Corruption PDF

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific
STRATEGIES FOR
BUSINESS,
GOVERNMENT, &
CIVIL SOCIETY
TO FIGHT
CORRUPTION
IN ASIA AND
THE PACIFIC
Proceedings of the 6th Regional Anti-Corruption
Conference
for Asia and the Pacific
STRATEGIES FOR
BUSINESS,
GOVERNMENT, AND
CIVIL SOCIETY TO
FIGHT CORRUPTION
IN ASIA AND
THE PACIFIC
Proceedings of the 6th Regional Anti-Corruption Conference
for Asia and the Pacific
Held in Singapore, 2628 November 2008, and hosted by the

Corrupt Practices Investigation Bureau (CPIB) Singapore
Asian Development Bank

Organisation for Economic Co-operation and Development
Publications of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific
Supporting the Fight against Corruption in Asia and the Pacific: ADB/OECD Anti-Corruption Initiative
Annual Report 2007. Paris, ADB/OECD, 2008.
Fighting Bribery in Public Procurement in Asia and the Pacific. Proceedings of the 7th Regional
Technical Seminar. Paris: ADB/OECD, 2008.
Asset Recovery and Mutual Legal Assistance in Asia and the Pacific. Proceedings of the 6th Regional
Technical Seminar. Paris: ADB/OECD, 2008.
Managing Conflict of Interest: Frameworks, Tools, and Instruments for Preventing, Detecting, and
Managing Conflict of Interest. Proceedings of the 5th Regional Technical Seminar. Manila:
ADB/OECD, 2008.
Mutual Legal Assistance, Extradition and Recovery of Proceeds of Corruption in Asia and the Pacific:
Frameworks and Practices in 27 Asian and Pacific Jurisdictions, Paris: ADB/OECD, 2008.
Curbing Corruption in Public Procurement in Asia and the Pacific: Progress and Challenges in 25
Countries, Manila: ADB/OECD, 2006.
Denying Safe Haven to the Corrupt and the Proceeds of Corruption: Enhancing Asia-Pacific Co-
operation on Mutual Legal Assistance, Extradition, and Return of the Proceeds of Corruption.
Proceedings of the 4th Master Training Seminar. Manila: ADB/OECD, 2006.
Knowledge-Commitment-Action against Corruption in Asia and the Pacific: Proceedings of the 5th
Regional Anti-Corruption Conference. Manila: ADB/OECD, 2006.
Anti-Corruption Policies in Asia and the Pacific: Progress in Legal and Institutional Reform in 25
Countries. Manila: ADB/OECD, 2006.
Anti-Corruption Action Plan for Asia and the Pacific with country endorsing statements. Manila:
ADB/OECD (2002; reprinted 2005).
Curbing Corruption in Tsunami Relief Operations. Manila: ADB/OECD/TI, 2005 (available in English,
Bahasa, Sinhala, and Tamil languages).
Controlling Corruption in Asia and the Pacific: Proceedings of the 4th Regional Anti-Corruption
Conference. Manila: ADB/OECD, 2005.
Anti-Corruption Policies in Asia and the Pacific: The Legal and Institutional Frameworks. Manila:
ADB/OECD, 2004.
Effective Prosecution of Corruption. Proceedings of the 1st Regional Training Seminar. Manila:
ADB/OECD, 2003.
Taking Action against Corruption in Asia and the Pacific: Proceedings of the 3rd Regional Anti-
Corruption Conference. Manila: ADB/OECD, 2002.
Progress in the Fight against Corruption in Asia and the Pacific: Proceedings of the 2nd Regional Anti-
Corruption Conference. Manila: ADB/OECD, 2001.
Combating Corruption in Asia and the Pacific: Proceedings of the Manila workshop held in 1999.
Manila: ADB/OECD, 2000.
These documents are available for download from the Initiatives Web site at
www.oecd.org/corruption/asiapacific/publications
2009 Organisation for Economic Co-operation and Development, Asian Development Bank
All rights reserved
ISBN 978-92-64077003
This publication was prepared by the Secretariat of the ADB/OECD Anti-Corruption Initiative for Asia and
the Pacific, composed of Asian Development Bank (ADB) and Organisation for Economic Co-operation
and Development (OECD) staff. The findings, interpretations, and conclusions expressed in it do not
necessarily represent the views of ADB or those of its member governments or of the OECD or its member
countries. ADB and OECD do not guarantee the accuracy of the data included in this publication and
accept no responsibility whatsoever for any consequences of their use. The term country does not
imply any judgment by the ADB or the OECD as to the legal or other status of any territorial entity.

Contents
Foreword ............................................................................................................. 7
Main abbreviations and acronyms ................................................................. 9
Introduction ...................................................................................................... 11
Acknowledgments and editorial remarks .................................................... 12
Keynote addresses .......................................................................................... 13
Welcome Remarks by Senior Minister Ho Peng Kee ................................. 15
Opening Statement by Lawrence Greenwood ........................................ 19
Opening Statement by Mario Amano ........................................................ 25
Closing Remarks by Peter Ho ........................................................................ 29
Concluding Remarks by Patrick Moulette .................................................. 33
Chapter 1 Combating corruption in business transactionsa
priority for governments, business, and civil society ........................ 35
The Business Case for Fighting Corruption (John Bray) ............................. 38
Efforts of the Business Community to Fight Corruption
(David Lyman).................................................................................................. 47
Singapores Experience in Fighting Bribery in Business
(Soh Kee Hean) ................................................................................................ 53
P.R. Chinas Campaign against Commercial Bribery
(Wang Huangeng) .......................................................................................... 59
A Global Framework for the Fight against Corruption in Business
Transactionsthe United Nations Convention against Corruption
(Kuniko Ozaki)................................................................................................... 65
Civil Societys Contribution to Curbing Bribery in Business
(Peter Rooke) ................................................................................................... 69

4 Strategies for Business, Government, and Civil Society to Fight Corruption
Chapter 2 The role of international criminal law standards in

combating bribery ................................................................................ 75
Implementing the OECD Anti-Bribery Convention (William Loo
and Christine Uriarte) ...................................................................................... 77
Setting Global Standards the Criminalization Chapter of the
United Nations Convention against Corruption (Kuniko Ozaki) ............. 87
Effective Anti-Corruption Enforcement: Another Flight of Fancy?
(Mathew Joseph) ............................................................................................ 91
Chapter 3 Corporate compliance programs and integrity systems ....... 101
Corporate Compliance Programs and Integrity Systems:
Singapores Experience (Juthika Ramanathan) ..................................... 107
Chapter 4 Conflict of interestthe soft side of corruption ........................ 113
OECD Guidelines, Toolkit, and Emerging Concerns (Jnos Bertok) .... 115
Conflict of Interest in Indonesia: Business as Usual
(Arief T. Surowidjojo) ...................................................................................... 121
Auditors ConflictsIndependence in the Audit of Financial
Statements (Navita Srikant) ......................................................................... 131
Conflict of Interest in the Transport Sector (William Paterson) .............. 137
Chapter 5 Working together to combat corruption: International
and regional initiatives ........................................................................ 141
The APG and its Role in Combating Corruption in Asia and the
Pacific (Ong Hian Sun) ................................................................................. 143
APEC Business Principles and UN Global Compact as Examples
of Regional and Global Cooperation in the Fight against
Corruption (Peter Rooke) ............................................................................. 149
Translating Regional and Global Initiatives into Local Action
Insights from the Republic of Korea (Geo-Sung Kim) ............................. 153
Implementing the Extractive Industry Transparency Initiative (EITI)
in Timor-Leste (Manuel de Lemos) .............................................................. 155
13th International Anti-Corruption ConferenceGlobal
Transparency: Fighting Corruption for a Sustainable Future
(Kathleen M. Moktan) ................................................................................... 157

Table of contents 5
Chapter 6 Private-to-Private Corruption: The Last Piece of the

Puzzle .................................................................................................... 161
Rethinking the Definition of Corruption (Jermyn Brooks) ....................... 163
Combating Corruption in the Private Sectorthe ICAC of Hong
Kong, China (Li Bo-Ian Rebecca)............................................................... 165
Singapores Strategies to Fight Corruption in the Private Sector
(Koh Teck Hin) ................................................................................................ 171
Chapter 7 Fighting corruption and the sustainable development
agenda ................................................................................................. 177
The Philippines Experience with Donor Supported National Anti-
Corruption Efforts (Merceditas N. Gutierrez) ............................................ 179
Republic of Koreas Experience as a Provider of Anti-Corruption
Technical Assistance (So-yeong Yoon) ..................................................... 183
Why Corruption Matters to Donors and their Role in Curbing
Corruption (Marcel van den Bogaard) ..................................................... 191
Annexes .......................................................................................................... 195
List of Participants .......................................................................................... 197
Agenda ........................................................................................................... 211
ADB/OECD Anti-Corruption Initiative for Asia-Pacific Secretariat
Contacts ............................................................................................... 217

Foreword
Created in 1999, the ADB/OECD Anti-Corruption Initiative for Asia and the
Pacific supports its members in strengthening their policies, legislation, institutions
and practices to fight corruption. The Initiative offers experts in Asia and the
Pacific opportunities to work with colleagues from around the globe to address
emerging challenges in the fight against corruption, and to seek solutions.
Expansion of Asian and Pacific economies and strengthened economic

ties among countries bring increased attention to the negative impact of bribery
in business. The members of the ADB/OECD Anti-Corruption Initiative for Asia and
the Pacific thus dedicated the 6th Regional Anti-Corruption Conference for Asia
and the Pacific on 2628 November 2008 to Fighting Corruption in Asia-Pacific:
Strategies for Business, Government, and Civil Society.
The conference, hosted by the Government of Singapore and its Corrupt

Practices Investigation Bureau (CPIB), brought 150 experts from 35 countries to a
regional forum to assess the role of businesses, governments, and civil society in
the fight against corruption, notably the supply of bribes. Workshop discussions
addressed six topics: the role of international criminal law standards; conflict of
interest; corporate compliance programs and integrity systems; international and
regional Initiatives to combat corruption; private-to-private corruption; and the
role of the fight against corruption for sustainable development.

Main abbreviations and
acronyms
ACRA Accounting and Corporate Regulatory Authority (Singapore)
ACT Anti-Corruption and Transparency Task Force
ACTT Anti-Corruption Task Team (of the OECD DAC GOVNET)
AML anti-money laundering
APCAC Asia-Pacific Council of American Chambers of Commerce
APEC Asia-Pacific Economic Cooperation
APG Asia-Pacific Group on Money Laundering
ASEAN Association of Southeast Asian Nations
AusAID Australian Agency for International Development
CEO Chief Executive Officer
CFT combating the financing of terrorism
CoI conflict of interest
CPI Corruption Perceptions Index
CPIB Corrupt Practices Investigation Bureau (Singapore)
DAC Development Assistance Committee of the OECD
EITI Extractive Industries Transparency Initiative
EUR euro
FATF Financial Action Task Force
FCPA Foreign Corrupt Practices Act
FIU financial intelligence unit
GDP gross domestic product
GNI gross national income
GOVNET Network on Governance (of the OECD Development
Assistance Committee DAC)
IACC International Anti-Corruption Conference
ICAC Independent Commission against Corruption (Hong Kong,
China)

10 Strategies for Business, Government, and Civil Society to Fight Corruption
ICC International Chamber of Commerce

IDR Indonesian rupee
KPK Komisi Pemberantasan KorupsiCorruption Eradication
Commission (Indonesia)
MNC multinational corporation
MOU memorandum of understanding
NGO non-government organization
OAS Organization of American States
ODA official development assistance
OMB Office of the Ombudsman (Philippines)
PACI Partnering against Corruption Initiative
PHP Philippine peso
SEC Securities and Exchange Commission (United States)
SFO Serious Fraud Office (United Kingdom)
SGD Singapore dollar
SME small and medium-sized enterprise
TI Transparency International
UK United Kingdom
UN United Nations
UNCAC United Nations Convention against Corruption
UNDP United Nations Development Programme
UNODC United Nations Office on Drugs and Crime
UNTOC United Nations Convention against Transnational Organized
Crime
US United States
USAID United States Agency for International Development
USD United States dollar
WEF World Economic Forum

Introduction
Recent corporate corruption scandals, many of which involved major
multinational enterprises, have brought the spotlight onto business bribery.
Several countries in Asia-Pacific have already responded by initiating anti-
corruption campaigns targeting this phenomenon. To further these efforts and to
exchange experience, the members of the ADB/OECD Anti-Corruption Initiative
for Asia and the Pacific dedicated the 6th Regional Anti-Corruption Conference
for Asia and the Pacific on 2628 November 2008 to Fighting Corruption in Asia-
Pacific: Strategies for Business, Government, and Civil Society.
The conference, hosted by the Government of Singapore and its Corrupt

Practices Investigation Bureau (CPIB), brought together 150 experts from 35
countries. In addition to plenary sessions, the conference consisted of six
workshops on the role of international criminal law standards; conflict of interest;
corporate compliance programs and integrity systems; international and
regional initiatives to combat corruption; private-to-private corruption; and the
role of the fight against corruption for sustainable development.
The conference saw presentations by representatives of business,

governments, civil society, and international organizations that were followed by
lively debates and exchanges of ideas. Most presentations were reproduced in
this publication, in hopes that the ideas and knowledge contained therein would
be disseminated to a wider audience.

Acknowledgments and
editorial remarks
The ADB/OECD Anti-Corruption Initiative for Asia and the Pacific thanks the
Corrupt Practices Investigation Bureau (CPIB) of Singapore, host of the 6th
Regional Anti-Corruption Conference for Asia and the Pacific, for its gracious
hospitality and excellent preparation. Special thanks also go to the conference
participants, particularly the expert speakers whose insights and experience
enriched the meeting discussions and informed its outcomes.
The conference was organized by CPIBincluding Phua Meng Geh, who

managed the eventand the ADB/OECD Anti-Corruption Initiative for Asia and
the Pacific Secretariat: Kathleen Moktan, Director, Capacity Development and
Governance Division, ADB; Marilyn Pizarro, Consultant, ADB; Christine Uriarte,
General Counsel, OECD Anti-Corruption Division; William Loo, Legal Analyst,
OECD Anti-Corruption Division; and Joachim Pohl, thenProject Coordinator,
Anti-Corruption Initiative for Asia-Pacific, OECD Anti-Corruption Division.
The Initiative is also grateful to its partners for their financial and intellectual
support: the Australian Agency for International Development, German Federal
Ministry for Economic Cooperation and Development, German Technical
Development Cooperation, Swedish International Development Cooperation
Agency, Asia-Pacific Group on Money Laundering, the American Bar
Association/Rule of Law Initiative, Pacific Basin Economic Council, Pacific Islands
Forum Secretariat, Transparency International, United Nations Development
Programme, World Bank, and Asia-Europe Foundation.
The term country in this publication also refers to territories or areas; the
designations employed and the presentation of the material do not imply the
expression of any opinion whatsoever concerning the legal status of any country
or territory on the part of ADBs Board and members or the OECD and its member
countries. Every effort has been made to verify the information in this publication.
However, ADB, OECD, and the authors disclaim any responsibility for the
accuracy of the information. ADBs Board and members and the OECD and its
member countries cannot accept responsibility for the consequences of its use
for other purposes or in other contexts.

Keynote addresses
Welcome Remarks by Senior Minister Ho Peng Kee
Opening Statement by Lawrence Greenwood
Opening Statement by Mario Amano
Closing Remarks by Peter Ho
Concluding Remarks by Patrick Moulette

Welcome Remarks
by Senior M inist er Ho Peng K ee
Associate Professor Ho Peng Kee, Senior Minister of State for Law

and Home Affairs, Singapore
I am happy that Singapore is organizing this ADB/OECD Regional Anti-

Corruption Conference for Asia-Pacific for the first time. I understand that there
are participants and speakers from more than 50 countries and international
organizations. Let me first extend a very warm welcome to all our overseas
participants to Singapore.
We are living in an increasingly interconnected global world. The financial

crisis of 2008 began with, what to most of us, was an event in the US that had little
relevance to us. I am referring to the US subprime mortgage crisis. Within a year,
the crisis had escalated to a colossal global financial meltdown requiring
government interventions in financial sectors all over the world. The financial crisis
is the perfect illustration of how corporate governance in the private sector can
lead to events that have wide social and economic impact. This brings me to the
theme for todays conferenceFighting Corruption in Asia-Pacific: Strategies for
Business, Government, and Civil Society.
In many countries, anti-corruption efforts have always focused on the

public sector, as it affects how a country is governed and how its public services
are administeredthese, of course, have a direct impact on the development of
the country. However, increasingly, the lines between the public and private
sectors are no longer clear. With outsourcing, functions previously undertaken by
public agencies may, today, be undertaken by private companies. This may
include essential services such as provision of utilities, healthcare, transport, or
even security. The public would also have interest in how private entities are run,
as some of these are publicly listed companies with members of the public as
shareholders. The activities of private companies today provide the engine of
growth and they have a significant impact on the lives of individuals. Private
sector activities in many instances are not really private Therefore, efforts in
good governance and anti-corruption must go beyond the public sector to
reach the private sector; activities of the private sector are not isolated unto
themselves but have an increasing impact on the man in the street. There are
two main approaches to thisthrough systemic structures put in place by
government, and through internal controls put in place within the private sector. I

16 Fighting bribery in public procurement in Asia and the Pacific
would now like to share with you Singapores efforts, starting with government-led
systemic structures.
Government-led structures
In Singapore, we put a lot of emphasis on administrative efficiency.
Processes which are streamlined and efficient ensure better services for the
public. They also reduce opportunities for corruption and abuse. If government
services take a long time to deliver and require multiple processes and steps,
then the likelihood of corruption and malpractice will multiply. In this regard, the
Singapore government has implemented electronic services to deal with many
government transactions. Through such services, members of the public can
search and access government information as well as conduct a wide range of
transactions. These include applying for licenses and permits, making reports,
and filing tax returns.
There is also an online business license service whereby businesses that

require multiple licenses need not send separate applications to different
departments. Using an online system, the applicant would just need to file a
single application, which will be routed to different government departments for
the issue of different licenses. Such electronic processes have cut down
processing time drastically and reduced the need for the public to deal with
officers from multiple government departments. A benefit of this arrangement is
that opportunities for corruption and abuse can be reduced.
The government also aims to engage the public in a continual process to

improve the system; for example, the public is invited to provide feedback under
the Cut Red Tape and Cut Waste movement. The business community is also
consulted through the Pro Enterprise Panel on how the government can be more
business-friendly. These links allow the public to tell the government directly about
problems and even suggest possible solutions; they show measures that can
enhance quality of service to the public, and also reduce likelihood of abuse.
To improve transparency, the Singapore Government has an electronic

portal that allows private sector entities to bid to supply goods and services to
the government. Today, all government procurement is done through the
Internet. The procurement specifications are posted on the Internet for all to see,
including international businesses who wish to take part. This ensures
transparency and reduces opportunities for corruption and abuse in public
private sector transactions.

Keynote addresses 17
Internal control measures

I will now move on to internal control measures. In 2004, the Accounting
and Corporate Regulatory Authority was formed to ensure that companies,
businesses, and auditors observe relevant standards and comply with legal
requirements. The Authority works with government agencies and professional
bodies to maintain high auditing standards and helps companies adopt good
disclosure and corporate governance practices. The private sector was also
actively involved in the process of setting the prescribed accounting and
governance standards through the Accounting Standards Council formed in
2007, and the Council of Corporate Disclosure and Governance formed in 2002.
Internal controls and governance in private companies is essential if the

private sector is to run smoothly and without problems. Governance and controls
must go beyond mere rhetoric. Companies must implement concrete measures
to ensure good governance and controls. This is the only way for companies to
sustain and thrive; otherwise, when the going gets tough, they will just fold over
and collapse. Corporate governance cannot be taken for granted. The primary
responsibility rests with the companies themselves, backed by an appropriate
level of interaction with government agencies. In this current climate of the
financial crisis, it is even more important that adequate attention be paid to such
issues.
Working together
It is thus clear that anti-corruption agencies cannot act alone. Fighting
corruption has to be a whole-of-government effort involving the improvement of
administrative processes within the public sector as well as improvement of
corporate governance standards within the private sector. Both the public and
private sectors have key roles to play. It is therefore important for anti-corruption
agencies to partner with external parties in their anti-corruption efforts. The
prevention of corruption in the private sector requires more than investigative
and outreach efforts from anti-corruption agencies. The commitment of
stakeholders has to be securedprivate entities must be encouraged to
implement systems of good governance from within. This entails putting in place
a framework of systemic processes incorporating checks and balances that
guide behaviour in the organization. A well-designed self-regulatory corporate
governance framework would reduce the possibility of improper or criminal
behaviour. More importantly, just as the public service has built up its ethos and
core values, a culture of ethical values must be cultivated in the private sector.

Anti-corruption agencies must therefore reach out to this sector by

understanding corporate practices and fostering close working relationships. I
am pleased to note that this conference includes workshops on corporate
governance, private sector corruption, and conflict of interest. These will provide
insights on the work to be undertaken in the private sector. This conference
provides a useful platform for dialogue with other stakeholders such as
businesses, civil society, and international organizations.
The past few years have seen an increase in international platforms

centering on anti-corruption. Since the coming into force of the United Nations
Convention against Corruption, a number of Conferences of the State Parties
and related working group meetings have been held. There are also various
international meetings held to facilitate discussions between anti-corruption
agencies. These include meetings to discuss follow-up action for the
Memorandum of Understanding between anti-corruption agencies of ASEAN
member countries and meetings under the International Association of Anti-
Corruption Authorities, to name a few.
I am happy to note that this conference seeks to work with the various
platforms by exploring how international and regional initiatives can play a part
in raising awareness and commitment to fight corruption in the region. As chair of
the APEC Anti-Corruption Task Force for 2009, Singapore is committed to
contributing to this process of dialogue and co-operation. Singapore has also
been an active member of this ADB/OECD Anti-Corruption Initiative since 2001,
and we continue to play an active part.
I note that, our Corrupt Practices Investigation Bureau, or CPIB, has

devoted enormous resources alongside the ADB/OECD Secretariat to put
together the programme and administrative arrangements. I am also told that
CPIB has been receiving increasing numbers of requests for study and training
visits and that our Civil Service College has also organized many courses on
governance and anti-corruption. All these programs will contribute to the
exchange of ideas and knowledge on anti-corruption at the international level.
At this conference, a wide array of experts and professionals from

government agencies, international organizations, civil society, and the private
sector are linked by a common interest: to fight corruption. I urge everyone to
use the opportunity to enhance your networks and share your experience and
expertise. I am sure that the interaction will energize you and spur you further on
in your anti-corruption efforts.

Opening Statement
by Law rence Greenw ood
Lawrence Greenwood Jr.

Vice President, Asian Development Bank
On behalf of the Asian Development Bank, it is my privilege to welcome

you to the 6th Regional Anti-Corruption Conference. I would like to begin by
commending each and every one of you, for your steadfast commitment to
combating corruption in Asia and the Pacific.
From the outset, I would like state that ADB welcomes the theme of this
years conferencewhich emphasizes the need for the private sector, civil
society, and governments to work together to combat corruption. Such a
comprehensive approach is needed first and foremost because the root of
corruption is the complex web of engagement between the private and public
sectors. Corruption is not simply a public sector issue. Corrupt transactions, by
definition, require the participation of more than one actor. After all, it takes two
to tango and for every briber offering money there is a bribee asking for it. Thus,
it will take the concerted effort of all stakeholderspublic, private, and civil
societyto successfully fight the scourge of corruption. That effort means
changing attitudes, strengthening institutions, adjusting regulation, resetting
incentives, and, more generally, reconsidering how a government interacts with
its citizens in ways that minimize the opportunity for corruption.
Secondly, there is a growing appreciation that corruption can significantly

undermine sustainable development, inclusive growth and poverty reduction,
resulting in significant social and economic tensions that have important
implications for a very broad range of stakeholders, not the least of which are
the poor who forgo basic social services and economic opportunity due to
corruption. Though it is not easy to measure the overall impact of corruption, let
us look at a few examples from recent studies:
A recent paper that estimated the effect of corruption on economic
growth and GDP per capita calculated the total effect of corruption as
follows: an increase of corruption by about one index point reduces
GDP growth by 0.13 percentage points and GDP per capita by
USD 425.1
More than USD 1 trillion is paid in bribes each year, according to
ongoing research at the World Bank Institute. The same research
showed that countries that tackle corruption and improve their rule of

law can increase their national income by as much as four times in the
long term.2
According to Transparency International, corruption equals a full 3% of
the worlds gross domestic product.3
Studies of the impact of corruption upon government procurement
policies in several Asian countries reveal that these governments have
paid from 20% to 100% more for goods and services than they would
have otherwise.
Finally, looking at corruption from the perspective of all stakeholders allows

us to better identify the win-win dynamics that can help create a stronger and
broader consensus to fight corruption. For example, citizens might be more
supportive of tax increases to support higher civil service pay if they better
understood that this was a far more efficient (and equitable) means than direct
bribery (which also comes out of citizens pockets) to compensate underpaid
government officials. Business might be more supportive of anti-bribery laws if
they better understood that businesses from countries with stronger enforcement
of anti-bribery laws are asked less frequently to pay bribes than businessmen of
countries with weak enforcement. Likewise, citizens that still fear exploitation by
foreign investors would fear less if they understood that such exploitation is only
possible to the extent that national officials are corruptible. When Lee Kwan Yew
in the 1960s invited foreign multinational corporationsMNC, then a dirty three-
letter wordto invest in Singapore, there was no question who was in charge. Mr.
Lees uncompromising stance against corruption made that possible. I hope this
conference will explore how we can create and take advantage of these win-
win opportunities to accelerate the fight against corruption.
The Role for Multilateral Cooperation

Although national action will be the most important key to success, clearly
multilateral cooperation such as we see in this conference will play an important
role in facilitating and promoting this comprehensive approach to fighting
corruption. The OECD Anti-Bribery Convention concluded in 1997 was one of the
first international efforts to address the supply side of corruption by requiring
signatories to criminalize and prosecute bribe giving. Thirty-seven countries have
now signed on to this historic accord. The United Nations Convention against
Corruption (UNCAC) addresses both sides of the corruption problem. Currently,
140 countries, including many in our region, are signatories to the UNCAC, a
clear indication of how seriously the world community takes the issue of
corruption.

The Extractive Industries Transparency Initiative (EITI) is another important

multilateral effort focusing on both supply and demand sides of the corruption
equation by requiring transparent reporting of extractive resource revenues from
companies, both private and state-owned, to governments and then
strengthening civil society monitoring of those revenues to ensure that the
revenues of extractive industries are used to foster economic growth and
development. I am happy to say that in February of this year, ADB joined the
growing coalition of countries, development institutions, international
corporations, and civil society organizations that have endorsed the EITI.
Progress and Challenges

Last, but certainly not least, the ADB/OECD Anti-Corruption Initiative for
Asia and the Pacific, a path-breaking multilateral undertaking, continues to grow
in importance. We are seeing significant progress under the Initiative. The number
of countries endorsing the Anti-corruption Action Plan for Asia and the Pacific
has grown from 25 at the time of our regional conference in September 2005 in
Beijing to 28 this year, with an additional four countries participating as active
observers. Twenty countries from Asia and the Pacific have ratified or acceded
to the UNCAC, and an additional 12 have signed. The recently held 13th
International Anti-corruption Conference was attended by more than 1,500
participants from more than 130 countries, representing the public sector, the
private sector, and civil society.
However, despite these significant efforts, barriers to progress remain:

prevailing practice, ineffective legal and regulatory frameworks, and institutional
weaknesses. It is a matter of concern, that progress on the World Banks world-
wide governance indicators has been limited in Asia and the Pacific. In fact,
these indicators suggest that control of corruption in the region has deteriorated
rather than improved over the past 10 years.
In addition, legislation in many countries does not yet extend to areas such
as foreign bribery or political corruption, and regulations are too often
ambiguous. Furthermore, not enough attention has been paid to reforming the
law enforcement agencies, whose cooperation is essential to the success of anti-
corruption agencies. And, although the contributions of civil society in raising
public awareness, encouraging reforms and monitoring progress are well-known,
some countries remain wary of fully engaging civil society as a partner in fighting
corruption. Building capacities and partnerships across the region is crucial to
address these ongoing challenges.

The Role of the Asian Development Bank

ADB is staunchly committed to this task. ADBs long-term strategic
framework recognizes the profound harm that corruption inflicts upon
development, and particularly on the poor, and reaffirms our commitment to
strengthen systems that emphasize prevention and utilize the international
framework embodied in the UNCAC.
ADB launched its Second Governance and Anticorruption Action Plan

(GACAP II) in the summer of 2007 and became the first multilateral development
bank to require, in partnership with its client governments and development
partners, governance risk assessments designed to identify critical weaknesses in
public financial management, procurement, and anti-corruption systems that
could compromise a countrys own development efforts. We are using those
assessments to help identify concrete measures that can help to mitigate
governance risks in our country strategies, sector work, and individual projects.
ADB has a very robust program of projects and technical assistance

aimed at improving governance and fighting corruption in partnership with our
developing member countries. In 2007, we undertook USD 3.3 billion worth of
loans, which included components aimed at improving governance and
USD 40.1 million of technical assistance in the same area. 4 These programs
focused in particular on public financial and economic management,
combating corruption, public administration reform, and reforms in the
infrastructure and financial sectors. Programs of particular note include: the
Good Governance Programme in Bangladesh, which supports UNCAC
implementation and strengthens the Anti-Corruption Commission; the Second
Development Policy Support Program in Indonesia and the Commune Council
Development Project in Cambodia, both of which put a strong emphasis on
strengthening Public Financial Management; and the Local Government
Financing and Budget Reform Cluster in the Philippines, with its emphasis on
transparent inter-governmental fiscal arrangements and financial management.
The Way Forward: Effective Partnerships and Continued

Resolve
Given the complexities of the global age, corruption cannot be handled
through stand-alone efforts. This battle requires state-of-the-art knowledge and
tools and, above all, firm resolve. Judging by the commitment of the 28 member
countries of the ADB/OECD Anti-corruption Initiative, we can be optimistic that
progress will continue.

On behalf of ADB, I would like to express our appreciation to the OECD for
its strong and ongoing partnership in and contributions to this Initiative. I would
also like to thank all the development partners who have provided their strong
support.
In particular, I want to extend our deep appreciation to the Government

of Singapore and the Corrupt Practices Investigation Bureau, our hosts for this
years conference. Singapore has been a role model in Asia and the Pacific and,
by holding this conference, it has yet again shown leadership in tackling
corruption in the region.
We deeply appreciate the governments efforts to make this important

event a success. The proceedings and outcomes of this conference will further
cement coordination among member countries, and with the international
governance and anti-corruption experts. We are confident that this will be a
milestone in the journey toward a transparent Asia that is free of poverty and
corruption.
NOTES
1 Dreher and Herzfeld, 2005.
2 World Bank Institute, 2004 and ongoing.
3 TI Anti-Corruption Handbook: corruption is defined as all instances where
entrusted power is used for private gain.
4 ADB. 2008. Governance Thematic Report 20062007.

Opening Statement
by M ario Amano
Mario Amano
Deputy Secretary-General, OECD
It is an honor to be here today and share the opening of the 6th Regional
Anti-Corruption Conference for Asia and the Pacific with my distinguished
colleagues from Singapore and the Asian Development Bank.
I am deeply grateful to the Government of Singapore for hosting this

conference, and for its tremendous efforts to ensure a program of highly relevant
topics to Asia and the Pacific. Singapore is an anti-corruption success story,
demonstrated by its high ranking on Transparency Internationals Corruption
Perceptions Index year after year. It is fitting that it is the host country for this
important event in 2008.
I am very proud that the OECD and the Asian Development Bank are
partners in this conference. Our two organizations have been working together
for almost 10 years on this Initiative. I believe that our blend of expertise and
perspectives gives Asia and the Pacific a unique opportunity in the fight against
corruption. The OECD looks forward to continuing this valuable partnership as we
embark on the next decade.
I am pleased to see that so many key actors in the fight against corruption
in the region have come together for this important conference.
It gives me great pleasure to address the ADB/OECD Anti-Corruption

Initiative for Asia and the Pacific, whose member countries have been making
such important efforts to fight corruption. Countries have implemented wide-
reaching awareness campaigns to increase knowledge of corruption and its
damaging effects. Technical assistance programs are underway, and
government-wide Action Plans have been put in place to guide reform efforts.
Additionally, 22 of the Initiatives 28 members have signed, ratified, or

acceded to the United Nations Convention against Corruption. This shows a
broad, sincere commitment to fighting corruption, and an acknowledgment of
the importance of international standards and collective action.
Your attendance here shows the reach and impact of the ADB/OECD
Anti-Corruption Initiative for Asia and the Pacific, which will celebrate its 10th
anniversary in 2009. Over the past decade, members of the Initiative have

worked hard to fight corruption in the region, and the Initiative has supported
you through policy dialogue and analysis, and capacity building.
The Action Plan, adopted in 2001, has provided a roadmap to guide and
support members country-level reform efforts. It sets goals and standards,
adapted to the regional context, that encourage the establishment of effective
and transparent systems, and promote integrity. It has led to individual and
collective efforts to reduce economic, political, and social corruption.
This demonstrates how effectively the Initiative creates an environment of

trust among its members, and encourages progress. The thematic reviews on
priority issues in the region are a key output. The 2007 review on mutual legal
assistance, extradition, and recovery of proceeds of corruption is a particular
success story. This helpful publication has been widely distributed within the
region and beyond. Officials in many countries and organizations use it to inform
and facilitate their daily work.
Some of you may ask why the OECD, with its emphasis on helping
governments foster prosperity and fight poverty through economic growth and
financial stability, is involved in fighting corruption, and how it came to be a
partner in the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific. The
OECD recognizes that corruption goes to the core of sustainable economic
development. It can derail development plans. It aggravates the potential for
infrastructure projects to go wrong with tragic consequences, when contracts
obtained through bribery result in the construction of bridges and dams that
collapse, or factories that poison lakes and rivers. It diverts public funds from
health care, the construction of hospitals and schools, and the purchase of
childrens schoolbooks.
The OECD, believes that to successfully combat corruption, a holistic multi-

dimensional approach such as set out in the ADB/OECD Anti-Corruption
Initiatives Action Planwith education to promote citizens expectations of
clean government and civil servants pride in being honest; decent public sector
salaries, regulatory reform to reduce opportunities for corruption; civil society
activism to insist on clean government, and moreis necessary. It also means
having an effective legal and law enforcement regime to prevent, detect, and
punish corrupt activities.
The Initiative has chosen as the theme for the 6th Regional Anti-Corruption
Conference the supply side of bribery in business transactions. An effective fight
against bribery in business transactions requires equal emphasis on the supply of
bribes by domestic and foreign companies and the demand for bribes from
public officials.

Fighting bribery in business transactions also has significant importance for

the region. As many economies are quickly expanding and becoming major
forces in international business, they have a strong interest in addressing
corruption that threatens fair competition and undermines the level playing field
for business.
This conference will provide participants with valuable opportunities to

exchange experiences on reducing the supply of bribes in business transactions.
It will do this by exploring a wide variety of issues such as criminalization,
managing conflicts of interest in the public and private sectors, internal company
controls, corruption between private sector agents, and sustainable
development.
Combating the supply of bribes also happens to be the focus of the OECD
Anti-Bribery Convention. This is because the 30 OECD member countries and the
7 non-member countries that are State Parties to the Convention felt that they
had a unique opportunity to deter companies from their countries from bribing
foreign public officials in international business transactions.
Since they have been monitoring implementation of the Convention for

almost 10 years, they have learned many lessons along the way. Their evaluation
reports document the challenges they have faced and recommend steps for
overcoming these challenges.
The countries that belong to the Convention have also analyzed the trends
and patterns in the challenges that they have faced. This has enabled them to
mutually support each other in finding solutions. It is in this same spirit that the
countries that joined the OECD Anti-Bribery Convention are keen to share
experiences with members of the Initiative facing similar challenges in
implementing international standards, such as the United Nations Convention
against Corruption (UNCAC). For this reason, I am pleased that three parties to
the OECD Anti-Bribery ConventionAustralia, Japan, and the Republic of
Koreaare also members of the Initiative.
Although its focus is broad, the UNCAC includes important provisions to

combat the supply of bribes. Like the OECD Anti-Bribery Convention, it requires
signatories to establish an offense of bribing a foreign public official. It also
requires signatories to establish an offense of bribing a domestic public official.
The OECD also shares the UNCACs focus on corruption and sustainable
development. The OECD Development Assistance Committees Network on
Governance works with donor countries to incorporate anti-corruption efforts into
development activities. The OECD introduced anti-corruption provisions in
bilateral development aid in 1996, and the DAC GOVNET strengthened support

for country-led anti-corruption strategies with the publication of the Principles for
Donor Action in 2003. In 2007, DAC Ministers agreed on a Collective Action
Agenda for Improving Governance to Fight Corruption which proposes a
harmonized approach among donors, and recognizes the role that both aid
donors and recipients can play to fight corruption.1
Public sector integrity is also a major area of anti-corruption work at the

OECD. A 2008 Recommendation of the OECD Council on Enhancing Integrity in
Public Procurement2 aims to help governments review and prevent corruption
throughout the entire public procurement cycle. The Recommendation provides
principles for enhancing integrity in public procurement drawn from good
practices in OECD and non-OECD countries.
Another area of anti-corruption work at the OECD concerns the use of tax
measures to prevent and detect bribery. A 1996 Recommendation of the OECD
Council provides for the non-deductibility of bribes, 3 which is an important
disincentive for corruption in business transactions. It also provides tax officials
with a basis for detecting and reporting bribes. The OECD Bribery Awareness
Handbook for Tax Examiners4 helps tax examiners detect and identify bribes. It is
available in several languages, including Chinese, Japanese, and Korean.
This conference represents an important opportunity for concerned

individuals, countries, organizations, companies, and other key stakeholders to
come together to delve into the most important anti-corruption issues of today.
I am pleased that you have brought your energy, ideas, and commitment
to the table today. I believe that the next 2 days will bring many fruitful
exchanges, innovative ideas, and productive partnerships.
In closing, I would like to share with you my wish that you will leave this
conference with renewed faith in the power of your collective action as
members of this Initiative to make a real impact on corruption in the region. I
congratulate you on nearing the 10th anniversary of this Initiative, and remind
you to stay positive and to be proud of every achievement that you have made
and will continue to make as you face the challenges of fighting the terrible
scourge of corruption.
NOTES
1 www.oecd.org/dataoecd/2/42/39618679.pdf
3 www.oecd.org/document/46/0,3343,en_2649_34551_2048174_1_1_1_1,00.html

Closing Remarks
by Pet er Ho
Peter Ho, Head, Civil Service, and Permanent Secretary for Foreign
Affairs, Singapore
This is the 6th Regional Anti-Corruption Conference for Asia and the Pacific
organized by the ADB/OECD Anti-Corruption Initiative. I am quite struck by the
diversity of participation in the conference. We have participants not only from
the anti-corruption agencies, but also from other government departments.
These include audit and procurement agencies, regulatory agencies,
Ombudsmans office, and so on. International organizations, civil society
(including Transparency International), and private sector organizations are also
represented.
Getting different government agencies to set aside turf issues and work
together is a big challenge. But it is a vital part of good governanceeven if it is
easier said than done. As the world becomes more complex, policy issues and
challenges become more interconnected. But the traditional allocation of
responsibilities of government to ministries and agencies creates a silo effect.
When issues span more than one agency, timely and effective responses are
difficult to achieve. What is required is that government officials cooperate with
officials from other agencies in solving problems from a whole-of-government
viewpoint. This includes fighting corruption. For instance, the officers from anti-
corruption agencies proactively offer ideas and insights they have gathered from
their work to help government agencies strengthen their processes and systems
to prevent corruption.
Indeed, this need to adopt a comprehensive appreciation of issues is not

only relevant to government. In the private sector, civil society, and the
international organizations, many issues cut across the whole of the organization.
Regardless of structure, staff have to be aware of cross-cutting issues that are
strategic to their organization. For instance, the people doing finance or
marketing must also know how the other parts of the organization work to be
effective. Anti-corruption is something that should be vital to any organization, so
it is important that key actors understand not just the why, but also the how
of dealing with this problem.
The theme of this conferenceFighting Corruption in Asia and the Pacific:

Strategies for Business, Government, and Civil Societyis a reflection of the point
that different parties are required to work together in the fight against corruption.

