United Nations CRIME PREVENTION AND CRIMINAL JUSTICE DIVISION United Nations action against CORRUPTION BRIBERY
United Nations CRIME PREVENTION AND CRIMINAL JUSTICE DIVISION United Nations action against CORRUPTION and BRIBERY
September 1997 CONTENTS Aspects of corruption: its roots and consequences p. 3 Corruption and typology of illicit activities associated with it p. 6 United Nations action against corruption and bribery p. 10
September 1997 CONTENTS Aspects of corruption: its roots and consequences p. 3 Corruption and typology of illicit activities associated with it p. 6 United Nations action against corruption and bribery p. 10
Activities of the crime prevention and Criminal Justice Division: Technical Cooperation p. 19 clusion Annex 1 General Assembly- Resolution 51/59 Action against corruption and International Code of Conduct for Public Officials Annex 2 General Assembly -Resolution 51/191 United Nations Declaration against Corruption and Bribery in International Commercial transactions Economic and social Council-Commission on Crime Prevention and Criminal Justice Sixth session -Promotion and maintenance of the rule of law and good governance. Action against corruption and bribery -Vienna, 28 April-9 May 1997 Annex 4 Commission on Crime Prevention and Criminal Justice- Sixth session draft resolution Iv International cooperation against corruption and
Activities of the Crime Prevention and Criminal Justice Division: Technical Cooperation p. 19 Conclusion P. 22 Annex 1 General Assembly - Resolution 51/59 Action against corruption and International Code of Conduct for Public Officials Annex 2 General Assembly - Resolution 51/191 United Nations Declaration against Corruption and Bribery in International Commercial Transactions Annex 3 Economic and Social Council - Commission on Crime Prevention and Criminal Justice - Sixth session - Promotion and maintenance of the rule of law and good governance. Action against corruption and bribery - Vienna, 28 April - 9 May 1997 Annex 4 Commission on Crime Prevention and Criminal Justice - Sixth session - draft resolution IV International cooperation against corruption and
bribery in international commercial transactions Aspects of corruption: its roots and consequences Several questions arise in connection with the increased interest in action against corruption at both the national and international levels. n such interest due to the higher occurrence of corrupt practices, higher detection rates or lower levels of (public, official and business) tolerance? The available evidence suggests that the answer may lie in a combination of these explanations. If each of them is examined separately, it will be easier to understand not only the eruption of scandals, but also the explosion of anti-corruption sentiments and how the two can be mutually reinforcing. There are good reasons to believe that in a world of relative turmoil produced by radical changes in the post-cold-war era, there are new opportunities and incentives to engage in corrupt practices. Although characteristics of particular people can be found that make them more prone to misconduct than others, the problem of corruption is a probler of systems and institutions rather than one of individuals. The structural roots of corruption may be examined under four interrelated
bribery in international commercial transactions Aspects of corruption: its roots and consequences Several questions arise in connection with the increased interest in action against corruption at both the national and international levels. In such interest due to the higher occurrence of corrupt practices, higher detection rates or lower levels of (public, official and business) tolerance? The available evidence suggests that the answer may lie in a combination of these explanations. If each of them is examined separately, it will be easier to understand not only the eruption of scandals, but also the explosion of anti-corruption sentiments and how the two can be mutually reinforcing. There are good reasons to believe that in a world of relative turmoil produced by radical changes in the post-cold-war era, there are new opportunities and incentives to engage in corrupt practices. Although characteristics of particular people can be found that make them more prone to misconduct than others, the problem of corruption is a problem of systems and institutions rather than one of individuals. The structural roots of corruption may be examined under four interrelated categories
First, there may be monopolistic or oligopolistic situations, in which one or a handful of companies control a given market. The State may wish to engage private companies to perform specific tasks or public works or provide services. To the extent that only a very small number of companies can practically carry out the work, the ground is fertile for corrupt practices (such as overcharging, providing low-quality work or delivering the work late). Such a condition obtains, for example, in the field of defence pro jects. Indeed, with regard to defence projects oligopolistic conditions may be desired: no one wishes to see the proliferation of certain types of weaponry or technology that affect both national and international security. In this field, then, it is warranted to devote special attention to transactions and to have special bodies overseeing them. In other cases, oligopolies may be created by rules requiring specific conditions that companies must meet for eligibility or may be introduced by rules dictating preferential treatment for some companies (for example, domestic versus foreign. Analytically the same type of situation arises when a party or regime monopolizes power and decision-making for very long periods. Secondly, very wide discretionary powers in the hands of individuals