Anti-bribery Policies Research Articles

Do corporate regulations deter or stimulate investment? The effect of the OECD anti-bribery convention on FDI

AbstractCountries prohibit firms’ transnational financial crime by coordinating their regulations under international organizations (IOs). Under these IOs, states threaten to prosecute firms’ foreign misconduct at home. Such threats can help conscript companies to diffuse sustainable business models abroad. This paper studies the effect of corporate criminal regulations on firms’ foreign direct investment (FDI). Critics of these policies claim they push firms’ investment away from host economies where financial crime is more likely to happen. Yet, regulations should also cut informal costs of crime and favor investment. I reconcile these opposed expectations and show they are special cases of the same argument. I claim that the effect of multilateral anti-bribery policies on FDI depends on the level of corruption of the host economy. It is null in non-corrupt countries. It is positive where corruption is moderate: here, laws provide legal leverage to refuse paying bribes and cut corruption costs. The effect is negative where corruption is endemic: here, anti-bribery laws expose firms to additional regulatory costs. I support the argument with multiple evidence. Company-level data on investment by 3871 firms between 2006 and 2011 show that regulated corporations have a $$27\%$$ 27 % higher probability of investing in moderately corrupt economies than unregulated firms, which plummets to $$-52\%$$ - 52 % in extremely corrupt countries. A synthetic counterfactual design using country-dyadic FDI flows corroborates this finding. Results show that regulatory policies harmonized by IOs change international competition for FDI in ways that do not necessarily harm regulated firms.

INTERNATIONAL STANDARDS REGARDING THE LEADERSHIP ROLE OF A LEADER IN PREVENTING AND DETECTING BRIBERY

Worldwide studies show that society sees a direct link between bribery and a leader, regardless of whether this leader is an official of public law or the head of a private enterprise. Global legal regulations and recommendations of international organisations say that the role of the leader (both at the country level and within an individual organisation) is crucial in the development of an integrity environment within the organisation. The article is devoted to the study of the international concept of "Tone at the Top" or "Leader's Voice" in preventing bribery within an organisation. At the same time, each institution needs an individual approach and establishment of an algorithm for developing an anti-bribery system and implementing a corporate culture based on the principles of ethics and integrity. The study is aimed at systematizing international standards in the field of bribery prevention and determining the role of the leader of each organisation in their implementation. For this, the leader needs to determine the key areas to make an effort in building the bribery prevention system within the organisation. The article summarizes the requirements of international standards, in particular, ISO 37001 "Anti-bribery management systems" and ISO 31000 "Risk Management", the recommendations of international organisations on the development of an effective system to prevent bribery, and defines the priority measures that should be implemented by the leader of the organisation in order to develop an integrity environment and to implement a corporate culture based on the principles of accountability and transparency. The article defines the following mandatory elements of such work: distributing the responsibility for anti-bribery policies of an organisation, establishing an anti-bribery unit and ensuring its activities, researching the anti-bribery context of the organisation and assessing bribery risks; raising awareness of the organisation's antibribery policies; fostering a culture of exposing bribery within the organisation; analysing the effectiveness of the organisation's anti-bribery policies. Such a system is able to provide a number of reputational advantages, the expansion of opportunities for foreign economic activity, the expansion of partnership and most importantly – the prevention of corruption abuse and attention to the organisation and its officials of law enforcement agencies.

Country corruption and corporate cash holdings: the mediating effect of firm’s anti-bribery policy

The literature about the influence of country corruption on corporate cash holdings is not conclusive as there are studies supporting both a positive and negative relationship. To better explain this relationship, our study introduces a corporate-level mediating variable, i.e. the company's willingness to fight bribery as part of its CSR policy. Using a sample of 1,075 listed firms from 21 European Union countries for the period 2008–2019 (7,771 firm-year observations), we find a partial mediating effect of the corporate anti-bribery policy on the relationship between country corruption and corporate cash holdings. On the one hand, according to the shielding argument, country corruption negatively influences corporate cash holdings. And, on the other hand, there is a mediating effect such that firms in corrupt countries adopt less tough anti-bribery policies and, instead, they reduce their cash holdings both to protect themselves from expropriation and to signal their limit on bribe payments.