30 Strategies for business, government, and civil society to fight corruption
In recent months, the subject of regulation has often been raised. In the
eyes of many, the financial crisis was caused largely by inadequate regulation of
the financial sector. In the context of anti-corruption, what this means is that
regulators and corporations have to ensure that the right processes are put in
place, coupled with an appropriate degree of regulation, so that the
opportunities for corruption are reduced in the first place.
The role of government is to set out a broad anti-corruption framework

through legislation, administrative policies, and regulations. Government must
also ensure that there is a strong enforcement agency capable of dealing with
those who commit corruption. But policies should neither be intrusive nor impede
the free market and the entrepreneurial spirit that are vital for the modern day
economy. The private sector also has a role to play. Indeed, it is the responsibility
of the private sector and individual entities to put in place internal systems of
governance in their organizations, because they know best how they operate. It
is only through an integrated approach involving the public and private sectors
that a successful anti-corruption framework can be implemented, encompassing
both preventive and enforcement measures.
During the conference, speakers touched on the supply side of the

corruption problemusing the term to refer to those companies and persons
who pay bribes to public officials. The supply side cannot be neglected if
effective corruption control is to be achieved. Of course, this is not meant to
imply that the entire private sector is the culprit, on account of the corrupt acts
of some of elements. In fact, the private sector is the vital engine of growth in all
economies. Nonetheless, tough action must be taken against the supply side in
tandem with the traditional tough action against the demand sidethose who
receive bribes. This approach has been embraced by Singapore since the
beginning and is increasingly adopted by many countries around the region, as
was evident from the discussions at this conference.
In the course of the workshops, we have also heard from regulators,

international organizations and private-sector entities about possible approaches
to deal with corruption. What has emerged is how similar these approaches are
to the anti-corruption measures adopted by governments. Firstly, just as
governments need to have political will to deal with corruption, there must be
willingness by private-sector organizations to deal with the risks of corruption.
Each organization must develop its internal anti-corruption policies. Next,
organizations should look at implementation issues, such as training, for its anti-
corruption measures. A proper system of internal audit and control, as well as a
reporting mechanism, must be established. Finally, follow-up measures such as
investigation and enforcement against the corrupt activity or breach of
procedure must be carried through.

Combating Corruption in Business Transactions 31
The success of these measures turns on the willingness and commitment of

the concerned organization. As pointed out by many of the speakers, for anti-
corruption agencies to successfully deal with private sector corruption, a culture
of intolerance of corruption has to be developed in the larger community. The
private sector must in turn commit to work with the government to fight
corruption. This is why knowledge sharing through conferences such as this is so
importantit allows different sectors to learn from each other and to further
cooperation toward the common objective of tackling corruption.
I hope all of you had excellent opportunities to learn from the workshops,
as well as opportunities to socialize and to network. If you are not coming on
official business, I do hope that you will still come again to Singapore for holidays.
In fact, next year, Singapore will be chairing APEC and will host the APEC Anti-
Corruption Task Force, where we will further explore the issue of publicprivate
sector governance through a workshop. We welcome your participation in the
workshop.
To our overseas participants and speakers, I wish all of you a safe journey
home.

Concluding Remarks
by Pat rick M oulett e
Patrick Moulette, Head, Anti-Corruption Division, OECD
On behalf of the OECD, I would like to express our gratitude to the

Singaporean government for hosting this very well-organized and productive
event.
I also thank the ADB for our ongoing, fruitful relationship that supports the
fight against corruption in Asia and the Pacific. This meeting has shown how
much can be accomplished when our organizations work togetherwith our
partners and member economiesto identify key challenges and seek solutions.
Of course, I am grateful to all the participants for bringing your energy,

ideas and commitment to this important regional meeting. Your work in your
home countries, your dedication to collective action, and your support of your
neighbors reform efforts are resulting positive change that can be felt across the
region and around the world.
Finally, I thank all our partner and donor organizations. I hope that the
conversations you have heard and actions you have seen over these past two
days have shown that your contributions and support are making a real
difference in fighting corruption in Asia and the Pacific.
This meeting has been a great opportunity for experts and key officials on
the ground in the fight against corruption to come together and discuss the key
issues in this important area. We have seen time and again how important a
regional perspective is in considering these issues.
The workshop on international criminal law standards reinforced the

importance of a solid legal frameworkbased on international standardsfor
the investigation and prosecution of foreign bribery offenses. Without this strong
foundation, these efforts cannot succeed.
However, effective implementation is of paramount importance as well.

The OECD Working Group on Briberys monitoring mechanism shows how peer
pressure and mutual trust can push countries forward toward meaningful
change.
Finally, this conference was a demonstration of how international and

regional initiatives can bring key players together for discussions and actions that

truly move the fight against corruption forward. I thank you all for being part of
the fight.

Chapter 1
Combating corruption in
business transactionsa
priority for governments,
business, and civil society
Corruption increases the cost of doing business. In addition to its social
costs, it has an adverse impact on a countrys business and investment climate.
The need to fight corruption is universally acknowledged, and many
governments have put comprehensive legal systems in place to do so. However,
enforcement remains inadequate, with some notable exceptions. This could
soon change, as governments in Asia and the Pacific increasingly understand
the importance of fighting corruption to foster economic prosperity.
Government efforts to curb bribery to improve the business

climate
The economic case for fighting bribery and corruption is a strong driver
behind efforts to eradicate bribery from businessfor example, in Singapore and
P.R. China.
Singaporean law criminalizes both bribery of public officials and bribery

among private sector entities. In addition to enforcing these criminal law
provisions, Singapore engages in a comprehensive set of measures to prevent
corruption, showing companies the risk of engaging in bribery. For example, the
government is open to receiving allegations of individual bribery cases from the
business sector, and to hearing businesses views on how red tape adds to
corruption risks. Singapores preventive efforts put emphasis on leaders in
business and on auditors.
P.R. China has engaged in a vast campaign against bribery in business.

The campaign was launched in 2006 in response to a perceived increase in

corruption in some industries. As in Singapore, this effort is driven by the negative

effects that bribery and corruption can have on social stability and economic
prosperity. The government of P.R. China understands that the transition of its
economic system to a market economy can bring corruption risks. Therefore,
system reforms are a key component of its campaign against business bribery.
Future parts of the campaign will prioritize preventive measures, and
investigations of cases that have a particularly damaging effect on social
stability and the business climate.
International instruments support and drive anti-bribery

efforts
An increasing number of countries worldwide address transnational
bribery, thus confirming the detrimental effects of this phenomenon. This issue is
at the core of the OECD Convention against Bribery of Foreign Public Officials in
International Business Transactions. The Convention requires its signatories to
criminalize the bribery of foreign public officials by companies operating in or
from their territories. By the end of 2008, 38 countries had become parties to this
international instrument, which has set the global standards on this issue since the
Conventions adoption in 1997. A rigorous peer review monitoring mechanism
continually assesses how countries are upholding their commitment to fight
bribery in international business. The review mechanism also provides for
international exchange of good practices.
Since its entry into force in 2005, the UN Convention against Corruption
(UNCAC) has added significant momentum to the global anti-corruption
movement. It complements requirements under the OECD Anti-Bribery
Convention, further supporting intergovernmental efforts to fight bribery in
business. The UNCAC is likewise instrumental in fostering a business climate that
discourages corruption. Its wide-ranging provisions require states to: implement
effective criminal laws that deter bribery; establish preventive mechanisms
against corruption; and ensure that the financial sector is not vulnerable to
laundering and transfer of illicit assets derived from corruption.
The effectiveness of the UNCAC, however, will depend on its thorough

implementation. An effective review mechanism must be put in place, and
many countries will require technical assistance to meet the Conventions
standards.

Business and civil society are allies in the fight against bribery
The economic case for fighting corruption appeals not only to
governments but also to individual companies and the business sector overall.
Companies and their representatives can be tempted to pay bribes to retain
contracts or to gain other short-term advantages in their business. However, they
increasingly realize that they can be victimized as targets of bribe solicitation, or
when they lose contracts to corrupt competitors. This awareness has led
companies to take action individually and collectively to reduce corruption in
business transactions.
Many companies have understood that ethics and compliance are

essential preconditions for their long-term interests and sustainability of their
operations. To ensure that companies that adopt strict anti-corruption policies do
not face disadvantages, the business sector has created alliances that help
companies resist engaging in bribery. These include the ICC Rules of Conduct,
the TI Business Principles for Countering Bribery, the World Economic Forum
Partnering Against Corruption Initiative, and the UN Global Compact. The ICC
has also issued assistance and guidance for companies aiming to bolster their
frameworks to reduce their exposure to corruption risks, guidelines for whistle-
blower protection, and a comprehensive corporate practices manual are
among these products.
Civil society has significantly contributed to mobilizing governments to fight

bribery in business, and civil society organizations facilitated and advocated for
anti-corruption efforts within the business sector. Transparency International (TI),
for example, has played an important role in the fight against transnational
bribery in business since 1993.
Although significant advances were achieved during the past decade,

TIs annual surveys suggest that the business sector may still be relatively corrupt
compared to other parts of society, and that companies seem to be more
inclined to bribe in transnational business operations than in their home markets.
Civil society thus continues to pressure businesses to improve their compliance
mechanisms, and plays an active role in catalyzing the formulation of business
standards against bribery and corruption.

The Business Case for Fighting Corruption
( John Bray)
John Bray
Director, Analysis, Control Risks
A review of the last 10 to 15 years shows that there is much to celebrate in

the international campaign against corruption. Our Singaporean hosts, the
Corrupt Practices Investigation Bureau (CPIB), have set a high standard for
national anti-corruption agencies. At an international level, the Organisation for
Economic Co-operation and Development (OECD) has made a major
contribution through its follow up on the 1997 Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery
Convention). Since 1999, the Asian Development Bank (ADB) and the OECD
have successfully promoted the ADB/OECD Anti-Corruption Initiative for Asia and
the Pacific. At a global level, we now have the 2003 United Nations Convention
against Corruption (UNCAC), which includes measures against both public and
private sector corruption.
However, despite these advances, the hardest part may still lie ahead. The
intellectual battle has been won. At a policy level, no one now seriously contests
the importance of combating corruption. In most countries, well-drafted laws are
now in place, and the remaining gaps are being filled. We have the basis of an
international framework. The challenge now is implementation: how can we
apply these new laws and frameworks so that they really make a difference in
the lives of ordinary people?
Successful implementation is not the task of government agencies alone. It

also demands the active participation of business and civil societyand here it is
hard to avoid a strong sense of disconnect. Government officials talk to each
other at international conferences. At the same time, there are now a number of
commercial conferences for business people concerned with the fight against
corruption and fraud. However, the two worlds rarely come together. If the anti-
corruption agenda is to be truly meaningful, it is essential that they do so. The
purpose of this paper is to point the way to a closer mutual understanding, and
to help bridge the publicprivate sector divide.

Business requires an enabling environment

From a responsible business perspective, the overall message is very clear:
the legal advances made in the last 10 years are very welcome, but they are not
enough.
For companies, the most important role of government is to provide an

equitable enabling environment which allows the private sector to flourish. A
key ingredient of this enabling environment is a well-designed legal system,
which works in practice as well as theory, thus helping protect honest companies
from corrupt competitors. However, all too often, domestic anti-corruption laws
are enforced inconsistently, or not at all. Meanwhile, despite the OECD Anti-
Bribery Convention, many leading trading nationswith the notable exceptions
of the US and, increasingly, Germany and Franceare still slow to enforce their
extra-territorial anti-bribery laws.1
These shortcomings have a direct impact on business. In International

Business Attitudes to Corruption, 2 a survey of 350 international companies
conducted by Control Risks and Simmons & Simmons in 2006, 43% of respondents
reported that they had failed to win business in the last 5 years because a
competitor had paid a bribe, and one-third had lost business to bribery in the
previous year. Smaller local companies lose out as much as, or more than, the
major international firms. In its World Development Report 2005,3 the World Bank
argued that smaller companies suffer even more than larger ones from
investment climate constraints such as lack of confidence that courts will uphold
property rights.
We know the reason for these failures: lack of political will. All too often,
politicians have other prioritiesand this is true both in industrialized and in
developing countries. Sometimes this is simply the result of complacency. In other
cases, politicians believe that their careers are more likely to be advanced
through various forms of political patronage, a practice which itself often borders
on corruption, and they do not wish to damage the interests of their supporters.
In both cases, the result is that law enforcement and anti-corruption agencies do
not get the resources that they need to do their jobs effectively.
Promote the economic case for anti-corruption initiatives

Anti-corruption specialists are notand should not bepoliticians, but
they must be able to make the case for the budgets they require to do their work
properly. To overcome the lack of political will, there needs to be more emphasis
on the economic case for anti-corruption initiatives. A major part of the
economic argument relates to the need to provide a secure investment climate.

In the 2006 Control Risks survey, more than 35% of respondents reported that they
had been deterred from an otherwise attractive investment because of the host
countrys reputation for corruption. Countries with poor governance standards
are less likely to be able to attract the high-quality companies that they need to
advance their economic development.
Similarly, the major trading nationslike the individual companies based in

their territoriesneed to be sensitive to brand reputation. If companies from
particular jurisdictions become known for a complacent attitude to bribery in
foreign markets, they may be able to win short-term advantages. However, in the
longer term, both their reputations and the wider national interest will suffer.
Singapore understands the economic and reputational case very well; its
high standards of governance and low levels of corruption are essential
ingredients that enhance the countrys appeal to the many international
companies who operate in its territory. Hong Kong, China likewise understands
the business case, and acts on it. Its Independent Commission Against Corruption
(ICAC) is, per head of population, one of the best-resourced agencies in the
world.
However, in many other parts of Asia and the Pacific, continuing

governance failures suggest that governments have yet to embrace the
economic case for combating corruption wholeheartedly. The task of ensuring
that they do so falls to an alliance of different interests: anti-corruption specialists,
business associations, individual companies andultimatelyindividual citizens.
There is an economic case for tackling corruption. Ultimately, there is a

political one as well and, without being partisan in a political party sense, we
need not be shy of making it. Governments that fail to protect their citizens from
corruption are not fulfilling their proper role. Continuing failure will bring their
legitimacy into question.
Promote the business case: ethics and compliance add

value
The wider economic arguments are important butparticularly when
addressing commercial audiencesit is important to emphasize that the business
case for combating corruption applies to individual companies as well as
national economies.
Responsible business leaders take changes in the law very seriously, and
this is a key part of the business case. However, it is not the only one. Similarly,
personal values also are an important, indeed vital, driver for high standards of

ethicsbut still far from being the only one. As much as anything, the business
anti-corruption case rests on the need for long-term sustainability.
Companies that pay bribes may be able to make short-term gains, but
bribery is not a sustainable business model. First, by paying bribes, companies
immediately incur demands for more, like throwing meat to dogs. Secondly, if
they do not secure the benefit they supposedly have paid for, they are in no
position to complain: they certainly have no recourse in the courts to enforce
illicit contracts. Thirdly, times change, the officials and politicians who accept
bribes move on or die, and their successors may or may not be susceptible to the
same blandishments.
In late 2008, times are certainly changing. In periods of plenty, fraud and
corruption are more likely to pass unnoticed. By contrast, malpractice is more
likely to be detected during a recession when every dollar counts. Companies
cannot survive unless they retain the confidence of their shareholders and
customers, and they are in a better position to do so if they can point to high
standards of ethics and legal compliance.
The links among strategic vision, internal governance, and commercial

value are now better understood in the financial markets where it has become
common to refer to environmental, social, governance (ESG) factors when
assessing companies worth.4 ESG includes the extent to which companies have
effective ethics and compliance systems. The business case for taking anti-
corruption initiatives is: in contemporary commercial parlance, they add value.
Be realistic about business problems

The overall business case is clear: high standards of ethics and legal
compliance make for greater commercial sustainability. Nevertheless, it is
important to be realistic about the challenges that individual companies face
when applying these standards, particularly when their competitors are dancing
to a different tune.
It has been common to refer to companies as representing the supply

side of corruption, whereas corrupt officials represent demand. Another pair
of contrasting terms refers to active corruption where the briber takes the
initiative, and passive corruption where the recipient makes the demand. And
still another way of expressing the same phenomenon is to think of seduction
where a company seeks to corrupt an official in order to secure a contract, and
extortion where the company faces a demand for a payment in order to
avoid some kind of penalty. An example of extortion would be a case where a

fire safety inspector threatens to close down a factory for spurious safety reasons
unless he or she receives a bribe.
The active or seduction variety of corruption is a reality, and

governmentsand their citizensare fully entitled to do all that they can to
crack down on the companies concerned. Nevertheless, in practice it is often
hard to discern which side is active and which side is passive. Business
leaders may be reluctant to take the anti-corruption agenda seriously, unless
there is a full appreciation of the kinds of problem that they face.
Recent research by Trace International, a US-based non-profit

membership organization focusing on corruption, offers some interesting pointers
in this regard. In 2007, Trace set up an internet Bribeline5 offering companies the
opportunity to make anonymous reports of cases where they had faced
demands for bribes. The fact that the reports are anonymous means that they
cannot be used as a basis for prosecution. Nevertheless, Trace believes that it is
useful to know if the same problem keeps recurring in a particular jurisdiction.
Even if the evidence is imperfect, it serves as an indicator of the need for action.
In Bribelines first year, there were 148 reports of bribery demands in P.R.
China, and of these, 20% were concerned with companies attempts to win new
business6. However, 24% of the demands were backed by a threat to inflict some
kind of harmful action: the hypothetical case of the fire safety inspector
threatening to close down a factory would be an example. In another 24% of the
cases reported, officials were seeking extra payment for the timely delivery of
some service, such as the issuing of a vital official document.
Timelydeliveryofservice 24%
A
voidharmfulaction 24%
Winningnewbusiness 20%
Favourabletreatment 9%
Receivepaymentforservicesalreadyrendered 6%
Exercisinginfluenceoveranothergov'tofficial 3%
Other 9%
0% 5% 10% 15% 20% 25% 30%
Nature of bribery demands reported by Trace International Bribeline, 2007-2008.

Source: Trace International Bribeline 2008sample of 148 cases in P.R. China.

To their credit, the Chinese authorities are working hard to crack down on
all kinds of business corruption. In order to win the support of their various business
communities, governments need to show understanding of the many cases
where companies see themselves as victims rather than instigators of corruption-
related crime and to do something about them.
Specific challenges in specific sectors

A further aspect of the need to move beyond generalities is the
importance of understanding the different kinds of problems faced by different
commercial sectors. The Control Risks International Business Attitudes to
Corruption survey showed that companies in the construction sector were most
likely to believe that they had lost business to a corrupt competitor, followed by
the oil, gas, and mining sectors. Two main factors are at play: in both sectors the
high value of projectsoften running into the hundreds of millions or billions of
dollarsincreases the temptations of bribery; and both involve negotiations with
government officials who have extensive discretionary power and may be
susceptible to bribery.
Companies believing they had failed to win a contract or new

business because a competitor paid a bribe. By sector.
60% 56% 55%
50% 45% 45%
39% 39%
40% 35% 36% 36%
30% 31%
28%
30% 26% 26%
21%
20% 16%
10%
0%
Co Oi IC Fin Po Ph Re De
ns l,g T an we arm ta i fe n
t ru as ce r a l ce
cti ,m
on i ne
Last 5 years Last 12 months

Source: International Business Attitudes to Corruption. Control Risks and Simmons &
Simmons, 2006.
Other commercial sectors face different kinds of problems:

Companies in the information and communications technology (ICT)
sector, such as those dealing with mobile phones, may come under
pressure to pay bribes when applying for licenses but can operate
relatively freely once the license has been granted.
International companies working in the finance sector are tightly
regulated and therefore less likely to operate in high-risk regions, not
least because of the risk of being caught up in money-laundering
scams.
The integrity issues faced by pharmaceuticals are different: license
applications may be difficult. At the same time, pharmaceutical
companies have often been accused of offering various forms of
bribes to doctors in order to market their products.
Retail companies are perhaps more likely to be caught in private-to-
private corruption than private-to-public corruption.
Finally, the defense sector is in a class of its own. The large amounts of
money involved increase the temptations for bribery, and the fact that
national security considerations come into play makes for an intrinsic
lack of transparency.
Business anti-corruption initiatives

Many of the most exciting anti-corruption initiatives involve business
associations operating at the international, national, and sectoral levels.
At the international level, Transparency International has developed a set

of Business Principles for Countering Bribery,7 along with guidelines for how to
apply them. The International Chamber of Commerce has recently revised and
updated its ICC Rules of Conduct and Recommendations to Combat Extortion
and Bribery.8 The World Economic Forum has its Partnering Against Corruption
Initiative, 9 The UN Global Compact has adopted transparency as its Tenth
Principle. 10 All four organizations recently published a joint statement on The
Business Case against Corruption, which is available on their respective websites.
Other initiatives are associated with specific commercial sectors. For

example, the International Federation of Consulting Engineers (FIDIC), which is
based in Lausanne, has developed a set of guidelines for a Business Integrity
Management System (BIMS). 11 Similarly, in the UK, the Anti-Corruption Forum
(ACF) is an alliance of companies and membership organizations concerned

with civil engineering and construction, which develops workshops, conferences,

and training materials on how to tackle corruption. 12 The strength of such
organizations lies in the fact that their members share a common professional
background and have a realistic technical appreciation of the problems that
they face.
Conclusion: how can government agencies advance the

business anti-corruption agenda?
Ten or fifteen years ago, it was hard to enter into a serious conversation
with business leaders about corruption. This is much less true today. Corruption
remains a sensitive topic, but among the various business communities in Asia
and the Pacific and beyond, there is a much greater realization of the
seriousness of the problem and the need to tackle it.
So how can governments promote the business anti-corruption agenda?

Three immediate opportunities spring to mind:
The first task of government is the same as it has always been: to
establish an equitable legal and regulatory framework to combat
corruption, and to apply it fairly and indiscriminately.
Second, national and multinational agencies must set a good example
with their own practices. The ADBs internal integrity and external
procurement programs are an important set of role models.
Third, government agencies can contribute to awareness raising in their
respective business communities, and may be able to provide
technical advice. For example, Hong Kong, Chinas ICAC rightly places
a strong emphasis on education and corruption prevention, as well as
investigation and prosecution.
Governments cannot and should not bear the entire burden of promoting
anti-corruption standards in the private sector. Business associations led by
people with firsthand private sector experience typically are better placed to
understand the problems faced by their members, to educate them and to
devise solutions. Government agencies can endorse and support such initiatives,
but they should not expect to run them.
To advance the anti-corruption agenda, we need to talkbut not about

generalities. Business people look for concrete solutions to specific problems.
Successful business people are promoted for their skill in problem solving. To the
extent that companies provide the supply side of corruption, they are part of
the problem. If business skills are harnessed properly, companies can beand
must bepart of the solution.

NOTES
1 Heimann, Fritz and Dell, Gillian. Progress Report 2008. Enforcement of the OECD
Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions. Berlin: Transparency International.
www.transparency.org/content/download/33627/516718
2 Control Risks and Simmons & Simmons. 2006. International Business Attitudes to
Corruption Survey 2006. London. www.control-
risks.com/pdf/corruption_survey_2006_V3.pdf
See also Control Risks and Simmons & Simmons. 2007. Facing up to Corruption. A
Practical Business Guide. www.control-
risks.com/pdf/Facing_up_to_corruption_2007_englishreport.pdf
3 World Bank. 2004. A Better Investment Climate for Everyone. World Bank
Development Report 2005. Washington and New York: World Bank and Oxford
University Press. www-
wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2005/08/01/0000
11823_20050801104043/Rendered/PDF/2882902005E.ver.010.pdf
4 Grene, Sophia. 2008. Investing in doing good can be good risk management,
Financial Times. 2 November.
5 www.bribeline.org
6 Trace International. 2008. BRIBELine China Report Provides New Details on Bribery.
www.traceinternational.org
The full report is available at
secure.traceinternational.org/news/pdf/China_PR_and_Report.pdf
7 Transparency International. 2002. Business Principles for Countering Bribery.
www.transparency.org/global_priorities/private_sector/business_principles
8 International Chamber of Commerce. 2005. ICC Rules of Conduct and
Recommendations to Combat Extortion and Bribery.
www.iccwbo.org/policy/anticorruption/
9 www.weforum.org/pdf/paci/PACI_Principles.pdf
10 www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/principle10.html
11 www.fidic.org
12 www.anticorruptionforum.org

Efforts of the Business Community to Fight
Corruption
( David Lyman)
David Lyman, Member, ICC Anti-Corruption Commission; Board

Member, ICC Thailand Chapter; and Chairman and Chief Values
Officer, Tilleke & Gibbins, Bangkok, Thailand
The first time I entered into Anti-Corruption endeavours was in 1977, when
the Asia-Pacific Council of American Chambers of Commerce (APCAC)
appointed me to develop arguments against the draft Foreign Corrupt Practices
Act (FCPA) that the US Congress had developed in reaction to several major
corruption scandals involving bribes paid by American corporations to non-
American public officials outside the United States. APCAC chose me because I
was an American lawyer with a legal practice in Bangkok and was a past
president of the American Chamber of Commerce Thailand.
I was soon to realize that the FCPA, with some tweaking a year or so later,
was actually a good law. It was the first significant law against bribery of foreign
public officials adopted by a major industrialized nation. Over the years, it
spawned an avalanche of conventions, legislations, self-governing rules and
codes of conduct guiding the conduct of business in corrupt environments. It
was then my privilege to have attended in Manila in 1999 the first gathering of
the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific. So it is most
heartening indeed to see 9 years later that this Initiative is thriving.
Perceptions on corruption change

A few years ago, a friend and colleague of mine when asked about
integrity, ethics, accountability, and corruption responded, I wouldnt know. Ive
lived in Thailand for the past 40 years.
Well, the good news in Thailand is that Thailand has begun its climb
upwards on TIs Perception of Corruption Index; this progress is due to some
recent constitutional changes, which have established several independent anti-
corruption agencies, and to the expansion of the court system to address and
deal specifically with corruption and abuse of power by government officials.
Corruption is still a most serious problem in the Land of Smilesup to 60% of the
costs of some procurement projects are estimated to have been diverted by

corrupt persons; today, corruption of policy is considered a more pressing

problem.
While I doubt that Thailand can achieve the corruption-free status of

Singapore in the near term, attitudes and the exposure of corruption in the Thai
public sector change. One driver behind this change is the private sector that
increasingly considers that corruptionbe it bribery or extortioncan no longer
be tolerated as inevitable. The United Stated FCPA (1977), the OECD Anti-Bribery
Convention (1999), the UN Convention against Corruption (UNCAC, 2003) and a
number of regional conventions have largely contributed to this change in
perception.
Private sector efforts to cope with corruption

The International Chamber of Commerce (ICC), headquartered in Paris,
France, pioneered and spearheaded many of the private sectors activities to
cope with corruption matters through self-regulation.1
Background
Today, the ICC is the global voice of virtually all sectors of international
business. Founded in 1919, and enjoying consultative status with the UN since
1945, the ICC operates through chapters in 84 countries. It espouses self-
regulation of business through a series of voluntary self-imposed rules, standards,
and codes. The ICC supports the ICC International Court of Arbitration as well as
a number of bureaus, councils, and some 16 Commissions of which Anti-
Corruption is one.
The Anti-Corruption Commission started in 1977 when it issued its first report
and its Rules of Conduct and RecommendationsCombating Extortion and
Bribery. 2 The UN failed to take up the ICCs recommendation for an anti-
corruption convention, andin 1997, 20 years after the ICCs Rules of Conduct
were issuedOECD eventually stepped in and adopted the Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions.
ICC Rules
Since 1977, the ICC Rules have been updated several times. Addressed to
the private sector, civil society, and enterprises, they are simple in concept and
consist of only nine Articles that cover
prohibition of bribery and extortion (both publicprivate and private-to-
private)

agents and other intermediaries

joint ventures and outsourcing agreements
political and charitable contributions and sponsorships
gifts, hospitality, and expenses
facilitation payments
corporate policies
financial recording and auditing
responsibilities
Fighting Corruption handbook

The Commission continued its efforts and published, in 1999, a handbook
for managers entitled Fighting CorruptionA Corporate Practices Manual. The
manual provides detailed practical guidance for compliance with the ICC Rules
of Conduct and the OECD Convention. It was substantially revised and updated
in 2003, and the newest and again expanded edition is due out in December
2008. For whatever it may be worth, I authored the chapters on Money
Laundering, but deliberately omitted the how-to instructions.
Whistle-blowing
The Commission remains busy. In July of this year, 2008, the Commission
issued its Guidelines on Whistle Blowing. Such Guidelines are a first by any world
business organization. These Guidelines seek to help companies establish and
implement internal whistle-blowing programs to promote disclosure of
questionable or illegal corporate conduct, and concurrently to protect whistle-
blowers from retribution. Experience demonstrates that absent insider disclosures,
many instances of fraud and malfeasance would go undetected, often causing
substantial damage and losses.
ICC/WEF/TI/UN Global Compactthe Business Case against

Corruption
Four principal multi-industry organizations focus on anti-corruption: the ICC
since 1977; the World Economic Forum (WEF) with its PACI initiative created in
2004; Transparency International (TI), a civil society organization dedicated to
fighting corruption, founded in 1993 by several former World Bank executives;
and the UN Global Compact with its 10th Principle on Corruption adopted in
2004. Their first joint meeting was in April 2007 at the ICC Headquarters in Paris. At
that meeting, these four sister organizations agreed to pool their ideas and
principles to issue a joint publication entitled Clean Business is Good Business

The Business Case against Corruption.3 The compilation of this work was released
on 15 July 2008.
RESIST project
A second joint project by these anti-corruption affinity groupswhich
represent the vast bulk of the global private sectoris now under way. Called
RESISTfor Resisting Extortion and Solicitation in International Transactions
and still in draft form, this Initiative will create a training tool that provides
practical guidance on how to respond to an inappropriate demand by a client,
business partner, or public authority. It is designed to help companies reduce
their exposure to corruption and find ways to react to solicitations in a legally and
ethically acceptable manner, which, of course, makes good business sense.
Real-life scenarios are presented in two main categorieshow to prevent and
how to react to (i) solicitations in the context of the procurement process and (ii)
solicitations in the context of the implementation process and daily operations.
The RESIST tool should be ready for publication in 2009.
UNCAC and OECD Conventions

During this conference, there will be numerous discussions on these
monumental anti-corruption agreements and their local implementation by
individual nations. Therefore I will not dwell on them other than to say that they
are wholeheartedly supported and promoted by the ICC and its allies in the war
on corruption. The key to the success of these conventions is geographic
coverage. The broader their adoption and implementation, the more effective
they become.
Closing
Let me leave you with three ideas:
First, read the book ILLICITHow Smugglers, Traffickers and Copycats are
Hijacking the Global Economy by my old friend, Moises Naim, editor of the
Foreign Policy journal. It will scare the hell out of you, and it should. It is about
corruption and a trade war we are not winning, yet.
Second, my title in my law firm is Chairman and Chief Values Officer

abbreviated as CVO. Why Chief Values Officer? We witness one corporate
scandal after another; we witness self-serving actions and attitudes supporting
the greed factor of far too many managers and corporate officers who should
know better; their disregard of moral and ethical values for the sake of
maximizing profit at almost any price requires someone senior in an organization

to keep it on the straight and narrow to do what is right. That is my job as CVO.
The full definition and/or job description is set forth in Item No. 35 of my third idea
for you.
Third, the CD-ROM I previously mentioned containing all of the anti-

corruption materials I have covered this morning and many more, all assembled
in one place. Copies have been prepared for you and are available after this
session.
Conclusion
Corruption has been with us since the days of Pharaoh in ancient Egypt,
and it is not going to go away. None of us will be out of work any time soon. But
globally organized anti-corruption endeavours in earnest are relatively new
phenomena. These efforts will falter and probably fail without the unrelenting
commitment and never ending cooperation of global, regional and local
governments, and judiciaries, together with civil society and the worlds private
sector, all acting in concert. That is where you and I can make ourselves useful
and our presence felt.
As a lawyer I cannot leave you without one piece of free legal advice
which I actually learned during my days in the US Navy: Dont let the bastards
get you down.
NOTES
1 A full overview of the activities of the ICC Anti-Corruption Commission, in depth
analysis, and full texts of referenced conventions and guidelines is available at
www.iccwbo.org.
2 The 2005 revision of the document is available at
www.unglobalcompact.org/docs/issues_doc/7.7/2005_ICC_Anti-
Corruption_Rules_FINAL.pdf
3 www.unglobalcompact.org/docs/news_events/8.1/clean_business_is_good_
business.pdf

Singapores Experience in Fighting Bribery in
Business
( Soh Kee Hean)
Soh Kee Hean, Director, Corrupt Practices Investigation Bureau,

Singapore
The theme for this conference Fighting Corruption in Asia and the Pacific:
Strategies for Business, Government, and Civil Society reminds us that corruption
is a problem which must be tackled from multiple angles. I shall therefore touch
on the nature of corruption, what it takes for anti-corruption enforcement, and
what can be done to curb corruption in the private sector. I must say up-front
that I have never been in business. I think some of my fellow panel members
have not been in business, either. My perspectives are based on what
Singapores Corrupt Practices Investigation Bureau (CPIB) has seen, what people
tell us, what I hear, and what we gather from cases that CPIB has handled.
Nature of corruption
Sometimes, we refer to the private sector as the supply side and public
sector as the demand side of corruption. While this is generally accurate, it can
overly generalize and lead us to overlook some facts of corruption. Private
companies can and do bribe other private companies, so that private
companies are on both the demand and supply side. We cannot ignore this
conduct. In Singapore, unlike some countries, enforcement action can be taken
where private companies bribe other companies or where private individuals
bribe other private individuals. Consistent action within the private sector will
keep these issues top-of-mind and set the standards expected from businesses.
In many instances, the demand and supply sides are represented by the
public sector and private sector, respectively. In economic terms, demand and
supply have a close relationship. Does demand drive supply or supply drive
demand? Sometimes this is a chicken and egg issuewhich came first? Was it
the bribe demand that came first, leading to bribe supply? Or was it the supply
that came first and enticed the demand? In reality, we have seen cases where
the government official was the greedy one, who sticks his hand out to press
businesses for bribes. Then again, we have seen cases where businesses actively
offer bribes to entrap government officials to do their bidding. So who came first?

This is ripe for an academic argumentbut it really does not matter. Both sides
are equally devious and must be dealt with decisively.
Indeed, in Singapore law, both are equally culpable. We do often

prosecute both parties, and on many occasions, both receive similar sentences
by the court. If the law only criminalizes one side, you can never eradicate
corruption. If you try to deal with one side first followed by the other in sequential
order, you will also never be able to reduce corruption. Our experience in
Singapore is that you need to deal with both sides simultaneously.
Enforcement issues
Prosecuting both parties, however, entails difficult challenges. If both sides
are accused, who are your prosecution witnesses? We need to be thorough in
investigation workand amass all the evidence we can get by way of interviews
with witnesses, interested parties, involved parties; gathering physical,
documentary, and computer evidence; and following the money trail. Without
comprehensive evidence, we will not be able to deal with both the supply and
demand sides of the corruption equation.
We sometimes take it for granted that anti-corruption agencies will be

effective. When we look at an agency fighting both demand and supply sides,
we need to be sure that all aspects of each situation are clear. The agency must
understand how the public sector operates and how the private sector does its
business. The private sector is large and varied, with different industry types. Anti-
corruption agencies need to be capable of learning quickly, and understanding
situations in order to take effective action. No agency can be expert in
understanding different fields of business, so it is incumbent on any agency to
develop its officers ability to learn fast and to establish links with experts in
various business fields who can serve as resources when the need arises.
When there is a crime or corruption, companies must know where to lodge

reports. We now receive feedback from various means, including business
people providing reports from their homes via the internet. As long as we make it
easy for people to lodge complaints, we can ensure there will be enforcement.
Of course, there will be those who report to us when they perceived corruption
that, in truth, did not exist. For example, in a government tender, the losing
bidder may believe that he lost the competition due to corruption. The CPIB
would investigate the matter, but would likely find no wrongdoing. If the
complaint was malicious, then we can take action against the complaining
party; at times, however, complaints are made when a company loses business
and does not understand why.