or organizations can generate temptations and motives for corrupt practices. Whenever there are few or no mechanisms of checks and balances, people will have plenty of opportunities to take undue advantage of their power. Examples of this corrupt -inducing situation are found in authoritarian regimes where powers are concentrated in the hands of very few persons. Another example is the power conferred to people with extremely specialized skills and knowledge. By definition, there are not too many of them, and therefore their powers are to a large extent unchecked. Again, the defence industry may be a concrete illustration of this situation. Additional examples of such a risk can be found in the field of physics, medicine. etc Thirdly, lack of transparency reduces the ability to control those in positions of authority. The lack of transparency may be caused by factors ranging from the banking secrecy to dictatorial regimes disallowing the questioning of authority. The same problem arises as a result of rare and specialized skills and knowledge If a given public work or special warship entails such complex and incomprehensible details that only a few individuals can understand the whole pro ject, transparency i effectively lacking. Whenever regulations of a particular sector are unclear, ambiguous and technically complicated, reporters, the public and lay persons may be completely unable to exercise effective control
First, there may be monopolistic or oligopolistic situations, in which one or a handful of companies control a given market. The State may wish to engage private companies to perform specific tasks or public works or provide services. To the extent that only a very small number of companies can practically carry out the work, the ground is fertile for corrupt practices (such as overcharging, providing low-quality work or delivering the work late). Such a condition obtains, for example, in the field of defence projects. Indeed, with regard to defence projects, oligopolistic conditions may be desired: no one wishes to see the proliferation of certain types of weaponry or technology that affect both national and international security. In this field, then, it is warranted to devote special attention to transactions and to have special bodies overseeing them. In other cases, oligopolies may be created by rules requiring specific conditions that companies must meet for eligibility, or may be introduced by rules dictating preferential treatment for some companies (for example, domestic versus foreign). Analytically, the same type of situation arises when a party or regime monopolizes power and decision-making for very long periods. Secondly, very wide discretionary powers in the hands of individuals or organizations can generate temptations and motives for corrupt practices. Whenever there are few or no mechanisms of checks and balances, people will have plenty of opportunities to take undue advantage of their power. Examples of this corrupt-inducing situation are found in authoritarian regimes where powers are concentrated in the hands of very few persons. Another example is the power conferred to people with extremely specialized skills and knowledge. By definition, there are not too many of them, and therefore their powers are to a large extent unchecked. Again, the defence industry may be a concrete illustration of this situation. Additional examples of such a risk can be found in the field of physics, medicine, etc. Thirdly, lack of transparency reduces the ability to control those in positions of authority. The lack of transparency may be caused by factors ranging from the banking secrecy to dictatorial regimes disallowing the questioning of authority. The same problem arises as a result of rare and specialized skills and knowledge. If a given public work or special warship entails such complex and incomprehensible details that only a few individuals can understand the whole project, transparency is effectively lacking. Whenever regulations of a particular sector are unclear, ambiguous and technically complicated, reporters, the public and lay persons may be completely unable to exercise effective control
The regulation of agricultural subsidies, price supports and loan guarantees in many countries provides a good example of the problem. Finally, the genesis of corruption may be analysed through the concept of asymmetries. Asymmetries are discrepancies or dis junctions that occur at the legal, administrative cultural, economic or political level. Although they are either domestic or international, the latter are more consequential in a global community. asymmetries are conducive to corruption both directly and indirectly through the creation of illega chat operate best with the collusion of autl of problematic legal asymmetries can be found in banking and tax regimes of different countries. This asymmetry invites many individuals and corporations to seek the most convenient jurisdiction to engage in certain transactions, even if that constitutes a violation of domestic laws. It also prov ides a shield against the discovery of corrupt practices Another example is the differential treatment of bribes paid to foreign officials. It is a serious crime in some countries but a tax-deductible business expense in others. This makes it easy for people to rationalize their corrupt practices as technical violations. Administrative asymmetries fuel the payment of speed money as well as clientelage and tronage systems. When some administrations function better and faster than others, bottlenecks and frustrations will certainly generate motives and rationalizations for illicit payments to get the job done or avoid the unnecessary costs of delays. Economic and political asymmetries can produce systematic frustrations in large