Does electronic economics matter to financial technology firms?

This paper addresses the notion of electronic economics by examining financial technology (fintech) firms' performance and corporate governance quality, using data from the United States. The findings support our maintained assumption that due to the economics of electronic platforms perused by financial technology firms, these firms outperform firms from other industries (non-Fintech). The final sample comprises 1,712 company-year observations between 2010 and 2019 (pre-COVID-19). The evidence suggests that our corporate governance quality index, developed from Organisation of Economic Cooperation and Development (www.oecd.org/corporate/corporate-governance-factbook.htm, 2019) guidelines, accurately captures corporate governance quality in the United States, principally due to the inclusion of an anti-bribery policy indicator, in the index. The results suggest that this evidence is not merely an artefact due to the corporate governance quality index potentially capturing priced risk factors. Our findings reveal that fintech firms have superior corporate governance quality than non-fintech and that fintech firms place more reliance on internal versus external corporate governance mechanisms, vis-a-vis companies in other industries.

Will the integrated GRC implementation be effective against corruption?

PurposeBusiness Principles for Countering Bribery, 2003, helps companies design and implement anti-bribery policies, one of anti-corruption. Since then, the business environment has changed, can carry out anti-corruption activities from within the organization through a management system. Currently, the business world recognizes the existence of an integrated governance, risk management and compliance (GRC), where one of the goals is to overcome the risk of corruption in the organization. Therefore, this study aims to clarify the concept of integrated GRC implementation within the organization through previous studies from 2007 to 2021.Design/methodology/approachThis study was designed in a systematic literature review based on five journal publishers’ articles/journals from the Web of Science, Scopus and Google Scholar databases. Keywords used to search consist of Anti-Corruption (AC); Governance (G); Risk Management (RM); Compliance (C); GRC. The four keywords G, RM, C and GRC, are filtered based on articles that correlate with AC.FindingsOverall, this review shows a few concepts for integrated GRC implementation in organizations that effectively support the prevention and detection of corruption. Although no empirical research has been found in the literature review, these three GRC silos – governance, risk management and compliance – support anti-corruption. In other words, it is hoped that the successful implementation of the integrated GRC in the future can improve the anti-corruption capabilities to be achieved in every organization.Research limitations/implicationsResearch only discusses one internal function within the organization, of the many internal functions that are known to detect and prevent corruption.Practical implicationsOrganizations can use this review to understand the importance of internal functions in combating the risk of corruption with a more consistent and committed commitment to implementing an integrated GRC.Originality/valueAs far as the authors’ search is concerned, there is no review of the concept of integrated GRC implementation against anti-corruption. It invites researchers to examine the actual implementation of this integrated GRC in organizations.

Is Less More? Field Evidence on the Impact of Anti-bribery Policies on Employee Knowledge and Corrupt Behavior

Is Less More? Field Evidence on the Impact of Anti-bribery Policies on Employee Knowledge and Corrupt Behavior

Perceptions on the impact of anti-bribery measures, strategies and programs on the persistence of bribery practices in Nigeria

PurposeThe purpose of this paper is to assess the perceptions of the grassroots on the impact of combative policy measures, strategies and programs introduced by the government and the civil society to reduce persistent occurrences of bribery practices in Nigeria.Design/methodology/approachMulti-stage or cluster sampling was used to acquire the data for this paper via survey questionnaire administered to the grassroots in Abuja, Nigeria. The data set is used to assess the impact of the various policy measures, strategies and programs on the persistence of bribery practices in Nigeria. The multiple linear regression method was used to estimate the data generated from 836 responses in Statistical Package for Social Sciences (SPSS) version 26.FindingsThe result of the estimations indicates that the respondents perceived that some of the policy measures, strategies and programs introduced have reduced persistence of bribery practices in Nigeria, whereas others have remained ineffective in reducing the persistence of bribery practices in Nigeria.Originality/valuePrevious studies on the impact of anti-bribery policy measures, strategies and programs were largely based on the perceptions of international institutions and business executives; this study appears to be the pioneer to focus on the perceptions of the grassroots in Abuja, Nigeria.

