Corruption knows no boundaries, or borders, according to a new study released by The Organization for Economic Cooperation and Development.
The OECD analyzed 427 foreign bribery cases that were closed between 1999 and 2014. What the researchers found is a steady stream of illicit money exchanges between multinational businesses and public officials in both poor and rich countries.
"We have learned that bribes are being paid across sectors to officials from countries at all stages of economic development," the researchers wrote. "Corporate leadership is involved, or at least aware, of the practice of foreign bribery in most cases, rebutting perceptions of bribery as the act of rogue employees."
Although the number of foreign bribery cases resulting in a punishment has fallen since its peak in 2011, it remains historically high.
And there have been cases affects at least 86 countries around the globe.
That should raise an eyebrow. After all, these are business executives and government officials who have actually been caught, meaning that they likely only represent a fraction of the total number involved in under the table cash exchanges. While the report doesn't name any of the corporations, finding one currently embattled by corruption accusations isn't hard. Wal-Mart, the world's largest retailers, is currently being probed for bribery in a number of countries, after the company disclosed potential violations in Mexico.
But what is truly unique about the study is the level of detail it uncovers about how the bribes are being paid, where they are being paid, why they are being paid, who is offering them, and to whom they are being offered.
Large multinational companies, for instance, appear to be much fonder of offering illicit cash for quiet favors than smaller corporate entities.
There are also certain industries, which appear more comfortable with—or, at least, familiar with—the practice than others. Nearly 60 percent of the foreign bribery cases observed happened in just four sectors: extractive (i.e. mining), construction, transportation and storage, and information and communication.
Senior management—sometimes even very senior management—was aware of, or complicit and even instrumental in more than half of the foreign bribery observed.
There are trendsnot only among the givers of bribes, but also among the takers.
The sorts of foreign public officials who were offered or solicited bribes ranged from employees of state-owned or controlled businesses to customs, health, defense, tax, and transport officials, and even heads of state. Some—namely, the employees of state-owned or controlled businesses—were much likelier to be involved in foreign bribery cases.
While employees of state-owned businesses were also the likeliest to actually accept a bribe, they comprised a much smaller percentage (some 27 percent) of all public workers who pocketed illegal money. Customs officials (11 percent) were second likeliest; health officials (7 percent), third; and defense officials (6 percent) were fourth.
The most common reason observed among the bribes was that companies wanted to gain an advantage landing public contracts with foreign governments—more than half of the time, the bribes were offered to win public procurement contracts. But a significant percentage—some 12 percent—were related to customs clearance—and another 6 percent were offered in exchange for favorable tax treatment.
In all, the bribes—whether merely offered or also accepted—amounted to more than $3 billion. Sometimes the bribes were huge—the costliest foreign bribe observed totaled more than $1.4 billion. Sometimes they were much smaller—the skimpiest was just $13.17.
Frequently, however, they significantly increased the cost of business. Bribes, on average, equaled more than 10 percent of the total transaction value and over a third of profits inherent in each transaction.
Multinational companies in the extractive (or mining) sector tended to pay largest bribes relative to the value of the related business, according to the OECD's findings, followed by those in the wholesale and retail sector, and those performing administrative service activities.
These extra (and illegal, for that matter) costs aren't always shouldered by the company—they can be levied onto the company's workers too. "In this context, the average of 10.9% of the transaction value spent on bribes means that the bribing individual or company would have to somehow recover or offset those costs," the researchers wrote. "Some companies might do this by paying employees less in countries with weaker employment laws."
But the costs are also borne by society, more broadly.
By bribing officials, multinational companies are in turn perpetuating a system that undermines the relationship between businesses and governments around the world, creating a form of corporate inequality where cash-rich corporations get all the breaks. In other words, it undermines both democracy and law, and funnels money away from otherwise moral companies and governments, and into the hands of corrupt officials and business owners.
There are, of course, significant obstacles in the way of correcting the system, and dissuading both multinational companies and government employees around the globe from offering, soliciting, and, ultimately, exchanging bribes. Among them is the reality that corrupt practices can be part of a culture.
"China is an environment where petty corruption is common and tolerated," Daniel C.K. Chow, a law professor at Ohio State University., told Bloomberg last year, in reference to China's "bribery culture."
Both Brazil and Mexico, two other developing economies, have also had to face uphill climbs in their bouts with corruption.
But it'd be a mistake to assume that bribery affects just developing countries. Nearly half of the bribes observed by the OECD, after all, were paid not to officials in poor countries, but rather to ones in particularly rich nations.
Another part of the problem is that a lot of foreign bribery—and corruption more generally, for that matter—is hard to track, for obvious reasons. In lieu of concrete, reliable data, other organizations, like global corruption watchdog Transparency International, have created corruption indices based on perception, rather than proven reality. As the OECD notes, studies like theirs are but the tip of a much, much larger iceberg. A good deal of the data for even the concluded cases was unattainable.
"These preliminary findings indicate that the pressure on governments to step up their enforcement of anti-bribery laws and ensure that penalties for this crime are effective, proportionate, and dissuasive, is well-placed," the researchers conclude. "There has, indeed, been progress in the fight against foreign bribery, but clearly, much more must be done to be successful in this fight."