parts of the population. They underlie and fuel capital flight, as well as the smuggling of aliens into countries where a better future appears possible. In another way, such asymmetries foster attitudes justifying corruption as functional to local economies and as a way of redistributing wealth. The globalization and liberalization processes of the 1990s have increased the number and types of such asymmetries, or they have generated more awareness of their existence Therefore, the criminologenic effect can be expected to be higher during the 1990s than before. Law enforcement asymmetries are also increased, at least temporarily, as borders are being redefined or renegotiated in different parts of the world. Lofty expectations in former centrally planned economies are frustrated intment and disillusionment The wave of privatizatie offer considerable opportunities for misconduct and corruption. Technological advances have made the contact between different countries easier and faster and this increases the possibility of clashes of traditions or lifestyles, as well as the feelings of relative deprivation
The regulation of agricultural subsidies, price supports and loan guarantees in many countries provides a good example of the problem. Finally, the genesis of corruption may be analysed through the concept of asymmetries. Asymmetries are discrepancies or disjunctions that occur at the legal, administrative, cultural, economic or political level. Although they are either domestic or international, the latter are more consequential in a global community. Asymmetries are conducive to corruption both directly and indirectly through the creation of illegal markets that operate best with the collusion of authorities. Examples of problematic legal asymmetries can be found in banking and tax regimes of different countries. This asymmetry invites many individuals and corporations to seek the most convenient jurisdiction to engage in certain transactions, even if that constitutes a violation of domestic laws. It also provides a shield against the discovery of corrupt practices. Another example is the differential treatment of bribes paid to foreign officials. It is a serious crime in some countries, but a tax-deductible business expense in others. This makes it easy for people to rationalize their corrupt practices as technical violations. Administrative asymmetries fuel the payment of speed money as well as clientelage and patronage systems. When some administrations function better and faster than others, bottlenecks and frustrations will certainly generate motives and rationalizations for illicit payments to "get the job done" or avoid the unnecessary costs of delays. Economic and political asymmetries can produce systematic frustrations in large parts of the population. They underlie and fuel capital flight, as well as the smuggling of aliens into countries where a better future appears possible. In another way, such asymmetries foster attitudes justifying corruption as functional to local economies and as a way of redistributing wealth. The globalization and liberalization processes of the 1990s have increased the number and types of such asymmetries, or they have generated more awareness of their existence. Therefore, the criminologenic effect can be expected to be higher during the 1990s than before. Law enforcement asymmetries are also increased, at least temporarily, as borders are being redefined or renegotiated in different parts of the world. Lofty expectations in former centrally planned economies are frustrated by disappointment and disillusionment. The wave of privatization processes offer considerable opportunities for misconduct and corruption. Technological advances have made the contact between different countries easier and faster, and this increases the possibility of clashes of traditions or lifestyles, as well as the feelings of relative deprivation
All the se reasons suggest that the problem of corruption may indeed be greater now than before The momentum of democratization and economic liberalization processes fosters attitudes strongly opposed to discrimination and market distort ions caused by corruption. Higher awareness and lower tolerance of the problem, combined with expected increases in the incidence of corruption, account for the intensity of debates and the large number of initiatives against this scourge Large numbers of people have come to realize the real extent of its negative consequences. all the more so in developing countries, where it has hampered national, social, economic and political progress. Where corruption involves the transfer of funds outside the country, it seriously undermines economic development. This in turn leads to political instability as well as poor ds schools, medical services, lower education standards and the non-completion of projects. The way funds are allocated is distorted and inefficient; competent and honest citizens feels frustrated, and the general populations level of distrust rises. As a consequence, much foreign aid disappears, productive capacity is weakened, administrative efficiency is reduced and the legitimacy of political order is undermined. The same effects, if somewhat less acute can be found in industrialized countries. Individuals who wish to conduct their affairs fairly and honestly are demoralized and lose faith in the rule of law. Corruption breeds distrust of public institutions, undermines ethi cal principles by rewarding those willing and able to pay bribes, and perpetuates inequality. Economic competition is distorted and public funds are squandered. As institutional and market reforms may lose credibility in the eyes of the public, processes of democratization(which should eventually reduce inequalities and improve transparency and accountability) risk losing momentum. Because of the substantial amounts involved in corrupt practices every year, the international financial system is also affected. The risk include what has been termed competitive deregulation, whereby jurisdictions seeking to attract these proceeds relax their regulations and enhance secret provisions. Money-laundering becomes an even more lucrative business with a potential corruptive effect, in turn leading to increased dependency of financial systems on such funds. Internationa conflicts and tensions are another risk, as States attempt to repatriate some of the funds, institute extraterritorial investigations that may be injure national pride or raise issues related to sovereignty, while
