Germany and Japan balk at OECD anti-corruption guidelines
March 17, 2006
By Canadian Consulting Engineer
Plans to fight corruption on the international stage hit a roadblock in February when Germany and Japan reportedly ...
Plans to fight corruption on the international stage hit a roadblock in February when Germany and Japan reportedly objected to new guidelines being proposed by the Organization for Economic Co-operation and Development (OECD). The OECD draft guidelines were due to be agreed in principle this March. They relate to practices by export credit agencies (such as Canada’s Export Credit Guarantee Department) which provide loans for projects throughout the world.
A report in the Financial Times of London said that Germany and Japan were resisting certain provisions in the guidelines on the basis that they were too bureaucratic and require the release of too much information. The critical paragraphs would require that companies applying for credits must disclose the identify of agents and the amount and purpose of the commissions they would be paid. Payments to such agents, who act as local intermediaries or advisors on behalf of international companies, can be substantial on multi-million dollar construction projects.
According to the Financial Times report, export credit agencies disburse around US $100 billion a year in medium and long term credits and guarantees. The multilateral development banks disburse about $60 billion in loans for international development projects.
Even activist groups such as Transparency International and Canada’s Probe International are sceptical about the effectiveness of the draft OECD guidelines. The anti-corruption activists believe the rules are too soft and that agents and companies who wish to subvert the rules have developed sophisticated methods that will still escape notice. The activists would like to see stronger sanctions against companies convicted of bribing officials, such as having them disqualified from receiving export credit loans.
The need for transparency in fighting corruption in the awarding of contracts in foreign countries is seen as increasingly important, especially in developing countries. The United States is ahead of many other countries in implementing anti-bribery measures for international trade credit agencies. The World Bank has been working for nine years to raise the profile of corruption as a development issue. “The Bank views corruption as both a symptom and a cause of institutional deficiencies,thriving where economic policies are poorly designed, where competition is lacking, and where the accountability of public institutions is weak,” says the bank’s website. “Poor governance and corruption remain among the most challenging problems today for many of the Bank’s clients.”
The World Bank has “sanctioned” more than 330 companies and individuals from doing business with the bank and runs a 24-hour a day anti-corruption telephone hotline.