Curbing corruption in the private sector

When we talk about the private sector being the supply side of the
corruption equation, we need to recognize that the private sector is large, and
only a minority of actors within the sector use corruption to further their aims.
Collectively, the private sector can contribute toward anti-corruption efforts in
the economy. Companies can highlight areas of government red tape which
impede efficiency and provide excuses for corruption. There are examples of
companies that walk away from business opportunities when bribes are
demanded and report to the authorities.
In Singapore, there is a Pro Enterprise Panel. This is chaired by Head of the

Civil Service, Mr. Peter Ho, and consists of members from industry and civil
service. Since its formation in 2000, the Pro Enterprise Panel has reviewed 1,700
suggestions from businesses, and accepted 54% for implementation. This has
helped businesses which encountered red tape to work out solutions with
relevant government agencies. In turn, the agencies have attained a better
understanding of business needs, thereby enhancing their regulatory functions.
The panel also looks at industry proposals that do not fit neatly under any
government agency. Its work contributes to increased efficiency and has the
side benefit of reducing corruption opportunities.
Where the usual infrastructure may be inadequate, civil society also helps
to highlight potential problem areas, suggest improvements and report
corruption cases.
Good corporate governance reduces corruption tendencies. There is

literature that links corporate governance to the level of corruptionI have seen
research papers such as those by researchers of the Lee Kuan Yew School of
Public Policy touching on this issue.
Corporate governance has to be more than just pronouncements in the

media, written company policy statements, or codes of ethics and posted on
company websites. Implementation is the key. Writing down statements is the
easy part. If companies pay lip service rather than practice what they lay down,
company policy statements are of no use. They will be susceptible to abuse,
malpractice, crime, and corruption. So when gauging corporate governance,
the criteria used must be based on actionable and observable behaviour and
conduct, and not just on the written word.
Corporate governance also does not mean writing volumes of rules and
rigidly applying them. There has to be a sufficient level of control, without stifling
enterprise and the free market principles that are essential for the private sector
to thrive. Singapore will see Integrated Resorts with Casinos open at the end of

2009. This involves a lot of money, and businesses operating in this context have
to comply with regulations. There is, of course, potential for abuse and
corruption. However, the answer is not to overregulate and control everything
down to the last detail because that will make it hard for businesses to operate.
The answer is establishing an appropriate level of regulation and good internal
corporate governance.
The quality of governance depends greatly on the top: the Board of

Directors. The Board can steer the company on a long and steady path of
growth. The Board and the CEO have a balance of power so that both can play
complementary roles. However, we have seen instances where there is a
superstar CEO who can override the Board. We have seen Boards subservient
to the CEO or to a strong individual, and therefore not capable of performing
their role. After the collapse of Lehman Brothers, various commentaries and
criticisms against Lehmans Board have been voiced how the majority of
members were aged in their 60s and 70s and not able to understand the
complex business and risk exposure of the company. If the Board does not
understand the business, it will be difficult to ensure its sustained profitability and
viability. However, these critics are often made in hindsight. Hindsight is useful but
we need to be proactive. How do we set things right proactively?
Recently, the Singapore Institute of Directors has enhanced training for its
members, who serve on various Boards. It is a good Initiative and recognizes the
importance of training. Modern business can be complex and we cannot
assume that all Directors will know their roles when they are appointed to a
Board. They need some orientation to understand the business they are in and
the contribution expected of them.
A guidebook for use by audit committees in Singapore was recently

developedit contains useful tips for audit committees to ensure they can
discharge their responsibilities. Audit committees are important features of good
corporate governance. They need to know their role and play their role well.
They need to stop abuses. The Guidebook will be a useful resource. At the same
time, I think companies should not wait until something is broken before making
changes. The companies should have inbuilt mechanisms to constantly review
their processes and controls to fine-tune and adjust according to changes going
on around them. Audit committees can have such a proactive role as well.
I came across this saying: The accomplice to the crime of corruption is

frequently our own indifference. Companies can bear in mind that if they do
not focus on the issues of anti-corruption and abuse, if they do not proactively
review what they do before problems crop up, they lay the seeds of future
problems through their indifference.

Singapore knows low levels of corruption. Therefore, an attitude of

indifference, as well as complacency, is a real danger. Public officials may think
that there is no corruption, and companies may ignore the potential dangers. If
we let our guard down, corruption will take root and it will be hard to eradicate.
Therefore, both the public sector and the private sector need to constantly keep
the issue of corruption in focus and do what it takes to keep it at bay.
Summing up
Singapore law allows us to take action against Singapore companies who
commit corruption overseas. Recently I met an official from International
Enterprise Singapore, the government agency spearheading the development
of Singapores external economic capacities. She said that Singapore businesses
sometimes complain that they come across as stupid and silly when other
foreign companies bribe their way to contracts overseasand they do not do so
because Singapore law forbids them from bribing foreign public officials. When
our officers meet business leaders, we are also asked about this issue. On the
surface, it appears as if Singapore companies will lose competitiveness because
of our extra-territorial provision that forbids them from paying bribes or facilitation
payments.
This is appealing logic, but bribery cannot sustain business in the long run.
In the longer run, the company that spends its time bribing its way will not be as
competitive as a company that focuses on developing its products and services
and fine-tuning its competitive edge. Those who bribe will be found and dealt
with. We have seen examples in various parts of the world where large
corporations have kept slush funds to pay bribesin a matter of time, they are
found and the company and personnel are dealt with severely.
Singapore is associated with integrity. It has been an effort to build up this

branding, and it has helped Singapore on a macroeconomic level. Some foreign
businesses are prepared to employ Singaporeans in senior positions such as Chief
Financial Officers, because Singaporeans are known for their integrity.
I think all companies around the world should adopt good governance
practices and behave responsibly within their home country, where they comply
with their domestic laws, and overseasregardless of whether they are covered
by an extraterritorial provision like companies incorporated in Singapore. That
way, the private sector as a whole contributes to fighting corruption.
Anti-corruption agencies need to continue to sharpen their capabilities to

fight corruption in both the public and private sectors. We cannot neglect either
sector or the fight will be lost.

P.R. Chinas Campaign against Commercial
Bribery
(W ang Huan gen g)
Wang Huangeng, Deputy Director-General, Ministry of Supervision,

Peoples Republic of China
P.R. Chinas efforts to curb commercial bribery: Concept,

components, and achievements
As market competition increases, P.R. China is seeing rampant
commercial bribery in some fields and industries. Commercial bribery poses a
major threat to social stability and economic growth. Therefore, the Central
Government launched a comprehensive anti-commercial bribery campaign in
2006. Special task forces were set up in 31 provinces and 39 central departments.
The campaign has already seen results and the government is ready to push this
work forward. The campaign involves three components: self-examination and
self-correction; investigation; and reform and system innovation.
Self-examination and self-correction

The first component involves self-examination and self-correction. All
enterprises are required to carry out an in-depth self-examination and self-
correction campaign to correct improper trading practices that breach business
ethics and market rules, and undermine fair play. Anti-commercial bribery efforts
are focused on six major fields and nine areas where commercial bribery has
been rampant: construction; land transfer; property right transactions;
procurement and sales of medical supplies; material procurement; resource
development and distribution; bank credit, securities, and futures; commercial
insurance; publishing; sports; telecommunications; electricity; quality control; and
environmental protection.
Joint self-examination by the dealers and the supervisors has been

conducted in different areas and fields, to uncover improper trading practices
and loopholes in the current supervision and management systems. Over
2.6 million enterprises and institutions, together with 49 competent supervisory
departments and corresponding industries, have launched self-examination and
self-correction campaigns, turning in RMB 1.2 billion (approximately
USD 175 million) of illegitimate income. By virtue of such campaigns, the dealers

have gradually built up their awareness of trading in accordance with the laws
and regulations, and the latent rule of securing trading opportunities and
commercial profit by means of gift giving and bribery is being corrected in some
areas and fields.
Investigation
Case investigation is the second component of the campaign. We have
delivered heavy punches at commercial bribery and resolutely curbed its
spread. Judiciary, administrative, and law enforcement departments at all levels
have determinedly cracked down on commercial bribery cases that violate laws
and regulations and involve provision or acceptance of improper benefits.
Special attention is given to cases in which civil servants engage in power-

for-money deals, solicitation or acceptance of bribes in commercial activities,
and where public interests are seriously damaged. As of September 2008, a total
of 54,298 commercial bribery cases involving a total amount of RMB 11.685 billion
(approximately USD 1.7 billion) have been dealt with. As a result, commercial
bribery in public procurement and sales of medical supplies has significantly
declined.
Reform and system innovation

The third component of the campaign covers reform and system
innovation. Commercial bribery results from the still-imperfect market economy
system of P.R. China. To combat commercial bribery, we must accelerate reform,
perfect laws and regulations, and strengthen market supervision.
To fight commercial bribery, we have recently accelerated reforms on: the

system of administrative approval; financial management system; investment
management system; property right transactions; land transfer; goods
procurement; and tendering and bidding for construction projects. Credit scaling
standards and dealers credit documents have been set down in government
organs in customs, taxation, quality inspection, finance, fiscal management,
justice, tourism, and others. The bribery inquiry system of procurement organs and
construction departments, as well as the "blacklist system at industrial and
commercial administrations, have laid an important foundation for strengthening
market supervision, playing a significant role in combating commercial bribery.

Focus of the next stages of the campaign against

commercial bribery
The next stages of P.R. Chinas campaign against commercial bribery will
focus on case investigation on the one hand, and establishment of preventive
measures on the other hand.
Prioritizing investigation
Investigations of commercial bribery cases will prioritize important cases
and cases involving cross-border commercial bribery. The first priority concerns
investigation into important cases; cases are considered important if commercial
bribery occurs in certain sectors, involves certain individuals, or has a particular
impact on society. In this respect, efforts are concentrated to curb commercial
bribery in project construction; land transfer; and the financial sector. Special
attention is also paid to cases that involve public servantsleaders in particular
who abuse their authority of approval, execution, and jurisdiction to engage in
collusion with businessmen, power-for-money deals, solicitation or acceptance of
bribes, and other bribery cases seriously encroaching the public interests. Severe
penalties will be imposed on those who take or offer bribes.
Specific priority will also be given to investigation of cross-border

commercial bribery. In accordance with the United Nations Convention against
Corruption and other international conventions, effective measures will be taken
to severely penalize commercial bribery committed by Chinese economic
organizations abroad, including outside the Chinese mainland, or bribery
committed by foreign economic organizations (or those organizations outside
mainland) in the Chinese mainland. International mechanisms for law-
enforcement cooperation, judicial assistance, extradition, and repatriation of
criminals, as well as corruption-related property recovery, should be established
and improved to severely punish bribery of multinational companies in China
and criminals that flee overseas.
Prioritizing prevention of commercial bribery

Prevention of commercial bribery at the source is the second main priority
of the campaign against commercial bribery. Preventive work mainly includes
three tasks: accelerating the establishment of a market credit system; reform of
the public management system; and legal reform.
Building a market credit system will involve information disclosure and

information sharing on market credit. A legal framework should integrate
enterprise and personal credit data. Departments of industry and commerce,

taxation, customs, commerce administrations, and financial institutions and

public societies currently hold this information. All information will gradually be
unified in a national enterprise credit information system and personal credit
information system. Laws will regulate when that credit information can be
disclosed, limited only by state security, commercial secret, and personal
privacy.
Enterprises and individuals that have a record of malpractice must be

treated in accordance with regulations with market access consequences and
exit management systems. Market entities that default on credit will lose
opportunities in business, public service, and bank credit.
System reform and management innovations will notably deepen reform

of the administrative approval system. The goal is to further reduce and the
number of items that need approval and standardize the process, reducing
government intervention in microeconomic operations. The mechanisms of
censoring and testing of the new administrative approval items, dynamic
management on the approval items and thorough supervision on the
administrative approval process will be established or improved.
Reforms with respect to public financial management, as well as the

structure and implementation of government-funded projects, will be
accelerated. Rules on public bidding and transfer of land for commercial and
industrial use will be more thoroughly applied. Also, licenses for mineral
exploration and mining will be assigned through public tendering. A system of
market trading of state-owned property rights of enterprises, and a
corresponding monitoring system will be established. Furthermore, we will expand
the scope of government procurement, deepen the reform of the state-owned
assets-management system, and establish a mechanism for enterprise
regulation, stimulation, and sanctions adapted to a modern enterprise system.
We shall also intensify the management of cash and foreign currency and
establish an early warning system against financial risk. In addition, an early
warning mechanism for high-value capital outflow and a system for sharing
system financial information should be established and improved. Finally, anti-
money laundering measures should be improved by integrating certain non-
financial institutions into supervision system.
Upgrading the legal system is the third priority area in preventing

commercial bribery. Further research will be conducted on the relevant articles
for penalising commercial bribery in the Criminal Law. Other areas of regulation
will also be addressed. Laws need to be drafted or amended. These include
notably: the Law of the Licensed Pharmacist; Regulations on the Implementation
of the Bidding Law; Regulations on Government Investment and Regulations on

the Implementation of Government Procurement Law; Anti-unfair Competition

Law; Environmental Protection Law; Construction Law; the Drug Control Law;
Regulations for the Supervision and Administration of Medical Devices;
Regulation on the Implementation of Audit Law; and Regulation on the
Supervision of Important Construction Projects.

A Global Framework for the Fight against
Corruption in Business Transactionsthe
United Nations Convention against
Corruption
( Kuniko Ozaki)
Kuniko Ozaki
Director, Division for Treaty Affairs (UNODC)
Integrity is the basis for legitimate government and an attractive business

environment. Corruption rots government, furthers organized crime and terrorism,
and scares away investment. The United Nations Convention against Corruption
(UNCAC) provides the first global framework to address these challenges. It
strives toward universal adherence, and in late November 2008 had 128 States
Parties and 140 signatories. For the States participating in the ADB/OECD Anti-
Corruption Initiative for Asia and the Pacific it isalong with the OECD
Business Transactionsthe essential legal framework. Fifteen members of the
ADB/OECD Initiative are States Parties and seven more are signatories.
The UNCAC is based on four pillars: prevention, criminalization,

international cooperation, and asset recovery. All are highly relevant for
economic development. Only full implementation of the entire Convention will
guarantee a transparent business environment, which is best described by the
elements delineated in the Convention itself: transparency and efficiency in
national decision-making, fair competition, integrity in procurement systems and
financial institutions, a ban on bribery in all domestic and international investment
decisions, efficient law enforcement, swift international cooperation and the
denial of safe havens for funds of illegal origin. These elements, when fully
implemented as characteristics of the national system, create a comparative
advantage for all countries who wish to attract foreign investment.
UNCAC as a driver and catalyst for improving business and

investment climate
Three key provisions show how the UNCAC works toward a favorable
business climate.

First, the Convention obliges States Parties to establish a wide range of

criminal offenses, thus developing an internationally agreed set of conduct that
must be criminalized. It requires States Parties to establish as a criminal offense,
inter alia, the bribery of foreign public officials in order to obtain an undue
advantage in relation to the conduct of international business (article 16,
paragraph 1). When the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions was adopted in 1997 and
entered into force in 1999, the criminalization of foreign bribery was still pioneer
work and controversial in many instances. Now, only 10 years later, it is an
evolving global standard. Since bribes can amount to between 5% and 30 % of
overall project costs in some business sectors, the universal implementation of the
foreign bribery offense is among the core principles supporting good business
and economic development.
Second, the Convention directly affects the business community in many

ways. Article 12 requires States Parties to take measures to prevent corruption in
business transactions, asks for cooperation between private companies and law
enforcement agencies, and requires codes of conduct in the private sector to
strengthen integrity, prevent conflicts of interest and safeguard good
commercial practices; it aims to ensure that companies have independent
internal auditors to prevent off-the-book accounts, recording of nonexistent
expenditures, use of false documents, and destruction of financial records. States
Parties must also disallow the tax deductibility of bribes.
Third, the Convention contains several provisions concerning the financial

sector. States must establish a comprehensive regulatory and supervisory regime,
ensure that the authorities dedicated to combating money-laundering have the
ability to cooperate and exchange information at the national and international
levels, implement measures to detect and monitor the cross-border movement of
cash, have effective suspicious transaction reporting systems in place, and
require financial institutions to maintain adequate records and apply enhanced
scrutiny to the accounts of politically exposed persons (articles 14 and 52). The
Convention contains innovative provisions on asset recovery and the prevention
of transfers of proceeds of corruption in Chapter V, which call for close
cooperation with the private sector as an essential element for success.
Effectiveness will depend on implementation

The UNCAC provides a comprehensive and, in many instances, innovative
framework for the fight against corruption. However, much will depend on its full
implementation. The Conference of the States Parties has the mandate to
enhance the capacity of and cooperation among States Parties. Leading up to

the third session of the Conference, which will be held in November 2009 in
Qatar, the most important and most challenging development is the
establishment of a mechanism to review of implementation of the Convention.
Based on its mandate from the Conference of the States Parties, the Open-
ended Intergovernmental Working Group for Review of Implementation is
preparing terms of reference for a mechanism to review implementation of the
Convention, for consideration and possible adoption by the Conference at its
third session. This work draws on 33 proposals submitted by States, among them
four States that are participants in the ADB/OECD Initiative. Further, 29 countries
from all regions have volunteered to test a variety of implementation review
methods in a voluntary pilot program run by UNODC, among them five
participants in the ADB/OECD Initiative. The program will report its findings to the
Conference of the States Parties at its third session.
Technical assistance and international cooperation assist

States Parties in implementation efforts
UNODC provides technical assistance to States for assessment of their
national systems and development of new legislation to implement the
Convention. The Office has developed a number of toolssuch as the
Legislative Guide, a Commentary to the Bangalore Principles on Judicial
Conduct, and the Mutual Legal Assistance Request Writer Toolto help States
make the Convention operational. Further, UNODC assists States Parties in
building institutional capacity and provides training to practitioners for the
application of the norms implementing the Convention.
On 13 October 2008, UNODC signed an agreement with Interpol to

establish the International Anti-Corruption Academy. The Academy will be the
worlds first educational institute dedicated to fighting corruption. The Academy
will conduct training courses and anti-corruption education for up to 600 students
per year from law enforcement agencies, the judiciary, governments and the
private sector, as well as intergovernmental and non-governmental
organizations. It will be open by the end of 2009.
With special regard to Chapter V of the Convention, UNODC cooperates

with the World Bank under the joint Stolen Asset Recovery Initiative (StAR
Initiative), launched on 17 September 2007. Activities under this initiative include
promoting the implementation of the Convention, and assisting in building
capacity and lowering barriers for asset recovery worldwide. The work of the
StAR Initiative has proven successful in a number of pilot countries including
Bangladesh, Haiti, Indonesia, and Nigeria.

In an interdependent world, governments alone cannot win the fight

against corruption. The Convention, although binding for Member States as
subjects of public international law, applies a multi-stakeholder approach and
gives important roles to the business community and civil society. The private
sector has a stake in stepping up its integrity policies and measures, and its
systems of checks and balances. UNODC therefore works closely with business
sector entities in their process of self-regulation.
At the second Conference of the States Parties to the UNCAC, a number

of representatives of the business community came together in a forum
organized by UNODC jointly with a number of international organizations
including the OECD. The representatives expressed broad support for a shared-
responsibility approach that involves all stakeholders: governments, the business
community, intergovernmental organizations, and civil society. The forum
adopted the Bali Business Declaration, in which the private sector called upon
governments to ratify and implement the Convention and urged the
Conference of the States Parties to establish an effective mechanism to review its
implementation. Further, the business community itself committed to work toward
the alignment of business principles with the fundamental values enshrined in the
Convention and to develop mechanisms to review companies compliance with
those business principles. Finally, it called for strengthening publicprivate
partnerships for combating corruption in business.
UNODC is also closely cooperating with the United Nations Global

Compact in the implementation of the 10th principle. The 10th principle,
announced during the Global Compact Leaders Summit on 24 June 2004, reads:
Businesses should work against corruption in all its forms, including extortion and
bribery. The 3rd meeting of the Working Group on the 10th Principle, co-
convened by UNODC and the Global Compact Office in Vienna on 56 June
2008, adopted a work program. It includes activities to: collect best practices;
ensure that the policies of major companies headquarters are applied to their
subsidiaries, suppliers, and subcontractors; develop an inventory of anti-
corruption tools and resources; and expand multi-stakeholder dialogue networks
involving public counterparts.
The fight against corruption is one of the main tools for creating a good
business climate and fostering economic development. Full ratification and
implementation of the UNCAC is a challenging, yet necessary milestone, and it
involves a variety of activities and actors.

Civil Societys Contribution to Curbing Bribery
in Business
( Pet er Rooke)
Peter Rooke, Senior Adviser, International Group, Transparency

International
At a time when the world economy is in crisis, it is particularly important to

maintain focus on the links between business and corruption. Corruption
increases the cost of doing business and the cost of goods and services to the
customer. The temptation to resort to bribery to gain business is increased when
times are bad.
The 2007 Global Corruption Barometer1 survey (conducted by the Gallup

organization for Transparency International) showed that the business sector was
perceived as the most corrupt of 14 sectors surveyed in Hong Kong, China and
Singapore, 3rd most corrupt in Thailand and 4th in Malaysia. Asia and the Pacific
average for the business sector was 5th out of 14 sectors, not a very satisfactory
score.
Much business corruption involves enterprises in their home country, but an

important issue is the impact of corrupt behaviour in the international
marketplacethe bribing of foreign public officials and other forms of cross-
border corruption.
The most recent TI Bribe Payers Index (BPI),2 launched on 9 December

2008International Anti-Corruption Dayseeks to gauge the impact of
transnational enterprises on corruption in developing countries. The BPI surveys
the perceived behaviour of enterprises from 30 leading exporting countries,
together representing 82% of world trade, from the perspective of the host
country. It is notable that transnational companies tend to be more likely to bribe
overseas than in their home market. This is particularly true in the case of
companies from countries that score well on various indices of corruption,
including the TI Corruption Perception Index.3 This is a regrettable example of
double standards.
I have drawn attention to these two TI surveys, as they show that business is
seen to be relatively corrupt and that business behaviour overseas is seen as
worse than at home in many cases.

Transparency International
I should perhaps say a brief word about my organization, Transparency
International. TI is the leading global anti-corruption NGO with national chapters
in over 90 jurisdictions, including 20 in Asia and the Pacific. Transparency
International is non-profit and independent. TIs funding comes from a wide
range of sources: governments, foundations and, increasingly, corporations.
Transparency Internationals strategy is to build coalitions with other

stakeholders, particularly from government and business, to work together to
curb corruption and to promote accountability and integrity.
Cross-border corruption a key issue

Since its beginning in 1993, Transparency International has seen curbing
business corruption across national borders as a key issue, for which responsibility
is shared between business on the supply side and public officials on the
demand side.
However, enforcement of anti-corruption laws was traditionally directed

almost exclusively at the corrupt official. Many exporting countries subsidized
foreign bribery through allowing tax deductibility of bribes and through their
export credit schemes.
Fifteen years later, governments and international organizations have

developed a legal framework criminalizing bribery of foreign public officials, as
well as greatly increasing international cooperation in law enforcement and
technical assistance in preventing and sanctioning corruption. The business
community has also focused much more attention on the need to curb
corruption.
OECD Convention at a crossroads

All major industrialized countries have ratified the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business Transactions
(OECD Anti-Bribery Convention). However, on the Convention's 10th anniversary
in 2007, OECD Secretary-General Angel Gurria said that much more needed to
be done to fight international corruption. "Some countries are still holding back
on implementing the Convention, he said. "They have almost no investigations.
They have brought no cases to court. They are not being pro-active. This needs
to change.4

UN Convention impact limited

The provisions on criminalizing bribery of foreign public officials in the UN
Convention against Corruption (UNCAC) are very similar to those in the OECD
Anti-Bribery Convention, but the reach of the UNCAC itself is much widerthe
UNCAC is a truly global instrument, and it has great potential. However, the
Convention is not yet fully implemented and does not yet have a follow-up or
monitoring mechanism.
In Asia and the Pacific, an important priority is for countries which have not
yet ratified the UNCAC to do so urgently. I would single out in particular India,
Japan, Singapore, and Thailand as important countries; most are taking
preparatory steps, but have yet to ratify the UNCAC. In all countries, effective
implementation will require much effort, both making necessary changes to laws
and institutions and putting resources into both corruption prevention and
enforcement.
OECD Anti-Bribery Convention outreach

It is significant that the OECD Convention has recently been opened to
additional States Parties, with a particular focus on the Russian Federation, India,
and P.R. China. Indeed, the OECD Working Group on Bribery has from the outset
pursued a vigorous outreach policy. One important outcome was, of course, the
launch of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific.
While justified criticism has been levelled at the slow pace of

implementation of the OECD Anti-Bribery Convention in many countries, more
than 150 investigations into foreign bribery are currently under way. There have
also been some high-profile convictions, notably that of the German engineering
company Siemens which was fined over USD 300 million in 2007 and its Chairman
and CEO pressured to resign.
Companies engaging in bribery not only run the risk of being subject to
criminal sanctions. Blacklistingthe exclusion from business opportunities
particularly by international financial institutions such as the World Bank and ADB,
is increasing as well. In many cases, it is a particularly effective sanction.
Government role in prevention of business corruption and

enforcement
Governments have responsibility for enforcing criminal anti-corruption
laws. It is very important that bribe payers, particularly from businesses, bear the

same risk of sanctions as those who take bribesand that extortion is also
effectively curbed. In some cases, laws need to be strengthened and in many
cases, enforcement needs to be more even-handed.
Because much corruption occurs at the interface between business and

government, governments have a responsibilityand an opportunityto
minimize the risk of corruption in public procurement and in other business
dealings with the public sector. Examples to do so, as we heard from Senior
Minister Ho, are electronic licensing, e-procurement and electronic customs
clearance.5
I understand that the majority of cases now brought by Hong Kong,

Chinas Independent Commission Against Corruption are against business. Yet,
many anti-corruption agencies do not include private sector corruption in their
mandates. Private-to-private corruption can have many of the adverse
consequences of bribery of public officials, and I am pleased to see that one of
the workshops is addressing this important area.
Given the difficulties in detecting and prosecuting corruption, it is very

important that governments provide effective protection for public interest
disclosures, or "whistle-blowing, and for witnesses in corruption cases. This is at
least as much a question of changing organizational culture as of improving laws
and regulations.
Nongovernment stakeholders, including the media and civil society, can

play an important role in curbing corruption. To tap this potential, these
stakeholders need to benefit from effective freedom of information that should
be narrowly limited only by essential national security concerns and other
fundamental public interests. The Extractive Industries Transparency Initiative (EITI)
is a practical example of increased transparency of revenues from oil, natural
gas, and mineral extraction. More countries in Asia and the Pacific could usefully
participate in EITI.
Corporate codes and standards

While the role of government in curbing business corruption is important,
the primary responsibility must rest with business itself.
Implementing adequate anti-corruption codes and compliance are a

core business responsibility. Many leading multinational enterprises have had
such codes for some time; given the absence of comprehensive international
standards, however, consistency is limited.

However, we should applaud the pioneering work of the International

Chamber of Commerce and, in this region, PBEC, the Pacific Basin Economic
Council. Both have developed very similar anti-bribery rules, which in the case of
PBEC are mandatory for all its members.
The addition of an anti-bribery principle to the UN Global Compact in

2004, following TI's advocacy, was also an important step. The Global Compact
brings together more than 4,700 corporations worldwide, including many in Asia
and the Pacific, to commit to improved corporate social responsibility. It
addresses the problem, highlighted by John Bray, of getting business and
government to interact in the same anti-corruption forums.6
A Steering Committee convened by TI developed the Business Principles

for Countering Bribery, which was launched in 2003. Multinational enterprises
including General Electric (GE), Rio Tinto, Shell, and Tata Groupas well as
representatives of the accounting profession, academia, trade unions, and
NGOsparticipated in this process. The Business Principles have been translated
into many languages and launched in more than 30 countries. A very important
aspect is the emphasis on effective compliance programs. These are supported
by a very comprehensive Guidance Document and a Six-Step Implementation
Plan. A Small Business Edition of the TI Business Principles was launched earlier in
2008 to cater to the needs of small and medium-sized enterprises (SMEs), a very
important sector accounting for 80%90% of businesses in most countries.
The World Economic Forum's Partnership Against Corruption (PACI)

Principles, follow the TI Business Principles very closely, as does the recently
adopted APEC Code of Conduct for Business in this region.
While a proliferation of standards may be seen as an unnecessary

complication, there is in fact close cooperation between the various standard-
setting bodies, as David Lyman has mentioned.7.
Apart from leading work to develop the TI Business Principles for

Countering Bribery, TI has pioneered the development of tools to curb corruption
in public procurement linked with corporate codes and compliance
mechanisms. Tools such as the TI Integrity Pact and the TI Project Anti-Corruption
System (PACS) have been used successfully in many countries in Asia and
elsewhere.
Recognising that business enterprises find it very hard to resist paying bribes
if competitors do so, TI works with important industry sectors to encourage a self-
regulatory approach to curbing corruption among key competitors. Such sectors
include construction and engineering, defense procurement and others.

NOTES
1 www.transparency.org/policy_research/surveys_indices/gcb
2 www.transparency.org/policy_research/surveys_indices/bpi
3 www.transparency.org/policy_research/surveys_indices/cpi
4 See www.oecd.org/document/37/0,3343,en_2649_34487_39656933_1_1_1_1,00
.html for the full text of the speech.
5 See Senior Minister Hos presentation on p. 15 in this volume.
6 See John Brays presentation on p. 38 in this volume.
7 See David Lymans presentation on p. 47 in this volume.

Chapter 2
The role of international
criminal law standards in
combating bribery
Countries can significantly reduce corruption in business transactions by
accepting a zero-tolerance policy toward companies and individuals that
engage in corrupt acts. Criminal law is a key deterrent to bribery and corruption.
However, legal offenses must cover all forms of corrupt behaviour, and must be
reinforced by effective procedural measures, such as mutual legal assistance
and the confiscation of proceeds of corruption.
International standards call for broad criminalization of

bribery and corruption
Global standards for criminalization of bribery are put forward in
international anti-corruption instruments, such as the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business Transactions
(the OECD Anti-Bribery Convention) and the United Nations Convention against
Corruption (UNCAC). These standards can shape national criminal law on bribery
and corruption in Asia and the Pacific.
Both the OECD Anti-Bribery Convention and the UNCAC require countries
to establish the offense of bribery of a foreign public official; thus far, few
countries in Asia and the Pacific have done so. Increased transnational business,
closer economic ties among countries, and regional and international economic
integration make sanctioning of transnational bribery even more urgent.
Sanctions imposed on individuals who carry out bribe transactions may not
deter bribery, especially in high value business transactions. Therefore, the OECD
and UN Conventions further require countries to establish liability of legal persons
for corruption and bribery.

Implementation of the standards is challenging

The standards embodied in these Conventions need to be translated into
national laws and adequately enforced. Implementingnot merely acceding to
or ratifyingthese Conventions is therefore the real goal. Unfortunately,
implementation remains a challenge, both in Asia and the Pacific and beyond.
It is with this difficulty in mind that the monitoring mechanism under the
OECD Convention was created. This process of peer pressure and review has
caused numerous countries to make significant changes so as to bring their legal
systems up to the Conventions standards. The monitoring process is also
responsible for the increased number of investigations and prosecutions of
foreign bribery that have seen companies pay hundreds of millions of euros in
fines and confiscation. This experience of treaty implementation through
monitoring can be usefully shared in Asia and the Pacific.
UNCACs Chapter II sets out 11 different offenses of corruption, bribery,

and related crimes. These form the core of the Convention, and provide the
point of reference for mutual legal assistance, asset recovery and other
mechanisms.
Only 73% of countries which filed reports under the UNCAC self-assessment
process consider that they have fully implemented the Conventions mandatory
provisions on criminal law; more than one-third of reporting Parties had not yet
criminalized bribery of foreign public officials.
Technical assistance and international experience is

available to support implementation
An UNCAC support program provides technical assistance to help Parties
fully implement its criminal law provisions. Many countries have requested
legislative assistance, model legislation, and legal advice.
The monitoring process under the OECD Anti-Bribery Convention provides

particularly valuable information to support implementation. The countries that
have ratified the OECD Anti-Bribery Conventionthe first instrument to require its
Parties to criminalize foreign bribery and sanction legal persons for bribery
abroadhave collected almost 10 years of experience in translating
international standards into national law. This is valuable, especially as the
standards in the OECD Anti-Bribery Convention and the UNCAC are very similar in
substance.

Implementing the OECD Anti-Bribery
Convention
(W illiam Loo an d Christ ine Uriart e)
William Loo and Christine Uriarte

Anti-Corruption Division, Directorate for Financial and Enterprise
Affairs, OECD1
The OECD Anti-Bribery Convention 2 came into force in February 1999.

Since then, the 38 Parties to the Convention have taken steps to implement the
treaty and to monitor its implementation by all Parties. This paper will describe the
experience of the Parties to the Convention in this regard. Ultimately, the paper
hopes to spark discussion on how this experience can be shared with Asian and
Pacific countries, so as to assist them in implementing international standards on
the criminalisation of bribery.
Key features of the OECD Anti-Bribery Convention

The OECD Convention has a relatively narrow focus in that it is primarily
concerned with the payment of bribes to foreign public officials in international
business transactions. Parties to the OECD Convention are required to enact
criminal offences outlawing such conduct (among other things). Expressed in
more technical jargon, the Convention deals with the supply side of (i.e., active)
bribery of foreign public officials that arises in the context of international
business. This focus was chosen to stem the flow of bribes from companies in
OECD countries.
Within this relatively narrow context, however, the OECD Convention

covers a very broad range of conduct. It concerns not only giving, but also
offering and promising bribes. It covers bribes to a foreign official given directly or
indirectly through an intermediary. It includes bribes given to an official for the
benefit of a third party. It covers bribes not only in money but also in any other
form.3
The breadth of the OECD Convention can also been seen in the definition
of a foreign public official. The OECD Convention does not only cover bribery
of officials in the executive branch of government; it also includes officials
holding legislative, administrative or judicial office, whether appointed or
elected. Also covered are persons exercising a public function, including for a

public agency or public enterprise. Officials and agents of public international

organisations are also included.4
A key feature of the OECD Convention is that both individuals and

companies (legal persons) may be held liable for transnational bribery. Parties
must take such measures as may be necessary, in accordance with their legal
principles, to establish the liability of legal persons for the bribery of a foreign
public official. They must also ensure that both individuals and companies who
bribe are punished with effective, proportionate and dissuasive sanctions. Parties
must also be able to seize and confiscate bribes and the proceeds of bribery.5
Beyond the core criminal offences, the OECD Convention also contains a
number of complementary features that enhance the fight against transnational
bribery. Parties are required to make laundering the proceeds of transnational
bribery a crime. False accounting associated with transnational bribery must be
punished. Parties must assist one another by providing mutual legal assistance
and extradition where appropriate. They must also have sufficiently broad
jurisdiction to prosecute offences that take place wholly or partly in their
territories, and offences that take place abroad when committed by a national.
Statutes of limitation must allow an adequate period of time for investigation and
prosecution.6
Commonalities between the OECD Convention and the

UNCAC
These key features in the OECD Convention are very similar to several
provisions in the UN Convention against Corruption (UNCAC). A comparison of
the relevant provisions of the OECD Convention and the UNCAC is included in
the Annex. It is immediately apparent that the bribery offences in the two
Conventions employ very similar language. Both criminalise the promise,
offering, or giving of an undue advantage, whether directly or
indirectly/through intermediaries, for an official or another person or entity/third
party in relation to the officials performance/exercise of official duties. For the
transnational bribery offence, both Conventions refer to the conduct of
international business.
The similarities between the provisions on liability of legal persons are

equally striking. Both instruments require criminal, civil or administrative liability
in accordance/consistent with its legal principles and with effective,
proportionate and dissuasive criminal or non-criminal sanctions, including
monetary sanctions. The complementary provisions on jurisdiction, money

The Role of International Criminal Law Standards 79
laundering and false accounting in the OECD Convention also have

comparable counterparts in the UNCAC.
Monitoring the Implementation of the OECD Anti-Bribery

Convention
Apart from these substantive provisions, one of the most important features
of the OECD Convention is its mechanism to monitor its implementation. The
OECD Convention requires Parties to co-operate in carrying out a programme of
systematic follow-up to monitor and promote the full implementation of the
Convention. 7 In lay terms, this means that each Party must participate in a
process for ensuring that all Parties do what the OECD Convention requires of
them.
The monitoring process is carried out within the OECD Working Group on
Bribery in International Business Transactions. The Working Group consists of all 38
Parties to the Convention and meets four times per year at OECD Headquarters
in Paris, France. Delegates from the Parties may include prosecutors, officials from
law enforcement and Ministries of Justice, and diplomats.
The Working Group carries out its monitoring function through a peer
review process that comprises two phases (so far). In Phase 1, the Working Group
examines whether each Partys domestic legislation conforms to the OECD
Convention. The examination looks at all aspects of the Convention described
above, i.e., it covers laws on the foreign bribery offence, corporate liability,
money laundering, false accounting, etc. Phase 1 also looks at compliance with
the 1996 OECD Council Recommendation on the non-tax deductibility of bribes.8
For each country assessment, two Parties are designated as examining

countries. A questionnaire is sent to the examined country to collect relevant
information. With assistance from the OECD Secretariat, the two examining
countries analyse the legislation of the examined country and prepare a draft
report for the Working Group. The Group then discusses and adopts the report,
taking into account the views of the examined country. It also makes
recommendations to the examined country.
In Phase 2, the Working Group goes beyond looking at legislation and

studies the legal and institutional structures for enforcing these laws, as well as
other measures for applying and implementing the OECD Convention. The
procedure is largely similar to Phase 1all aspects of the Convention are
covered, two Parties are again designated as lead examiners for each country
review, and a questionnaire is sent to the examined country to collect
information. Phase 2 also covers the implementation of other OECD anti-bribery

instruments, including the 1997 Revised Recommendation of the OECD Council,

which covers measures for detecting and preventing the bribery of foreign
officials. 9 In Phase 2, the examiners and the Secretariat pay a five-day fact-
finding on-site visit to the examined country. During the visit, the examining team
meets with the police, prosecutors, judiciary, and government officials from
relevant ministries (e.g., Ministries of Justice, Interior, Foreign Affairs, and Finance).
To obtain different perspectives, the team also meets with the business sector,
civil society, practising lawyers, the auditing and accounting professions,
legislators, and academics.
After gathering the necessary information, the examining team prepares a

draft Phase 2 report for the Working Group. The Group then discusses and adopts
the Phase 2 report, and also makes recommendations to the examined country.
Countries are required to present regular follow-up reports to the Working Group
detailing their progress in implementing the recommendations.
As of December 2008, 37 of 38 Parties to the OECD Convention have

completed their Phase 1 examinations and all but two have completed Phase
2. 10 The examination reports and recommendations are published on the
Internet.11 Phase 3 of the monitoring process is expected to begin in 2010.
Impact of the monitoring process

The monitoring process has identified a wide range of weaknesses within
Parties legislation. Some are straightforward, e.g., non-coverage of offering or
promising a bribe, absence of liability of legal persons for foreign bribery, or very
low sanctions. Other issues are much more complex. For instance:
Bribing through intermediaries: Who constitutes an intermediary? Does
the offence cover intermediaries who are not aware that they are
being used to bribe?
Bribes benefiting third parties: Who constitutes a third party? Does the
offence cover a bribe that is transferred directly from the briber to a
third party, i.e., by-passing the bribed official?
Definition of a foreign public official: Is a person employed by a state-
controlled enterprise considered a public official?
Corporate liability: Are state-owned or -controlled companies liable for
foreign bribery? When is a company liable for bribery by persons acting
on its behalf? Should liability for bribery be triggered by the acts of any
employee, or only by the acts of senior management and directors?
What if one company bribes for the benefit of another member of the
same corporate group, such as a subsidiary or a parent company?