All these reasons suggest that the problem of corruption may indeed be greater now than before. The momentum of democratization and economic liberalization processes fosters attitudes strongly opposed to discrimination and market distortions caused by corruption. Higher awareness and lower tolerance of the problem, combined with expected increases in the incidence of corruption, account for the intensity of debates and the large number of initiatives against this scourge. Large numbers of people have come to realize the real extent of its negative consequences. All the more so in developing countries, where it has hampered national, social, economic and political progress. Where corruption involves the transfer of funds outside the country, it seriously undermines economic development. This in turn leads to political instability as well as poor roads, schools, medical services, lower education standards and the non-completion of projects. The way funds are allocated is distorted and inefficient; competent and honest citizens feels frustrated, and the general population's level of distrust rises. As a consequence, much foreign aid disappears, productive capacity is weakened, administrative efficiency is reduced and the legitimacy of political order is undermined. The same effects, if somewhat less acute, can be found in industrialized countries. Individuals who wish to conduct their affairs fairly and honestly are demoralized and lose faith in the rule of law. Corruption breeds distrust of public institutions, undermines ethical principles by rewarding those willing and able to pay bribes, and perpetuates inequality. Economic competition is distorted and public funds are squandered. As institutional and market reforms may lose credibility in the eyes of the public, processes of democratization (which should eventually reduce inequalities and improve transparency and accountability) risk losing momentum. Because of the substantial amounts involved in corrupt practices every year, the international financial system is also affected. The risk include what has been termed competitive deregulation, whereby jurisdictions seeking to attract these proceeds relax their regulations and enhance secret provisions. Money-laundering becomes an even more lucrative business with a potential corruptive effect, in turn leading to increased dependency of financial systems on such funds. International conflicts and tensions are another risk, as States attempt to repatriate some of the funds, institute extraterritorial investigations that may be injure national pride or raise issues related to sovereignty, while
others may be compelled to exert increased pressures on some States te amend their legislation and provide mutual assistance in corruption cases The global risks are even higher when links between corruption and organized crime become clearer. Several recent examples have highlighted how the illicit relationships between organized criminal groups and public officials have the potential to cause serious damage to the socio-economic structure of States@. It is essential to note that serious and profitable illicit activities-whether related to ancient sculpture nuclear material, drugs, illegal aliens or prostitution -invariably rely at some point in time on the support of corrupt public officials. Corruption is a necessary condition for organized criminals to operate. The risk is that, because of the immense power that some groups command organized criminals may come to acquire such great power that they would completely undermine and destroy institutions, with dire consequences for democracy and the rule of law. Corruption and typology of illicit activities associated with it Over the years, considerable debate has been carried out in both academic and international forum on the definition of corruption. On the basis of the report of the Italian Minister of Justice at the 19th Conference of European Ministers of Justice organized by the Council of Europe at Valletta, Malta, from 14 to 15 June 1994), the Multidisciplinary Group on Corruption(GMC, the French acronym)of the Council of Europe establi shed the following provisional working definition of corruption Corruption as dealt with by the Council of Europe s Gmc is bribery and any other behaviour in relation to persons entrusted with responsibilities in the public or private sector which violates their duties that follow from their status as public official, private employee independent agent or other relationship of that kind and is aimed at obtaining undue advantages of any kind for themse lves or for others In other words, corruption could be said to constitute the combined effect of monopoly of power plus discretion in decision-making in the absence
