Pot calling the kettle black?

Multinationals headquartered in rich countries earn huge profits by exploiting workers in poor countries

With Pakistan ranked the 53rd most corrupt country out of 168 countries in the world, Pakistani officials are elated that the international NGO, Transparency International (TI), has found Pakistan to be the only Saarc country to have improved its Corruption Perceptions Index score during the current year.

The problem of corruption remains troublingly pervasive. There is no country in the world which is corruption-free. Sixty-eight per cent of countries around the world are struggling with serious corruption problems, including half of the G20 countries. Even western Europe has seen major banking scandals erupt during this past year. Corruption seems to be worsening in countries like Hungary, Spain and Turkey. Perceptions of corruption in the Australian government and the public sector have also increased for the fourth year in a row.

The fact that even more severe forms of corruption plague the so-called ‘developing countries’ is common knowledge. Countries like Iraq, Libya, Sudan, North Korea and Somalia are placed at the bottom of the abovementioned index.  Most other developing countries, including our own, can also hardly boast of an impressive record. Despite moving up slightly in the corruption ranking, Pakistan is also singled out as one of the countries, besides Afghanistan, where perceptions of widespread corruption ferment social unrest and have the potential to further exacerbate conflict.

Corruption is readily cited as one of the major reasons for the glaring deprivations evident across many African, Asian and South American countries. Moreover, it is not only citizens of the nations where corruption is rife who blame various forms of bribery, kickbacks, nepotism, for much of the malaise afflicting their countries. The more prosperous countries also blame internal corruption as a major problem which prevents developing countries to improve the lives of the vast majority of their populations.

While it is convenient for richer countries to identify corruption within developing countries as the underlying reason for their deprivation, the problem of corruption actually transcends national boundaries in today’s integrated global economy. It is noteworthy that TI does at least acknowledges that foreign bribery by business interests within rich countries also has damaging consequences in the form of contracts not going to the best qualified suppliers, prices often being inflated to cover bribe payments, environmental requirements not being enforced and taxes not being collected.

TI has, therefore, also been working to highlight how half of the powerful 41 OECD countries are violating their existing international obligations to crack down on bribery by their companies abroad. The OECD Anti-Bribery Convention, adopted in 1997, is considered a key instrument for curbing the export of corruption globally because the 41 signatory countries are responsible for approximately two-thirds of world exports and almost 90 per cent of total foreign direct investment outflows. Yet, 16 years after the OECD Convention on Combating Foreign Bribery entered into force, there are still 20 countries with ‘little’ or ‘no enforcement’ and nine signatory countries with only ‘limited enforcement’ of the convention.

In the Netherlands, for example, despite official commitments to increase the resources of anti-corruption bodies, and to improve the Dutch investigative and prosecutorial capacities, actual implementation remains lacklustre. In Japan, sanctions for foreign bribery offences remain inadequate. In France, the application of foreign bribery sanctions is deemed too lenient. In Russia, changes to the criminal code have actually reduced the size of penalties for receiving or giving bribes, including those relating to foreign officials, and increased the maximum time available to pay such fines in installments.

Besides pressuring more developed OECD countries to clamp down harder on their firms which engage in foreign corruption, it would be great if TI were to broaden its conceptual parameters for what other types of practices prevalent within the global economy can be considered as corruption. It may not be easy to pin down the damage done to the developing world by colonial and imperial legacies. However, it is possible to categorise existing lop-sided rules of trade, or the exploitative production practices of multinational companies headquartered in rich countries which enable them to accumulate vast amounts of profits by exploiting workers in poor countries, within the ambit of corrupt practices. If this were to happen, many other powerful countries, which currently boast of corruption-free environments, would also become embroiled in the global corruption menace.

It is the job of TI chapters in developing countries, including Pakistan, to try and lobby with the Berlin-headquartered NGO to broaden the current parameters of corruption, and make them more comprehensive.

Published in The Express Tribune, February 5^th,  2016.

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