What if bribery occurs even though the company has internal controls
for preventing such acts? What if a countrys constitution does not
permit criminal liability of legal persons?
Confiscation of the proceeds of corruption: How are the proceeds of
corruption quantified, especially if the proceeds are derived from a
contract for services (e.g., for building a bridge) that was obtained
through bribery?
Jurisdiction: When should a country exercise jurisdiction to prosecute
foreign bribery that takes place abroad? What if the corrupt act is
carried out by a foreign subsidiary abroad?
Mutual legal assistance and extradition: Does bank secrecy impede
the provision of mutual legal assistance? Does the requirement of dual
criminality prevent co-operation if the requested state does not have a
foreign bribery offence?
As a result of the monitoring process, many Parties to the OECD

Convention have improved their legislation for fighting foreign bribery. For
example, some Parties have established liability against companies and other
legal persons for foreign bribery, while others have eliminated loopholes in their
foreign bribery offences. Additional legislative changes include extending
jurisdiction to prosecute nationals for foreign bribery committed anywhere in the
world, and expressly prohibiting the tax deduction of bribe payments.
The monitoring process has also identified issues relating to the application
and enforcement of the relevant laws. The Working Group has found instances in
which a Party has not given sufficiently high priority to investigating and
prosecuting foreign bribery cases. This often results in allegations that are not
investigated or prosecuted, or in the early termination of investigations and
prosecutions. In other cases, the Working Group has observed inadequate
resources and skills for investigating foreign bribery. There were also examples in
which Parties did not designate a specific agency to investigate and prosecute
foreign bribery cases, resulting in allegations that were neglected.
The enforcement aspect of the monitoring process has also seen results.
The number of foreign bribery investigations and prosecutions has increased
steadily. As of October 2008, there have been at least 65 convictions for foreign
bribery (roughly half in the United States) and 200 ongoing investigations (albeit
some in very preliminary stages) among the 38 Parties. In one case, one
jurisdiction levied fines and confiscation of over EUR 201 million against a single
company. The same company then received further criminal and administrative
penalties of USD 1.6 billion in a second jurisdiction.

Progress can also be seen in specific countries. For example, the Working
Group noted in 2005 that one country had not designated a specific body for
investigating and prosecuting foreign bribery cases. Consequently, a number of
serious allegations were not being investigated. By 2008, the same country had
designated a specific body to deal with foreign bribery cases and spent
significant resources investigating such cases. It also had increased investigations
and obtained its first conviction for foreign bribery.
Overall, it is fair to say that the monitoring process has had significant
impact in improving both the laws relating to foreign bribery and the
enforcement of those laws. Although there is room for improvement in most
Parties, it is important to bear in mind that the OECD Convention has been in
force for only 10 years and that its implementation remains work in progress. It is
also important to recall that before 1999 most Parties did not have an offence of
foreign bribery, and virtually all Parties allowed tax deduction of bribes. This
makes a compelling case for a continuing, rigorous monitoring of the
Conventions implementation.
Sharing the OECDs experience with Asia-Pacific countries

The knowledge and experience accumulated through the OECD
Conventions monitoring process could be useful to Asia-Pacific countries.
Because there are many commonalities between the OECD Convention and the
UNCAC provisions on criminalisation of bribery, experience in implementing the
OECD Convention is relevant to the implementation of the UNCAC. This will be
particularly important to roughly half of the Initiatives members that are Parties
to the UNCAC and will be required to implement the standards in the UN
Convention.
Even for members that are not yet Parties to the UNCAC, meeting the
criminalisation standards in the UN Convention is an important goal.
Demonstrable compliance with these standards sends a strong message that a
country has an effective anti-corruption framework. This, in turn, can help build a
foundation for sustainable development by attracting investment into the
country. It also makes that countrys companies more welcome in foreign
markets. Sound bribery offences are also crucial to recovering stolen assets from
overseas, since obtaining domestic convictions and confiscation orders are vital
to recovery. Compliance with international standards on criminalising bribery can
have positive effects in many areas.
There are several ways to share the OECD experience and knowledge
with members of the ADB/OECD Initiative. The Initiatives thematic review in 2009

will look at the bribery offences in its member countries and draw on the
experience under the OECD Convention. This will be similar to the earlier
thematic review on extradition, mutual legal assistance, and asset recovery. 12 In
addition, all of the Working Groups evaluations reports are available on the
internet.13 The 2006 Mid-Term Study of Phase 2 Reports 14 contains a wealth of
information about cross-cutting issues that Parties to the Convention have had to
overcome. Also available are technical publications such as Corruption: Glossary
of International Criminal Standards, 15 which compares the OECD Convention,
the UNCAC and the Council of Europe Criminal Law Convention on Corruption.
The OECD can also share its experience through technical events and
conferences, such as this 6th Regional Conference of the ADB/OECD Initiative in
Singapore. Other avenues can also be explored if there are sufficient interest
and resources, e.g., missions by experts to interested countries to discuss
common challenges, and regional expert workshops with the Initiatives
members.
Conclusion
Since the OECD Convention came into force in 1999, the Parties to the
Convention have rigorously monitored its implementation. As a result, the Parties
have accumulated a wealth of knowledge on the criminalisation of foreign
bribery in many countries. Given the similarities between the OECD Convention
and the UNCAC, this body of information will be extremely useful to members of
the ADB/OECD Initiative as they implement the UN Convention. By sharing this
experience, it is hoped that the Initiatives members can avoid many of the
mistakes and obstacles that arose in the Parties to the OECD Convention.

Annex: Comparison between the UNCAC and the OECD

Anti-Bribery Convention
Bribery Offences
UNCAC OECD Convention
Article 15 Bribery of national Article 16 Bribery of foreign Article 1 The offence of bribery
public officials public officials and officials of of foreign public officials
public international
1. Each State Party shall adopt 1. Each Party shall take such
organisations
such legislative and other measures as may be necessary
measures as may be necessary 1. Each State Party shall adopt to establish that it is a criminal
to establish as criminal such legislative and other offence under its law for any
offences, when committed measures as may be necessary person intentionally to offer,
intentionally: to establish as a criminal promise or give any undue
offence, when committed pecuniary or other advantage,
(a) The promise, offering or
intentionally, the promise, whether directly or through
giving, to a public official,
offering or giving to a foreign intermediaries, to a foreign
directly or indirectly, of an
public official or an official of a public official, for that official or
undue advantage, for the
public international for a third party, in order that
official himself or herself or
organisation, directly or the official act or refrain from
another person or entity, in
indirectly, of an undue acting in relation to the
order that the official act or
advantage, for the official performance of official duties,
refrain from acting in the
himself or herself or another in order to obtain or retain
exercise of his or her official
person or entity, in order that business or other improper
duties;
the official act or refrain from advantage in the conduct of
(b) The solicitation or acting in the exercise of his or international business.
acceptance by a public her official duties, in order to
official, directly or indirectly, of obtain or retain business or
an undue advantage, for the other undue advantage in
official himself or herself or relation to the conduct of
another person or entity, in international business.
2. Each State Party shall
consider adopting such
legislative and other measures
duties.
as may be necessary to
establish as a criminal offence,
when committed intentionally,
the solicitation or acceptance
by a foreign public official or
an official of a public
international organisation,
directly or indirectly, of an
undue advantage, for the
official himself or herself or
another person or entity, in
duties.

Liability of Legal Persons

UNCAC OECD Convention
Article 26 Liability of legal persons Article 2 Responsibility of Legal Persons
1. Each State Party shall adopt such measures as Each Party shall take such measures as may be
may be necessary, consistent with its legal necessary, in accordance with its legal
principles, to establish the liability of legal principles, to establish the liability of legal
persons for participation in the offences persons for the bribery of a foreign public official.
established in accordance with this Convention.
Article 3 Sanctions
2. Subject to the legal principles of the State
1. The bribery of a foreign public official shall be
Party, the liability of legal persons may be
punishable by effective, proportionate and
criminal, civil or administrative.
dissuasive criminal penalties. []
3. Such liability shall be without prejudice to the
2. In the event that, under the legal system of a
criminal liability of the natural persons who have
Party, criminal responsibility is not applicable to
committed the offences.
legal persons, that Party shall ensure that legal
4. Each State Party shall, in particular, ensure that persons shall be subject to effective,
legal persons held liable in accordance with this proportionate and dissuasive non-criminal
article are subject to effective, proportionate and sanctions, including monetary sanctions, for
dissuasive criminal or non-criminal sanctions, bribery of foreign public officials.
including monetary sanctions.
[]
4. Each Party shall consider the imposition of

additional civil or administrative sanctions upon
a person subject to sanctions for the bribery of a
foreign public official.
NOTES
1 The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries.
2 The full name of the Convention is: OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transaction. All OECD anti-bribery
instruments are available at: www.oecd.org/daf/nocorruption
3 OECD Anti-Bribery Convention, Article 1(1).
4 Ibid., Article 1(4)(a).
5 Ibid., Articles 2 and 3.
6 Ibid., Articles 4-11.
7 Ibid., Article 12.
8 The full name of this OECD Council recommendation is: Recommendation of the
Council on the Tax Deductibility of Bribes to Foreign Public Officials.
9 The full name of this OECD Council recommendation is: Revised
Recommendation of the Council on Combating Bribery in International Business
Transactions.

10 South Africa, which became a Party to the Convention in June 2007, has
undergone its Phase 1 examination and is scheduled for Phase 2 in 2009. Israel
became a Party in December 2008 and will soon undergo Phase 1 examination.
11 www.oecd.org/topic/0,3373,en_2649_34855_1_1_1_1_37447,00.html
12 The Report of the thematic review is available at
www.oecd.org/dataoecd/28/47/37900503.pdf
13 www.oecd.org/document/24/0,3343,en_2649_34859_1933144_1_1_1_1,00.html

Setting Global Standards the
Criminalization Chapter of the United Nations
Convention against Corruption
( Kuniko Ozaki)
Kuniko Ozaki
Director, Division for Treaty Affairs (UNODC)
The United Nations Convention against Corruption is the first global

instrument against corruption, with 128 States Parties and 140 signatories to date.
More than half of the States participating in the ADB/OECD Anti-Corruption
Initiative for Asia and the Pacific are States Parties to the Convention, and a
number of others are in the ratification process. The Convention is therefore the
essential legal framework for their anti-corruption efforts, together with the OECD
Business Transactions. The Convention is based on four pillars: prevention,
criminalization and law enforcement, international cooperation, and asset
recovery. For various reasons, Chapter II on criminalization and law enforcement
can be considered the core chapter of the Convention.
Criminalisation chapter: The core of the UNCAC

First, it is important to note that the Convention does not contain a
definition of corruption, but provides a frame of reference through a wide range
of 11 criminal offenses. Five are mandatory: bribery of national and foreign
officials (Articles 15 and 16 para. 1), diversion of property by public officials
(article 17), laundering of proceeds of corruption (Article 23), and obstruction of
justice (Article 25). Additionally, six non-mandatory offenses are regulated, such
as trading in influence (Article 18), illicit enrichment (Article 20) and bribery and
embezzlement in the private sector (Articles 21 and 22).
Second, these 11 offenses do not only provide the basis for effective
international criminalization of corruption. They also serve as the point of
reference for the other chapters of the Convention they provide the range of
offenses for which international cooperation must be provided and to which the
asset recovery provisions of Chapter V apply. They define the conduct that must
be established as an extraditable offense (Article 44), and set parameters for
cases in which full mutual legal assistance must be afforded (Article 46). Further, if

such conduct generates proceeds of crime, the Convention regulates the kind
of mechanisms that States must have in place for the confiscation of such
proceeds (Article 31) and for international cooperation for the purposes of
confiscation (Articles 54 and 55). The proceeds of the conduct defined in those
11 offenses must be returned or disposed of according to Article 57 of the
Convention. Given their role in the facilitation of international cooperation, the
11 offenses of the Convention have a central role as emerging global standards
in criminal law.
Third, the 11 offenses regulated in the Convention are complemented by

a number of provisions on enforcement. States are, inter alia, obliged to establish
rules on the liability of legal persons (Article 26) and on the protection of
witnesses, experts and victims (Article 32), and to establish a sufficiently wide
jurisdiction for the adjudication of the offenses (Article 42). These complementary
provisions ensure that the 11 offenses of the Convention are not symbolic, and
can be used efficiently and effectively by law enforcement and the judiciary for
the prosecution of offenders.
Implementing the Convention may be difficult

Implementing the Convention and making the criminalization and law
enforcement provisions operational is not an easy task.
Information-gathering is first step toward informed decision-making, and

full ratification and implementation of the Convention. It also highlights States
challenges and technical assistance needs. In order to initiate the process of
gathering information on the implementation to the Convention, UNODC
developed a self-assessment checklist addressing specific issues, embedded in a
user-friendly software application. The results were very encouraging. In
November 2008, 73 States, including eight States participating in the ADB/OECD
Anti-Corruption Initiative, had submitted their self-assessment reports.
In its resolution 2/1, the Conference of the States Parties welcomed the
development of the self-assessment checklist. It further requested the Secretariat
to explore the option of expanding the self-assessment checklist to create a
comprehensive information-gathering tool. An expert group meeting was held in
Vancouver, Canada, on 1517 April 2008, on the formulation of comprehensive
software to gather information on the implementation of the five crime-related
international legal instruments that fall under the mandate of UNODC: The United
Nations Convention against Corruption, the United Nations Convention against
Transnational Organized Crime and the three Protocols thereto. After being
consulted and test-run with Member States, the final version of the

comprehensive, computer-based tool will be presented for endorsement to the

Conference of the States Parties at its third session.
Self assessment status on criminal standards

Considering the central role of Chapter II of the Convention, full
implementation is essential for the implementation of the other parts of the
Convention. The self-assessment reports on Chapter II seem positive at first
glance: 73% of the reporting Parties consider the criminalization chapter fully
implemented. This is a very high number, especially compared to the reported
figures regarding the asset recovery chapter. However, on specific articles much
remains to be done: 10 States Parties reported partial or non-criminalization of
the offense of bribery of national public officials with all elements regulated in
Article 15 of the Convention. In addition, the complex provision on money
laundering provided particularly challenges, resulting in 16 States Parties that
reported partial or non-implementation of Article 23. It is particularly serious that
24 States, more than one-third of the reporting Parties, reported partial or non-
criminalization of foreign bribery in Article 16 paragraph 1.
The self-assessment checklist requests States Parties to report on their

technical assistance needs and provide information on technical assistance
already provided. This makes the self-assessment reports a valuable tool for the
planning and coordination of technical assistance on the global and country
levels. Of those States Parties that reported partial or non-implementation, 68%
requested technical assistance. The types of technical assistance most frequently
requested (both generally and for the provisions on criminalization) were
legislative assistance, model legislation and legal advice, followed by the
development of an action plan for the implementation of the relevant provisions
and a site visit by an anti-corruption expert.
UNODC has provided technical assistance for the implementation of the

Convention, anti-corruption policies, and judicial reform to a number of countries
that also participate in the ADB/OECD Initiative. These countries include
Bangladesh, Fiji Islands, Indonesia, Kyrgyz Republic, Thailand, and Vietnam.
UNODC launched a mentor program in 2007, with the objective to provide top-
level and long-term specialized expertise through the placement of anti-
corruption experts within government institutions tasked with the control and
prevention of corruption. Beneficiary countries that also participate in the
ADB/OECD Initiative are the Kyrgyz Republic and Thailand.
The Fiji Islands, Indonesia, Mongolia. and the Philippines are participating in
the Voluntary Pilot Programme for the Review of Implementation of the

Convention run by UNODC. In the Pilot Programme, 29 countries from all regions
are testing a variety of review methods, based on a peer review methodology.
The program is gathering experience for the establishment of a mechanism to
review UNCAC implementation. This experience will be reported back to the
Conference of the States Parties at its third session. Further, the program entails
an important technical assistance component. Taking the self-assessment as a
starting point, countries are discussing their implementation gaps, technical
assistance needs and technical assistance opportunities in detail with their
reviewing partner countries and the Secretariat. At the request of the country
under review, priorities for further action or an action plan can be developed.
Technical assistance to foster implementation

The Conference of the States Parties has established an Open-Ended
Intergovernmental Working Group on Technical Assistance. In its resolution 2/4,
titled Strengthening coordination and enhancing technical assistance for the
implementation of the Convention, the Conference renewed the mandate of
the Working Group to advise and assist the Conference in the implementation of
its mandate on technical assistance. The Working Group will hold its second
intersessional meeting on 18-19 December 2008. It will review States needs for
technical assistance, give guidance on priorities for technical assistance and on
coordination of activities, and discuss the mobilisation of necessary resources.
Implementing the Convention is a complex and challenging task. It is

essential to support the Conference of the States Parties on the way toward its
third session in Qatar in November 2009. It will be necessary to raise the number
of ratifications, to collect more accurate and more comprehensive information,
to prepare the establishment of a strong and efficient mechanism for the review
of the implementation of the Convention, and to join forces in providing
technical assistance toward the highest standards of quality and coordination.
Good practices and the exchange of experience in the implementation of the
Convention are an important part of this task. International criminal law
standards are not set when a Convention enters into force; setting international
criminal law standards is a dynamic process that requires full and ongoing
commitment of States and the international community.

Effective Anti-Corruption Enforcement:
Another Flight of Fancy?
(M at hew Joseph)
Mathew Joseph, Deputy Principal Senior State Counsel,

Attorney-Generals Chambers, Singapore1
The advent of transnational crime and corruption has seen the dawn of
the bewitching hour for all States. However, States must not take the attitude, as
did the witches in Shakespeares Macbeth, that Fair is foul, foul is fair. States
must always use effective but fair means to pursue and apprehend criminals
involved in transnational crime.
Never has our common agenda in Asia and the Pacific been so symbiotic,
mutually beneficial, and convergentfrom combating piracy, drug trafficking,
people smuggling, money laundering to bribery and corruptionall calling for
greater regional and bilateral cooperation.
Developments over the past 20 years have resulted in several international

treaties aimed at combating corruption or bribery. As a result, States more often
than not have had to enact or amend domestic legislation to give effect to the
anti-corruption treatyin addition to revising or modifying how such crimes are
investigated and prosecuted.
Naturally, fulfilling international obligations does not end with simply

enacting legislation. Treaties are just words on a piece of paper. Effective
compliance requires the substantive backing of a well-structured system of
enforcement. The aim of this paper is to address the issue of enforcement, by
illustrating the dichotomy between balancing domestic interests, which usually
tend to promote economic interests of a State, especially developing
economies. The ultimate objective is not to offer an exhaustive analysis of the
international law relating to corruption, but rather to engender debate and
discussion by highlighting some of the more vexed issues which have become
apparent over the years.
Bribery in the international contextthe phenomenon of

globalization
Historically, the notion that certain regions of the world are more corrupt
than others has been well documented. In the course of his impeachment trial

for corruption, Warren Hastings, the first Governor of Bengal, argued before the
House of Lords that the socio-political nature of Asia meant that the act of
accepting bribes was perfectly acceptable, and that he should not be judged
based on moral standards of the West. Hastings was acquitted.2
There is also the notion that only the lower echelons of a bureaucracy
allow themselves to be tempted by corrupt payments. The corollary of this, of
course, is that senior officials are in fact immune to such temptation and
impervious to such attempts at inflection on their character.
Even a cursory glance at the events of the past 20 years would result in a
universal rejection of the above presumptions. Centuries-old bias and
stereotyping have to be discarded in light of numerous high-profile corruption
scandals. From Marcos to Montesinos, Abacha to Chiluba, Heads of State,
military rulers, intelligence chiefs, corporate executives, National Olympic
Committee officials, cricket and football stars, probably no job or post has been
immune to the pervasive reaches of the corrupt act. Indeed, it may well be that
every person has a price at which she or he can be bought. However, the
dilemma for the global law enforcement community is that for many, the price is
all too easily payable. Moreover, the phenomenon of globalization has created
a borderless world, and cross-border transactions and interactions are
commonplace. Likewise, improvements in technology facilitate the ease with
which large sums of money can be moved around without raising suspicion. This
has created more opportunities for bribery to occur at all levels.
It is not surprising, therefore, that the corresponding period has seen the
advent of numerous international legal instruments, such as:
1996 Organization of American States Inter-American Convention
Against Corruption (OAS Convention);
1997 Organisation for Economic Co-operation and Development
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (OECD Anti-Bribery Convention)
2000 United Nations Convention Against Transnational Organized Crime
(UNTOC); and
2003 United Nations Convention against Corruption (UNCAC).
Let us now consider some key aspects of these Conventions.

Multilateral initiatives Put your money where your mouth

is
Monitoring
The OAS Convention, which entered into force in 1997, marked a major
triumph in the fight against corruption. At the time, it was distinctive in that it
included developed and developing countries, and displayed what can be
regarded as a defiant rejection of corruption, given the various political
upheavals which were plaguing the developing countries of the Americas region
at that time. Compared with some later initiatives, the OAS Convention was
ahead of its time in some aspects: It applied not only to active bribery (the giving
of the bribe) but also to passive bribery (the receiving of the bribe), and required
States to enact legislation criminalising such acts. Nevertheless, some critics view
the OAS Convention as flawed, given its weak monitoring of implementation,
which has only in the past five years picked up pace.
The OECD Anti-Bribery Convention, which entered into force in 1999, has
the central focus on combating bribery of foreign public officials through the use
of domestic law,3 establishing the jurisdiction of domestic courts for offenses by
their nationals which occur abroadbut does not apply to bribery which is
purely domestic, and does not require legislation to criminalize bribery of a
States own public officials. However, unlike the OAS Convention,
implementation of the OECD Anti-Bribery Convention is monitored closely.
Monitoring is carried out by the OECD Working Group on Bribery, and takes
place in two phases: Phase 1 monitoring assesses whether States Parties have in
place legislation in conformity with the Conventions standards; Phase 2 assesses
whether legislative and institutional frameworks are effective in practice.
Article 5 of the OECD Anti-Bribery Convention forbids any state, in

investigating allegations of corruption, from taking into consideration national
economic interest, the potential effect upon relations with another State or the
identity of the natural or legal persons involved. Therefore, States are required to
develop and implement hard coordinated anti-corruption policies and legal
frameworks to combat bribery of foreign public officials in accordance with the
fundamental principles of their own legal systems. There is no requirement to
establish or promote soft anti-corruption practices on the ground to prevent
corruption. Furthermore, the periodic evaluation of anti-corruption laws and
procedures is only discretionary and is also subject to the usual resource and time
constraints that usually plague such evaluation processes.
The Convention against Corruption (UNCAC), approved by the Vienna

negotiating ad hoc Committee, was adopted by the UN General Assembly by

resolution 58/4 of 31 October 2003. The UNCAC had the distinction of becoming
the first legally binding, international anti-corruption instrument. Conceived and
born out of the growing realization that corruption allows organized crime and
terrorism to flourish, reduces foreign direct investment, and is an obstacle to
social and economic development, it would not be surprising to expect the
UNCAC to contain robust provisions on implementation and a strong review
mechanism. In a most heavy and telling omission fraught with significance, the
UNCAC does not actually contain any explicit review mechanism at all. Instead,
its Article 63 (7) merely states is that the Conference of States Parties shall
establish, if it deems necessary, any appropriate mechanism or body to assist in
the effective implementation of the convention. The use of such discretionary
language appears to be an attempt by the negotiating States to display an
ideological new bottle but which actually contained no new wine. Is the UNCAC
therefore going to be a case where the paper rhetoric does not match the
ground reality? Only time will tell.
The issue of enforcement

Let us move away from the issue of monitoring implementation to the issue
of enforcement. It is necessary to begin with UNTOC. The UNTOC was envisaged
as a means to remove some of the problems which had hindered international
law enforcement efforts against certain crimes commonly associated with
organized criminal groups. For this purpose, it establishes a wide range of
cooperation measures and technical assistance provisions. Corruption was one
of the four key organized crimes that UNTOC identifies. UNTOC not only requires
States to adopt laws to criminalize active and passive bribery, but also
emphasizes that States shall take measures to ensure effective action by its
authorities in the prevention, detection and punishment of the corruption of
public officials, including providing such authorities with adequate
independence to deter the exertion of inappropriate influence on their actions. 4
Unfortunately, the UNTOC is not without defects. Its Article 9(1) provides
that a State Party is to take measures appropriate and consistent with its legal
system. Effectively, this means that States can avail themselves of an
exception and avoid effective enforcement on constitutional grounds. Indeed,
in some countries, Heads of State and Heads of Government and even other
high-ranking officials enjoy immunity from criminal prosecution. This can thwart
effective prosecution and also the tracing, seizure, and forfeiture of proceeds of
corruption, especially if the immunities are absolute or broadly defined.
The UNCAC arrived soon thereafter, perhaps to address some of these

issues. The UNCAC requires States to specifically provide for enforcement
measures, such as the adoption of a code of conduct for public officials and the

establishment of anti-corruption units. Improving upon the OECD Anti-Bribery

Convention, the UNCAC requires the criminalization of both active and passive
corruption. Further, it also provides for the lifting of bank secrecy in relevant cases
and establishes an extensive jurisdictional basis, specifically including passive
personality jurisdiction.5
Having had a look at the parameters established by some recent

international instruments, we now turn to a case study illustrative of some of the
involved issues.
Case studyThe BAE saga

The December 2006 decision by the UKs Serious Fraud Office (SFO) to
abandon an investigation into alleged corruption involving BAE Systems and the
Government of Saudi Arabia to procure lucrative defense contracts sparked
large-scale media uproar.
On 14 December 2006and no doubt aware of Article 5 of the OECD

Anti-Bribery ConventionAttorney-General Lord Goldsmith informed the House
of Lords that the SFO investigation into BAE was being discontinued. He
explained that the decision had been taken after the SFO had considered that
proceeding with the investigation would jeopardize the UKs national security
interests in that it would damage important security ties with Saudi Arabia.
It appears that the UK authorities faced a dilemma: On the one hand, the
investigation could have been halted without any difficulty based on domestic
law; on the other hand, the strict requirements of the OECD Anti-Bribery
Convention would not permit such an abrupt halt.
As mentioned above, the OECD Anti-Bribery Convention makes it clear

that neither considerations such as national economic interest nor potential
effects on relations with other States should influence the decision of whether or
not to prosecute. Therefore, while it is debatable whether or not the decision to
stop the investigation was a genuine case of protecting national security interests
or simply a commercial decision, the fact remains that the resulting widespread
media coverage, in the UK and abroad, brought into sharp focus the potential
conflict between the interests of the State versus its international treaty
obligations.
Whether or not the UK has complied with its obligations under the OECD
Anti-Bribery Convention can be debated.6 However, perhaps more importantly,
one needs to consider what kind of impact the BAE case has had in the global
fight against corruption. It would appear extremely difficult to avoid the

conclusion that the SFO decision may well have significantly weakened the UKs
role and image in the worldwide fight against corruption. However, is this
necessarily a new position? The UK's apparent failure to properly enforce laws
prohibiting the bribery of foreign public officials had been identified as a
weakness before: the OECD previously adversely cited the UK on the grounds
that no prosecutions had been brought in the UK since the Convention was
ratified in 1999!
However, this begs the question of whether prosecutions themselves or

even conviction rates should be the sole or key criteria of a successful anti-
corruption enforcement policy. I leave this difficult issue for further discussion
during our workshop deliberations, to benefit from the collective wisdom of all
the participants in this conference.
By way of comparison, and perhaps a model from which we in Asia and

the Pacific can borrow from and adapt: the US Department of Justice and the
Securities and Exchange Commission (SEC) actively police the US Foreign Corrupt
Practices Act (FCPA). Authorities in the US have also been quick to apply the
FCPA jurisdiction extra-territorially to non-US companies.
Going forward
As some commentators have pointed out, it is one thing to tell the world
that ones nation is participating in an international convention, and another
matter altogether to actually live up to the convention itself.7 Essentially, States
Parties to a Convention have to take on board the idea that signing that
Convention is just the beginning, not the end.
As the experiences in other jurisdictions that have implemented

international anti-corruption initiatives show, there is a futility of purpose when
there is little or no impact on the groundthis is pure lip service. The question is:
how can we remedy this situation? How can we ensure that this does not
happen?
It would seem that the answer to these questions has been with us, but we
may have inadvertently let it slip by. Firstly, during the drafting of the UNCAC,
Norway submitted a proposal for a two-phase evaluation based on the
mechanism practiced for the OECD Anti-Bribery Convention. The first phase
would focus on ensuring that domestic legislation is in line with the Convention,
and a second phase would consist of a study of enforcement measures put in
place.

This proposal is not novel as far as previous Conventions are concerned.

Where it does get interesting, however, are Norways proposals for
noncompliance, which included measures such as targeted technical
assistance, as well as suspension from the Convention. However, this proposal did
not garner much support, and never made it past the drafting stage for a variety
of reasons. This was unfortunate. Recent lessons show that Norways proposal,
though seemingly far-reaching at the time, would not be such a bad thing from
todays perspectiveespecially in relation to a soft-targeted technical-
assistance-and-capacity-building approach, as opposed to a hard name-and-
shame approach.
Additionally, the role that the UNCAC accords to civil society is weak: a
mechanism may be established to assist in the effective implementation of the
Convention, but only if it deems it necessary.8 This allows States a large degree
of leeway to decide if and how far to incorporate the Convention into domestic
law. Notwithstanding its weaknesses, the monitoring mechanism practiced for
the OECD Anti-Bribery Convention demonstrates that peer review and mutual
evaluation can help raise public awareness. Likewise, the role of NGOs, such as
Transparency International (TI), cannot be underestimated. Its lobbying and
monitoring efforts around the world have kept alive the ideal of wiping out
corruption on the global agenda, and have ensured that this does not remain a
pious hope.
Conclusion
In his message to the Third Global Forum on Fighting Corruption and
Safeguarding Integrity, former UN Secretary-General Kofi Annan said, Corruption
impoverishes national economies, undermines democratic institutions and the
rule of law, and facilitates the emergence of other threats to human security,
such as organized crime, human trafficking, and terrorism.
The formal or official position of companies is, of course, that bribes are
unacceptable. When it comes to doing business, however, many companies will
no doubt acknowledge (albeit in hushed tones) their fear that they will lose the
deal to someone who does pay facilitation payments or tea money.
Problems with enforcing the OECD Anti-Bribery Convention demonstrate

the challenges of reducing corruption in practice. Although focused, widely
ratified, and equipped with a well-planned monitoring system, it has yet to
produce significant changes in reality. Likewise, the lack of consensus on
developing a monitoring mechanism for the UNCAC, as seen at the UNCAC

conference in Bali in January 2008, 9 translates into a lack of incentive for

effective enforcement.
Therefore, what is required will be a sustainable, consistent, and

coordinated effort not only by States to reaffirm their commitments under the
respective Conventions, but also a considered effort by businesses to ensure that
all transactions are corruption-free. Then, the issue will really turn on how far
government coordination extends. If it extends to impressive lawmaking but not
to effective law enforcement, then we are no better off than when the question
of drafting a convention against corruption was raised for the first time during the
Vienna negotiations for the Convention against Transnational Organized Crime
almost a decade ago.
Let me conclude nowit has been said that the 21st century will be the
century of change. It is believed that more things will change in more places in
the next 10 years than in the past 100 years. We are already witnessing the
tumultuous changes that the US subprime crisis brings and that has now already
changed into an almost unprecedented global financial crisis. What will not
change, however, is the scourge of corruption and the global threat it poses to
developed and developing countries alike.
Corruption poses a serious threat to democracy, the rule of law, human

rights, international peace and securityand strikes at the core values of the
United Nations. International cooperation has never been so critical to preserve
international peace and security.
It needs to be emphasized that international initiatives, regional treaties,

and UN Conventions do not solve the corruption problem. Political commitment,
lawmaking, and rigorous and unrelenting law enforcement are crucial, if these
impressive documents should not remain just pretty words on paper. All States
must play their part, and the UNs role in providing technical assistance and
capacity building through its Global Program against Corruption is a critical step
in the right directiontogether with the work of the ADB/OECD Anti-Corruption
Initiative for Asia and the Pacific.
We have heard of the three Ts of the 21st centuryTrade, Technology,

and Terrorismand that all three are deeply interconnected. They also bring the
world to an important T-junction. There is also for us, here in Asia and the Pacific
and in the world at large, a fourth TTHREAT of corruption. If we make a wrong
turn, the road will lead to disaster. In the global fight against corruption,
international initiatives combined with effective domestic legislation and efficient
law enforcement have never been so critical to ensure international stability,
regional peace, and security AND a better life for all.

NOTES
1 The views expressed by the writer are his personal views and do not reflect the
views of the Attorney-Generals Chambers of Singapore or of the Government of
Singapore.
2 The Impeachment of Warren Hastings, Papers from a Bicentenary
Commemoration, 1989, Edinburgh University Press.
3 Art 1(1) of the Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (OECD Anti-Bribery Convention). The full text of
the Convention is available at
www.oecd.org/document/21/0,3343,en_2649_34859_2017813_1_1_1_1,00.html
4 Art 9(2) of the UNTOC.
5 Art 42 of the UNCAC.
6 The report regarding the UK by the OECD Working Group on Bribery, the body that
assesses the implementation of the OECD Anti-Bribery Convention, is available at
www.oecd.org/document/24/0,3343,en_2649_34859_1933144_1_1_1_1,00.html
7 Luz Esta Nagle, The Challenges of Fighting Global Organized Crime in Latin
America, 26 Fordham International Law Journal (2003), 1649, at 1665.
8 Art 63(7) of the UNCAC.
9 TI has labelled this development as a major setback. See
www.transparency.org/news_room/latest_news/press_releases/2008/2008_02_01_u
ncac_final

Chapter 3
Corporate compliance
programs and integrity
systems
All stakeholders must contribute to the fight against corruption in business.
Businesses, which are often the source of bribes and illicit payments, also have a
role in reducing corruptionand have begun to act accordingly. Individual
companies are taking action, and some industries in specific countries have
taken collective steps as well. This chapter summarizes anti-corruption action at
the individual-company level, which was discussed in the workshop on
Corporate compliance programs and integrity systems. (Chapter 5 presents the
workshop on collective action by businesses).
In the wake of numerous corporate scandals and in an ever-changing

regulatory environment, business leaders are becoming more aware of the legal
and reputational risks associated with corruption. This workshop addressed the
components of effective corporate compliance programs and tools to assist
business, large and small, to design and implement appropriate integrity systems.
Three overall themesthree Tsstood out.

Tone at the top. In business, as in government, strong leadership and
personal commitment from the top are essential.
Tone in the middle. Statements of principle from company leadership
are not sufficient. Companies also need effective ethics and
compliance systems to ensure that middle management endorses and
applies anti-corruption policies.
Trust. Companies need the trust of governments and customers to
secure their social license to operate. They also need the trust of their
employees if their anti-corruption strategies are to be taken seriously.
Rebecca Li of Hong Kongs Independent Commission Against Corruption

(ICAC) chaired the workshop. The other participants included

One company practitioner: Eddie How, Regional Head of Business

Integrity, Shell Eastern Petroleum Pte Ltd, Singapore.
Two consultants: Neil Thamotheram, PriceWaterhouseCoopers,
(Thailand), and Peter Coleman. Deloitte (Singapore);
One civil society representative: Jermyn Brooks, Director, Private Sector
Programs, Transparency International; and
One regulator: Juthika Ramanathan, Accounting and Corporate
Regulatory Authority (ACRA), Singapore.
1. Drivers: why do companies need to develop compliance

and integrity programs?
Recent events have highlighted the need for integrity in business.
The scandals surrounding the collapse of Enron led to calls for higher
standards of senior management accountability, both in the US and
internationally. The Enron affair undermined public trust in major companies, and
governments and companies themselves are still working to rebuild confidence.
One important outcome was the 2002 US Sarbanes-Oxley Act (SOX) which has
led to important corporate governance reforms. Other countries have
introduced their own corporate governance reforms; Japans measure, passed
into law in 2006, is known informally as J-Sox.
A second, related driver has been tighter enforcement of the US Foreign

Corrupt Practices Act (FCPA). The FCPA applies to both US companies and
individuals, and foreign companies listed in the US. All OECD countries now have
legislation similar to the FCPA in placecriminalizing bribery of foreign public
officials anywhere in the world (for instance, in Asia and the Pacific).
Enforcement of such legislation has increased in OECD countries because of the
monitoring mechanism under the OECD Anti-Bribery Convention.
Many countries are now stepping up their anti-corruption efforts. The

clearest example is Siemens, which was convicted of foreign bribery and
subjected to millions of euros in fines and confiscation in the US and Germany.
Asia-Pacific countries are also cracking down on companies that bribe.

Juthika Ramanathans presentation on Singapores Accounting and Corporate
Regulatory Authority (ACRA) and Mr. Wang Huanggengs view from the Chinese
Ministry of Supervision present ongoing initiatives to combat private sector
corruption.

Corporate compliance programmes and integrity systems 103
Finally, high ethical standards are good business, enabling companies to

attract and retain the best staff; win the respect of customers and suppliers; and
ultimately operate profitably and sustainably.
2. What are the keys to good compliance programs?

Transparency International, the International Chamber of Commerce and
the World Economic Forums Partnering Against Corruption Initiative have issued
guidelines for effective compliance programs. Key factors include:
Strong leadership. Business leaders must make clear, through action as
well as words, that high standards of ethics are essential to their
companies success.
Codes of ethics. Companies ethics codes must take into account their
specific industries and cultures. Shells Statement of General Business
Principles is an example.
Implementation. Statements of principle are not enough. Company
compliance programs must include training, risk assessments, and
audits.
Peter Coleman of Deloitte emphasized the importance of whistle-

blowing. Companies must provide concerned employees with a secure means
of communication to report suspected ethical lapses to senior management.
Whistle-blowing systems must be properly publicised within the company, but
also be truly confidential.
Eddie How explained how Shells integrity system works. The Business
Integrity Division receives extensive resources, and Mr. Hows sole responsibilities
are related to business integrity.
The main elements of successful compliance programs apply to both

companies and public sector agencies. Clare Wee of the ADBs Integrity Division
cited similar components in the workshop on Fighting Corruption and the
Sustainable Development Agenda.
3. Some problem situations

The workshop briefly addressed how to deal with problem situations. What
can companies do if they believe that competitors are winning contracts
through bribery? Or if they discover evidence of internal corruption?