others may be compelled to exert increased pressures on some States to amend their legislation and provide mutual assistance in corruption cases. The global risks are even higher when links between corruption and organized crime become clearer. Several recent examples have highlighted how the illicit relationships between organized criminal groups and public officials have the potential to cause serious damage to the socio-economic structure of States(1). It is essential to note that serious and profitable illicit activities - whether related to ancient sculpture, nuclear material, drugs, illegal aliens or prostitution - invariably rely at some point in time on the support of corrupt public officials. Corruption is a necessary condition for organized criminals to operate. The risk is that, because of the immense power that some groups command, organized criminals may come to acquire such great power that they would completely undermine and destroy institutions, with dire consequences for democracy and the rule of law. Corruption and typology of illicit activities associated with it Over the years, considerable debate has been carried out in both academic and international forum on the definition of corruption. On the basis of the report of the Italian Minister of Justice at the 19th Conference of European Ministers of Justice (organized by the Council of Europe at Valletta, Malta, from 14 to 15 June 1994), the Multidisciplinary Group on Corruption (GMC, the French acronym) of the Council of Europe established the following provisional working definition of corruption: "Corruption as dealt with by the Council of Europe's GMC is bribery and any other behaviour in relation to persons entrusted with responsibilities in the public or private sector which violates their duties that follow from their status as public official, private employee, independent agent or other relationship of that kind and is aimed at obtaining undue advantages of any kind for themselves or for others". In other words, corruption could be said to constitute the combined effect of monopoly of power plus discretion in decision-making in the absence
of accountability. This means that officials will have the opportunity to collect corrupt benefits as a function of their degree of monopoly how much. and the degree to which their activities are accounaeox over a service or activity, their discretion in deciding who should Accountability then becomes one of the key issues of international discourse, as well as the ultimate goal of international cooperation. Large scale corruption may be transnational. Even when a large scale fraud is perpetrated entirely within one country, the necessity to transfer funds overseas introduces an international element. The danger posed by corruption are magnified and exacerbated by its reciprocal relationship with organized transnational crime. In a world that is constantl changing and becoming more interdependent, the long-term consequences of that relationship merit attention and action. Organized criminal groups have demonstrated their preference towards sy stemic corruption designed to ensure the preservation of a congenial and low-risk home base or a comfortable environment in host countries. Such a method of operation may be characterized by widespread use of bribery and favours to the malleability of key positions and agencies; political funding to ensure that politicians elected to office will be indebted to the criminal organizations; carefully targeted"payoffs to law enforcement personnel to provide intelligence; and the provision of financial incentives to members of the judiciary to ensure that the penalties for criminal activities are either not imposed or are modest. Indeed, systemic corruption is one of the ways in which criminal organizations develop a symbiotic relationship with the State. a growing awareness that corruption is a serious problem has galvanized support for an international and coordinated fight against it. In spite of this awareness, corruption remains a highly complex phenomenon. Conceptually, it is generally agreed that at the core of the problem lies some form of abuse of power a generic conceptualization could be the abuse of public office for direct or indirect personal gain. Indirect personal gain would include benefits that someone secures improperly for his or her organization (for example, a company, a politica af party or a non-profit organization). Given the need for a common understanding of what is at stake and what kind of practices are to be eradicated, it is worthwhile to list several specific questionable or illegal acts that are criminalized in various States. The list is, of course not exhaustive This empirical approach towards corrupt practices would avoid culture-bound conceptions, thereby enhancing consensus-building and
of accountability. This means that officials will have the opportunity to collect corrupt benefits as a function of their degree of monopoly over a service or activity, their discretion in deciding who should get how much, and the degree to which their activities are accountable. Accountability then becomes one of the key issues of international discourse, as well as the ultimate goal of international cooperation. Large scale corruption may be transnational. Even when a large scale fraud is perpetrated entirely within one country, the necessity to transfer funds overseas introduces an international element. The danger posed by corruption are magnified and exacerbated by its reciprocal relationship with organized transnational crime. In a world that is constantly changing and becoming more interdependent, the long-term consequences of that relationship merit attention and action. Organized criminal groups have demonstrated their preference towards "systemic" corruption designed to ensure the preservation of a congenial and low-risk home base or a comfortable environment in host countries. Such a method of operation may be characterized by widespread use of bribery and favours to ensure the malleability of key positions and agencies; political funding to ensure that politicians elected