UK: New Borders; New Approach

Until ten years ago, the UK’s approach to bribery and corruption, including at its borders, was fragmented, limited in scope and unsuccessful in tackling bribery across borders. This article focuses on the changes which the Bribery Act 2010 has brought about over the last decade which has elevated the UK’s anti-bribery regime to one which is highly regarded. One might expect the natural consequence of the Bribery Act’s international reach to be a dramatic increase in the number of prosecutions (particularly in relation to bribing public officials) – however that has not proved to be the case. This article shows that the Bribery Act has instead brought about a fundamental change of approach by lawmakers and businesses alike – which is not evident from the raw statistics. The Bribery Act’s power lies in the combination of its international reach and the obligations it places on commercial organizations to prevent bribery which have caused UK corporates (including those incorporated elsewhere but who carry on a business, or part of a business, in the UK) to significantly tighten their anti-bribery internal policies and procedures. The shift in focus from the individual to the corporate has also been reflected in the approach of UK law enforcement through their use of Deferred Prosecution Agreements which has resulted in corporate offenders being punished with unprecedented fines. The paper ends by asking whether Brexit and the re-establishment of a large number of hard borders with EU countries will lead to an increase in the number of prosecutions for bribing customs officials after all. Bribery Act 2010, bribery and corruption, corporate offence, commercial organization, failure to prevent, extra-territorial reach, strict liability, Deferred Prosecution Agreement

Anti-bribery and Corruption Policies in International Sports Governing Bodies.

International Sports Governing Bodies (“ISGBs”) are diverse in their aims but share a need to maintain a reputation of accountability in the eyes of their stakeholders. While some literature analyses the general governance concerns faced by these organizations, there is limited focus on anti-bribery and corruption (“ABC”) within this sphere. This paper's research aim is an exploratory evaluation of the ABC best practice policies that exist within ISGBs, asking how they can be assessed and what best practice policies currently exist within this framework. This paper undertakes a critical review of the diverse ABC governance policies in the largest ISGBs through content analysis on governance documents publically available on the sample ISGB websites. This review was undertaken twice on the same ISGBs, in 2017 and 2020, and the changes reviewed. The research highlights best practice policies for recommendation to all ISGBs, and illuminates the absence of adequate policies with regards to the risk of bribery in ISGBs. The findings show there was no area within the framework that ISGBs performed well at as a collective, and there was no single ISGB whose anti-bribery policies were strong in all areas. However, the comparison between 2017 and 2020 shows an improvement in ABC policies in some ISGBs over the timeframe analyzed. The implications are a need for sharing best practice in this area of governance, and providing global guidance on ABC policies for ISGBs to ensure integrity in the sector.

A Gap Analysis of Enforcing FCPA-compliant Codes of Conduct in Low- and Middle - Income Countries

Recent quantum of FCPA (US ‘Foreign Corrupt Practices Act, 1977’) settlements reveal eye-popping numbers. It has brought to light that superficial anti-bribery enforcement mechanisms are still being deployed as order of the day across many large enterprises. It seems that even after a decade of balance-sheet busting Deferred Prosecution Agreements, Non- Prosecution Agreements and other resolutions, corporations are still taking anti-bribery enforcement efforts lightly. The FCPA compliance industry is a multi-billion-dollar industry and is growing in leaps and bounds, and there is a wide variety of expertise available at all price-bands; that being so, how is it that codes of conduct and anti-bribery policies fail to prevent and/or detect misconduct for years before it spirals out of control? In this article, I will be going over a few select elements of drafting and enforcing an effective code of conduct, which under ‘normal’ operating protocols may be perceived to be too ‘tight’ for well-lubed enterprises, but the tried and tested methods will ensure that the corporation is combat ready in the event of a breach. I will be focusing on FCPA compliant codes but will also cross-refer other legislation like the UKBA (‘Bribery Act 2010ʹ). The fact that conduct enforcers are faced with the fact that extra-territorial laws lack public assent in most low- and middle-income countries is something that I will assess in significant detail. I will be covering behavioural dynamics influenced by socio-cultural and socio-economic parameters of employees and institutions, and how pre-conceived notions of what ‘misconduct’ is, impact actual compliance efforts. Whilst the focus will be on using an effective code of conduct which works in practice, I will draw in other issues like hotline distrust, procurement integrity, economic disruption stemming from anti-bribery investigations, merits of self-reporting violations and perceptions about compliance enforcers, and how they impact organizational behaviour and institutional culture. I will be drawing cues from select high-profile resolutions like Airbus, Rolls-Royce, Odebrecht and Ericsson. I will be talking about the usual suspects inside institutions, who suddenly become sensitive to issues of compliance after a regulator has expressed interest in a subject company. I will also look at pressure points after it is imminent that there would be enforcement action, or an investigation has already begun. A lot of my content will be focussing on the Asian strand but theobservations and intrinsic assessments, albeit picked up from actual conduct in emerging markets in Asia, will apply to a universal set of problems in most low- and middle-income countries. Conduct, culture, socio-economic parameters, FCPA, UKBA, internal controls