Several important factors should guide companies actions in these

situations, including the quality of evidence and the likely attitude and
responsiveness of the host government.
Where companies uncover evidence of internal corruption, they may be

reluctant to report to government agencies they believe to be corrupt. Similarly,
companies are often reluctant to report cases of bribery by their competitors,
particularly if the evidence is incomplete. They may choose to stop competing
for projects in the same jurisdiction, rather than reporting their suspicions.
4. Challenges
Challenges in promoting corporate compliance and integrity systems
include
poor ethical standards at the senior level: the tone at the top is not
always as positive as it should be;
ensuring compliance at the middle-management level is always
demanding, especially in high-risk countries;
major companies (such as Shell) can afford business integrity divisions;
this is more difficult for smaller firms with limited resources;
honest companies have to develop strategies to win business in the
face of competition from corrupt rivals.
5. Emerging best practice for business: Selected resources

Business Anti-corruption Portal, in addition to providing country
information, includes flow charts explaining the due diligence process
etc. www.business-anti-corruption.com/Home.asp
Control Risks and Simmons & Simmons. 2007. Facing up to Corruption.
A Practical Business Guide, offers a combination of analysis and
advice www.control-risks.com/pdf/Facing_up_to_corruption_2007_
englishreport.pdf
International Chamber of Commerce Rules of Conduct and
Recommendations to Counter Extortion contains a set of principles
that can be used as a model for individual company codes
www.iccwbo.org /policy/anticorruption/
OGPInternational Association of Oil & Gas Producers is a leading
industry association. The OGP has published a number of reports on
issues related to corruption. These include Guidelines on Reputational
Due Diligence www.ogp.org.uk/pubs/356.pdf and OGP Training

Template. Combating Corruption www.ogp.org.uk/pubs/

352.pdf
TRACE International is a US-based membership organization, originally
set up to vet and validate commercial agents and other
intermediaries. Most of its resources are now restricted to members, but
a number of articles and publications are publicly accessible
www.traceinternational.org
Transparency International Business Principles for Countering Bribery
include a guidance document and a six-step implementation process
www.transparency.org/global_priorities/private_sector/business_princi
ples
Transparency International Anti-corruption Training Manual is designed
specifically for the infrastructure, construction and engineering sectors.
The manual aims to help users achieve a better understanding of
corruption and how to avoid it. It can be used by individuals, and by
companies as part of their corporate training www.transparency.org/
tools/contracting/construction_projects/section_b
UN Global CompactBusiness Against Bribery is a book-length report
with examples of best practice in due diligence and other areas
www.unglobalcompact.org/Issues/transparency_anticorruption/Public
ations_x_Documents.html
World Bank: Towards a More Systematic Fight Against Corruptionthe
Role of the Private Sector presents an e-discussion from July 2006
siteresources.worldbank.org/CGCSRLP/Resources/ediscussion.pdf
World Economic ForumPartnering Against Corruption Initiative
www.weforum.org/en/initiatives/paci/index.htm
The workshop on Corporate compliance programs and integrity systems

presented a number of perspectives on ethical business behaviour. The drivers
that motivate companies to develop compliance and integrity programs include
(i) increased regulation resulting from high-profile corporate scandals; (ii) stricter
enforcement of the US Foreign Corrupt Practices Act (FCPA) including against
non-US companies listed on US stock exchanges; (iii) stricter enforcement of
foreign bribery in other parties to the OECD Anti-Bribery Convention; (iv) legal
reforms in emerging markets; (v) the financial crisis and the decreasing public
trust in companies; and (vi) the business case unethical behaviour is not
sustainable in the current business environment.
Challenges include how to operate in an environment with corrupt

competitors, internal corruption within a company and/or a group of companies,
and how to address the specific needs of SMEs. The role of the public sector was

also debated; speakers stated that legal frameworks should address private-to-
private corruption and that corporate disclosure requirements can help to
strengthen the regulatory framework. Participants concluded both policy and
regulation are needed, in addition to voluntary initiatives designed and
implemented by the private sector. The fight against corruption requires that the
private and public sectors, as well as civil society, work together.

Corporate Compliance Programs and
Integrity Systems: Singapores Experience
( Jut hika Raman at han)
Juthika Ramanathan, Chief Executive, Accounting and Corporate

Regulatory Authority (ACRA), Singapore
The Accounting and Corporate Regulatory Authority (ACRA) of Singapore

is responsible for the registration and regulation of companies, businesses, limited
liability partnerships, and public accountants and accounting entities. Hence,
ACRA plays a direct role as the regulator of corporate bodies, overseeing their
incorporation and operational affairs including compliance with relevant
legislation such as the Companies Act. In its oversight of the auditing profession,
ACRA also indirectly works toward ensuring corporate compliance with
disclosure requirements and the integrity of the financial reporting regime.
ACRAs vision is for Singapore to be the trusted and best place for business.
Our mission is to provide a responsive and trusted regulatory environment for
businesses and public accountants. Essential to achieving this mission is
continually strengthening the integrity of our regulatory framework through
constant review and refinement of our legislation and policies, as well as
effective corporate regulatory actions.
A disclosure-based regime
Singapore operates a disclosure-based regime based on a regulatory
strategy involving an informed market that reacts to relevant information. On a
fundamental level, company directors have the duty to act in the best interests
of the corporate entity. These include disclosure obligations, which are primarily
the responsibility of directors, who rely on information and advice given by others
such as advisors or employees under certain conditions. Annual audits required
of larger companies contribute to ensuring the integrity of the information that is
conveyed to shareholders and other stakeholders (such as creditors)and help
guarantee that corporations are equipped with a system of internal controls
which assure effective corporate compliance with relevant obligations.

Government bodies and relevant laws

ACRA and other bodies administer several pieces of legislation, which
contribute to upholding the integrity of the disclosure-based regime in Singapore.
Apart from ACRA, the other relevant regulatory bodies are:
Singapore Exchange, which regulates listed companies;
Monetary Authority of Singapore, which supervises financial markets;
Commercial Affairs Department and the Corrupt Practices
Investigation Bureau, which investigate and enforce relevant laws; and
Insolvency and Public Trustees Office, which administers insolvency
laws.
The role of ACRA

ACRA administers business legislation such as the Companies Act, Business
Registration Act, and the Limited Liability Partnerships Act. The upcoming Limited
Partnership Act will also be administered by ACRA (the Bill was first read in
Parliament in October 2008). ACRA also administers the Accountants Act and
oversees the registration and regulation of public accountants. One of the
objectives of corporate regulation is to minimize corporate misdeeds, including
but not limited to corruption.
The Companies Act and directors duties

Directors are key players in controlling companies. A natural starting point
in regulating corporations is to ask what duties are imposed on these leaders.
Under the Companies Act, directors have a duty to at all times act
honestly (Companies Act, section 157) and to disclose any conflict of interests
to the other directors (section 156). An officer or agent of a company shall not
make improper use of any information acquired by virtue of his position to gain
an advantage for himself or others, or cause detriment to the company (section
157). Two other mechanisms aim to regulate conduct of directors and provide
adequate transparency. First, certain transactionssuch as loans to directors,
loans to persons connected to the directors of a lending company, or payments
to directors for loss of office are prohibitedunless shareholders approve of such
transactions or the transactions fall under the exceptions provided in law.
Second, a company must keep a register to reflect the directors shareholdings
or interests in shareholdings in the company or related corporations.
Having laws in place is just a starting point. ACRA also undertakes to

facilitate compliance with these legal obligations through several initiatives to

ensure a high level of awareness. For example, a letter sent to every newly
appointed director details the legal obligations of directors. Talks and seminars
are also regularly conducted by ACRA to raise awareness of these and other
compliance issues.
The Companies Act and corporate transparency

Transparency is an enemy of corruption. Various laws are in place to
achieve transparency of company affairs. The Companies Act requires that
companies maintain accounting records for 5 years (Companies Act, section
199). Directors must ensure that true and fair accounts compliant with Financial
Reporting Standards are presented to shareholders (section 201). Failure to do so
is an offense punishable with up to 2 years in prison (section 204). Companies are
required to file their accounts with ACRA, and these can be viewed by the
public (section 197). Public companies are legally obliged to have adequate
internal controls (section 199(2A)).
Adding to the transparency of corporate affairs is the legal obligation to

maintain various registers, some of which the public may inspect, including:
Register of members;
Register of directors, managers, secretaries and auditors;
Register of directors shareholdings;
Register of substantial shareholders;
Register of debenture holders; and
Register of charges.
Minute books must be kept with records of all general meetings and
directors meetings. Failure to do so is an offense (Companies Act, section 188).
The minute books are open to inspection by members (section 189). Other
information filed with ACRA, and therefore available to the public, includes
basic company information such as the constitution of the company
and the particulars of its shareholders and directors;
charges created by the company and changes in status;
financial data on the company; and
application to winding up or deletion from the corporate registry.
Auditing: Companies obligations

Quality auditing and corporate financial reporting form the foundation of
market confidence, which leads to a climate that promotes international
investment and growth. Singaporean law therefore requires all companies to

maintain accounting records, and conduct annual audits. Private companies

with a turnover below SGD 5 million and dormant companies are exempt from
these obligations. These audits provide independent assurance that the
accounts present a true and fair view, and that internal controls are adequate.
The integrity of accounts of listed companies is particularly important. As

such, the audit of their accounts also is more significant. Since 2004, listed
companies are required have an Audit Committee to facilitate audits and
ensure their effectiveness.
Auditing: Auditors obligations

Auditors may uncover wrongdoings such as corrupt acts. The law requires
that auditors report any breach of law or offense of fraud or dishonesty
(Companies Act, section 207[9A])). Obstructing an auditor from doing so is a
crime (Companies Act, section 207[10]).
Auditing: Maintaining professional standards

ACRA plays a role in the maintenance of high standards for professionals
qualified to conduct audits. The standard is maintained through registration
requirements consisting of a mixture of technical knowledge and experience.
Audit quality is the cornerstone of market confidence, ensuring reliability of

the financial information upon which the market makes capital allocation
decisions. ACRA regards the Practice Monitoring Program as an important
regulatory instrument that promotes audit quality.
Essentially, the Practice Monitoring Program is a mechanism for ACRA to

assess the quality of the work of Singapore auditors. The program also serves to
provide quality assurance to the market by ascertaining whether public
accountants have complied with internationally recognized standards, methods,
procedures and other requirements prescribed under Singaporean law. It also
aims to determine the tone at the top of the audit firm. This assurance gives users
of financial reports increased confidence in audit opinions.
Financial Reporting: Maintaining confidence in Singapores

financial reports
ACRA believes that compliance with accounting standards promotes
confidence in Singapores corporate financial reports and facilitates a
transparent and informed market. High-quality corporate financial reporting by
directors is vital to maintaining a trusted business environment.

ACRA conducts the financial surveillance program to monitor and take

necessary enforcement action on compliance of Singapore incorporated
companies financial statements with requirements as specified in the
Companies Act and the Financial Reporting standards.
ACRA carries out its financial surveillance program with a risk-based

approach targeted at listed companies. It emphasizes the importance of
directors taking ownership of the quality of corporate financial reporting.
Dealing with noncompliance

Inevitably, there will be instances of noncompliance. What is important is
that such instances are dealt with in a swift and just manner. Typically,
noncompliance might lead to:
belated compliance where defaulters approach ACRA voluntarily;
complaints, which ACRA will act upon;
discovery and enforcement action by ACRA financial surveillance.
Conclusion
Trust is essential for the wheels of business to turn smoothly. Hence, the
integrity of corporate officers and of the information they provide to investors
cannot be overstated. ACRA recognizes this and will continue to work toward
maintaining a trusted environment for business.

Chapter 4
Conflict of interestthe soft
side of corruption
The intersection of the public and private sectors creates opportunities for
briberybut corruption does not always manifest itself as a financial crime.
Conflicts of interest occur when private interests compromise official, public, or
organizational interests. This workshop defined conflict of interest, and presented
emerging issues in identifying and managing real and potential conflicts. The
session addressed country-specific approaches to managing conflicts of interest,
and showed that the relationship between conflict of interest and corruption is
highly subjective issue. The perspectives of the private sector, and the legal and
auditing professions were presented.
The session opened with a discussion on what conflict of interest is, how
the definition and practical implications have evolved, and why it matters in
todays context. Rules, laws, and policies are not enough: understanding the
issues and ensuring capacity to implement the rules, laws, and policies are
equallyif not moreimportant. In many cases, conflict of interest standards
exist or are included within specific legislation, but they are not enforceable.
The session also discussed the situation in Indonesia, where conflict of

interest is not specifically defined (except in the capital market law) and is not
well understood. The UNCAC now provides Indonesia with an opportunity to
revisit the issue.
The conflict of interest inherent in independent audit services and how

conflict of interest can manifest in a sector context were also examined. In both
cases, it was agreed that conflict of interest is natural. While conflict of interest
cannot be avoided, it can be managed.

OECD Guidelines, Toolkit, and Emerging
Concerns
( Jnos Bert ok)
Jnos Bertok
Principal Administrator, Innovation and Integrity Division, Public
Governance and Territorial Development Directorate
Conflict of interest: a major concern

Conflict of interest in both the public and private sectors has become a
major matter of public concern worldwide. There is a growing expectation from
an increasingly informed and educated citizenry that governments will ensure
that public officials perform their duties in a fair and unbiased way, so that
decisions are not improperly affected by self-interest or considerations of
personal gain. The public sector is increasingly commercialized and works in
increasingly close relationship with the business and nonprofit sectors, giving rise
to the potential for new forms of conflict between the individual private interests
and public duties of public officials.
Corruption and conflicts of interest are related phenomena; they are two
sides of the same coin. Corruption can arise from a conflict of interest which has
been inadequately identified or managed. In a rapidly changing public sector
environment, conflicts of interest will always be an issue for concern. A too-strict
approach to controlling the exercise of private interests may be conflict with
other rights, or be unworkable or counterproductive in practice, or may deter
some people from seeking public office altogether. Therefore, a modern conflict
of interest policy seeks to strike a balance by identifying risks to the integrity of
public organizations and public officials, prohibiting unacceptable forms of
conflict, managing conflict situations appropriately, making public organizations
and individual officials aware of the incidence of such conflicts, and ensuring
effective procedures are deployed for the identification, disclosure,
management, and promotion of the appropriate resolution of conflict of interest
situations.

OECD Guidelines and Toolkit for Managing Conflict of

Interest
The OECD Guidelines for Managing Conflict of Interest in the Public Service
responded to a growing demand to ensure integrity and transparency, and
reduce bias and abuse of office in the public sector. The OECD Guidelines help
government institutions develop and implement an effective conflict-of-interest
policy that fosters public confidence in the integrity of public officials and official
decision making. The Guidelines provide a practical framework of reference for
reviewing existing policy solutions and for modernizing mechanisms used to
manage conflict-of-interest situations in line with identified good practices. The
Guidelines, which were approved as an OECD Recommendation in 2003,
provide a comprehensive benchmark for countries, against which it will be
possible to compare, assess, and evaluate policy effectiveness.
The Guidelines developed a simple and practical definition of "conflict of

interest" to assist effective identification and management of such conflicting
situations, namely, a conflict between the public duty and private interests of a
public official, in which the public official has private-capacity interests which
could improperly influence the performance of their official duties and
responsibilities.
The Guidelines present set of core principles with standards and

procedures for identifying and resolving conflicts (Part 1. Developing the Policy
Framework) and management measures for putting the Policy Framework into
practice (Part 2. Implementing the Policy Framework). Key elements of successful
implementation include a clear and objective definition of conflict of interest,
demonstrated leadership commitment, practical management systems,
coordination of preventive measures, such as reviewing "at-risk" areas for
potential conflicts, and positive enforcement (e.g., control, monitoring, and
management strategies) to promote a public service culture where conflicts of
interest are properly identified and resolved or managed without unduly
inhibiting the effectiveness and efficiency of public organizations.
The Guidelines also support partnership with employees and recommend

a new partnership with the business and non-profit sectors (in the form of
awareness-raising, citizen involvement, and proactive safeguards against
potential conflicts, etc.) in accordance with clear public standards defining the
parties' responsibilities for integrity.
Identifying a specific conflict of interest in practice can be difficult.

Resolving the conflicting interests appropriately in a particular case is something
that most people find even more challenging. To provide hands-on support, the

OECD Toolkit for Managing Conflict of Interest in the Public Sector presents
specific techniques, resources, and strategies for identifying, managing, and
preventing conflict-of-interest situations more effectively; and increasing integrity
in official decision making, which might be compromised by a conflict of interest.
This Toolkit provides nontechnical, practical help to enable officials recognize
problematic situations and help them ensure that integrity and reputation are
not compromised. The tools themselves are provided in generic form. They are
based on examples of sound conflict-of-interest policy and practice drawn from
various OECD member and nonmember countries. They have been designed for
adaptation to suit countries with different legal and administrative systems.
The OECD reviewed progress made by member countries in implementing

the Recommendation and reported on trends in recent developments for
modernizing conflict-of-interest policy and practice as well as the impact of the
Guidelines. The review process also identified emerging concerns, namely, post-
public employment and lobbying.
Post-public employment
There is increased concern about movement. Increased mobility of
personnel between the public and the private sectors has supported labor-
market dynamism. When officials leave public officeeither permanently or
temporarilyto work for private or nonprofit sectors, however, concerns of
impropriety (such as the misuse of insider information and position) can put
trust in the public service at risk. Consequently, many countries are making it a
priority to review and modernize arrangements to effectively prevent and
manage conflict of interest in post-public employment. Most post-public
employment offenses occur when public officials use information or contacts
acquired while in government to benefit themselves, or others, after they leave
government. However, despite the use of the term post-public employment,
these offenses can also occur before officials actually leave government. Major
post-public employment problem areas involve public officials when they
seek future employment outside the public service;
conduct post-public employment lobbying back to government
institutions;
switch sides in the same process;
use insider information such as commercially sensitive information;
and
are reemployed in the public service, for example, to do the same
tasks.

The challenge for governments is to strike an appropriate balance

between fostering public integrity through adequate post-public employment
instruments and preserving a reasonable measure of employment freedom to
attract experienced and skillful candidates for public office. Survey findings show
that the vast majority of OECD countries have established basic post-
employment standards to avoid conflicts of interest. Several countries have even
strengthened restrictions in the past years. However, only a few countries have
tailored standards to risk areas, for example, when regulators or procurement
officials move to the private sector. In addition, enforcing established standards
and imposing suitable sanctions remain a challenge for many countries. Ensuring
compliance with post-public employment measures can indeed be particularly
difficult because most post-public employment offenses are committed by
public officials who, by leaving the public sector, move somewhat beyond
administrative government control.
To help policy makers, the OECD developed Principles for Managing Post-
Public Employment Conflict of Interest that provide a point of reference for
reviewing and modernizing post-public employment policy and practice. The
Principles were designed to support efforts to prevent actual or potential conflict
of interest in public office, such as by requiring that public officials should not
enhance their future private sector employment prospects by giving preferential
treatment to potential employers in decision making. In reviewing their actual
arrangements, policy makers may consider systematically examining the extent
to which existing regulations, policies, and practices can meet the requirements
of the principles as a first step.
Moreover, the Post-Public Employment Good Practice Framework provides

options for implementation of the Principles. The Framework addresses strategic
aspects of managing a post-public employment system and provides a structure
for developing coherent and comprehensive post-public employment policy
and practice. Selected elements of good practices are also presented in the
Framework to give concrete examples of options that could be considered
benchmarks. Key pillars of the Post-Public Employment Good Practice Framework
include:
The post-public employment system contains the instrument(s) needed
to deal effectively with its current and anticipated post-public
employment problems and emerging concerns.
The post-public employment instrument(s) is linked, where feasible, with
instrument(s) dealing with conflict of interest in the public sector and
with the overall values and integrity framework.

The post-public employment system covers all entities for which post-
public employment is a real or potential problem and meets the
distinctive needs of each entity.
The post-public employment system covers all important risk areas for
post-public employment conflict of interest.
The restrictionsparticularly the length of time limits imposed on the
activities of former public officialsare proportionate to the gravity of
the post-public employment conflict of interest threat that the officials
pose.
The restrictions and prohibitions contained in the post-public
employment system are effectively communicated to all affected
parties.
The authorities, procedures, and criteria for making approval-decisions
in individual post-public employment cases and for appeals against
these decisions are transparent and effective.
The enforcement sanctions for post-public employment offenses are
clear and proportional, and are timely, consistently, and equitably
applied.
The effectiveness of the policies and practices contained in each post-
public employment system is assessed regularly and, where
appropriate, is updated and adjusted to emerging concerns.
Dealing with post-public employment problems has been a relatively

recent challenge in many countries. However, even countries with established
post-public employment frameworks have faced newly emerging concerns
driven by constantly evolving sociopolitical contextsthat have forced
governments to adjust existing regulations, policies, and practices. The OECD
report draws attention to reviewed elements of good practicesidentified at the
subnational and national levelsto help decision makers by outlining alternative
options as valuable benchmarks and sharing experiences and lessons learned.

Conflict of Interest in Indonesia: Business as
Usual
( Arief T. Surow idjojo)
Arief T. Surowidjojo
Founding partner of Law Firm Lubis Ganie Surowidjojo; Former
chairperson of the Supervisory Board of Transparency International
Indonesia
Conflict of interest: a major concern

Indonesia does not have a specific law on CoI. Rather, the concept is
used in various laws and regulations, without one all-purpose definition. Conflict
of interest is defined in the Law on Depository Insurance Agency and in the Law
on Capital Markets, for the respective purposes of these acts. However, the
definitions used in those acts are not sufficient in discussing issues of CoI in the
context of governance, clean government, and wider anti-corruption efforts.
If a more precise definition of CoI is included in the law, it is more likely that
law enforcers will enforce it. But while definition is compromised, or could give rise
to different interpretations, a loophole is opened; and regardless of how narrow
the loophole is, the concept of CoI is rendered ineffective and useless in a
corrupt environment.
It has to be said that conflict of interest is notoriously difficult to define; this

can be observed in the drafting of CoI laws in other jurisdictions. The conflict of
interest law in force in the Czech Republic from 1992 to 2006 confuses conflict of
interest with actual corrupt conduct, as follows:
A conflict between the public interest and personal interest is understood

to be conduct [of a public functionary] or failure [of a public functionary to act]
which undermines trust in his/her impartiality, or by which a public functionary
misuses his/her position in order to obtain unauthorized benefit for him or herself
or another individual or legal entity. 1
This law is not the only example of confused drafting; the United Nations
guide for Anti-Corruption Policies states that:2
Most forms of corruption involve the creation or exploitation of some

conflict between the professional responsibilities of a corrupt individual and his or

her private interests. The acceptance of a bribe creates such a conflict of

interest.
In reality, conflict of interest is a situation, not an action and it is clear

that a public official may find him or herself in a conflict of interest situation
without actually behaving corruptly. As Speck points out, 3 The concept of
conflict of interest does not refer to actual wrongdoing, but rather to the
potential to engage in wrongdoing. Indeed, it is all but inevitable that a public
official will face situations where the public interest s/he has been elected or
appointed to serve will conflict with other interests to which s/he is subject.
The Policy Brief on the OECD Guidelines for Managing Conflicts of Interest
in the Public Sector 4 states that the concept of conflict of interest arises in a
multiplicity of situations, such as
A public official having private business interests in the form of
partnerships, shareholdings, board memberships, investments,
government contracts, etc.;
A public official having affiliations with other organizations (e.g., a
senior public official sits on the board of a nonprofit organization that
receives funding from the officials agency); and
A public official leaving office to work for a regulated private company
or a chief executive taking up a key position in a government agency
with a commercial relationship with his/her former company.
Background on Indonesia: Good news

After 10 years of undertaking spiritedalbeit restrainedreform efforts in
all sectors, Indonesia has made several praiseworthy achievements, especially in
that relatively short timeframe. These achievements include:
Amending the 1945 Constitution several times, producing improved
governance and democratic systems with much weight on the role of
the State in supporting the still-developing democratisation process,
securing the wealth of citizens, promoting social justice, and protecting
the human rights of Indonesias diverse communities.
Holding, in a commendably peaceful manner, the first direct general
elections in 2004 for the parliament, regional representatives, president
and vice president; this was followed by dynamic regional elections for
regional parliaments, as well as the regional representatives, governors,
majors and regents in more than 400 provinces, cities, and regencies.
Although there were disputes on the election results, these were finally
settled by the Courts, and Indonesias famous street demonstrations

that inevitably happened due to the suits turned out to be

manageable.
Creating 30 new state institutions, commissions, and agencies needed
to support good governance and anti-corruption systems since the
start of reformation in 1998.
Taking serious and rigorous efforts in the prevention and eradication of
corrupt practices to answer the Indonesian publics cry for drastic
action. The independent Corruption Eradication Commission (KPK),
established in 2004, leads these efforts. That corruption cases were (and
for the moment, still are) independently adjudicated by a special Anti-
Corruption Court contributed to the effectiveness of the anti-corruption
efforts. The special anti-corruption Court sits with a majority of ad hoc
judges and decides corruption cases processed by the KPK.
Creating an open economic environment that boosts investment in a
balanced way, taking into consideration socially responsible policies.
Modern laws and regulations now exist in the areas of corporation,
capital markets, tax, foreign investments, environmental protection, oil
and natural gas, mining, infrastructure, anti-monopoly, independent
judiciary, and other key areas. Fortunately, Indonesia has not
neglected to enact laws and regulations that cater to public interests
in the areas of labour, consumer protection, human rights protection,
land issues, disclosure of public information, and the like.
Initiating a comprehensive bureaucratic reform of hundreds of
thousands of ineffective public jobs, and applying merit-based
programs for public officials. These began with internal reforms within
the Department of Finance, the Financial Audit Board, and the
Supreme Court.
Safeguarding the freedom of the press, thereby positioning the
Indonesian media among the freest media in the world. The media
voices the peoples opinions, and directly impacts the performance of
the government, parliament and judiciary.
Applying regional autonomy policies in a country with thousands of
islands and a population of more than 220 million. This provides all
citizens across Indonesia with equal opportunities and a chance to
progress and develop.
and setbacks
In Transparency Internationals Corruption Perception Index 2007,
Indonesia ranks 144 out of 180; its index is 2.3.5 The Political and Economic Risk

Consultancy (PERC) ranked Indonesia as the third most corrupt country among
13 Asian economies.6 The International Finance Corporation (IFC) in 2007 ranked
Indonesias investment climate as 123 out of 178.7
For the last 10 years after reformation, 82 corruption cases were

investigates across the country. Corruption cases investigated and indicted by
KPK are basically those involving funds of IDR 1 billion, or those that otherwise
adversely affect the economy or state finances, and thus attract significant
public concern. Despite the rigorous efforts and effectiveness of the KPK in
preventing and combating corruption, corruption is still pervasive across the
country. Corruption takes many forms, and includes petty bribery in the provision
of basic public servicesprocessing national identity cards and driving licenses,
for instancebut also more expensive processes such as land conveyance,
construction licenses, business licenses, government tenders; corruption occurs
even in the area of public policy making by the parliament or executives.
Reform efforts are perceived to be half-hearted. Lack of funding, political

pressure and interests, absence of leadership in many sectors, and cultural
constraints often prevent good blue prints from being effectively translated into
action.
Despite a genuine aspiration to distribute wealth of the country equally

among citizens in rural and remote areas, the regional autonomy programs have
resulted in the uncoordinated development and wrong implementation of
thousands of local policies. Some of these measures even reinvent or copy the
corrupt practices that were standard procedures of Suhartos cronies during the
New Order administration. Local formal and informal leaders and
activistswho seek to secure their regions access to local natural and other
resources, following four to five decades during which these resources had been
exploited by the central governmentreceive complaints from the private
sector and the public on this proliferation of corrupt practices in the regions.
The countrys leadership is in question. Crises call for tough and firm
decisions, even though they might sometimes be unpopular. It is a widely made
criticism that few days after winning the 2004 election, the current administration
began to take decisions with a view to winning the 2009 election. The current
administration has been praised for its anti-corruption agenda, although the
success of the KPK in the establishment of corruption-prevention measures and
sending corrupt public officials to jail is not linked to the performance of the
current administration but rather to the dedication and integrity of the KPK, its
commissioners, and its staff.
Most worrying among the reform failures is that the judiciary does not really
support the reform of the judiciary. The results have been very underwhelming,

even though good laws have been enacted; police, prosecutors, and judges
have been trained; resources are available; new systems, technology and
governance systems have been introduced. The decisions of the courts indicate
that either the quality of the judiciary is still low or that the level of corruption in
the law enforcement agencies is still high.
The current global financial crisis will affect the ability of Indonesia to deal
with its economic and financial issues; this will also affect the result of the general
election in 2009. Economic and political turmoil will also influence how efforts to
eradicate corruption and to fight for a clean government will be implemented in
the near future.
Regulating conflict of interest

Based on its legal tradition of civil law, Indonesia tends to regulate
everything though legislative and executive means. After reformation in 1998,
Government and Parliament have promulgated 375 laws, the Government has
issued 12 government regulations in-lieu-of-law as well as 927 government
regulations; 252 Presidential Regulations, 913 Presidential Decrees, and 45
Presidential Instructions have been issued. Thousands of Ministerial Decisions,
Instructions and Directives, and other decisions, instructions, rules, and guidance
issued by public officials below the Minister levelplus legal products of state
commissions, committees, and boards, either issued to facilitate the
implementation of the higher laws and regulations, or simply issued to regulate at
that levelhave also been put in place.
Conflict of interest is regulated in various laws and regulations, and

decisions of legislative, executive, and judicative bodies, and mostly in
nonbinding codes of conduct or ethics issued by such bodies. The concept of
conflict of interest is present in numerous legal documents such as the
Indonesian Constitution of 1945, as amended several times;
Decrees of the Peoples Consultative Assembly;
Law on General Election;
Law on the Ratification of UN Convention against Corruption;
Law on Regional Autonomy;
Law on Judicial Commission;
Law on Supreme Court;
Law on Power of Judiciary;
Law on Money Laundering;
Law on the Commission on Eradication of Corruption;

Law on Governing of Clean Government and Free from Corruption,

Collusion, and Nepotism;
Law on Indonesian Police Force;
Law on Public Prosecutor;
Law on Bribery;
Law on Corruption;
Law on the Presidency; and
Law on the State Ministries.
The laws and regulations basically deal with conflict of interest in respect
to: official oaths of public officials; public officials taking on multiple functions;
codes of ethics of public officials; conflicts of interest in public function (i.e.,
issuing a policy in favor of affiliates interests, having business interests in any
company or organization); not taking roles in political parties; not practicing a
profession while being a public official (lawyers, public accountants, etc.).
The pace of making new laws and regulations in Indonesias

transformation from a long-repressed to a democratic society is still sadly
unmatched by the capacity of institutions and agencies to implement laws and
regulations. Reform and anti-corruption efforts can be expected to produce real
results only in one of two decades from now.
Since 2007, efforts to regulate conflict of interest have continued and

resulted in the promulgation of the Law on Presidency; the Law on State Ministry;
the Law on General Election (amended); and the Law on the Composition and
Position of the Parliament and Regional Representative Board; this last law was
being discussed in Parliament in November 2008.
Most common conflicts of interest

In Indonesia, the most common conflict of interest situations involve:
A public official designs, sets up, or issues a public policy, or makes a
decision favorable to a business he/she directly or indirectly owns or
controls, or that he/she expects to acquire or control;
A public official designs, sets up, or issues a public policy or makes a
decision favorable to a business of his affiliates (political, religious,
family, ethnic, place of living, association, professional), regardless of
whether or not there is a conflict of economic or financial interest in
such an act;
A public official puts himself in a position that potentially triggers a
conflict between his public duties and his personal interests; the official

may not necessarily intend to engage in unethical conduct, and

policies or mechanisms for preventing or managing such potential
conflicts may or may not be in place;
A public official receives money, goods, or services without incurring
any immediate obligation to design, set up or issue a favorable policy
or decision; however, such gifts still give rise to a psychological situation,
where the public official feels obliged to return the favor in the future;
A public official holds a position, role or interest in a corporation whose
business depends on the policies or decisions of the official or his/her
fellow public officials;
A public official holds multiple positions, which may create a conflict or
potential conflict between them.
The practice of dealing with conflict of interest: Business as

usual
During the Suharto regime, corrupt acts involving collusion, cronyism, and
conflicts of interest were standard conduct of most public officials. Family
members and cronies of the Suharto Government controlled tenders for public
procurement of goods and services. Suharto family members and his cronies
marked up prices of goods and services, and issued businesses licenses,
especially in the area of natural resources and infrastructure. The parliament,
executive and judiciary, mass media and political parties were government
controlled, and criticizing Suharto or his policies meant inviting trouble.
One would expect that reformationwhich brought free, direct, and

transparent general elections; a free press, academia, and public; as well as
good governance and systems of checks and balanceswould also bring clear
regulations of conflict of interest, including effective prevention, and sanctions
for perpetrators. Although progress has been made, collusion still compromises
many government tenders, projects are still being marked-up and many public
officials still hold multiple positions.
Conflict of interest is still pervasive where public officials have direct or

indirect business interests in big corporations. Mr. Jusuf Kalla, Indonesias Vice
President, has interests in several corporations, including the Bukaka Group and
the Bosowa Group. Mr. Aburizal Bakrie, currently Coordinating Minister of
Peoples Welfare (formerly the Coordinating Minister for Economic Affairs) has
interests in several corporations including Bumi Resources, KPC, and Bakrie
Telecom. Both individuals have won several government projects in toll road
projects, transportation, gas, mining, power generation, and telecommunication

amounting to several billion USD. Messrs. Kalla and Bakrie are respectively chair
and co-chair of the Golongan Karya (Golkar) Party, a party that supported
Suhartos repressive regime for the last 32 years of his administration.
For the last several years, the Bakrie group has been trying to convince the
Government that a mud explosion in Sidoarjo, East Java, that paralyzed
thousands of hectares of land was a natural disaster and not a technical error
caused by an oil operation of one of their affiliates. If it were declared as a
national natural disaster, the operator of the mines would be freed from any
liabilities. In a more recent case, shortly after the global economic crisis started to
affect the Indonesian capital markets, Bumi Resources, a member of Bakrie
Group, encountered difficulties in servicing its debts. Media reports suggest that
the Bakrie Group tried to influence the Minister of Finance and the Capital
Markets authority to suspend trading of Bumis shares during the negotiations with
a buyer. The Bakrie Group is considering initiating legal action against an
Indonesian media company. Tempo Magazine, in its November 2008 edition,
reported Jusuf Kalla from the offices of the Vice President said clearly: whats
wrong with the Government helping [Bakrie Group]? He was quoted to say that
the Bakrie Group is a national asset.
In another interesting case, one member of Parliament reported to KPK

that he and his fellow Parliamentarians received money for the purpose of
winning the election of the Senior Deputy Governor of the Central Bank. The
Senior Deputy Governor refused to admit it, but media reports suggest that a
member of the banking industry may have made the payments, hoping to get
favorable decisions in the future.
Establishing an appropriate prevention program

Reformists in the government and other stakeholders are aware that
conflict of interest problems will not disappear through passage of a single
regulation. Comprehensive measures are necessary. The Government initiated
regulatory reform in 2007, starting with the Department of Finance, the Supreme
Audit Board, and the Supreme Court. One of the main programs will be
organizational reform, which will involve launching programs to increase
discipline amongst public officials, including avoiding multifunction and
increasing public officials salaries to reduce abuses arising from conflict of
interest situations.
The ADB/OEDC Anti-Corruption Initiative for Asia and the Pacific held a
regional technical seminar on Preventing and Managing Conflict of Interest in
Jakarta in August 2007. Since then, KPK and development partners have been in

communication to prepare a more comprehensive study with the purpose of:

mapping COI rules and regulations; increasing public knowledge of the concept
of preventing COI; issuing a new and more effective rule specifically on COI;
establishing oversight agencies on COI in practice; and setting out effective
disciplinary measures against non-complying public officials. The study is
expected to be completed in 2009, and has the potential to contribute
significantly to government reform programs.
Policy recommendations
Indonesia has ratified the UN Convention against Corruption (UNCAC),
and a domestic law for its implementation has been enacted. The UN
Convention contains important provisions on conflict of interest that reflect
global governance and business standards. Policy efforts should start with a
mapping activity on the laws and regulations that must be adjusted to the
principles of the Convention. Subsequently, pressure needs to be exerted to
force Government and Parliament to comply with the UN Convention.
The process to adjust the laws and regulations as set out above needs
considerable time and effort. Pending the completion of these efforts, there
should be a general rule applied to all public officials or prospective public
officials, obliging them to
prior to election and appointment processes, declare and register
publicly all business and other interests that he/she and family and
affiliates own or control;
update any changes to such interests that intervene in the course of
their function in public office;
declare arising conflicts of interest to a responsible body;
abstain from making any decision in a potential direct or indirect
conflict of interest situation;
subject themselves to an investigation by the responsible body when a
conflict of interest occurs; and
comply with the recommendations or disciplinary actions administered
by the responsible body.
Socialization to, and oversight measures taken by, stakeholders are

important. The current laws and regulations appear sufficient to make public all
important information that relates to national interests. For example, all
information on the government procurement of goods and services shall be
made public, including pricing policies and benchmarking processes to the
open market. The public shall be able to point out when a process is not in line

with the benchmarks generally available in the market, and the body or agency
in charge of monitoring conflict of interest shall be able to follow up any reports
from the public, and take necessary measures or actions.
NOTES
1 See Quentin Reed: Sitting on the Fence, Conflict of Interest and How To Regulate
Them. U4 Issue 6.2008. Available at www.cmi.no/publications/file/?3160=sitting-on-
the-fence
2 United Nations Office on Drugs and Crime: United Nations Anti-Corruption Toolkit,
pp. 1516. The document is available at
www.unodc.org/documents/corruption/publications_toolkit_sep04.pdf
3 Quoted after Quentin Reed: Sitting on the Fence, Conflict of Interest and How To
Regulate Them (see note 1 above).
4 September 2005. Available at www.oecd.org/dataoecd/31/15/36587312.pdf
5 The CPI is available at www.transparency.org/policy_research/surveys_indices/cpi
6 www.asiarisk.com
7 The index is available at www.doingbusiness.org/economyrankings/

Auditors ConflictsIndependence in the
Audit of Financial Statements
( Navit a Srikant)
Navita Srikant, Partner and National Leader, Fraud Investigation

and Dispute Services, Ernst & Young Pvt Ltd., Mumbai, India
Expert views can be valuable, and help people formulate opinions. Quite
often, however, these experts face conflicts of interest between their professional
obligations and their own self-interest to provide good advice.
Integrity needs no rules and such conflict is difficult to define: a situation

which can cause conflict for one person may not be a problem for another. The
majority of professionals are unaware of the gradual accumulation of pressures
on them to slant their conclusionsa process which has been characterized as
moral seduction.
Given what we now know generally about motivated reasoning and self-
serving biases in human cognitionand specifically about the incentive and
accountability matrix within which auditors work (Bazerman, Morgan, &
Loewenstein, 1997)we should view personal testimonials of auditor
independence with scepticism.
Evidence has suggested that intentional corruption is probably the

exception, and that unconscious bias is far more pervasive. This distinction
between conscious corruption and unconscious bias is important, because the
two respond to different incentives and operate in different ways.
Most professionals feel that their decisions are justified and that concerns
about conflicts of interest are overblown by ignorant outsiders who malign them
unfairly. Perhaps the most notable feature of the psychological processes at work
in conflicts of interest is that they can occur without any conscious intention to
indulge in corruption. Psychological research on the impact of motivated
reasoning and self-serving biases questions the validity of this assumption. The
evolution of several audit-related professional services over time and the impact
of non-audit fees have also played a significant role in the discussion between
Independence and conflict of interest.
In 1978 the SEC required companies to disclose any non-audit services

their auditors performed for them if and when the fees paid to the auditor for
non-audit services were at least 3% of the audit fees paid. However, this

requirement was repealed in 1982 by the SEC, which concluded that the
required disclosure was not generally of sufficient utility to investors to justify
continuation, despite evidence showing that knowledge of a consulting
relationship creates a perceived lack of auditor independence.
Non-audit services proved to be yet another important growth area for

accounting firms. The Public Oversight Board Panel on Audit Effectiveness
Reports and Recommendations in 2002 reported that by 1999, fees for non-audit
services had grown to 66% of revenues and 70% of profits for the major
accounting firms.
Much has been written and spoken about the loss of public confidence in
financial reporting during the late 1990s and early 2000s, and the auditors
performance of this gatekeeper role. A few factors could be taken into
consideration to understand this significant erosion of trust:
The rise of non-audit, consulting services: Revenues from activitiessuch as
systems design, tax planning, assistance with data processing procedures,
and a host of other high-margin advisory servicesbecame increasingly
important. In many cases, clients were paying their auditors more for
consulting than for the financial statement audit. As a consequence, firms
began to see the lower-margin audit as a hindrance to more lucrative
consulting engagements.
Downward pressure on auditing fees: Firms faced considerable pressure to
keep the audit fee low, or risk losing both their audit and (more profitable)
non-audit relationships with clients. In a growing market, clients viewed the
audit opinion as merely another standardized commodity to be purchased
as economically as possible.
Increased reliance on more cost-efficient means of auditing: The tactic of
using the audit to gain entry to other work, coupled with the difficulty in
raising audit fees, meant that the costs of auditing had to be controlled.
That, in turn, led to more emphasis on risk-based auditing, the theory under
which auditors plans their work based on judgments about which aspects of
the clients business are the most likely prone to error or fraud. In the areas of
perceived low risk, the auditor relies more heavily on internal controls and
management representations. Though theoretically strong, this processif
not judiciously appliedcan have disastrous consequences, particularly if
the underlying judgment about risk turns out to be incorrect. An example of
this is WorldCom.
What is independence?
Various legal and other definitions are available for independence The
Code of Ethics for Professional Accountants, issued by International Federation of

Accountants (IFAC), distinguishes independence of mind and independence of

appearance. Per their definition, independence is:
Independence of mind - the state of mind that permits the provision of an
opinion without being affected by influences that compromise professional
judgment, allowing an individual to act with integrity and exercise objectivity
and professional scepticism; and
Independence in appearance - the avoidance of facts and circumstances
that are so significant a reasonable and informed third party, having
knowledge of all relevant information, including any safeguards applied,
would reasonably conclude a firm's, or a member of the assurance team's,
integrity, objectivity or professional scepticism had been compromised."
The code further identifies five specific threats to auditor independence:
Self-interest threats Partner or associate benefiting from a financial interest
in an audit client.
i. Direct financial interest or materially significant indirect financial interest
in a client,
ii. Loan or guarantee to or from the concerned client,
iii. Undue dependence on a client's fees and, hence, concerns about
losing the engagement,
iv. Close business relationship with an audit client, or potential
employment with the client, and
v. Contingent fees for the audit engagement.
Self-review threats Reviewing of any judgment or conclusion reached in a
previous audit or non-audit engagement, or when a member of the audit
team was previously a director or senior employee of the client.
i. When an auditor has recently been a director or senior officer of the
company, and
ii. When auditors perform services that are themselves subject matters of
audit.
Advocacy threats When an auditor promotes, or is perceived to promote,
a client's opinion to a point where people may believe that objectivity is
being compromised (e.g., when an auditor deals with shares or securities of
the audited company, or becomes the client's advocate in litigation and
third-party disputes).
Familiarity threats When auditors form relationships with the client where
they end up being too sympathetic to the client's interests. This can occur in
many ways:
i. Close relative of the audit team working in a senior position in the client
company,
ii. Former partner of the audit firm being a director or senior employee of
the client,
iii. Long association between specific auditors and their specific client
counterparts, and

iv. Acceptance of significant gifts or hospitality from the client company,

its directors or employees.
Intimidation threats When auditors are deterred from acting objectively
with an adequate degree of professional scepticism. Basically, this could
occur because of threat of replacement over disagreements with the
application of accounting principles, or pressure to disproportionately
reduce work in response to reduced audit fees.
Regulation in the Indian Context

Various countries have created regulations on auditor conflict and
independence. In India, both the Companies Act of 1956 and the Chartered
Accountants Act of 1949 provide restrictions to ensure independence of auditors.
Following are few key examples from Indian regulatory context on the
independence of chartered accountants (CA) as auditors: Section 226 of the
Companies Act prohibits the appointment of a CA as auditor if there exists
certain relationships or indebtedness to the Company or the auditor is a
shareholder, while section 334 of the Companies Act also provides for special
resolutions to be adopted if the appointed auditor has relationships with any
director or managers in the company.
Under the CA Act, the areas of restrictions are: fees and kind of fees that
can be paid to the auditor which are not success based, services that can be
provided (liquidator, internal auditor, management consultant, etc.) and if
substantial interest or director or in the employment as an officer in the company
either himself or through partner or relative.
Resolving Conflict of Interest

Given the cognitive and political barriers to solving the problems created
by conflicts of interest, it is unlikely that society will ever entirely eliminate them.
Nevertheless, that does not mean that it is impossible to limit their reach.
Auditor independence is the cornerstone upon which the audit profession

has been built, and indeed, discharges its duty to its clients and the market at
large. The key characteristic of this independence is the state of mind of the
auditor. This must include integrity, strength of character to stand up for what is
right, and freedom from undue influence with a positive independent outlook.
Understandably, as we see all manner of corporate collapse, including a global
audit firm, the question of audit independence must be challenged.
A number of theories have been written and talked about in this context:

Auditors should perform audits and no other services.

