13 Oct 2006: ISS Today: A Race to the Bottom - Corporate Bribery in Africa

13 October 2006: A Race to the Bottom - Corporate Bribery in Africa

 

Who calls the tune in Africa? Although political and military elites are the usual suspects, it is often the interests of foreign private corporations - in collusion with local elites – that have the potential to drown out the political voice of Africa’s people. The recently released Bribe Payers Index (BPI) gives weight to the argument that a popular route for Multinational Corporations to secure profit and influence in Africa remains through the payment of bribes. It’s this ‘wonga’ that continues to prove a more effective lubricant for buying influence and large contracts than the funding of military coups – a la Mark Thatcher. Ultimately elites in Africa and the global North are, on balance, more comfortable with trading dollars in anonymous hotel lobbies than bullets on the battlefield. Responsible business practice is infrequently an option.  

 

The Transparency International authored BPI surveyed over 11,000 business executives from companies in 125 countries. It asked them to select the origin of companies that are most likely to pay bribes in their own countries. Respondents could select these countries (the bribe-payers) from amongst the top thirty exporting nations in the world – South Africa is the only country to be included in this wealthy club.

 

In the overall ranking Switzerland, Sweden and Australia – are the top performers, scoring around an imperfect 7,5 out of 10. At the bottom of the list are India, China, and Russia – all scoring below the fifty percent mark. South Africa comes in seventh from last with an unimpressive 5,61. The poor standing of South African corporations has no doubt been reinforced following press reports of alleged bribe payments in countries such as India (involving arms trader Denel in an arms deal valued at hundreds of millions of Rands) and mobile phone giant Vodacom in Nigeria. To single out South Africa would be trite as it is one of at least eighteen countries on the score sheet that have laws that criminalise the payment of foreign public officials. It is therefore obvious that the political will in wealthy countries to implement these laws is still lacking. However, the South African example is instructive as to the general approach by wealthy nations to these laws - there has not been one reported case of such an offence in the country since a new anti-corruption law was passed thirty months ago. Considering South Africa’s low ranking, it suggests incongruence between the law and the enforcement thereof that the South African Prosecuting Authority, Trade and Industry Ministry and Foreign Affairs needs to urgently concern itself with.

 

The importance of tackling this issue is amplified when one considers the important role that foreign corporations play in big-ticket expenditure in developing countries such as natural resources, arms, construction and other large public procurement deals. Far from being a victim of corrupt circumstances, they show a willingness to pay a bribe where the possibility of profit far outstrips the risk of prosecution or public naming and shaming.  A relevant parallel would be the support of sweatshops by the multinational apparel industry that lasted well into the first years of this decade. It is therefore telling that respondents to the BPI - from developing countries in general and Africa in particular - rate foreign corporations far worse than those from Europe, Japan and North America (all members of the Organisation of Economic Co-operation and Development – OECD). It appears that corporate governance principles that apply at home do not mirror practice abroad. For example, the USA scores 8.2 amongst its OECD peers but 6.8 amongst African respondents – and a similar trend is noticeable amongst all other countries.

 

Equally worrying for Africans should be the fact that countries such as India and China fall even lower, pushing their overall dismal score of approximately five out of ten to 3.89 and 4.74 respectively in Africa. The interest of these countries in Africa’s natural resources, and the fact that they do not even have a law that criminalises such practice, does not bode well so long as a propensity to pay bribes exists. It should be remembered that bribe paying is also a competitive endeavour and it may not be too long before other countries start to slip even further in the rankings of bribe payers. Ultimately it will always be the poor in Africa who subsidise these bribes that are used to purchase goods, which are either unnecessary or hopelessly expensive. It also leave an inter-generational legacy as they inflate national debt and are used to sell off national treasures such as oil, forests, fishing stock and mineral wealth for what is effectively a bag of silver.

 

It is imperative that both African civil society and states start to take up this issue by formulating an African policy response to these issues. This needs to be supported by research and active monitoring of corruption – and should ideally be lead from a continental level. Without such an approach the current mad scramble to plunder, greased by bribe payments, will continue. Neither global corporate elites nor corrupt local elites will be the first to push for a policy change as they continue to benefit from such practice. It is, therefore, up to reform-minded African public representatives, officials and civil society to set the agenda. The legacy of inaction will be a greasy pole that African states and foreign businesses will find is much easier to slide down, than climb back up.

 

Hennie van Vuuren, Corruption and Governance Programme, ISS Cape Town Office