Preventing Cross-Border Bribery

in the AEC

International Business Integrity Conference (IBIC) 2016:

Trends, Challenges and Collective Action in Corruption Prevention

Jakarta, 16-17 November 2016

Transparency International Indonesia

More than 6 billion people

live in countries with a serious corruption problem

Global Corruption

of countries worldwide have a serious corruption problem. Half of the G20 are among them.

%

0-9

10-19

20-29

30-39

40-49

50-59

60-69

70-79

80-89

90-100

Highly Corrupt

Very Clean

OECD Convention Against Bribery

Non-signatories of convention, no data

Share of exports too small to yield result

Little or no enforcement

Limited enforcement

Moderate enforcement

Active enforcement

South East Asian Corruption

The poor results of 2015 demand that leaders revisit the sincerity of their efforts and propel the region beyond stagnation.

ASEAN In The CPI

0-9

10-19

20-29

30-39

40-49

50-59

60-69

70-79

80-89

90-100

Highly Corrupt

Very Clean

REGIONAL RANKING

GLOBAL RANKING

COUNTRY SCORE

2 8 SINGAPORE

Rank & Score Down 85

9 54 MALAYSIA

Rank & Score Down 50

11 76 THAILAND

Rank Down ─ Score Constant 38

15 88 INDONESIA

Rank & Score Up 36

16 95 PHILIPPINES

Rank & Score Down 35

17 112 VIETNAM

Rank Up ─ Score Constant 31

24 147 MYANMAR

Rank Down ─ Score Up 22

ASEAN In Comparison

ASEAN Average Up 1 Point

40 ASIAPAC Average No Change

43 G20 Average No Change

54

As ASEAN becomes One Economic

Community Opportunity for economic growth, creating jobs, reducing poverty, corruption risks are going to increase

6 Factors Raising Corruption Risks In AEC

1

2

3

4

5

6

Weak transparent & anti-corruption infrastructure

Insufficient legal frameworks

Ineffective anti-corruption institutions

Unresolved corruption challenges

Emerging corruption risks of AEC

Ad-hoc regional collaboration

Emerging Risks From Increased Cross Border Economic Activity

1

2

3

4

5

6

New patterns of foreign bribery & growth in cross-border bribery

Lack of expertise and skills to tackle foreign bribery

Illicit international trade network

Money laundering and asset recovery

Easier to hide ill-gotten assets

Challenges in investigating and prosecuting cross-national border cases

Building An ASEAN Integrity Community

1

Commitment from Top

Government

2

Regional Bodies &

Institutions Responsible

3

Ownership & Participation of Business

& CSO 4

Priority & Realistic

Plans

5

Resource & Support

6

Communica-tions &

Knowledge Exchanges

Why An AIC?

Capability of the

systems to deal with corruption

risks

Emerging & existing corruption

risks

Foreign bribery is not an abstract

phenomenon It has damaging consequences

Why Companies Bribe

COUNTRY AS A GIFT, OR TO

EXPRESS GRATITUDE TO GET A CHEAPER

SERVICE TO SPEED THINGS UP

IT WAS THE ONLY WAY TO OBTAIN A

SERVICE

SEA 20% 10% 55% 15%

Cambodia 51% 6% 28% 15%

Indonesia 13% 6% 71% 11%

Malaysia 3% 19% 55% 23%

Philippines 19% 6% 67% 8%

Thailand 10% 16% 67% 8%

Vietnam 24% 9% 41% 26%

Source: Global Corruption Barometer (Transparency International, 2013)

Business Integrity

UK

Germ

any

USA

Austr

alia

Fra

nce

Japan

Chin

a

13

90%

81%

74% 74%

70%

41%

20%

8 8 5 8 5

44

44 #of companies

20% Chinese Company

Average

90% UK Company

Average

Transparency in Corporate Reporting

Business Integrity

Indonesia

Mala

ysia

Philip

ines

Sin

gapore

Thailand

39% 40% 43% 47%

57%

10%

20%

0%

60%

40%

30%

50%

39% Indonesia Company Average

57% Thailand Company Average

Source: Research conducted by ASEAN CSR Network & NUS

Overall Level of Disclosure

45%

Average level of disclosure rate per country Average level of disclosure across 5 countries

Recommendations: Business

Prohibit Facilitation Payments

Develop, Apply & Make publicly available A/C programs within co, agents, intermediaries

Publicly Disclose Subsidiaries, Affiliate, Joint Venture, and Other Entities inc those in other countries

1

2

3

Publicly Disclose Political Donations 4

Recommendations: Government & Regulators

Government &

Regulatory Bodies

Require Companies to Disclose corporate structure, subsidiaries, affiliates, and Joint Ventures and other entities

Require Companies to Disclose

Financial Accounts on Country by

Country

Implement Antibribery

Law and Enforce

Them

Rules for mandatory reporting of company AC measures.

Recommendations: Civil Society Organizations

Civil Society Organization

Monitor, analyse and disseminate public corporate

information

Promote the adoption of country-by-country reporting

Demand that companies be

more transparent