An audit firm should be hired for a fixed period, perhaps 5 years.
All parties involved in the audit, executives and staff alike, should be
prohibited from taking jobs with the firms they audit.
Auditors should make a set of independent assessments, rather than
simply ratify the accounting of the client firm.
The auditor should be chosen not by company management but by
the audit committee of the board of directors.
Conclusion
Abraham Lincoln once said: You cannot build character and courage by
taking away a man's initiative and independence. This saying holds true in the
auditing world as well: initiative is required by auditors to take right decisions,
keeping in mind the factsand walking the lane of independence is a very
essential characteristic of this profession.
However, like so many other professional issues this issue requires rigorous
debate, robust research and, ultimately clears professional judgment. Structures
and processes will certainly support both the fact and perception of auditor
independence, but in the final analysis it is the integrity of the auditor which
ensures that correct judgment calls are made.

Conflict of Interest in the Transport Sector
(W illiam Pat erson)
William D. O. Paterson, Consultant, former Lead Infrastructure

Specialist with the World Bank
In the realm of business, public officials commonly interact or deal with

suppliers, contractors, and consultants in the private sector on a regular basis in
the performance of their ordinary duties. These situations of interaction, which in
themselves are natural and a necessary part of business dealings, can also have
the potential for officials to experience a conflict between private interests and
the public interest, which may lead to corrupt activity.
It is important when reviewing situations where conflict of interest can

arise, to distinguish this situation from actual corrupt behavior because corrupt
behavior does not necessarily follow from the situation. The aim in managing and
controlling conflicts of interest is therefore to reduce the likelihood of conflict of
interest situations, and to avoid a conflict situation leading to corrupt behaviour.
In this presentation, we will be considering the kind of situations that arise in

an important public sector, which is also one of the most vulnerable to
corruptionthe transport sector.
Sources of conflict of interest

In most transactions between the public and private sectors, there is a
familiar array of controls over various facets of the transactionthrough internal
control systems, internal audit, external audit, and increasingly through a third
party monitor not employed by the government. However, provisions to limit the
private interests of officials participating in the process are much less common in
many developing countries.
In the case of the transport sector, and many other infrastructure sectors
also, public officials will often be qualified technical professionals in the sector. As
such, they will usually have a network of peers, developed partly through their
academic and professional training, and partly through trade and professional
associations, which run in parallel to their public employment. Furthermore, some
may well come from extended families with financial interests in supply,
construction or consulting firmsor have strong geographical or political ties to a
regionthat may induce indirect benefits or cause indirect influence over

decisions. Guidelines for when an official should recuse themselves from certain
situations or decisions are therefore important but difficult to devise.
Conflict of interest situations can also arise for any third party group
brought in to monitor the situation, especially if the private sector or public
officials capture the situation in a scheme to cover corrupt activities and to co-
opt or influence the third party monitor. Third party monitors may be provided
with transportation, accommodation, entertainment, or even direct
remuneration of varying levelsusually through the private sectorin order to
influence their judgment. While some of these may begin as simple administrative
arrangements, they may easily be extended in scope or amount as bribes, and
in some forms may later be used for blackmail or coercion purposes, in order to
maintain secrecy over the scheme and influence over the decisions being
made.
The following threat areas need to be addressed by provisions to control

conflict of interest:
1. Recruitment and appointment of staff: A critical tool in corrupt
schemes is often the use of patronage to place individuals who are
well connected to local officials or influential firms into management
staff positions responsible for business decisions such as procurement,
payment authorization, budget allocation, etc. Thus, staff recruitment
should include provisions for declaration and review of the commercial
and political ties and interests of a recruit or appointee. For
transparency, this information might also be disclosed within
appropriate guidelines.
2. Professional or technical associations: A declaration of membership
and positions of responsibility held in technical and professional
associations, or nonprofit organizations that may receive government
funding, should be made and updated regularly for mid-level and
senior staff. Ideally, membership in such organizations may reduce the
risks when there are strong ethical and professional standards in the
organization; however, in other situations the participation could
induce opportunities for market sharing and cartel-type behaviour if
allowed to pass unchecked.
3. Security concerns: In areas of security risk, a mechanism of internal
transparency is needed to ensure that staff do not compromise quality
and decisions out of concern for safety and security, and that the
actions taken to address the risks are appropriate and duly disclosed.
4. Assets and private interests: The practice of requiring staff in decision-
making positions to make regularly updated declarations of financial

assets and commercial interests has been growing, and provides a

crucially important tool for transparency and control of potential
conflicts of interest. The effective application of asset declarations,
however, also requires careful attention by management to ensure
that staff actually recuse themselves from situations where a conflict of
interest might arise, and that this is not left to become a pro forma
exercise.
5. Post-public-employment issues: Significant opportunities for conflict of
interest arise with former public officials who take up employment in
organizations which work in the same sphere or may be retained by
the government to provide services of some kind. Specific provisions for
a cooling-down period and arms-length relationships are necessary
for the rules to be clear and accepted.
For the private sector, there are many stages in the value chain or project
cycle where a potential conflict of interest could be exploited. General
facilitation through small or large gifts, hospitality and entertainment, including
sporting events such as golf, have all been used to develop a spontaneous and
reliable relationship with public officials which is expected to yield payback
through favors in critical stages of the project cycle. The stages that are the most
vulnerable are those where significant discretion is involved or where
transparency is lacking in the processing of information.
Specific vulnerabilities arising from conflict of interest

In procurement, the most vulnerable stages are usually the
prequalification, evaluation, and contract award stages. In addition to controls
to ensure fair competition and transparency, specific actions should be taken to
ensure that individual public staff involved in evaluations and decisions are fair
and independentand free from commercial interest or connection with any of
the competing firms, with a specific declaration of any specific connections
which might constitute a conflict of interest. In the implementation stage, the
potential for conflicts of interest is almost as high, because a firm can exploit
relationships with supervising staff to have deficient work accepted or to inflate
contract variations, using the savings or proceeds to benefit both the supervisor
and the supplying firm.
As noted earlier, even third parties who are intended to provide an

independent monitoring function can be vulnerable if key provisions are not
made to prevent or minimize conflict of interest situations. For inspectors and
supervisors, provisions should preserve the independence of mobility to, from and
around the site, subsistence and work operations.

For auditors, a conflict of interest situation arises, especially for a firm which
has been incumbent for some time, in the judgment distinguishing substantial
variances from minor ones, and in the hope for continuity of business from year to
year.
Similarly, even financing agencies can face conflicts of interest in the

oversight of programs, through pressure to expedite clearances or financing to
enhance portfolio performance, perhaps at the expense of quality or
governance issues.
Preventing and managing conflict of interest

An interesting example, where constructive forces of partnership counter-
balance the potential for conflicts of interest, is the multi-stakeholder monitoring
group in the Philippines road sector. There, a partnership between civil society,
nongovernment organizations, the private sector, and the public implementing
agency was formed to tackle an array of quality and governance issues. The
partnership structure facilitates access to information and sites, and constructive
responses. To preserve impartiality as a watchdog, however, the public agency
was excluded from critical executive actions such as voting by the board.
These situations, which commonly arise in infrastructure sector processes,

require special attention when developing conflict of interest provisions,
especially when adapting general provisions to control of conflict of interest. As
the OECD Gifts and Gratuities Checklist expresses,1 the test of evaluating a gift or
situation comprises the following aspects: Is the advantage a genuine
appreciation and not solicited? Will I maintain independence in my job in the
future? Am I free of obligation to do anything in return? And am I prepared to
declare it transparently to my colleagues?
NOTES
1 More information on this concept is available in Managing Conflict of Interest in
the Public Sector: A Toolkit. OECD 2005, p. 43. A free read-only version is available
at browse.oecdbookshop.org/oecd/pdfs/browseit/4205121e.pdf

Chapter 5
Working together to
combat corruption:
International and regional
initiatives
With the growth of multinational enterprises and transnational economic
ties, governments and businesses have created regional and global alliances to
respond to corruption and related crimes. Through these initiatives, governments
and businesses seek to jointly address common challenges and to minimize risks
in a sensitive environment. These programs can address corruption in general, or
on industry-specific issues. These international initiatives play an important role in
driving reform. However, their impact largely depends on implementation at the
country level, which is often driven or supported by civil society.
Joint government action at the regional level
The ADB/OECD Anti-Corruption Initiative for Asia and the Pacific is an

example of regional dialogue on anti-corruption in Asia and the Pacific. Its work
is supported by the Asia-Pacific Group on Money Laundering (APG), an Initiative
partner, which pursues regional cooperation in the fight against money
launderinga crime with close links to corruption. A recent APG study on the
links between corruption and money laundering shows these offenses may have
mutually reinforcing effects: corruption undermines anti-moneylaundering
efforts, and money laundering helps the corrupt benefit from the crime. In turn,
efforts to reduce vulnerabilities for money laundering or corruption are doubly
beneficial. Closer corruption between financial intelligence units and anti-
corruption bodies will therefore lead to even more effective efforts.
Joint anti-bribery programs in the business sector
Businesses also work together on the regional level to fight bribery and
corruption. The APEC Business Advisory Council (ABAC) has developed a Code

of Conduct for Business based on work by civil society and the international
business community (notably TI, the ICC, and the WEF). The code, which APEC
leaders endorsed in September 2007, sets out comprehensive yet concise
standards addressing bribery risks. It is also intended to assist small and medium-
sized enterprises, which typically have fewer resources for integrity measures.
The Global Compact operates at the international level. It is open to

companies in all industries from all countries. Participating companies commit to
respect 10 principles in their business operations, including to work against
corruption in all its forms, including extortion and bribery. The Extractive Industries
Transparency Initiative (EITI) is another global effort focuses on the extractive
Industries, where corruption is particularly rife and damaging.
Implementation of regional programs at the country level
Regional Initiatives are a catalyst for reform and change, but countries
must translate these regional programs into local action in order to enjoy their
full benefits. For example, the K-PACT, a joint effort by all stakeholders of Korean
society and government to counter corruption in the country, facilitated Korean
companies involvement in the Global Compact. A national network for the
Global Compact was also created.
The EITI also requires efforts at the country level to achieve its goals. In
Timor-Leste, a country rich in natural resources and a participant in EITI, all parts
of society and government cooperate in implementing the EITI work program. EITI
provides a framework for this cooperation and the international exchange of
experience, while leaving ownership and responsibility to the country level. EITI is
a tool in a process rather than an end in itself. Working toward its goals provided
Timor-Leste with an opportunity to build a multi-stakeholder collaboration.
The 13th IACC
The IACC is a biennial event that brings together governments, private

sector entities, civil society organizations, academia, the media and international
organizations in the fight against corruption. The 13th IACC held in Athens,
Greece, was designed around four themes: peace and security, corruption in
the natural resources and energy sectors, climate change and corruption, and
sustainable globalization. The 14th IACC, which will be held in Thailand in 2010,
will be an opportunity to showcase best practices in Asia and the Pacific.

The APG and its Role in Combating
Corruption in Asia and the Pacific
( Ong Hian Sun)
Ong Hian Sun, Director, Commercial Affairs Department, Singapore;

Co-Chair, Asia-Pacific Group on Money Laundering
First of all, I would like to thank the Asian Development Bank and the
Organisation for Economic Co-operation and Development for inviting me to
speak at this conference. It is indeed an honor for me to share my thoughts on
pertinent issues with regard to combating corruption in my capacity as the Co-
Chairman of The Asia-Pacific Group on Money Laundering (APG).
Background on the APG

The APG is an international organization consisting of 38 member
countries/jurisdictions and a number of international and regional observers
including the United Nations, International Monetary Fund (IMF), and World Bank.
The APG is closely affiliated with the Financial Action Task Force (FATF), an inter-
governmental body that develops and promotes policies to combat money
laundering and terrorist financing. All APG members commit to effectively
implement the FATF's 40+9 Recommendations, 1 which essentially encompass
guidelines to put together a basic framework to detect, prevent, and suppress
money laundering and the financing of terrorism.
The APGs key roles include

Assessing compliance by APG member jurisdictions with the global
AML/CFT standards through a robust mutual evaluation program.
The purpose of the mutual evaluation program is to monitor the degree
of compliance by member countries with the FATFs 40+9
Recommendations through periodic on-site evaluations by a panel of
legal, financial and law enforcement experts. It provides feedback on
the robustness and effectiveness of a countrys domestic anti-money
laundering and counter-financing of terrorism framework.
Coordinating technical assistance and training with donor agencies
and countries in Asia and the Pacific to improve compliance by APG
members with the global AML/CFT standards.

The APG organizes capacity-building workshops and technical

assistance forums to encourage countries to implement the FATFs 40+9
Recommendations.
Participating in and cooperating with the international anti-money
laundering network, primarily with the FATF and with other regional anti-
money laundering groups.
The APG, the FATF and the other regional anti-money laundering
bodies constitute an affiliated global network to combat money
laundering and the financing of terrorism.
To contribute to the global development of anti-money laundering and
counter-terrorism financing standards by active Associate Membership
status in the FATF.
In June 2006, APG was granted Associate Membership in FATF to deepen

the cooperation between APG and FATF. This membership gives APG direct
access to the policy-making and standard-setting process of FATF.
Another key APG work area is research and analysis into money
laundering and terrorist financing trends and methods, to better inform APG
members of systemic and other associated risks and vulnerabilities.
This includes studying typologies on corruption, on which APG has

conducted extensive research since 2003. In fact, FATF and APG are currently
co-drafting a research paper on anti-corruption. This paper focuses on the links
between corruption and money laundering, which traditionally have been
studied in isolation.
You may be wondering what a regional anti-money laundering body has

to do with combating corruption. Corruption is actually inextricably linked to
money laundering. It has become increasingly obvious that despite the distinct
nature of these two forms of criminality, they are in fact inseparable.
The link between corruption and money laundering

The APG has identified three main areas 2 of crossover between corruption
and money laundering. They are:
1. Corruption generates enormous profits to be laundered.
Corruption generates more than USD 1trillion of illicit funds annually,
which are laundered both domestically and increasingly in the
international financial system.
2. Corruption facilitates numerous money laundering and terrorist
financing methods and supports predicate criminal activities.

Working together to combat corruption: international and regional initiatives 145
The machine of money laundering often requires the lubricant of

corruption to function effectively. An example of corrupt assistance to
facilitate money laundering is when corrupted public officials provide
identification documents that establish false identities. Such identities
are then used to operate bank accounts and conduct other financial
transactions.
3. Systemic corruption undermines effectiveness of legislation, regulations,
and enforcement of anti-money laundering and counterterrorism-
financing matters.
Systemic corruption may block AML investigations, impede suspicious
transacting reporting systems, and undermine good governance
standards. For the most serious and large-scale instances of corruption-
related money laundering, there is a real danger that high-ranking
political officials will be able to sabotage the proper functioning of the
AML system. This might take the form of cabinet-level officials
withholding permission to prosecute even once sufficient evidence for
a prosecution has been gathered.
Corruption-related money laundering: Methods and trends

in Asia and the Pacific
According to a typology study conducted by the APG,3 laundering the
proceeds of corruption in Asia and the Pacific was achieved in a myriad of ways,
particularly the common use of cash for bribes, with proceeds of corruption
remaining in the form of cash and concealed in homes or business premises. In
fact, third parties are also commonly used, including family members or affiliated
companies which receive corrupt payments in a variety of forms and
subsequently deposit proceeds of corruption into financial institutions.
APG research also reveals a trend that gatekeeperssuch as accountants

and lawyersare being used to conceal the origin of corrupt payments,
including disguising such payments as consultancy fees. Gatekeepers are also
are being used to manage the subsequent investment of corrupt funds into
assets including real estate, stocks, bonds, or mingling within legitimate
businesses.
Common corruption vulnerabilities in Asia and the Pacific

APG also found in a study that countries in the region face nine common
vulnerabilities:

1. Low pay and poor conditions of those in the public sector produce a
systematic vulnerability to corruption.
2. Financial expertise in identifying corruption typologies is lacking.
3. APG member jurisdictions with cash-based economies face great
difficulties in distinguishing money from legitimate and illegitimate
sources.
4. Absence of a dedicated anti-corruption body and a lack of vigorous
media scrutiny keep corrupt acts hidden.
5. Weak political will of senior managers and the government to develop
a robust anti-corruption culture lead to low levels of prevention and
enforcement.
6. Concerns exist that Politically Exposed Persons (PEPs) may block anti-
money laundering investigations, impede the suspicious transaction
reporting system, and undermine good governance standards.
7. It is difficult to keep investigations secret in small jurisdictions where
tipping off is a constant danger.
8. Law enforcement and prosecutors are often more interested in
pursuing the predicate crime rather than money laundering or
corruption offenses.
9. Finally, because corruption-related money laundering often
necessitates international action, such investigations tend to be
complex, time-consuming, and expensiveand require considerable
expertise.
The corruption/money laundering paradigm of international cooperation

is similar to the problem of investigating transnational financial crimes in general.
The multiple layers of obstacles and complexities arising from tracing, freezing,
and recovering the proceeds of corruption internationally make this even more
complicated. Given the significant sums of corrupt proceeds that have been
laundered, there is an extra dimension to providing effective international
cooperation in this field.
Facing these challenges, how can we protect our communities and

businesses from the menace of corruption and money laundering in the new
environment of pervasive exposure to international criminals?

APG strategies in combating corruption in the region
Improving international cooperation

APG has always advocated close international cooperation to combat
the common threat of transnational corruption and money laundering.
International cooperation could be promoted through benchmarking effective
systems for mutual legal assistance, extradition, and seizure of assets and the
denial of safe havens for criminals and the proceeds of their crime. APG also
actively encourages its members to sign and ratify regional and global treaties
and conventions aimed at facilitating international cooperation in fighting
money laundering and corruption.
Improving coordination between financial intelligence units and

anti-corruption bodies
AML/CFT systems hold considerable potential to counter corruption; this
potential is currently underutilized. Legislation, establishment of financial
intelligence systems, and creation of specialized anti-money laundering bodies
equip countries with potent anti-corruption instruments. However, an excessively
narrow conception of the proper function of the AML/CFT system that generally
provides for little interaction between Financial Intelligence Units (FIUs) and anti-
corruption bodies is largely responsible for missing this opportunity.
Using AML/CFT freezing and seizure provisions for asset recovery

AML/CFT provisions on asset freezing and seizure can be of use for anti-
corruption purposes in both domestic and international cases. The ability to bring
money laundering charges against corrupt officials and those abetting them can
bring conviction-based asset confiscation procedures into play. Nonconviction
based and civil mechanisms are perhaps even more effective; these
mechanisms allow a reduced burden of proof for stripping illicit gains from those
involved in money laundering and corruption. Confiscation in this manner acts as
deterrent and penalty, and confiscated assets may provide resources to bolster
capacity.
Aligning anti-corruption and AML/CFT strategies

The first step to capitalising on potential synergies between AML/CFT and
anti-corruption measures is to encourage joint training and enhanced links
between Financial Intelligence Units and anti-corruption bodies. UNODC and the
Commonwealth have already adopted this principle in many of their technical

assistance programs, but further reinforcement along these lines is needed. In

particular, anti-corruption bodies should be trained to know how to follow up
financial intelligence gathered by FIUs.
Conclusion
Today I have shared with you information on APGs work, its research
findings on trends and vulnerabilities in respect to corruption-related money
laundering issues in the region and some of its strategies to combat such crimes.
The APG is working on training its member jurisdictions to prevent and detect
corruption as well as to successfully prosecute those responsible for offering and
accepting bribes and laundering the proceeds. However, there is still a strong
sense that more needs to be done to promulgate an anti-corruption culture.
Of course, APG is not alone in the battle against corruption and money
laundering, nor are the law enforcement agencies. Workshop 3 highlighted how
the private sector can work on corporate compliance programs and integrity
systems.4 To bring down crime, we need to work hand in hand together with the
private sector. We have to act together as a group to fight against the criminals.
Criminals in this new age are tenacious in probing our systems for gaps and
creative in devising new methods to overcome safeguards.
Therefore, it is crucial that we keep abreast of the latest developments

through more interaction and discussion. Indeed, active collaboration and
partnership among the private sector, industry experts, and international
enforcement agencies is critical to maintaining the integrity and credibility of
Asia and the Pacific.
NOTES
1 See www.fatf-gafi.org
2 APG Scoping Paper.
3 APG Scoping Paper.
4 See these presentations on p. 99 and following in this volume.

APEC Business Principles and UN Global
Compact as Examples of Regional and
Global Cooperation in the Fight against
Corruption
( Pet er Rooke)

International
APEC Code of Conduct for Business

The Asia Pacific Economic Cooperation (APEC) is an inter-governmental
economic organization bringing together leading economies on both sides of
the Pacific. Many of the countries that are members of the ADB/OECD Anti-
Corruption Initiative for Asia and the Pacific are APEC members.
APEC was slow to address corruption directly; it starting instead with work
on developing transparency principles for general application and then
adapting them to specific situations, from customs to clearance to direct
investment and procurement. However, partly in response to pressure from the
APEC Business Advisory Council (ABAC), which was advocating development of
an APEC Anti-Corruption Convention, APEC Leaders agreed in 2004 to endorse
the APEC Course of Action on Fighting Corruption and Ensuring Transparency.
One of the key priorities of the Action Plan is to encourage APEC member
economies to ratify the UNCAC. APEC Leaders also decided to establish the
APEC Anti-Corruption and Transparency Task Force (ACT). ACT meets twice a
year at Senior Officials Meetings leading up to the Leaders meeting late in the
calendar year.
TI has participated as an observer in all ACT meetings. When Australia

hosted APEC in 2007, TI was actively involved in the development of the APEC
Code of Conduct for Business, which APEC Leaders endorsed in September that
year. The Code of Conduct used as a basis the TI Business Principles for
Combating Bribery, the ICC Rules on Combating Bribery and Extortion, and the
World Economic Forum Partnering Against Corruption (PACI) principles as well as
brief principles developed by ABAC. TI successfully advocated for the Code to
include strong provisions on implementation. TI is also very pleased to see that
the Code contains a clear prohibition on facilitation payments, on the ground

that they are illegal under the domestic laws of most countries although not
expressly prohibited by the United States Foreign Corrupt Practices Act (FCPA) or
the OECD Anti-Bribery Convention.
The Code which fits on one page of paper is titled Business Integrity
and Transparency Principles for the Private Sector and begins with the
statement: The enterprise shall prohibit bribery in any form. 1 It requires
enterprises to develop a comprehensive program to counter bribery.
The Scope and Guidelines address:

charitable contributions;
gifts, hospitality, and expenses;
facilitation payments (as I mentioned); and
political contributions.
The Program Implementation Requirements cover

business relationships;
communication;
leadership;
financial recording and auditing;
human resources;
monitoring and review;
raising concerns and seeking guidance;
training; and
organization and responsibilities.
The ACT plans a pilot rollout of the Code in Australia, Chile, and Vietnam,
focusing on the SME sector. SMEs are considered to need particular help in
addressing integrity issues due to their relative lack of resources and their greater
vulnerability to corruption pressures in many cases.
UN Global Compact
An example of a global initiative with great resonance in Asia and the
Pacific is the UN Global Compact.
The Global Compact is an initiative of former UN Secretary-General Kofi

Annan. Launched in July 2000 as a policy platform and framework for companies
committed to sustainability and responsible business practices, the Global
Compact originally consisted of nine principles covering human rights, labor and
environmental issues. On 9 December 2004, International Anti-Corruption Day, a

Tenth anti-corruption Principle was added, following advocacy by TI and others.

The Tenth Principle reads:
Business should work against corruption in all its forms, including extortion
and bribery.
The Global Compact membership consists currently of around 4,700

businesses and 1,500 other stakeholders, including NGOs, academic and
research institutions, and others. Many of the businesses are SMEs but they also
include a large number of MNCs.
In Asia and the Pacific, membership is unevenly spread among countries.

P.R. China tops the list with 187 members, India has 172, and Indonesia and the
Republic of Korea have 142 each. However, there are only 18 Global Compact
members in Malaysia, 16 each in Thailand and Vietnam, and 73 in Japan.
Countries with larger numbers of members have established National

Networks with designated Contact Points. My colleague Geo-Sung Kim from TI
Korea will share the experience of establishing a National Network in Korea.2
Global Compact membership entails the obligation to uphold the Ten

Principles and to report progress regularly to the Global Compact Secretariat.
Failure to report over time leads to expulsion; several hundred members met this
fate in 2007 and again in 2008. However, the fact that there are currently 4,700
members in good standing is encouraging.
The Global Compact gives guidance on implementation. In the case of

the Tenth Principle on anti-corruption, suggested implementation steps are
Introduce and implement effect zero-tolerance policies and programs,
and adopt a company ethics code;
Train employees to ensure that an ethical culture is developed within
the company and integrated in management systems;
Adopt internal reporting procedures;
Be accountable and transparent in all company transactions;
Cooperate with authorities investigating and prosecuting cases of
corruption;
Engage in collective business action with industry peers;
Check with human resources and other relevant departments to see if
the following exist:
an employee-training program on how to identify bribery and
corruption;
a code of business conduct and ethics that includes a requirement
for employees to review and sign off on the code regularly;

an ethics hotline for reporting suspected violations (as well as use

statistics);
an investigation procedure that addresses violations, including
information on investigation results.
As David Lyman mentioned in his presentation,3 the Global Compact has

signed a memorandum of understanding to cooperate with TI, the ICC and the
World Economic Forum to promote anti-corruption standards, and it has also
signed a memorandum of understanding with UNODC.
Such cooperation between the main international standard-setting bodies

in relation to anti-corruption standards for business is essential to engage business
effectively. As John Bray said so eloquently,4 companies need a clear business
case to take action on corruption. One of the first fruits of the cooperation
between the Global Compact, TI, the ICC, and the World Economic Forum is the
booklet Clean Business is Good Business: the Business Case Against Corruption 5.
Lastly, TI is working with the Global Compact to develop reporting

indicators for the Tenth Principle so that Global Compact members can report
appropriately on their anti-corruption compliance efforts in the sustainability
reports, which more and more companies are issuing.
NOTES
1 The Business Integrity and Transparency Principles for the Private Sector are
available at
www.apec.org/apec/news___media/2007_media_releases/060907_aus_bizcodec
onduct.MedialibDownload.v1.html?url=/etc/medialib/apec_media_library/downl
oads/taskforce/act.Par.0002.File.v1.1
2 See Mr. Geo-Sung Kims presentation on p. 145 in this volume.
3 See Mr. Lymans presentation on p. 47 in this volume.
4 See Mr. Brays presentation on p. 38 in this volume
5 www.unglobalcompact.org/docs/news_events/8.1/clean_business_is_good_
business.pdf

Translating Regional and Global Initiatives
into Local ActionInsights from the Republic
of Korea
( Geo-Sung Kim)
Geo-Sung Kim, Chairperson, Transparency International Korea
Transparency International Korea has been inviting major players from the
public and private sectors to build a coalition for promoting transparency and
fighting against corruption. As a result, the Korean Pact on Anti-Corruption and
Transparency, K-PACT, proposed by TI-Korea in 2004, was signed on 9 March
2005.
Article 16 of the K-PACT states: The private sector should participate in the
UN Global Compact based on ten principles of the human rights, labor
standards, environment, and anti-corruption areas. K-PACT aims to empower
the movement for change in the private sector itself.1
At the time of the K-PACT signing ceremony, not one single participant in
the UN Global Compact came from Korea. Now, in the fourth year of K-PACT,
144 participants in the UN Global Compact come from the Republic of Korea.
This result is partly due to the K-PACT Initiative, but other forces also contributed
to this progress, such as the fact that the UN Secretary General, Mr. Ban Ki-Moon,
is a Korean national.
As a board member of the UN Global Compact Korea Network, I am

pleased to inform you that the Networks major activities focus mainly on
promoting anti-corruption strategies and enhancing transparency in the private
sector. Korea has also witnessed some failure stories, including three bribery
cases involving the chief executive officers of companies that participate in the
UN Global Compact.
As you may know, TI developed the concept of a National Integrity

System (NIS) as part of its holistic approach to countering corruption. The NIS
consists of the principal institutions and actors that contribute to integrity,
transparency, and accountability in a society. A national integrity system
includes several elements: the legislature, executive, judiciary, public sector, law
enforcement, electoral management body, ombudsman, audit institution, anti-
corruption agencies, political parties, media, civil society, and business. Each

element can be seen as a pillar underpinning rule of law, sustainable

development, and quality of life.2
However, we also need to look at the foundation of the national integrity

systemnamely, the political-institutional, sociopolitical, and socioeconomic
foundations. In that sense, TI-Korea emphasizes the importance and the need of
youth integrity promotion. There are 13 NGOs and 13 academic institutions in the
Korean participants of UN Global Compact. I hope those academic institutions
can also play important roles for better corporate governance in the future.
In some countries, it is very difficult to find the ADB/OECD Anti-Corruption

Action Plan for Asia and the Pacific in translation into the local languages. But
more importantly, regional or global initiatives must be translated into local
actions. For that purpose, I would like to stress the importance of building a
coalition in each economy to implement those regional and global promises.
Without those measures of implementation, these promises will remain useless.
NOTES
1 More information on the K-PACT is available at www.pact.or.kr/english
2 For a graphical depiction of this concept, please see
www.transparency.org/policy_research/nis

Implementing the Extractive Industry
Transparency Initiative (EITI) in Timor-Leste
(M anuel de L emos)
Manuel de Lemos, Director, Secretariat of State for Natural

Resources, Timor-Leste
Timor-Leste, a petroleum-rich country, is expected to accrue substantial

revenues from oil and gas production in the decades to come. In many
countries, resource endowments resulted in poverty, corruption, and conflict. To
avoid such a resource curse, and to utilize the potential revenues to foster
growth and reduce poverty, the government of Timor-Leste was among the first
to express its commitment to the Extractives Industry Transparency Initiative (EITI)
at the first EITI Global Conference in London in June 2003.
In addition to more efficiently collecting the revenues from the exploitation

of natural resources, the engagement in EITI demonstrates Timor-Lestes national
commitment to transparency and good governance; promotes accountability;
and is expected to improve sovereign ratings through EITIs systematic framework
for collaboration. The engagement in EITI also underscores the governments
acknowledgement of the important role civil society plays in these regards.
This contribution explains the concept and mechanisms of EITI 1 and

describes the current status of Timor-Leste in this process.
Goals and concept of EITI

EITI was launched at the World Summit for Sustainable Development in
Johannesburg in 2002 to improve transparency and accountability and to
strengthen governance in the extractive industries, especially in petroleum, gas,
and mining of mineral resources. For this purpose, EITI sets a global standard for
companies to publish the tax and royalty payments they make and for
governments to disclose the revenues they receive. EITI provides a robust
mechanism for monitoring and reconciling the reported payments and revenues
under the oversight of a multi-stakeholder group.
EITI builds on a coalition of governments, companies, civil society,

investors, and international organizations. Institutionally, EITI is overseen by an
Executive Boardwith members who represent both implementing and
supporting governments, civil society, and companiesand assisted by a global
Secretariat located in Oslo, Norway.

Reaching EITI compliance

A country that participates in EITI first undergoes a process of candidature
that comprises a series of steps of preparation; disclosure of information of
revenues and payments; and public dissemination of this information.
At the end of this process, which must be completed within 2 years, stands
an external validation. Validation is an essential element of the EITI global
standard. It provides an independent assessment of progress and identifies
measures to strengthen the EITI process. Only countries that meet all Validation
Indicators are awarded the EITI Compliant status. The Validation is carried out by
an independent validator who applies a defined assessment methodology.
If the EITI International Board 2 considers a country to have met all the
indicators in the Validation grid, the country will be recognized as EITI Compliant.
If a country has made good progress, but does not meet all of EITI requirements,
the country may apply to retain its Candidate status for a limited period. Where
validation shows that no meaningful progress has been achieved, the Board will
revoke the countrys Candidate status.
Status of Timor-Leste in regard to EITI

The government of Timor-Leste was among the first to commit to the
principles and criteria of EITI in June 2003. To guide the full implementation of EITI
in Timor-Leste, a tripartite EITI Working Group was established comprised of
representatives of relevant government ministries and agencies, extractive
industry companies, and civil society. In September 2007, the Working Group
agreed on and published its work plan3.
In late November 2008, the Timor-Leste EITI Working Group was in the
process of finalizing a template for a first Timor-Leste EITI Report which is due to be
released in early June 2009.
NOTES
1 More detailed information on EITI, its mechanisms, and participants is available at
http://eitransparency.org
2 At the biannual EITI International Conference, held in Doha, Qatar on 16-19
February 2009, the Secretary of State of Timor-Leste, Mr. Alfredo Pires, has been
appointed member of the International Board of EITI for 2009-2011. Mr. Pires is the
first member of the International Board from an Asian-Pacific country.
3 The work plan is available at
www.timor-leste.gov.tl/EMRD/ETTI/TL%20EITI%20Workplan%20Final%20(English).pdf

13th International Anti-Corruption
ConferenceGlobal Transparency: Fighting
Corruption for a Sustainable Future
( Kat hleen M . M okt an)
Kathleen M. Moktan, Director, Public Management, Governance

and Participation Division, Regional Sustainable Development
Department, Asian Development Bank1
We have just heard examples of regional and global initiatives that bring
governments, the private sector, and civil society together in the fight against
corruption. What is clear is that fighting corruption is everyones problem; no one
segment of society can solve this problem alone. The 13th International Anti-
corruption Conference (IACC) is a biannual event that also recognizes this point
and brings together governments, private sector entities, civil society
organizations, academia, the media, and international organizations. The 13th
IACC was held in Athens in early November 2008, just a few weeks prior to this 6th
Regional Anti-Corruption Conference for Asia and the Pacific. This contribution
brings the key messages emerging from the 13th IACC to Asia and the Pacific.
Exploring the threats of corruption to a sustainable future

The 13th IACC gathered 1,300 people from 135 countries to explore how
corruption undermines all facets of sustainability by fostering conflict and
violence, distorting natural resource use, aggravating climate change and
hampering our response to it, and deepening global inequities. The conference
was designed around four themes of particular current relevance:
peace and security, including exploring linkages between human rights
and the anti-corruption agenda;
corruption in the natural resources and energy sectors;
climate change and corruption; and
sustainable globalization, recognizing that corruption is a core
development issue and that efforts toward sustainable economic
development are continuing to be undermined by corruption.
There was also considerable discussion around an emerging issue: the still-
unfolding global financial crisis and impending recession.