to office will be indebted to the criminal organizations; carefully targeted "payoffs" to law enforcement personnel to provide intelligence; and the provision of financial incentives to members of the judiciary to ensure that the penalties for criminal activities are either not imposed or are modest. Indeed, systemic corruption is one of the ways in which criminal organizations develop a symbiotic relationship with the State. A growing awareness that corruption is a serious problem has galvanized support for an international and coordinated fight against it. In spite of this awareness, corruption remains a highly complex phenomenon. Conceptually, it is generally agreed that at the core of the problem lies some form of abuse of power. A generic conceptualization could be the abuse of public office for direct or indirect personal gain. Indirect personal gain would include benefits that someone secures improperly for his or her organization (for example, a company, a political party or a non-profit organization). Given the need for a common understanding of what is at stake and what kind of practices are to be eradicated, it is worthwhile to list several specific questionable or illegal acts that are criminalized in various States. The list is, of course, not exhaustive. This empirical approach towards corrupt practices would avoid culture-bound conceptions, thereby enhancing consensus-building and
allowing anti-corruption efforts to gain further momentum. All the offences dealt with below are frequently differentiated depending on whether the offender is a low-level or high-level official Distinctions are also made on the basis of the gravity of the offence and the amounts involved. Systemic, large-scale and high-level corrupt practices are more severely punished. Nevertheless, all types and all levels of corruption need to be equally addressed and at the same time since the cumulative effect of petty corruption can be just as significant in monetary terms. In addition, it serves to maintain a culture that facilitates corruption, constantly frustrating and demoralizing the public Bribery The penal laws of most countries include the offence of bribery, where private parties offer or promise money or advantages to officials in order to influence their decisions. Variations exist as to the attempt, promise giving, solicitation or acceptance of a bribe(active and passive bribery). The crime of extortion generally consists in the demand of a benefit by an official. One of the main sources of recent global initiatives springs from the concern that public officials in many contracts or offer business deals to particular corporations. The y countries accept illicit payments or other advantages in order to exter criminalization of the direct or indirect offer or actual giving of anything of value to a foreign official in order to assist a company in its international business has become a model that may guide national lawmakers and multinational efforts. This offence is not a new concept and involves little more than the extension of domestic bribery laws to cover bribery committed in a foreign country. The logic remains the same no one should be required or allowed to exercise improper influence on the decision of officials in any jurisdiction. Another way in which such practices are dealt with is by resorting to unfair trade or anti-trust regulations. A company or individual that obtains a contract because of illicit payments has gained an unfair advantage over other competitors. Rules governing competition in domestic or international markets address this problem
allowing anti-corruption efforts to gain further momentum. All the offences dealt with below are frequently differentiated depending on whether the offender is a low-level or high-level official. Distinctions are also made on the basis of the gravity of the offence and the amounts involved. Systemic, large-scale and high-level corrupt practices are more severely punished. Nevertheless, all types and all levels of corruption need to be equally addressed and at the same time, since, the cumulative effect of petty corruption can be just as significant in monetary terms. In addition, it serves to maintain a culture that facilitates corruption, constantly frustrating and demoralizing the public. Bribery The penal laws of most countries include the offence of bribery, where private parties offer or promise money or advantages to officials in order to influence their decisions. Variations exist as to the attempt, promise, giving, solicitation or acceptance of a bribe (active and passive bribery). The crime of extortion generally consists in the demand of a benefit by an official. One of the main sources of recent global initiatives springs from the concern that public officials in many countries accept illicit payments or other advantages in order to extend contracts or offer business deals to particular corporations. The criminalization of the direct or indirect offer or actual giving of anything of value to a foreign official in order to assist a company in its international business has become a model that may guide national lawmakers and multinational efforts. This offence is not a new concept, and involves little more than the extension of domestic bribery laws to cover bribery committed in a foreign country. The logic remains the same: no one should be required or allowed to exercise improper influence on the decision of officials in any jurisdiction. Another way in which such practices are dealt with is by resorting to unfair trade or anti-trust regulations. A company or individual that obtains a contract because of illicit payments has gained an unfair advantage over other competitors. Rules governing competition in domestic or international markets address this problem
