebrecht SA, which operates in construction, and its Brazilian company, Braskem SA, which operates in the petrochemical industry. The investigations concerning the bribes paid by the two companies are in full swing and so far, the prosecutors and officials of the American State Department have found that civil sector employees and political parties from 12 states have received payments - Angola, Argentina, Brazil, Columbia, the Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru and Venezuela. The amounts paid as bribes in the 12 countries amount to 788 million dollars and have concerned the winning of contracts for the execution of works in various lines of business. The payments have been made through proxy companies and through offshore bank accounts. According to those who are still investigating the activity of the two companies, the behavior of Odebrecht SA and Braskem SA led to "corrupt payments and profits" amounting to approximately 3.34 billion dollars.
     For that activity, the two companies have been drastically sanctioned. Following an agreement in 2017 between the US State Department, and Brazil and Switzerland, Odebrecht SA was fined 2.6 billion dollars, and Braskem SA 632 million dollars, and the two companies have also been under careful monitoring for two years.
     * Pharmaceutical company fined 519 million dollars
     According to the report, one of the countries that carefully checks the businesses conducted in other countries is Israel, which launched 13 investigations between 2014-2017.
     In the first case of discovery of the bribing of foreign clerks, Israeli company NIP Global was forced in December 2016 to pay a fine of 1.2 million dollars, after it admitted that it paid a fine of 500,000 dollars to a high ranking clerk of the Ministry of Internal Affairs of Lesotho, Africa, to be able to start a business in that country.
     According to the report, in January 2018, following an investigation which began in 2017, the Israeli authorities reached a deal with Teva Pharmaceuticals Industries Ltd. Based on the agreement with the Ministry of Justice of Israel, Teva acknowledged all the accusations, took responsibility for its illegal actions and agreed to pay an administrative fine of 75 million shekels (approximately 22 million dollars). Aside from that fine, the pharma giant paid sanctions of 519 million dollars to the American authorities for violating the legislation concerning the practices of foreign corruption.
     According to Transparency International, in February 2018, the Israeli police began the verification of the Shikun & Binui Holdings Ltd, a public company owned by Arison Investments, concerning the alleged bribery of civil servants in Africa, including in Kenya, for the conducting of construction projects worth hundreds of millions of dollars.
     In March 2018, the Israeli police and the Tax Administration have reported that they have withheld three high-ranking employees of Israel Shipyards, a private company owned by the Shlomo group, on suspicion of bribing African officials for the facilitation of export transactions amounting to tens of millions of dollars. The investigations concern the sale by the company, about 10 years ago, of two patrol ships to the Nigerian army.
     * China, the biggest exporter of corruption
     The report drawn up by Transparency International claims that, out of all the investigated countries, Chinese companies are the most involved in cases of corrupting foreign clerks, something which is also caused by the fact that between 2014 and 2017 the authorities in Beijing have not conducted any verification concerning the Chinese companies that have entered the markets of other countries.
     According to a chart included in the quoted document, there are at least 12 cases where the major companies of China have bribed foreign civil servants on all continents. Thus, in 2018, China Harbour Engineering Company was blacklisted because it tried to bribe public servants from Bangladesh to be awarded some works. China International Water and Electric, a builder of hydroelectric plants, is being investigated in Ecuador for the corrupting of a civil servant. The company in question has also been fined in 2014 by the World Bank for inappropriate conduct in Africa and South-East Asia.
     In 2017, a Chinese construction company was involved in the embezzlement of funds of 47.2 million dollars, together with government officials in Ethiopia. In Kenya was investigated China Roads and Bridge Construction Company, for bribing public servants from the road and highway authority.
     The ethics council of the pension fund of the Norwegian government has recommended three years ago, the exclusion of Chinese company ZTE from the Global Pension Fund, due to the accusations of corruption in which the company was involved in several countries.
     Aside from these cases, other Chinese companies have been involved between 2014-2017 in corruption cases of the US, Sri Lanka, Zambia, India and Switzerland.
     Essentially, so far, the Chinese authorities have exported corruption to every continent, without the authorities in Beijing doing anything to stop these measures. It's only in March 2018, that the Chinese officials have set up a new anti-corruption agency - the National Oversight Commission - which will also check the activity of major domestic companies that operate abroad. 

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