Global Financial Crisis: Throughout the conference the looming threat of a

prolonged and painful recession, particularly in developing countries, was a
theme that permeated virtually every panel and discussion. It was recognized
that the new level of interconnectivity between economies and the truly global
nature of business in the 21st century has resulted in a crisis that began in the
mortgage sector but has now impacted credit and equity markets and the
global economy more broadly. The contagion has spread quickly to Asia and
the Pacific, in spite of steps taken to strengthen financial market regulation
following the 1997 Asian Currency Crisis. It was also noted that the poor are not
able to bear the cost of greed and mismanagement by financial professionals
half a world away.
Sustainable development, including strengthening governments and

reducing vulnerability to corruption, must remain at the top of the global
agenda. The conference concluded that the financial crisis and the climate
change challenge have the same roots: humanitys unsustainable practices. The
solution is to continue to strengthen governance, and reduce corruption,
although the impact of the crisis may reduce the resources available to
implement this solution.
Peace and Security: The conference recognized that corruption

undermines stability: it keeps states from functioning effectively and promotes an
unequal distribution of wealth and opportunities. Corruption also enables
terrorism; organized crime; state capture; illegal trafficking in arms, drugs and
human beings; and facilitates human rights violations.
The conference brought together the human rights and anti-corruption

community, recognizing that there is an opportunity to gain from the natural
synergy that exists between the two communities and their respective agendas.
One speaker noted that the list of the 10 most corrupt countries in the world looks
remarkably similar to the list of the 10 worst violators of basic human rights. It was
noted that the human rights frameworkincluding the rights to freedom of
expression, freedom of association, and freedom of assemblyis underutilized in
the fight against corruption, further concluding that an empowered citizen is the
best actor to fight corruption.
Recognizing the difficulty faced by many anti-corruption advocates

whether working in civil society, or the private or public sectora resolution was
passed expressing deep concern and calling upon the Nigerian Government
and the global community to take urgent action to guarantee the physical
safety of Mr. Nuhu Ribadu, former Chair of Nigerias Economic and Financial
Crimes Commission who fears for his life as a result of investigations that he has
led. Mr. Ribadu inspired many delegates from member countries of the

ADB/OECD Anti-Corruption Initiative when he addressed the Initiatives regional

seminar on Asset Recovery and Mutual Legal Assistance in Bali last year2. This is a
stark reminder that much needs to be done to ensure the safety of all those who
participate in anti-corruption activities.
Corruption in the Natural Resource and Energy Sectors: The oil and gas
industry was identified as extremely vulnerable to corruption. It was also noted
that, if left unchecked, corruption in this sector can have dire consequences,
including quickly increasing rather than reducing poverty. Examples included the
case of the President of Equatorial Guinea; records indicate he has purchased a
home worth USD 36 million in the US, and one credit card receipt shows
USD 250,000 for a single days shopping Equatorial Guinea has with the highest
economic growth rate, and a significant portion of the population lives on less
than USD 1 per day. Imagine the schools, hospitals, public health facilities that
USD 36 million would finance. These consequences were discussed, along with
strategies and partnerships available to mitigate them, including the EITI. Better
enforcement and awareness of land and resource rights were identified as ways
to improve the governance of natural resources.
Climate Change and Corruption: The climate change agenda is

particularly vulnerable to corruption: carbon credit schemes; resettlement of
displaced populations; protecting forests and biodiversity; managing increasingly
strained water resources; and the impact of increasing competition for
decreasing natural resourcescorruption threatens to exacerbate
environmental problems and to undermine attempts to manage them.
Recognising the threat that corruption plays to the climate change agenda is a
tremendous opportunity, and may lead to significant benefits.
In response, the 13th IACC recommended that anti-corruption

mechanisms be built into both the governance and implementation procedures
of any future Kyoto-based system. The conference also recognized that climate
change is more than just an environmental or technical issue; it is also an issue of
social justice. The conference recognized that there are convincing arguments
to develop an active partnership between those with expertise and capacity in
fighting corruption and those who are planning the global responses to climate
change.
Sustainable Globalisation: The UNCAC was identified as the most promising

available instrument to set common standards at the country level and to pursue
cross-border corruption issues. There was a call for governments to adopt a
transparent and participatory review mechanism at the next Conference of the
States Parties (to be held in Doha, Qatar in 2009), noting the decision of the
government of Qatar to invite civil society to participate in the conference. The

OECD Anti-Bribery Convention was also highlighted, noting the continuing fallout
from the UK Governments decision to terminate the investigation into alleged
corruption in the BAE-Saudi-Arabia Al-Yamamah arms deal.
The issue of asset recovery was discussed with a call for increased
transparency as assets are recovered and returned. Conference participants
also noted the corrosive effective of political corruption, and identified political
corruption as the greatest threat to democratic governance in the 21th century.
Disclosure and civil society oversight were identified as vital mitigating measures.
Conclusions: The conference identified four primary conclusions:

the anti-corruption movement needs to strengthen interdisciplinary
cooperation, to link, for example, corruption and human rights, or
corruption and climate change;
the long term importance of the UNCAC was stressed;
there is a need for better resource governance; and
greater civil society engagement is required.
As a participant, ADB took back three key messages:

sustainable development requires not only economic growth but also
respect for the environment, peace and security, and the recognition
of basic human rightsand corruption undermines each of these;
policy prescriptions with respect to climate change need to go beyond
technical solutions to address the issues of people, power, equity, and
accountability;
there is scope to use supply chain management and voluntary
programs to support ethical business behaviour.
The 14th IACC will be held in Bangkok in 2010. The conference will provide
an excellent opportunity for Asia and the Pacific to showcase experience,
lessons and progress made in the regional fight against corruption.
NOTES
1 This presentation is based on the Summary Report from the 13th IACC as posted
on the conference's website www.13iacc.org
2 The website www.oecd.org/corruption/asiapacific/capacitybuilding provides
information on this seminar and access to the proceedings that contain Mr.
Rubadus presentation.

Chapter 6
Private-to-Private
Corruption: The Last Piece
of the Puzzle
Bribery and corruption involving public officials have been on the
international policy agenda for decades. Corrupt practices within and between
enterprises (private-to-private corruption), on the other hand, have only
recently emerged as an area of concern. Private-to-private corruptions harmful
effect on the business and investment climate, and on the public interest more
generally, is increasingly acknowledgedespecially as private enterprises
provide more public services. The inclusion of a non-mandatory offense of
private-to-private corruption in the UN Convention against Corruption testifies to
the global recognition of the increasing importance of tackling private-to-private
corruption.
Few jurisdictions in Asia and the Pacific have taken comprehensive

measures to counter private-to-private corruption (Hong Kong, China and
Singapore are notable exceptions). These jurisdictions experience in addressing
private-to-private corruption through preventive measures and law enforcement
provides valuable insights on both challenges and effective approaches.
In Hong Kong, China where private-to-private corruption has been a

criminal offense for decades, there is a high level of community awareness of this
crimes detrimental effects. Until the mid-1980s, the majority of corruption cases
reported to the Independent Commission Against Corruption (ICAC) involved
public officials. Because of more rigorous enforcement, private-to-private
corruption cases have since outnumbered public-sector corruption by about two
to one.
ICAC has investigated a wide range of private-to-private corruption cases:

bribery has been used to manipulate share prices, to the detriment of honest
investors; in the banking industry exposed banks to financial risks; to obtain an
advantage over honest competitors; and to conceal poor quality construction.

Because cases of private-to-private corruption are particularly difficult to

investigate, ICAC uses the full scope of powers and investigative means,
including granting immunity to informants. However, enforcement remains a
challenge; prevention is therefore particularly important. ICAC established the
Hong Kong Ethics Development Centre, in cooperation with partners from the
private sector, to provide consultancy services to the business sector and to
advise businesses on potential weaknesses and preventive measures.
Like Hong Kong, China, Singapore aims to reduce private-to-private

corruptions negative impact on the business and investment climate; on public
service delivery; on fair competition; and on public safety. Singapore has a
similar empirical experience with private-to-private corruption cases, suggesting
that these patterns are widespread, if not universal.
Singapores anti-corruption agency, CPIB, prosecutes private-to-private

corruption cases vigorously, and also sponsors a broad program of education
and prevention measures.

Rethinking the Definition of Corruption
( Jermyn Brooks)
Jermyn Brooks, Director of Private Sector Programs, International

Secretariat
The traditional definition of corruptionthe abuse of public power for

private gainrequires the involvement of public officials. This is reflected in the
OECD Anti-Bribery Convention, and laws such as the FCPA; and this focus on
public sector has informed much of the global fight against corruption. While
criminal law addresses public corruption, often only civil law is available to fight
private-to-private corruption.
Efforts by both independent and corporate lawyers focus on protecting

companies from legal risk and curbing regulatory reach, with the result that
private-to-private corruption is frequently ignored.
Companies themselves, however, generally do not distinguish between

public and private corruption. Companies sanction employees similarly for public
and private corruption, encourage whistle-blowing for both types of offenses,
and have common mandates for notifying authorities. Corporations therefore
use the same methods for fighting corruption in public- and private-sector
relationships.
Businesses face significant opportunities to commit corrupt acts. Two areas

of particular risk are the purchasing function (vulnerable to fraud, kickbacks and
misuse of gifts, and hospitality) and sales and marketing (especially the granting
of favors, offering bribes and misuse of gifts and hospitality). SMEs are also
especially vulnerable to extortion. Countermeasures must rest on strong
corporate integrity policies including anti-corruption standards, training and
enforcement, and effective whistle-blower protections.
Private-sector anti-bribery practices should include the following six steps:

assessment of the corruption risks specific to the business;
development of detailed anti-bribery policies;
implementation of these policies;
self-monitoring of the effective implementation of the policies;
public reporting on the policies and related programs;

where appropriate to enhance the credibility of the programs,

independent assurance of the effectiveness of these efforts.
Private-to-private corruption is clearly a significant problem facing

businesses today. It is time to embrace a more modern definition of corruption:
the abuse of entrusted power for private gain.
Some international business anti-corruption initiatives have taken this

definition on board. TIs Business Principles for Countering Bribery, the PACI
Principles and the ICCs Code of Conduct address illegitimate payments to all
partners.

Combating Corruption in the Private Sector
the ICAC of Hong Kong, China
( Li Bo-I an Rebecc a)
Li Bo-Ian Rebecca, Assistant Director, Independent Commission

Against Corruption, Hong Kong, China
In many countries, the offense of bribery is confined to the conduct of

public officials and those who seek to corrupt them. Since its inception in 1974,
the Independent Commission Against Corruption (ICAC) in Hong Kong, China
has been empowered by legislation to investigate corruption offenses in the
private, as well as the public, sector.
In the early days after the ICAC was put in place, the community was
more concerned with corruption in the public sector. In the first 15 years after it
commenced operation, over 50% of the corruption complaints ICAC received
related to public-sector corruption. In the first 10 years, the proportion went from
87% in 1974 down to 65% in 1983. This downward trend has continued, and now
private-sector corruption complaints exceed public-sector complaints.
Since the mid-80s, the ICAC has been pursuing corruption in the private
sector as vigorously as in the public sector. Over the years, the ICAC has
allocated more and more of its investigative resources to private-sector
corruption, as the volume of complaints relating to the private sector has
increased. Since 1989, private-sector corruption has taken up more than 50% of
the complaints received by the ICAC. As at the end of October 2008, 65% of the
complaints received in 2008 related to private-sector corruption.
Different manifestations of private-sector corruption

I would now like to talk about the different forms of corruption that Hong
Kong, Chinas ICAC has encountered in the private sector. In Hong Kong, China
corruption in the private sector has usually involved a third party corrupting an
employee to gain an advantage in relation to the affairs or business of the
corrupted employees principal. Various factors can trigger this behavior, but it is
usually prompted by the desire for monetary gain. The third party is invariably
looking to obtain an advantage over his competitors in the dealings he has with
the employer of the person he is bribing. But, of course, corruption has many

faces and is not limited to this simple situation. Although this may be the most
common form of private-sector corruption, there are many other forms as well.
Corruption is used also to facilitate other crimes, such as fraud, which may
be committed by the senior management of a company. Senior management
of companies may also bribe employees of other companies to benefit from that
other company which will have a much wider effect on society. This occurred,
for instance, when the management of a listed company bribed a fund
manager to make him purchase a large block of shares; this was done in order to
keep the price of the listed companys shares high and maintain market
confidence in the company. When the activities of the corrupt management
were uncovered, the share price of the listed company dropped and many
innocent investors in the company suffered a loss.
Another example is where a company may use bribery to conceal poor

standards in the performance of its work; this happens in the construction
industry.
A further area in which the ICAC has encountered corruption that has had
serious consequences for an institution is in the banking industry. Bank staff who
are bribed to approve large loans which are insufficiently secured can put the
financial position of the bank at risk.
Thus, corruption can manifest itself in various forms, some of which may
affect only the particular company that is the victim of it; others may involve a
large group of people; and some forms may affect virtually the whole
community. Some say that the true victim of corruption is society. Although this is
more readily apparent with public-sector corruption, it is equally true of
corruption in the private sector.
Investigating private-sector corruption

What all these different forms of private-sector corruption have in common
is that, as with public-sector corruption, they are committed in secret and
therefore very difficult to investigate.
Hong Kong, Chinas Prevention of Bribery Ordinanceits anti-corruption

lawgives the ICAC special powers to support its investigation of corruption. We
have found that in order to investigate corruption properly, we need to make
use of every investigative tool available. These involve powers to obtain, on the
authority of the ICAC Commissioner, access to bank records and the records of
other financial institutions, as well as access to the records held by government
departments. Our High Court has granted additional powers to compel suspects

Private-to-private corruption: the last piece of the puzzle 167
and other involved persons to provide us with information. We are also

empowered to obtain Production Orders in respect to the records of the Inland
Revenue Department and to apply for the search warrants in respect of any
premises.
Legislation also allows ICAC to apply to a judge to use electronic

surveillance as an evidence-gathering tool and telephone interception as an
intelligence-gathering tool. These tools are particularly useful in undercover
operations. One of the lessons we have learned over the years is that being
proactive in our operational work can yield great successes in fighting
corruption. This has required the ICAC to learn how to: gather intelligence on
corruption and effectively analyze it; develop and handle informants; and make
imaginative use of the intelligence they generate.
ICAC uses its own forensic accounting experts and persons with technical
expertise in computer forensics. Both of these specialist areas have become
increasingly important in the investigation of private-sector corruption.
However, even with all these special investigative techniques and

expertise available to us, we still find it difficult at times to obtain the evidence
required for a successful prosecution. Thus, we often seek the assistance of
someone with inside knowledge of the corruption that is taking place in order to
penetrate the secrecy surrounding the corrupt conduct. If an insider is willing to
become an informant and assist us, the Secretary for Justicewho is responsible
for all prosecutions in Hong Kong, China according to the Basic Lawwill
consider granting this informant partial or full immunity to enable him to testify
against the main suspect of the investigation.
The importance of corruption prevention

Since its inception, the ICAC has recognized that along with enforcement,
it is equally important to work with the community to ensure zero tolerance for
corruption. It therefore has adopted a three-pronged strategy in combating
corruption that consists of enforcement, prevention, and education.
In combating private-sector corruption, success did not come easily,

because there was strong resistance from the business community in the
beginning. This resistance was partly due to a misconception that the ICAC was
opposed to all business rebates and commissionseven ones accepted as
normal and proper. However, through ICACs corruption prevention and
community education activities, we were able to dispel this misconception.
Today the business community is supportive of ICAC and has become one of its
key partners in the fight against corruption.

The establishment of the Hong Kong Ethics Development Centre (EDC) is a

testimony of the change in attitude of the business sectorfrom initial suspicion
of the ICAC and hesitation to working with it, to active partnership in anti-
corruption activities. ICAC set up the EDC in 1995 to promote business and
professional ethics as the first line of defense against corruption. Six leading
chambers of commerce in Hong Kong, China are represented on the advisory
committee that steers the work of the EDC. The EDC provides a wide range of
consultancy services on corporate ethics programs. The EDC also partners with
various professional bodies and chambers of commerce in Hong Kong, China to
disseminate ethical governance messages to their members. Upon request, ICAC
also provides any business with assistance in developing specific practices and
procedures to prevent corruption.
The rule of law

At the very basic level, corruption is all about treating people unequally
unfairly obtaining an advantage at the expense of the honest, decent citizen.
The law protects the concept of equality of treatment: it is a fundamental human
right and, as such, it is a core component of the rule of law. Of course, it is also
the rule of law that ensures the protection of the rights of every individual citizen.
Anti-corruption legislation works in support of the right to equality of treatment by
ensuring that Hong Kong, Chinas citizens are protected from the effects of
corruption.
In one of Hong Kong, Chinas leading cases on one of its more unusual
anti-corruption offensesillicit enrichment by government officialsour Court of
Appeal discussed whether an aspect of this offense which reverses the burden of
proof was in accord with human rights law. The Court of Appeal upheld this
provision. The Court declared that the public had a right to protection against
corruption and the equal-protection-clause in our Bill of Rights Ordinance
guaranteed this right. The Court said, If the law only protected persons accused
of corruption, but failed to protect members of the general public from the evils
and perils of corruption, then it would deny them equal protection.
Conclusion
I hope that this information and experience demonstrates the need for a
private-sector corruption offense. Hong Kong, Chinas experience has certainly
taught it the need for such an offense and I am sure that many other countries
have learned the same lessons from fighting corruption. Indeed, the importance
of having a private sector corruption offense was recognized by the drafters of

the UN Convention against Corruption (UNCAC). Like Hong Kong, China, the
authors of this Convention realized that in order to effectively eradicate corrupt
practices from a society, it is necessary that the citizens of that society do not
tolerate corruption in the private sector and that the private sector not be
treated any differently from the public sector. This is why the UNCAC encourages
the creation of a private-sector bribery offense.
The mission of the ICAC may have a slightly different emphasis now
compared to its mission when it first started its work. However, this mission is still to
combat corruption within the whole of Hong Kong, Chinas society so that every
citizen can feel free of this evil.

Singapores Strategies to Fight Corruption in
the Private Sector
( Koh Teck Hin)
Koh Teck Hin, Deputy Director (Operations), Corrupt Practices

Investigation Bureau, Prime Ministers Office, Singapore
Singapores approach to fighting corruption

In the 1940s and 1950s, corruption was more or less a way of life in
Singapore. Through persistent efforts in combating corruption since 1959, when
Singapore attained self-government, the Government has managed to curb
corruption. The Government made hard-hitting and decisive changes that were
pertinent in saving our nation from corruption. The political leaders took it upon
themselves to set good examples for public officers to follow. They created, by
sheer personal example, a climate of honesty and integrity, making it known to
public officers and the society in no uncertain terms that corruption in any form
would not be tolerated.
Administrative measures
Alongside the statutory measures dealing with corrupt offenders, strict rules
and regulations govern the conduct of public officers to ensure a high standard
of discipline. For government officials, the Instruction Manual (IM) stipulates that
each officer has to conduct himself in a manner which upholds the integrity of
the Public Service. He or she must not act in such a way that gives rise to public
perception that he or she has obtained special advantage through his or her
official position or connections. Each officer has a duty to exercise care to
preserve his or her ability to be fair and impartial. He or she should avoid
becoming beholden to any party because of past favors or special
concessionary treatment.
Generally, the government instruction manual requires public officers to

report any corrupt act that comes to their knowledge, and regulates the
wrongdoing of public servants. It also obligates public servants to declare any
conflict of interest, gifts received, etc.
Other measures exist to address specific areas: For instance, when a

successful bidder for a government procurement contract signs the contract for

delivery of goods or services, the bidder will be reminded that bribing public
officers administering the contract may render their contracts to be terminated.
A clause to this effect forms part of the standard contract conditions. A
contractor found to indulge in corruption is prosecuted. In addition, this
contractor is debarred from future government contracts for up to 5 years.
These rules help uphold good conduct of public officials and help deter
the private sector from committing corruption. Applied to the interface between
public and private sectors, they help reduce corruption tendencies.
Corruption in the private sector

CPIB is empowered to investigate corruption in both the public and
private sectors.
Why deal with private-sector corruption?

There are good reasons why CPIB also deals with corruption in the private
sector:
First, corruption in the private sector affects public interest. Some people
used to think erroneously that private-sector corruption is a private affair
between the giver and the taker. However, consider the following: When a
supermarket purchaser takes bribes from a supplier, the supplier will inevitably
mark up its cost to cover the bribes. As a result, the supermarket, which
purchased the goods at a higher price will sell it an even higher price. The public
suffers in the end.
Second, Singapore is a small nation without natural resources. It has to

depend on trade and foreign investment. To attract investment, Singapore has
to ensure that business costs are low. Corruption, however, increases business
cost regardless of whether it takes place in the private or public sector.
Third, the private sector is a key pillar of Singapores economy and drives
national economic growth. Singapore needs a level playing field for all, and the
private sector must be clean to attract foreign businesses to work and invest in
Singapore.
The private and public sectors are also intertwined, which is another
reason why it matters that CPIB watches over the private sector as well. As the
government outsources more and more of its traditional functions to the private
sector, many private companies are now performing functions that the
government used to carry out. Corruption in segments of the private sector that

are involved in strategic functions can also impact key areas of government and
society at large.
Lastly, many private-sector enterprises have huge public shareholdings. If

the enterprise is not well run and commits crimes, its share price may be
affectedthis has consequences for the public interests.
Types of private-sector cases

Private-sector corruption cases can come in various forms. A selection of
cases that we have seen in the private sector illustrates this variety:
Some cases involved contracts or procurement of services or supplies.
An example of a recent case involves senior staff management of a
car company for receiving expensive gifts in return for awarding
agency contracts.
Other cases involve corrupt offenders who were in charge of
supervising contractors or suppliers, for example, but did not check the
quality of work or product delivered and overlooked deficiencies. This
can result in serious repercussions, for example in building works.
There are those who have access to sensitive data and divulge it to
unauthorized persons in return for rewards. These cases for instance
involve people working in areas where there are storehouses of data
about customers. These individuals abuse their access to this data by
passing it on to persons such as illegal moneylenders who are looking
for their debtors, and private investigators tracing whereabouts of
persons of interest.
There are those who are in positions of authority such as a Chief
Executive Officer or General Manager, who took bribes in return for
granting approval to the bribe givers in various matters.
In some cases, corruption occurs in conjunction with other offenses. For
example, the corrupt may also cook the companys books to hide
corrupt transactions. They may manufacture false invoices to reflect
fictitious transactions. Once uncovered, CPIB will deal with these as
well, as CPIB officers are also empowered to investigate other crimes
uncovered in the course of a corruption investigation.
Preventive measures in the private sector

The private sector is a key pillar of Singapores economy. Corruption in the
private sector increases business costs and reduces investment. Thus, CPIB takes
proactive action against corruption through the following measures:

Giving anti-corruption prevention talks and working with private

companies to disseminate anti-corruption messages.
Taking a total enforcement approach by dealing with givers and
receivers bribes in a private-sector transaction. Enforcement actually
has preventive value.
Facilitating complaints by civic-minded members of the public through
different means, including e-mails, and safeguarding them through
protection of informers by law.
Conducting thorough investigations and securing evidence, including
documentary and computer evidence, against corrupt offenders in
the private sector to ensure a high conviction rate, which gives
confidence to the public to come forward.
Debarring contractors who engage in bribery involving government
contracts and terminating such contracts.
Code of governance for private companies

The private sector in Singapore is large and comprises a wide variety of
different industry types. How clean the private sector is depends largely on its
internal state of affairs. Efficient company systems and processes promote
productivity and reduce opportunities for malpractice and corruption.
Singapores Code of Corporate Governance, under the purview of the

Monetary Authority of Singapore and the Singapore Exchange, serves as a guide
for private companies conduct. It addresses the following matters:
Board matterson responsibilities, separation of duties between
Chairman and CEO, Independent Directors, access to information.
Remunerationon a formal and transparent procedure, and disclosure
of remuneration policy.
Audit and accountabilityon an audit committee to review internal
controls, financial review, operational and compliance controls.
Communication with shareholderson timely and regular
engagement and communication with shareholders.
The Code of Corporate Governance is a broad guide for companies, and

individual companies have to build their specific systems and measures to
enhance good corporate governance.
Charity sector
A governance code has also been introduced in the charity sector, after
a series of malpractices in charity organizations were uncovered. For instance,

not long ago, the CPIB prosecuted the CEO of the National Kidney Foundation
for using a false document, resulting in a three-month jail sentence. The
Government has since reviewed the laws, and a Commissioner of Charities was
established to oversee all charity organizations; also, a Code of Governance was
promulgated for the charity sector. The Code is a set of principles and standards
accepted as an industrys best practices, which stakeholders in the charity sector
aim to adopt as an exercise of good faith.
Tough punishment
To successfully combat corruption, in addition to adopting strict and
effective enforcement, we need tough punishments meted out on convicted
offenders to serve as a deterrent to the like-minded.
Punishment can be severe and depends on the impact and severity of the
act. In fact, many private-sector cases have resulted in jail sentences
comparable to those applied for public-sector corruption.
We have a case whereby the Assistant General Manager of a public listed

recycling firm was sentenced to eight years in jail for bribing various staff from
various companies to the tune of SGD 1.8 million in return for certain favors. The
accused in this case had claimed in his defense that he was merely following the
CEOs instructions. However, the court did not accept this excuse; it viewed it
seriously and meted out an 8-year sentence.
In another case, an ex-Assistant Vice President of a foreign bank operating

in Singapore was sentenced to a 15-week jail term following a conviction for
taking a SGD150,000 bribe as a reward for recommending loan applications.
However, on appeal, his jail term was increased to 15 months by the Chief
Justice, who felt that the sentence meted out by the lower court does not reflect
the potential harm that the act had caused. The accused was in a senior
position and breached the trust that the bank had placed upon him, and his
corrupt act undermined the integrity of the banking profession and Singapores
aim to be a financial hub.
Apart from criminal sanctions, the Prevention of Corruption Act (PCA) also
provides for civil recourse for recovery of bribe money. This was tested in court
recently. The CPIB had prosecuted a facilities manager in a large private
company for taking about SGD 300,000 as bribes in return for awarding
contracts. He was convicted and sentenced to 10 months in jail and ordered to
pay to the State a penalty of about SGD 300,000, equal to the amount of bribes
he had pocketed. After the prosecution, his company brought a civil suit against
him to recover the amount of bribes he had accepted during his incumbency.

The accused appealed to the court, on the grounds that he had been ordered
to pay back the equivalent of the bribe as a penalty and cannot be required to
pay a second time, and on a second occasion, through the civil suit. The Court
of Appeal dismissed his appeal stating that the law expressly provided for two
distinct provisionsa criminal proceeding to disgorge benefits, and civil
proceedings to recover the bribe money. Hence, there can be a double
disgorgement. This sends a clear message to corrupt offenders: they will be
made to pay heavily for their corrupt activities; this constitutes a further
deterrence against corruption.
Conclusion
It is imperative to deal with corruption in the public and private sectors, as
there is a great linkage between the two sectors. Singapore has dealt with both
sectors for a long time.
In Singapore, we are glad that many established companies have codes

of conduct and measures that govern their official staff. This makes it more
difficult for employees in private-sector companies to dabble in corrupt activities
and then claim ignorance. CPIB has also engaged and reached out to the
private sector to raise their awareness on corruption issues.
Effective laws and clean government institutions are key elements in

reducing corruption from greasing contracts between the public and private
sectors. Private enterprises can also help to prevent and reduce corruption by
adopting ethical business conduct, practicing good governance, and
maintaining standards of goods and services in the marketplace.
I have shared the experience we encountered in Singapore. It may not be

replicated anywhere else, as every country has its unique character and
circumstances. Nonetheless, corruption is a common problem that we all face.
We therefore have scope for sharing and learning from each other and
togetherwe will fight the disease of corruption and make the world a better
place to live in.

Chapter 7
Fighting corruption and the
sustainable development
agenda
Corruption inflicts profound harm upon development, and particularly on
the poor. Countries in Asia-Pacific thus emphasize measures for improving
governance and fighting corruption in order to lay a sound basis for further
economic and social development. Development partners support these efforts.
To enhance the impact of their work, they coordinate their efforts through the
OECD Development Assistance Committee (DAC). Increasingly, development
partners also address the risks of corruption in their own programs and projects,
both collectively and individually.
Experience from the Philippines shows how a low-income country can

achieve significant progress in strengthening the capacity of its anti-corruption
institutions with assistance from development partners. The Philippines has
recently established a comprehensive legal framework to fight corruption.
However, limited implementation capacity prevented the country from fully
reaping the fruits of these reform efforts.
The Philippines Office of the Ombudsmans program to strengthen

capacity has benefited from support and assistance from development partners.
The Ombudsman has comprehensively build capacity through specialized
training, corruption resistance reviews, and corruption vulnerability assessments.
The Republic of Koreas testimony provides a concrete example of

bilateral cooperation and technical assistance in the region. Not long ago,
Korea was itself a recipient of development assistance, but thanks to its
economic prosperity and recent experience in anti-corruption law and policy
making, Korea now helps other countries in Asia and the Pacific in these areas.
Five years after the creation of its independent anti-corruption agency,

Korea began providing technical assistance to other countries in the region. It

started a 3-year bilateral cooperation program with the Indonesia Corruption

Eradication Commission (KPK), through which the Anti-Corruption and Civil Rights
Commission has transferred its corruption prevention tools such as the Integrity
Survey, Anti-Corruption Initiatives Assessment and the Corruption Impact
Assessment to its Indonesian counterpart. Korea plans to increase its anti-
corruption capacity-building efforts in Asia and the Pacific in cooperation with
other international organizations.
Development partners have realized that corruption is a symptom of wider

unresolved problems, and hence assist in strengthening recipient countries
governance systems. These efforts seek to strengthen horizontal accountability
through anti-corruption agencies, and vertical accountability through civil
society and the media. Forums such as the OECD Development Assistance
Committee Governance Network (DAC-GOVNET) help to coordinate
development partners approaches and thus strengthen their positive impact.
Development partners also remain concerned with stemming the supply

of bribes from their home countries to partner countries. They can act proactively
by engaging private sector, reinforcing the need for corporate social
responsibility, and advocating for support to initiatives such as the Kimberly
process, EITI, and the like.
Donors also remain concerned with the integrity of their own operations,
as the example of the Asian Development Bank shows. ADB, a key development
partner in Asia and the Pacific, pursues two policy goals: supporting member
countries efforts to bolster their anti-corruption frameworks, and seeking to
eliminate corruption from its lending and technical assistance programs. To do
so, ADB established a comprehensive policy to support anti-corruption efforts in
its member countries; its Integrity Division ensures that the ADBs own operations
adhere to ethical standards. The Integrity Division investigates allegations,
provides training, promotes awareness, and conducts project procurement-
related audits. All multilateral development banks have now largely harmonized
their definitions of corrupt practices, and coordinated sanctions for corrupt
practices. Some important differences remain, however, such as publishing
blacklists of contractors that have engaged in corruption.
The discussion among workshop participants pointed to particular

challenges, notably how development partners should respond when corrupt
regimes resist fighting corruption. They debated whether disengaging from these
countries was an appropriate response. Civil society and other stakeholders can
call for stepped up accountability. The discussion also underscored the
importance of assessing the impact of development partners anti-corruption
initiatives in countries through stronger monitoring and evaluation mechanisms.

The Philippines Experience with Donor
Supported National Anti-Corruption Efforts
(M ercedit as N. Gut ierrez)
Merceditas N. Gutierrez, Ombudsman of the Philippines
I would like to share with you the efforts of the Office of the Ombudsman
of the Philippines in fighting corruption; what the office has done and continues
to do toward sustaining our development agenda; and the ultimate goal of
reducing to a considerable extent, if not eliminating, corruption in our country.
The Office of the Ombudsman (OMB), created under the Constitution of

the Republic of the Philippines, is the countrys lead agency in the fight against
corruption. It is independent and mandated to act on any complaint filed in any
form or manner against government officials and employees for any act or
omission that appears to be illegal, unjust, improper, or inefficient. It investigates,
prosecutes, and imposes administrative sanctions.
Two other bodies support the Office of the Ombudsman: The Commission
on Audit, also an independent and constitutionally mandated office, has the
duty to examine, audit, and settle all accounts pertaining to the revenue and
receipts of government expenses and expenditure, or uses of public funds and
property. The Anti-Money-Laundering Council investigates suspicious bank
transactions, triggers the freezing of accounts alleged to contain proceeds of
unlawful activities, and initiates filing of complaints for money laundering.
The Philippines has established a legal framework that penalizes various

forms of fraud and corruption. The relevant laws include:
The Anti-Graft and Corrupt Practices Act, which penalizes acts or
omissions such as trading in influence, certain forms of gift-giving,
abuses of official functions, conflicts of interest, as well as corruption
linked to government contracts;
The Revised Penal Code, which criminalizes bribery, malversation, and
various forms of fraud;
The Plunder Law, which punishes amassing wealth, in the amount of at
least PHP 50 million (about USD 1.03 million), through a series or
combination of corrupt schemes;

The Code of Conduct and Ethical Standards, which enumerates and

penalizes prohibited acts by public officials and employees, such as
acts related to conflict of interest and solicitation of gifts;
The Anti-Money-Laundering Act, which allows the forfeiture of
proceeds of unlawful activities, including violations of the Anti-Graft Act
and the Plunder Law.
To enhance its effectiveness in the fight against corruption, the Office of

the Ombudsman engages in various capacity-building measures, some of which
are financially supported by development partners, such as
Specialized trainings on contract fraud, lifestyle checks, trial advocacy,
legal writing and legal research, legal tax accounting, and conduct
surveillance; this training is provided to OMB prosecutors and
investigators under the Millennium Challenge Account-Philippine
Threshold Program-Technical Assistance Project (MCA-PTP-TAP);
surveillance equipment was also donated to the Office of the
Ombudsman.
With the support of the USAIDRule of Law Effectiveness (ROLE)
Programme, the Office of the Ombudsman launched its program Legal
Resource for Public Accountability, a digital database of anti-
corruption laws, jurisprudence and legal analyzes that is equipped with
research functions. The CD Lecture Series on Prosecuting Corruption is a
training manual for new investigators and prosecutors on bribery,
malversation, conduct disadvantageous to the government and
causing undue injury to the government.
The World Bank supported the Office of the Ombudsman in the
development of case-flow management software in the Office of the
Special Prosecutor (OSP), and has also supported advance field
investigators training.
The Philippine-Australia Human Resources Development Foundation
(PAHRDF) assisted and funded trainings of personnel of the Office of
the Ombudsman for the completion of the Recruitment and Selection
Manual of the Office. PAHRDF also conducted trainings on monitoring
and evaluation of projects in the Office of the Ombudsman.
With funding from the European Commission and USAID, the office of
the Ombudsman has conducted corruption resistance reviews and
corruption vulnerability assessments of agencies that carry out high-
volume procurements through the Integrity Development Review (IDR).
The IDR is a compendium of diagnostic toolsself-assessment
scorecards for managers; feedback surveys of employees; and
corruption vulnerability assessmentsfor measuring the robustness of

Fighting corruption and the sustainable development agenda 181
corruption resistance mechanisms, and for identifying the vulnerabilities

of government agencies to corruption. It seeks to design and
implement safeguards to prevent corruption in the public sector. The
purpose of the review is to institutionalise reform measures in these
agencies to reduce incidences of corruption. The following are post-
IDR reforms in revenue-generating procurement agencies:
The Department of Public Works and Highways (DPWH)
Streamlined processing of contractors and consultants billing;
Posted list of accounts payable on DPWH website; and
Installed online complaints desk at DPWH website.
The Bureau of Internal Revenue (BIR)
Revalidated audit and collection cases;
Supported capacity building of internal audit personnel for
internal control;
Integrated code of conduct provisions into contracts with external
parties; and
Audited financial controls and systems of Bids and Awards
Committee (BAC) decisions.
The Bureau of Customs (BOC)
Decreased Red Lane selections from 80% to 20%;
Decreased face-to-face contact with brokers;
Passed acceptance testing and implementation readiness for
Electronic Manifest, Selectivity, Warehouse Entry, and Hold and
Alert Systems;
Piloted implementation of e-payment/bank-to-bank of customs
duties;
Pilot tested End-to-End Import and Assessment Systems; and
Installed X-ray machines.
To address red tape and to provide a level playing field for business, and
to create an improved business environment, the Philippine Government
adopted corruption prevention initiatives, as illustrated by the following
examples:
Philippine Bidding Documents and the Generic Procurement Manual
were issued to standardize the bidding process in government
procurement projects.
The Government Procurement Policy Board (GPPB) issued uniform
guidelines for blacklisting manufacturers, suppliers, distributors,
contractors, and consultants for certain offenses including any
documented unsolicited attempt by a bidder to unduly influence the
outcome of the bidding in his or her favor.

To increase public oversight and enhance active participation of civil

society organizations, the Office of the Ombudsman and Procurement
Watch Inc. issued guidelines on Bid and Awards Committee (BAC)
Observers Feedback and Complaint Handling Mechanism to handle
feedback from civil society observers in the procurement process.
Likewise, the President constituted the Procurement Transparency
Group (PTG), with civil society representation, to monitor and evaluate
big-ticket government procurement contracts.
To help ensure the most cost-efficient project design and avoid
overpricing of infrastructure projects, guidelines for the Construction
Performance Evaluation System (CPES) for roads, bridges, housing,
buildings, ports and harbors, irrigation, and flood control projects were
issued.
An Executive Order was issued mandating the installation of internal
audit units in government agencies to ensure the faithful discharge of
their mandates. The Generic Internal Audit Manual was also developed
to standardize internal audit practice in government.
The majority of government entities have already installed the
Electronic-New Government Accounting System (E-NGAS)
The National Competitiveness Council was created and is composed
of representatives from the private sector and relevant government
agencies.
The Department of Trade and Industry (DTI) is spearheading the
Philippine Business Registry Project to eliminate red-tape by harmonising
processes among agencies involved in business registration. The project
also aims to reduce documentary requirements for business
registration.
We intend to craft a law that would criminalize corruption in the private

sector. We have been undertaking reforms in the public sector for business to
thrive, and the next step is to look at businesses and their conduct and dealings
with government that lead to bribery and corruption.

