Privatizing – A Way to Make Illicit Profits With Bribery and Corruption – A Study by Artur Victoria

For more than a year it has been France’s turn to fall under the microscope of the international media over bribery and corruption allegations, as it had been Britain turn in the mid 1990s over sleaze in the Conservative Government. Recent events in the USA, Canada, France, Germany, Austria, Britain, Ireland, Netherlands, Belgium, Spain, Portugal, Italy, Greece, Turkey, Denmark, Cyprus, Malta, Luxembourg, Switzerland, Liechtenstein, Norway, Sweden and Finland. Between them these countries are responsible for around 70% of world exports and 61.6% of the world combined GNP.

But there can be no doubt that attitudes to bribery and corruption are in the process of dynamic change, spurred on by organizations like OECD, the Financial Action Task Force and Transparency International. The governments of Western Europe and North America have been at the forefront of seeking international anti-corruption conventions. 19 of the 34 countries that signed the OECD 1997 Convention (which came into effect in February 1999). All those have now ratified except Ireland and Luxembourg (check later this is likely to change).

The year has seen legislative changes in a number of the countries to tackle corruption. Although France might be beleaguered by the scale of recent corruption allegations it is to its’ government credit that it implemented vanguard anti corruption legislation in June 2000. It is now illegal in France to bribe a foreign official.

Concerted international debate over corruption has certainly resulted in real changes. Many Western governments have now eliminated the tax-deductible status of bribery on international business contracts. Again in the vanguard, France changed its tax laws in autumn 2000 to outlaw such practices. According to the OECD of the countries that signed the 1997 Bribery Convention some fifteen did not deny tax deductibility, Now 13 have reviewed their legislation. (No Longer Business as Usual, OECD, October 2000)

The major regional trends observed by the anti corruption movement over the last year are discussed at length below. These are political funding scandals, real evidence of bribery of foreign officials, and the emergence of intelligence agencies in fighting corruption, the crackdown on money laundering and pressure for reform of Export Guarantee Insurance agencies.

While corruption-related prosecutions and convictions in Canada and the USA are low, commentators in a number of countries, e.g. Portugal and Italy, are extremely concerned about the extent of corruption in their countries.

Under international and internal pressure for reform, the Turkish government is attempting reform to tackle its reputation for endemic corruption. One commentator observed: Corruption has long been woven into Turkish life. But now, with Turkey banking on joining the European Union and becoming part of the global economy, the stakes are much higher. Some Turkish commentators argue that, in addition to economic reforms, Turkey needs urgent reform of an undemocratic political party system and its bloated bureaucracy.

Concerns have been expressed in a number of countries that privatization and public private finance initiatives may be a source of corruption. More than 10,000 state owned companies were privatized between 1988 and 2008. Large profits have been made in the transfer of utility and other businesses to the private sector. In some cases these sales have not been completed in an open and transparent manner.

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