A critical analysis of corruption and anti-corruption policies in Italy

Purpose This study aims to critically analyse the Law 9 January 2019, n. 3, on “Measures to fight crimes against the public administration and on the transparency of political parties and movements” (so-called bribe-destroyer law). Design/methodology/approach This paper draws on reports, legal scholarship and other open-source data to examine a legislative innovation for the corruption in Italy in relation to the general guarantees of the trial process and with the controversial paradigm of the national perception index of bribery. Findings The Italian legislative initiative that will be examined is innovative in nature and goes beyond the constitutional and conventional principles on procedural guarantees. The new initiative needs to be integrated into the international and European action against bribery that targets criminal proceeds, and at the same time, be anchored in respect for human rights during the process. Research limitations/implications The new initiative needs to be integrated into the international and European action against bribery that targets criminal proceeds, and at the same time, be anchored in respect for human rights during the process. Practical implications Despite the aggressiveness and lofty proclamations by those who aspire to fight corruption from the highest levels, the goal of rehabilitating Italy from one of the seven “deadly sins” that delay economic growth still seems far off. Social implications In the absence of public ethics, the increase in criminalisation does not seem sufficient on its own to guarantee the containment of the phenomenon. Originality/value This study examines the strengths and weaknesses of the important new law, its compatibility with human rights standards and its relationship to international standards of anti-bribery policies. The aggressive legislation critically relies on the pervasive and persistent lack of perception of corruption as a crime. In the confiscation (and now also reparation) of equivalent that normally addresses assets accumulated in a lawful manner, the periculum is even presumed in re ipsa and the classical aims of caution undergo a total torsion revealing an authoritarian face that takes on the meaning of anticipating further sanctioning contents. Finally, the presence of many levels of sanctioning in relation to the same fact poses serious problems of violation of the ne bis in idem rule.

Optimal antibribery policy when bribery type is endogenous

AbstractThis paper analyzes the optimal allocation of antibribery resources when bribery type is endogenously determined by corrupt bureaucrats. A firm is supposed to invest to get licenses for production from bureaucrats. The bureaucrat commits to a bribes schedule that specifies bribes demanded from compliant firms (therefore, engaging in extortion) and noncompliant firms (engaging in collusion) as a precondition of granting the license. The allocation of antibribery resources determines the probability that each type of bribery is detected and prosecuted and thus affects the bureaucrat's choice of bribes schedule and the equilibrium bribery type. We find that the government should prioritize combating collusion when the resources are sufficiently scarce, should abstain from combating extortion after it wipes out collusion when the resources are less scarce, and should eradicate both types of bribery when the resources are sufficiently abundant. When there are multiple investment dimensions, however, there exists a special case where the government targets both types of bribery when the resources are at some intermediate level.

Optimal Antibribery Policy When Bribery Type is Endogenous

This paper analyzes the optimal allocation of antibribery resources when bribery type is endogenously determined by corrupt bureaucrats. A firm is supposed to invest to get licenses for production from bureaucrats. The bureaucrat commits to a bribes schedule that specifies bribes demanded from compliant firms (therefore engaging in extortion) and noncompliant firms (engaging in collusion) as a precondition of granting the license. The allocation of antibribery resources determines the probability that each type of bribery is detected and prosecuted and thus affects the bureaucrat's choice of bribery type. We find that the government should prioritize combating collusion when the resources are sufficiently scarce, should abstain from combating extortion after it wipes out collusion when the resources are less scarce, and should eradicate both types of bribery when the resources are sufficiently abundant. When there are multiple investment dimensions, however, there exists a special case where the government targets both types of bribery when the resources are at some intermediate level.

The impact of corruption on analyst coverage

PurposeThis study aims to investigate the impact of country-level corruption and firms’ anti-bribery policies on analyst coverage. Analyst coverage has been identified as a powerful tool to detect fraud and should equally act as a possible tool to reduce corruption.Design/methodology/approachThis study used a negative binomial count regression method on a longitudinal data set of a sample of S&P Global 1200 companies for the years 2010-2015. To control for potential endogeneity bias and improve the reliability of the estimation, both country-level corruption and firms’ anti-bribery policies variables were instrumented.FindingsAfter controlling potential endogeneity bias, the results show that the adoption of anti-bribery policies at firm level attracts more analysts to follow a firm. The results for corruption at country level show that analyst coverage increases in less corrupted countries indicating that the costs of corruption exceed its potential benefits. When the variables corruption at country level and anti-bribery policies are interacted, the relationship is positive and highly significant.Practical implicationsGiven the potential important role played by anti-corruption measures, firms are encouraged to adopt them to reduce the incidence of corruption and to increase analyst coverage, which will reinforce the benign effect of monitoring.Originality/valueAlthough the literature on corruption at the country level is rich, it is geared towards the determinants of corruption in contrast to its consequences, and fewer studies have focused on the impact of corruption at firm level because of data limitations. This paper addresses this gap and contributes to the literature on the consequences of corruption at firm level.

The Bundling of Foreign Bribery Cases

This article is the first that discusses how national enforcement authorities have been using bundling, meaning tying or rolling up a number of things together, to settle with corporations over multiple bribery allegations. These settlements rely on some allegedly illegal acts that defendants would likely reject to settle if they were to decide on them separately. In this context, our understanding of what constitutes and should constitute a foreign bribery case is limited. The article shows that anti-bribery bundling is part of a broad trend that allows, in some cases, the United States (US) enforcement authorities to enforce foreign anti-bribery laws extraterritorially. This trend is illustrated on cases in which the US enforcement authorities punished companies headquartered in Europe for their operations outside the US. The article concludes with a discussion of the significant implications the extraterritoriality of bundling has for foreign anti-bribery law theory and policy.

Clinical research ethics review process in Lebanon: efficiency and functions of research ethics committees \u2013 results from a descriptive questionnaire-based study

BackgroundClinical trials conducted in Lebanon are increasing. However, little is known about the performance of research ethics committees (RECs) in charge of reviewing the research protocols. This study aimed to assess the level of adherence to the ethics surrounding the conduct of clinical trials and perceptions of team members regarding roles of the RECs during the conduct of clinical trials in Lebanon. The research question was: Are RECs adherent to the ethics surrounding the conduct of clinical trials (chapters II and IV in ‘Standards and Operational Guidance for Ethics Review of Health-related Research with Human Participants’ in Lebanon?’MethodsThis was a quantitative and descriptive questionnaire-based study conducted among RECs of university hospitals in Lebanon. The questionnaire had to be completed online and included general questions in addition to items reflecting the different aspects of a REC performance and effectiveness. All the questionnaire was assigned a total score of 175 points. General information and questions assigned point values/scores were analysed using descriptive statistics: frequency and percentage, mean score ± standard deviation.ResultsTen RECs participated in the study (52 persons: four chairs, one vice-president, 47 ordinary members). Forty-seven (90.4%) had previous experience with clinical research and 30 (57.7%) had a diploma or had done a training in research ethics. Forty-one percent confirmed that they were required to have a training in research ethics. All RECs had a policy for disclosing and managing potential conflicts of interest for its members, but 71.8% of participants reported the existence of such a policy for researchers. Thirty-three point three percent reported that the RECs had an anti-bribery policy. The questionnaire mean score was 129.6 ± 22.3/175 points reflecting thus an excellent adherence to international standards.ConclusionInadequate training of REC members and the lack of anti-bribery policies should be resolved to improve their performance.

Combatting the global crime of bribery: a report on Canadian foreign official anti-bribery policy

PurposeThe purpose of this paper is to provide an updated review of Canadian foreign official anti-bribery policy.Design/methodology/approachTo achieve this objective, seven factors were examined. Several factors have been emphasized by the Organisation for Economic Co-operation and Development, and others are original.FindingsThe results indicate that while Canada is making progress towards strengthening its foreign official anti-bribery policy, significant weaknesses still remain.Originality/valueThis study adds to the literature in this area by utilizing several new factors which attempt to gauge the effectiveness of foreign official anti-bribery policy.

Combating Foreign Bribery in China: Rethinking Zero Tolerance with ‘Chinese Characteristics’

This article examines foreign bribery in China since the early 2000s and the State’s legal and penal changes in response to this increasingly common form of transnational corruption. It argues that over the last fifteen years, Chinese authorities have shifted national anti-bribery policies from one of de facto corporate impunity to de jure zero tolerance. Multinational corporations engaging in foreign bribery in China today are no longer vulnerable only to the risk of investigation, prosecution, and punishment by foreign jurisdictions. Rather, foreign corporations are now faced with much tougher domestic law enforcement, which forms part of the State’s wider crackdown on corruption in China. However, as our case studies reveal, while the impact of zero tolerance strategies in curbing corporate offending is debatable, applying strategies of ‘harsh justice’ may ultimately be counterproductive to social stability and crime control. Although draconian, zero-tolerance strategies may appeal to politics of punitive populism, the authors contend that alternative strategies based on diversionary justice, such as deferred prosecution agreements and/or negotiated settlements, can more effectively realize the aims of prevention, restitution, rehabilitation, and reform. Drawing valuable lessons from the US and UK experiences, China has the potential to devise its own reconciliation scheme, tailored to local concerns and culture, and balancing legal accountability, cost-efficiency and social stability, especially in relation to the limiting potential adverse economic harms flowing from prosecuting multinational corporations for foreign bribery in China. Balancing the ‘payoffs’ and ‘pitfalls’ of negotiated justice, this article concludes that trialing diversionary measures is likely to appeal to affected stakeholders, including regulatory agencies, law enforcement and judicial authorities, corporate and business sectors, and the wider community, which are seeking to end to cultures of impunity for corporate corruption.

Poverty, corruption, trade, or terrorism? Strategic framing in the politics of UK anti-bribery compliance

What explains longstanding UK non-compliance with international anti-bribery norms? Drawing on evidence from a comparative study of state compliance with the Organization for Economic Cooperation and Development (OECD) anti-bribery Convention and building on the literature on ‘framing’ in Sociology and International Relations, this article identifies and illustrates the impact of strategic policy framing on UK anti-bribery policy in the years following the United Kingdom’s commitment to criminalize transnational business bribes, in 1997. The research examines the way in which anti-bribery proponents and opponents framed the practice of transnational bribery differently across four distinct policy contexts in the United Kingdom: international development and poverty reduction, domestic anti-corruption, strategic trade, and—following 11 September 2001—international anti-terrorism. The analysis shows that: (a) policy advocates’ choice of frame crucially affected the timing and scope of UK anti-bribery legislation and the extent of UK (non)compliance with international anti-corruption law; and (b) the expedient frame was not necessarily the most conducive to full compliance.

Analyst Coverage, Corruption and Financial Secrecy: A Multi-Country Study

This study extends the literature on analyst coverage by examining the impact of both the experience of corruption at country-level and firm actions to prevent corruption on analyst coverage. It also extends the literature on analyst coverage by examining the effect of financial secrecy at country-level on the number of analysts following a firm, using a large multi-country sample for the year 2011. Furthermore, we examine the impact of these experimental variables on analyst coverage for advanced and emerging markets separately. The results show that high levels of corruption and financial secrecy at country-level significantly reduce analyst coverage consistent with the hypothesis that they are associated with higher levels of information acquisition costs. This result is consistent for both advanced and emerging economies, but because the financial secrecy and corruption variables at country-level are highly correlated in emerging markets, we should consider their impact on analyst coverage individually. The results also indicate that the adoption of anti-bribery and corruption policies at the firm-level may not in itself be sufficient to induce analyst coverage, indicating that it is the actual conduct rather than policies on paper that attracts analyst coverage.