Republic of Koreas Experience as a Provider
of Anti-Corruption Technical Assistance
( So-yeong Yoon)
So-yeong Yoon, Deputy Director, Anti-Corruption International

Cooperation Division, Anti-Corruption and Civil Rights Commission,
Republic of Korea
With the progress of globalization, interdependence among states is

increasing. It is vital to the economic growth and sustainability of a country to
maintain mutually beneficial relationships with other countries. Corruption has
become a global issue that undermines economic development, the rule of law,
democratic governance, and social stability. As such, it is closely interlinked with
diverse diseases plaguing almost every part of the world such as poverty,
environmental destruction, exhaustion of natural resources, and terrorism, which
cannot be tackled by any country alone. Under such recognition, the
international community has recently been stepping up collaborative efforts for
the common goal of fighting corruption.
Since the United Nations Convention against Corruption (UNCAC) entered

into force in December 2005, the demands for technical cooperation for the
fight against corruption have increased. Chapter 6 of the UNCAC deals with
technical assistance to combat corruption, especially training and technical
assistance for developing and transition countries.
Korea: From an aid recipient to a donor

In the aftermath of the Korean War in 1950, the Republic of Korea was one
of the poorest nations in the world. Korea received development aid funds
estimated at more than USD 10 billion by the 1980s. This overseas aid served as
one of the driving forces behind Koreas development.
Today, Korea is the worlds 12th largest economy and a member of the
OECD. The volume of Koreas official development assistance (ODA) to
developing countries has steadily grown since 1987. In 2007, Koreas ODA
recorded more than USD 680 million.
The Government of the Republic of Korea is fully aware of its humanitarian

responsibility as a member of the international community, and perceives it as its

moral obligation to return the development assistance it once received and

contribute to the achievement of the Millennium Development Goals (MDGs).
For this reason, it aims to increase its ODA in proportion to its Gross National
Income per capita (about USD18,732 in 2006) to meet the global standard. To
better coordinate with other donor countries in achieving the MDGs, Korea has
been making preparations to join the OECD Development Assistance Committee
(DAC) by 2010.
A realistic model in establishing good governance

The unique experience of Korea in overcoming extreme poverty and
achieving economic growthand making a transition from an aid recipient to a
donor in just a few decadescan be useful to other countries. The international
community rates Koreas development experience as a realistic model in
establishing good governance, appropriate for developing countries sharing
similar experiences.
The 1997 Asian financial crisis brought about the bankruptcy of major
Korean companies which had received preferential treatment from the
government, resulting in poor financial structure and excessive corporate debt.
Koreas foreign exchange reserves were drained, and the country was on the
brink of defaulting on its foreign loans.
Fortunately, Korea managed to overcome the crisis through relief loans

from the International Monetary Fund (IMF) and a series of drastic domestic
reforms. Through this experience, however, Koreans realized that corporate
malpractices were one of the main causes of the economic crisis, and the
Korean government began to take a wide range of anti-corruption measures
including improvement of corporate governance and accounting transparency.
In the late 1990s, Korean civil society groups came together to form the
Citizens Coalition for Anti-Corruption Legislation. This audacious move of civil
societycoupled with the governments strong anti-corruption platformled to
the enactment of the Anti-Corruption Act in July 2001 and the creation of the
Korea Independent Commission Against Corruption (KICAC) in January 2002.
In February 2008, the KICAC was consolidated with the Ombudsman of

Korea and the Administrative Appeals Commission to form the Anti-Corruption
and Civil Rights Commission (ACRC).
Recently, the ACRC has been receiving numerous calls from other
countries for technical assistance, and international organizations such as UNDP,
the UN, and TI have suggested that Korea should play a more active role in the

global fight against corruption, commensurate with its economic standing. In

response to such calls, the ACRC began efforts to provide anti-corruption
technical assistance to other countries in late 2006.
Bilateral cooperation with Indonesian KPK

Since 2007, the ACRC has been implementing a 3-year bilateral
cooperation program with the Indonesian Corruption Eradication Commission
(KPK) pursuant to the Memorandum of Understanding (MOU) Regarding Mutual
Cooperation on Combating Corruption, which was signed by the heads of the
two commissions in December 2006 in Jakarta, Indonesia. Both heads of state,
then-Korean President Roh Moo-hyun and incumbent Indonesian President Susilo
Bambang Yudhoyono, witnessed the signing ceremony at the Indonesian
presidential palace. The MOU was initially proposed by KPK, Indonesia's anti-
corruption body, which sought an opportunity to share anti-corruption strategies
and instruments, and strengthen cooperation with the ACRC.
The provisions agreed in the MOU include (i) exchange of anti-corruption

policies, experiences, and human resources between the two organizations; (ii)
joint research projects; (iii) organization of bilateral seminars and symposiums; (iv)
collaborative development of anti-corruption training programs; (v)
establishment of a Cooperation and Co-ordinating Committee that implements
and coordinates cooperation activities pursuant to the MOU; and (vi)
designation of liaison officers who are responsible for facilitating cooperation
between the two organizations.
At the first meeting of the bilateral Cooperation and Co-ordinating

Committee in Seoul on 22 May 2007, both parties agreed on a work program,
which includes technical assistance, staff exchange, and organization of training
workshops.
In implementing the bilateral agreement, the ACRC has been focusing on

transferring its corruption prevention tools (such as the Integrity Survey, Anti-
Corruption Initiatives Assessment, and Corruption Impact Assessment) to its
Indonesian counterpart. KPK officials were seconded to the ACRC on three
occasions to explore the possibility of adopting these tools.
In 2007, the ACRC helped introduce its Integrity Survey to Indonesia. Similar
to TIs Corruption Perceptions Index (CPI), the Integrity Survey is a kind of "naming
and shaming" policy, intended to discourage corrupt practices and encourage
good behaviour by exposing wrongdoers to public humiliation.

However, unlike surveys based on mere perceptions, the Integrity Survey is

a reliable tool to assess the levels of corruption and corruption factors in public
organizations by surveying average citizens and public officials who have had
first-hand experience with public service. The purpose of this system is to assist
public organizations in setting up effective measures to prevent corrupt practices
in corruption-prone areas and to encourage them to step up their anti-
corruption efforts.
The outcome of implementing the Integrity Survey is extremely

encouraging. Public institutions near the bottom of the ranking reinforce their
efforts to improve their anti-corruption systems, while top performers strive
continuously to maintain their good reputation. Moreover, the survey areas are
so specific that each public institution can discover and correct problems in a
cost-effective way; the surveys cover over 1,000 areas of government service,
including the awarding of contracts and licensing.
The ACRC has been conducting the Integrity Survey since 2002, surveying
more than 90,000 people who recently experienced services provided by over
300 public institutions in Korea.
KPK conducted a pilot integrity survey in 2007 to measure the integrity

levels of 30 central government agencies after in-depth consultations with the
ACRC. Building upon the success of that pilot survey, the Indonesian anti-
corruption body is planning to carry out the integrity survey every year while
expanding the assessment program to some 100 central and local government
agencies in Indonesia in 2008. The ACRC will continue to offer advice and
consultation to KPK in order to better tailor the measurement system to the
specific situation of Indonesia.
The ACRC is also transferring its Anti-Corruption Initiatives Assessment (AIA)

to Indonesia according to the agreement made at the 2nd session of the
Cooperation and Coordinating Committee, held in Jakarta on 17 July 2008.
The AIA is a comprehensive annual review of anti-corruption measures

undertaken by public-sector organizations. It determines whether their anti-
corruption efforts and outcomes effectively meet the objectives of the
governments anti-corruption policy. The fundamental goal of the AIA is to
promote each organizations efforts to counter corruption and disseminate best
practices. The assessment framework consists of two factors: anti-corruption
frameworks, which cover anti-corruption systems and policies, the leaders
commitment, and institutional improvement; and anti-corruption performance,
which includes compliance with the code of conduct, promotion of whistle-
blowing, and educational and promotional activities.

In October 2008, three KPK officials were seconded to the ACRC for 2
weeks to study its AIA system, which is expected to be introduced to Indonesia as
early as 2009.
The ACRC is planning to assist Indonesia in 2009 in adopting the Corruption

Impact Assessment, an analytical mechanism designed to identify and remove
corruption risk factors from new and existing legislation. Under Koreas Anti-
Corruption Act, each government agency of Korea which intends to revise or
introduce legislation must submit a "corruption assessment report" to the ACRC.
Then, the ACRC reviews the proposed legislation to determine if any of its
elements might contribute to the occurrence of corrupt practices.
Following the Korea-Indonesia MOUthe first of its kind that Korea has
ever signed with a foreign countrythe ACRC plans to step up cooperation with
anti-corruption agencies in other countries that have recently asked ACRC for
assistance in building their anti-corruption capacity and institutions.
Joint technical assistance project with UNDP

Since 2007, the ACRC has been conducting a technical assistance
program jointly with UNDP. The ACRC concluded an MOU with UNDP in August
2007 to conduct anti-corruption technical assistance programs for countries in
Asia and the Pacific including Bhutan and Bangladesh. The joint project was
proposed by UNDP, which contributed USD 935,580 for this project.
Under the MOU, effective for 2 years starting from 2007, the ACRC provides
comprehensive consulting services including: establishing a survey model to
assess the status of corruption in each country; supporting the development of
national anti-corruption strategies; assisting in the establishment of a model to
review and assess national anti-corruption policies and systems; and providing
education and training to anti-corruption officials.
Cooperation with Bhutan

Bhutan was the first country that Koreas ACRC assisted in the framework
of the joint technical assistance program. The ACRC held a joint workshop in
Bhutans capital, Thimphu, with the UNDP's Regional Center in Colombo and the
Bhutanese government from 20-21 August 2007 to help the Asian kingdom
address corruption in its society. About 200 Bhutanese senior public officials
including Prime Minister Lyonpo Kinjang Dorji, Chairperson of the Anti-Corruption
Commission (ACC) Neten Zangmo, social leaders, and UNDP officials
participated in the 2-day event. As agreed at the inception meeting, the ACRC

produced and handed over to the ACC a technical guide to its major anti-
corruption measures.
For 2 weeks from 31 July 2008, the ACRC organized an anti-corruption

training program for Bhutanese public officials. Ten public officials from
Bhutanese anti-corruption agencies including the ACC, Attorney-Generals
Office, and the High Court, attended the training program at the ACRC Anti-
Corruption Training Center and the International Cooperation Center of the
Korea International Cooperation Agency.
The capacity-building program was designed to work out effective,

concrete strategies to implement anti-corruption systems applicable to the
Kingdom of Bhutan. It was organized as twelve modules on anti-corruption
measures including corruption prevention systems, institutional improvement,
anti-corruption education, a code of conduct for public officials, registration of
public officials assets, and e-procurement. Experts from the Ministry of Public
Administration and Security, Board of Audit and Inspection, and Korea Institute of
Public Administration, as well as the ACRC, delivered the lectures. The Bhutanese
officials also visited the Public Procurement Service (PPS) and the Seoul
Metropolitan Government to learn how Korea is using electronic technology as a
powerful tool to enhance transparency in the processing of civil applications and
government contracts. The main outcome of the training program was a draft
Action Plan for preventing and deterring corruption in accordance with the local
circumstances.
In response to requests made by Bhutanese participants in the training

program, the ACRC experts visited Bhutan in mid-November 2008 to provide on-
site consulting on institutional improvement, the Integrity Survey, and anti-
corruption education to the Bhutanese ACC.
Cooperation with Bangladesh

The technical assistance project for Bangladesh started with a project
inception meeting and a workshop, organized between 30 June and 2 July 2008
in Colombo, Sri Lanka, jointly with the UNDP Regional Centre in Colombo.
The workshop brought together senior officials of the Bangladesh

government and UNDP experts; representatives from civil society groups in
Bangladesh and Sri Lanka also attended. This workshop provided participants
with the opportunity to discuss and share various anti-corruption measures and
efforts of Korea, Bangladesh, and Sri Lanka.
At the working group meeting following the workshop, the three parties
agreed to transfer to Bangladesh Koreas know-how on system improvement,

monitoring and evaluation, and information communication technology. The

agreements reached on that day included the training of Bangladesh public
officials in Korea in October 2008.
The training course for Bangladesh covered a range of topics including

institutional improvements, Corruption Impact Assessment, and electronic
solutions to prevent corruption to meet the needs of the Bangladesh anti-
corruption authorities.
Future work
The ACRC plans to make greater efforts to assist countries in Asia and the
Pacific in building their anti-corruption capacity, in close cooperation with
international organizations and donor agencies. It will also willingly respond to
calls from the international community to share its expertise and knowledge in
preventing corruption.
As part of such efforts, the ACRC is planning to host an APEC Anti-

Corruption Capacity Building Workshop in October 2009. In October 2008, the
APEC Budget and Management Committee approved the ACRCs proposal to
host this workshop. The purpose of the workshop is to establish and implement a
systematic approach for national anti-corruption strategies and build anti-
corruption capacity. The ACRC is planning to invite government officials from 30
or more countries, including 21 APEC member economies, as well as
international experts.

Why Corruption Matters to Donors and their
Role in Curbing Corruption
(M arcel van den Bogaard)
Marcel van den Bogaard, Senior Policy Officer, Good Governance

Division, Human Rights, Good Governance and Humanitarian Aid
Department, DMH/GB, Ministry of Foreign Affairs of the Netherlands1
Previous and later presentations have addressed the fight against

corruption from the perspectives of governments, businesses, civil society, and
others. I will add the perspective of the donors that cooperate in the OECD
Development Assistance Committee. I will address three topics: why corruption
matters to donors; how donors incorporate anti-corruption interventions into their
broader support for governance; and the contribution that donors can bring to
support efforts aimed at tackling the supply side of corruption.
Why corruption matters to donors

Why does corruption matter to donors? Donors have an interest in
combating corruption for the simple reason that corruption constitutes risks to
them. These risks may be grouped into three major categories.
The first risk is what we call the fiduciary risk. It constitutes the risk that donor
funds are not used for their intended purposes. The recent increase in aid volume
exacerbates this concern.
A second risk is the so-called developmental risk: corruption undermines

the achievement of economic growth and poverty reduction by its corrosive
effects on governmental performance and private investment.
The third risk is reputational risk: Providing aid to countries governed by

corrupt leaders tarnishes donors reputations and consequently undermines the
case for aid and its popular support. In the current crisis in the financial sector, this
last element has become rather prominent in the domestic debate in donor
countries on the level of funds to be allocated to development assistance. In
times of economic hardship, it is increasingly difficult to make the case for
development assistance if serious doubts exist as to the proper use of these funds
and to the lack of political will in developing countries to seriously tackle
corruption.

How donors incorporate anti-corruption interventions into the

broader support for governance
Donors response to corruption has undergone a series of changes over
time.
In the past, many donors responded to the occurrence of corruption by

ring-fencing, i.e., by building extensive safeguards into the management of
donor-funded projects. Two circumstances led donors to abandon this approach
in favor of efforts to strengthen country systems.
The first driver behind this change is linked to the modalities of aid delivery:
the traditional supply-driven structure of projectsoffered and initiated by
donorswas gradually replaced by donor support of demand-driven programs,
i.e., programs that developing countries requested. Later, the Paris Declaration
on Aid Effectiveness2 triggered and accelerated the provision of sector-specific
and general budget support.
The second driver that triggered donors shift toward strengthening

country systems resulted from donors awareness that corruption in a developing
country is both a symptom and an outcome of unresolved problems in the
countrys wider governance system, and that success of reforms depends on
national ownership and political will.
Both these drivers shifted the focus of donors response to corruption from
ring-fencing to the strengthening of country systems. In this effort, donors initially
endeavoured to strengthen institutions of horizontal accountability, i.e.,
government agencies that oversee, control, redress, and, where required,
sanction other government agencies.
This approach brought rather disappointing results in terms of reducing

corruption. Support to anti-corruption commissions, for example, often remained
unsuccessful due to problems elsewhere in the wider governance system and
the lack of political will to tackle these governance issues. A partisan judiciary or
the granting of executive clemency neutralised efforts by anti-corruption
commissions in certain cases.
These meager results made donors support other accountability

relationships like vertical accountability, toward parliaments, for example, and
societal accountability, toward stakeholders in society. In recent years, this
approach has led donors to become active in democratic reform by supporting
political institutions and processes, by supporting the judicial sector, and by
strengthening public-sector capacity through better systems for public finance

management, including the administration of revenues and procurement

systems.
Nowadays, donor interventions address not only the supply side of

governance but also the demand side of governance: grassroots monitoring of
public expenditures; support to civil society as a countervailing power that
influences governance reforms; and support to media. These are examples of
typical interventions in this respect. Transparency, accountability, citizen
participation, and legitimacy are the goals that donors pursue.
Eventually, however, all efforts will stand and fall with the commitment to
reform by the governments of developing countries.
Donors contribution to tackling the supply side of corruption

I should also touch upon how donors can support efforts aimed at tackling
the supply side of corruption. Corruption is a two-way street: for every bribe taker
there is a bribe payer. Regrettably, some transnational corporations based in
OECD member countries contribute to fuelling corruption when they offer bribes
to politicians and bureaucrats in developing countries. Donors should also tackle
this supply side of corruption to remain credible development partners.
Apart from supporting the work of the OECD Working Group on Bribery to
monitor the implementation and enforcement of the OECD Convention on
Combating Bribery of Foreign Public Officials, donors can take additional
measures to tackle the supply side of corruption. This includes measures to
promote the UN Convention against Corruption (UNCAC) and to raise awareness
of the work of the Financial Action Task Force (FATF) and of the issues of money
laundering and other illicit financial flows.
Donors can also venture into efforts on the home front by proactively
involving the private sectorincluding both transnational corporations and small
and medium-sized enterprisesand by reminding companies of their corporate
social responsibilities. Joint activities among governments, civil society, and the
private sector should receive strong support, notably the Kimberly Process, the
Publish-What-You-Pay campaign, and the Extractive Industries Transparency
Initiative (EITI).
Donors should also contribute to processes of mutual legal assistance that

include developing countries, and the freezing and recovery of assets deposited
in OECD countries.
By undertaking action in these areas, donors can contribute to drying out

the sources of bribes prevalent in the business sector. These efforts will also boost

the perception of donors as reliable partners in the struggle against poverty as

promoted by the recently adopted Accra Action Agenda.
NOTES
1 Representing the OECD Development Assistance Committee Network on
Governance Anti Corruption Task Team (OECD DAC GOVNET ACTT).
2 For information on the Paris Declaration visit www.oecd.org/dac/effectiveness

Annexes
List of Participants
Conference Agenda

List of Participants
Government representatives
Afghanistan
Rahela HASHIM SIDIQI
Senior Advisor, Independent Administrative Reform and Civil Service
Commission (IARCSC)
Sayed Ikram AFZALI
Project Specialist, UNDP Country Office
UNDP/ACT Project, Ministry of Finance
Australia
Luke John Breedon
Senior Consultant Corruption Prevention, Education & Research
Corruption and Crime Commission of Western Australia
Jessica Wilby
Principal Research Officer, Corruption and Crime Commission of Western
Australia
Bangladesh
Md. Matiar RAHMAN
Joint Secretary, Cabinet Division, Government of Bangladesh
Bhutan
Karma THINLAY
Head, Prevention Services, Anti-Corruption Commission
Brunei Darussalam
Hjh Siti Norkalbi bte Sheikh Haji Hussin
Chief Special Investigator, Anti-Corruption Bureau, Prime Ministers Office
Hasrina Suzanty bte Haji Jamil
Special Investigator, Anti-Corruption Bureau, Prime Ministers Office

Cambodia
Sambath SAR
Permanent Member of Anti-Corruption Unit, Office of the Council of Ministers
China, Peoples Republic of

WANG Huangeng
Deputy Director-General, Ministry of Supervision
CHU Cunwang
Deputy Director-General, Ministry of Supervision
XU Dingqiu
Director, Ministry of Supervision
MENG Qinghai
Staff, Ministry of Supervision
Cook Islands
Janet MAKI
Ombudsman
East Timor
Danilo Afonso-Henriques
Senior Executive Officer, Office of the Minister of Foreign Affairs
Fiji Islands
Ralulu CIRIKIYASAWA
Principal Auditor, Surcharge and Compliance, Ministry of Finance, National
Planning and Sugar Industry
Hong Kong, China

Bo Lan, Rebecca LI
Assistant Director, Independent Commission Against Corruption
Shu-keung CHOI
Principal Investigator, Independent Commission Against Corruption
Kin-Hung Tyrol YAU
Chief Inspector of Police, Hong Kong Police Force
Wing Yip Cyril MAK
Senior Inspector of Police, Hong Kong Police Force

Conference program 199
Indonesia
Bibit Samad RIANTO
Vice Chairman, Corruption Eradication Commission (KPK)
Giri SUPRAPDIONO
International Cooperation Specialist, Coordinator for International
Cooperation Unit
Corruption Eradication Commission (KPK)
Japan
Keiko MIZOGUCHI
Official of OECD Division, Ministry of Foreign Affairs / Economic Affairs Bureau
Korea, Republic of
So-yeong YOON
Deputy Director, Anti-Corruption International Cooperation Division
Anti-Corruption and Civil Rights Commission
Kyrgyz Republic
Bakyt BAKETAYEV
Head of the National Anti-Corruption Commission
Macao, China
Ioc San HO
Chief of Cabinet of the Commissioner, Commission Against Corruption
IAO Man Leng
Advisor, Commission Against Corruption
Ivo Donat Firmo MINEIRO
Chief Investigation Officer, Commission Against Corruption
Shu Qing TANG
Chief of Community Relations Department, Commission Against Corruption
Malaysia
Samarajoo MANIKAM
Deputy Commissioner, Anti-Corruption Agency
Abdul Razak HAMZAH
Senior Superintendent, Anti-Corruption Agency

Anthony KEVIN MORAIS

Deputy Public Prosecutor of Attorney General Chambers attached to Anti-
Corruption Agency
Maldives
Ibrahim NAEEM
Auditor General of Maldives, Auditor Generals Office
Mexico
Aragon Lagunas Miguel Guillermo
Procuraduria General de la Republica
Titular de la Unidad Especializada en Investigacion de Delitos Cometidos por
Servidores Publicos y contra la Adminsitracion de Justicia
Lopez Trujillo Armando
Embassy of MexicoSingapore
Mongolia
Sunduisuren DORJ
Deputy Chief, Commissioner in Charge, Independent Authority Against
Corruption
Badral DELGER
Head of Internal Affairs, Senior Commissioner, Independent Authority against
Corruption
Nepal
Lalit LIMBU
Acting Chief Commissioner, Commission for the Investigation of Abuse of
Authority (CIAA)
Mahesh Sharma POUDEL
Joint Attorney, Commission for the Investigation of Abuse of Authority (CIAA)
Pakistan
Shahnawaz BADAR
Director General, National Accountability Bureau
Palau
Satrunino TEWID
Acting Public Auditor

Papua New Guinea

Mathew YUANGU
Director, National Anti-Corruption Alliance (NACA), Ministry of Police
Philippines
Ma. Merceditas GUTIERREZ
Ombudsman, Office of the Ombudsman
Dina Joy TENALA
Assistant Ombudsman, Office of the Ombudsman
Samoa
Leasi Papali T. SCANLAN
Governor, Central Bank of Samoa
Gilbert WONGSIN
Manager, Financial Institutions Department, Central Bank of Samoa
Singapore
Kee Hean SOH
Director, Corrupt Practices Investigation Bureau, Prime Ministers Office
Teck Hin KOH
Deputy Director (Operations), Corrupt Practices Investigation Bureau, Prime
Ministers Office
Huey Chin CHEW
Acting Deputy Director (Plans & Projects), Corrupt Practices Investigation
Bureau, Prime Ministers Office
Seow Lian ANG
Assistant Director (Intelligences), Corrupt Practices Investigation Bureau,
Prime Ministers Office
Wai Kit FONG
Investigation Officer, Corrupt Practices Investigation Bureau, Prime Ministers
Office
Wee Liam CHIN
Head Investigation, Corrupt Practices Investigation Bureau, Prime Ministers
Office

Sea Yong NAM

Office
Wei Chuan Lee
Office
Chun How BAY
Office
Benjamin TAN
Office
Huey Phing LOI
Office
Kheng Pei POH
Office
Hian Sun ONG
Director, Commercial Affairs Department, Singapore Police Force
Chin Wah PEI
Head Finance Investigation Branch, Commercial Affairs Department,
Singapore
Juthika RAMANATHAN
Chief Executive
Mathew JOSEPH
Deputy Principal Senior State Counsel, Attorney-Generals Chamber
Peggy YEAP
Senior Secretariat Executive, Public Service Division
Teng Lee CHENG
Director Defense Procurement, Defense Science and Technology Agency
(DSTA)
Anna CHENG
Head, Internal Audit, Ministry of Defense
Michelle Lay Sien NG
Senior Audit Officer , Internal Audit, Ministry of Defense

Vivian Bee Main BOH

Senior Audit Officer, Internal Audit, Ministry of Defense
Chee Khiang TEO
Deputy Auditor General
Yien Hoe YEO
Assistant Director , Auditor-Generals Office
Cheng Ee LOW
Audit Officer, Auditor-Generals Office
Mark JAYARANTAM
Deputy Director, Legal Policy Division, Ministry of Law
Betty TAN
Director (Value for Money Review) Accountant-Generals Department
Jovine LOY
Associate, Monetary Authority of Singapore
Maureen TEE
Associate, Monetary Authority of Singapore
Sheena HOONG
Assistant Manager (Investigations), Casino Regulatory Authority of Singapore
Christine YONG
Manager (Licensing), Casino Regulatory Authority of Singapore
Sweet Hay Gina LEE
Assistant Director (Benefits), Personnel Policy
Prime Minister's OfficePublic Service Division (Personnel Policy Department)
Seok Lin SIM
Assistant Director (Manpower), Singapore Police Force
Spain
Juan Antonio PELAEZ BOHIGAS
Economic and Commercial Counsellor, Embassy of Spain/Commercial
Office
Sri Lanka
Ameer ISMAIL
Chairman, Commission to Investigate Allegations of Bribery or Corruption

Luckshmi Menaka Minu JAYAWICKREMA

Director General, Commission to Investigate Allegations of Bribery or
Corruption
Punyadasa EDUSSURIYA
Commissioner, Commission to Investigate Allegations of Bribery or Corruption
Disna Sajeevani GURUSINGHE ARACHCHIGE
Assistant Director (Legal), Commission to Investigate Allegations of Bribery or
Corruption
Ranabahu Mudiyanselage Aruna WICKRAMASINGHE
Assistant Director (Legal), Commission to Investigate Allegations of Bribery or
Corruption
Thailand
Terdsak PUTSON
Director, International Affairs Division
Public Sector Anti-Corruption Commission, Ministry of Justice
Kannika SRISOMKIAT
Foreign Relations Officer, Foreign Affairs Division
The Office of Public Sector Anti-Corruption (PACC), Ministry of Justice
Mr. Chadil Suppawannakit
Senior Officer, The National Counter Corruption Commission (NACC)
United Kingdom
Keith MCCARTHY
Head of Anti-Corruption, Serious Fraud Office
Vietnam
NGUYEN Huu Loc
Deputy Director General, Department for International Cooperation
Government Inspectorate of Vietnam
Yemen
Saadaldeen, TALIB
Member, Head of International Cooperation Sector
Supreme National Authority for Combating Corruption

International Organizations, Civil Society, and

Advisory Group Members
American Bar Association

Andrew BONAME
Regional Anti-Corruption Advisor, ABA-ROLI, Asia Division
Asia Europe Foundation (ASEF)

Dominique GIRARD
Executive Director
Peter RYAN
Director for Intellectual Exchange
Ronan LENIHAN
Project Officer
Natalia FIGGE
Project Manager
Susanne WALLENOEFFER
Project Executive
Asian Development Bank (ADB)

C. Lawrence GREENWOOD, Jr.
Vice President (Operations 2)
Hamid SHARIF
Principal Director, Central Operations Services Office
Claire WEE
Director, Integrity Division, Office of the Auditor General
Australian Agency for International Development (AusAID)

Tony PRESCOTT
Anti-Corruption Specialist
German Technical Cooperation (GTZ)

Georg HUBER-GRABENWARTER
Planning and Development, Project UN Convention against Corruption,
State and Governance

Organisation for Economic Co-operation and Development

(OECD)
Mario AMANO
Deputy Secretary-General
Patrick MOULETTE
Head, Anti-Corruption Division
Directorate for Financial and Enterprise Affairs
Jnos BERTOK
Principal Administrator
Innovation and Integrity Division, Public Governance and Territorial
Development Directorate
OECD Donor Assistance Committee (DAC) Governance

Network (GOVNET) Anti-Corruption Task Team (ACTT)
Marcel van den BOGAARD
Senior Policy Officer, Good Governance Division
Human Rights, Good Governance and Humanitarian Aid Department
DMH/GB, Ministry of Foreign Affairs of the Netherlands
Transparency International (TI)

Jermyn BROOKS
Director of Private Sector Programs, International Secretariat
Paul BROWNE
Executive Officer, Transparency International New Zealand
Mark CHAY
Executive Director, Transparency International Malaysia
Anupama JHA
Executive Director, Transparency India
Geo-Sung KIM
Chairperson, Transparency International, Korea
Ilham MOHAMED
Executive Director, Transparency International, Maldives
Robert James POLLARD
Chairman, Pasifiki Services Ltd, Honiara, Solomon Islands
Peter ROOKE
Senior Adviser, International Group

Nalina SOMBUNTHAM
Consultant, Transparency International, Maldives
Emily George TAULE
Executive Director, Transparency International, Papua New Guinea
Rezki Sri WIBONO
Deputy Secretary General, Transparency International Indonesia
United Nations Development Programme (UNDP)

Pauline TAMESIS
Regional Governance Programme Co-ordinator
UNDP Regional Center in Bangkok
United Nations Office on Drugs and Crime (UNODC)

Kuniko OZAKI
Director, Division for Treaty Affairs, United Nations Office on Drugs and Crime
Keisuke SENTA
Senior Legal Expert in Terrorism Prevention (Asia and the Pacific)
Terrorism Prevention Branch, Regional Centre for East Asia and the Pacific
United States Agency for International Development (USAID)

Paul SIMONETT
Senior Rule of Law Advisor, US Embassy Jakarta
World Bank
Joel TURKEWITZ
Lead Governance Specialist, World Bank, Bangkok
Naseer RANA
Advisor, Governance and Anticorruption, South Asia Region
Private Sector Representatives and other

Experts
John BRAY
Director (Analysis), Control Risks

Khee Yang CHOR

Vice PresidentAudit, Singapore Telecommunications Limited
Peter COLEMAN
Executive Director, Forensic, Deloitte & Touche
Melinda De Jesus
Executive Director, Center for Media Freedom and Responsibility
GUO Yong
Assistant Professor and Deputy Director, School of Public Policy and
Management, Tsinghua University
P.R. China
Rosalia Suci HANDAYANI
Executive Legal Advisor, Directorate of Legal Affairs, Bank of Indonesia
Wah Lee HO
Director Fraud Services, KPMG, Singapore
Eddie HOW
Regional Head of Business Integrity, Shell Eastern Petroleum Pte Ltd,
Singapore
Grace KOWK
SVP Internal Audit, Singapore Technologies Engineering Limited
Dadang Arif KUSUMA
Legal Advisor, Directorate of Legal Affairs, Bank of Indonesia
Lawrance LAI
Managing Director, Ernst & Young (China) Advisory Services Ltd
David LYMAN
Chairman and Chief Values Officer, Tilleke & Gibbins International Ltd,
Bangkok, Thailand
S Chandra MOHAN
Associate Professor, Singapore Management University
William PATERSON
Consultant
Jon QUAH
Anti-corruption Consultant
Navita SRIKANT
Partner & National Leader, Fraud Investigation & Dispute Services, Ernst &
Young Pvt Ltd., Mumbai, India

Arief SUROWIDJOJO
Founding partner of Law Firm Lubis Ganie Surowidjojo;
Former chairperson of the Supervisory Board of Transparency International
Indonesia;
Chairperson of the Board of Advisory of the Indonesian Society for
Transparency
Roy SZE
Regional Security Manager (East Asia), Shell Eastern Petroleum Pte Ltd,
Singapore
Neil THAMOTHERAM
Director, PricewaterhouseCoopers, Thailand
ADB/OECD Anti-Corruption Initiative for Asia-

Pacific Secretariat
Asian Development Bank (ADB)
6 ADB Ave.
Mandaluyong City
1550 Metro Manila, Philippines
Tel +632 632 4444
Fax +632 636 2444 / 636 2193
Kathleen MOKTAN
Director, Capacity Development and Governance Division
Regional and Sustainable Development Department
kmoktan@adb.org
Marilyn PIZARRO
Consultant, Capacity Development and Governance Division
mpizarro@adb.org
Organisation for Economic Co-operation and Development (OECD)
2, rue Andr Pascal
75775 Paris CEDEX 16, France
Tel +33 1 4524 9582
Fax +33 1 4430 6307

Christine URIARTE
General Counsel, Anti-Corruption Division, Directorate for Financial and
Enterprise Affairs
christine.uriarte@oecd.org
William LOO
Legal Analyst, Anti-Corruption Initiative for Asia-Pacific
Anti-Corruption Division, Directorate for Financial and Enterprise Affairs
william.loo@oecd.org
Joachim POHL
Project Co-ordinator, Anti-Corruption Initiative for Asia-Pacific
Anti-Corruption Division, Directorate for Financial and Enterprise Affairs
joachim.pohl@oecd.org

Agenda
Wednesday, 26 November 2008
9:009:45 Opening Remarks by Guest of Honour
Associate Professor Ho Peng Kee, Senior Minister of State for Law & Home
Affairs, Singapore
Opening Remarks by ADB and OECD

Lawrence Greenwood, Vice President (Operations 2), ADB
Mario Amano, Deputy Secretary-General, OECD
10:1512:30 Opening Plenary:
Combating corruption in business transactions

Corruption has an adverse impact on the business and investment climate in
Asia and the Pacific, increases the costs of doing business and
correspondingly, the cost of public service delivery. The challenge is to
reduce corruption in business transactions by reducing the incentives and
increasing the risks associated with corrupt activity.
The plenary session will set the stage for the workshops that follow, by
discussing the perceived corruption risk in the region and the impact of
corruption on the business and investment climate in Asia and the Pacific. It
will look at current strategies for reducing corruption, and the importance of
fighting the supply-side of corruption. It will also look at the need for business,
government, and civil society to share responsibility for finding solutions.
Chair: Patrick Moulette, Head, Anti-Corruption Division, OECD
Speakers: John Bray, Director (Analysis), ControlRisks
Soh Kee Hean, Director, Corrupt Practices Investigation Bureau
(CPIB), Singapore
Wang Huangeng, Deputy Director-General of the Reporting
Center, Ministry of Supervision, Peoples Republic of China
Kuniko Ozaki, Director, Division for Treaty Affairs, United Nations
Office on Drugs and Crime
David Lyman, Chairman & Chief Values Officer, Tilleke &
Gibbins International Ltd., Bangkok
International

14:0017:00 Workshop session
Workshop 1 Workshop 2
Combating bribery: the role of Conflict of interest
international criminal law the soft side of corruption
standards
Corruption undermines competition and The intersection between the public and
increases the costs of doing business. An private sector can create opportunities
effective legal and regulatory framework for bribery, but corruption does not
informed by international legal always manifest as a financial crime.
instruments and based on international Conflict of interest occurs when private
standards, which recognizes corruption interest compromises public interest.
and bribery as criminal acts, is necessary
The workshop will define conflict of
to support government efforts to reduce
interest, discuss various regulatory
corruption.
approaches for managing conflict of
This workshop will: discuss the issue of interest, and discuss how conflict of
bribery within the Asia and Pacific context; interest manifests at the sector level.
discuss international legal standards and
Chair:
their enforcement (in particular UNCAC);
Koh Teck Hin, Deputy Director
present the challenges facing (Operations), CPIB, Singapore
governments as they attempt to
implement anti-corruption and anti-bribery Rapporteur:
offenses; and explore options for involving Janet Maki, Ombudsman, Cook Islands
civil society in the legislative process. In Speakers:
addition, it will explore how experience Janos Bertok, Principal Administrator,
implementing the OECD Anti-Bribery Directorate for Governance and
Convention could assist Asia and the Territorial Development, OECD
Pacific countries implement international
Arief T. Surowidjojo, Lawyer, Indonesia
criminalization standards.
Navita Srikant, Partner, Ernst & Young,
Chair: Hamid Sharif, Principal Director,
India
Central Operations Services Office, ADB
William Paterson, World Bank
Rapporteur: Andrew Boname, Regional
Anti-Corruption Advisor, ABA Rule of Law
Initiative
Speakers:
William Loo, Anti-Corruption Division,
OECD
Kuniko Ozaki, Director, Division for Treaty
Affairs, UNODC
Mathew Joseph, Deputy Principal Senior
State Counsel, Attorney-General's
Chambers, Singapore
Jaswant Singh, Deputy Senior State
Counsel, Attorney-General's Chambers,
Singapore

Thursday, 27 November 2008

Ethical business practices: Working together to combat
Corporate compliance programs corruption: international and
and integrity systems regional initiatives
In the wake of numerous corporate Individual companies may not always be
scandals and an ever-changing in the best position to withstand pressure
regulatory environment, business leaders to offer bribes. Regional and international
are becoming more and more aware of initiatives provide a forum for private
legal and reputational risks associated sector, public sector, and civil society
with corruption. actors to come together with a common
goal of reducing vulnerability to
The workshop will discuss components of
corruption.
effective corporate compliance
programs and tools to assist businesses, The workshop will present lessons learned
large and small, in designing and and assess how international and
implementing appropriate integrity regional initiatives contribute to raise
systems. It will also examine the awareness and commitment to fight
application of these systems in practice, corruption in the region.
including in relation to public
Chair: Peter Ryan, Director for Intellectual
procurement contracting.
Exchange, Asia-Europe Foundation
Chair: LI Bo-lan Rebecca, Hong Kong,
Rapporteur: Abdul Razak Hamzah, Senior
China
Superintendent, Anti-Corruption Agency,
Rapporteur: John Bray, ControlRisks Malaysia
Speakers: Speakers:
Neil Thamotheram, PriceWaterhouseCo- Ong Hian Sun, Director, Commercial
opers Thailand Affairs Department, Singapore & Co-
Chair, Asia Pacific Group on Money
Juthika Ramanathan, Chief Executive,
Laundering
Accounting and Corporate Regulatory
Authority, Singapore Peter Rooke, Transparency International
Eddie How, Regional Head of Business Manuel de Lemos, Director, Secretariat of
Integrity (APME), Shell Eastern Petroleum State for Natural Resources, Timor-Leste
Pte Ltd, Singapore
Kathleen Moktan, ADB
Jermyn Brooks, Director, Private Sector
Programs, Transparency International

Private sector corruption: last Fighting corruption and the
piece of the puzzle sustainable development agenda
The general inclination is to think of The development community recognizes
corruption occurring involving private the profound harm that corruption inflicts
and state owned actors, in the case of on development, and particularly on the
influence peddling, offering and poor. A number of bi- and multilateral
receiving bribes etc. However, corruption donors with programs in Asia and the
also occurs within the private sector. This Pacific coordinate their efforts through
corruption can be more difficult to the OECD Development Assistance
address as it falls outside the remit of Committee (DAC) Governance Network.
typical public sector integrity
This workshop will focus on key corruption
mechanisms.
issues that impact on sustainable
The workshop will examine how development in Asia and the Pacific
corruption manifests in private-to-private (e.g., in mineral extraction, oil and gas
transactions, tools, and options available industries, and forestry), and follow-up
to address this form of corruption and the discussions at the 13th IACC in Athens. It
linkages with the rule of law. will look at the issue of facilitation
payments and how they weaken
Chair: Joel Turkewitz, Lead Governance
development. It will also discuss how
Specialist, World Bank
donors incorporate anti-corruption into
Rapporteur: tbd the broader support for governance, and
Speakers: how they can support efforts aimed at
Jermyn Brooks, Director, Private Sector drying out the sources of bribes prevalent
Programs, Transparency International in the business sector.
Ho Wah Lee, Director, Fraud Services, Chair: Tony Prescott, Anti-Corruption

KPMG, Singapore Specialist, AusAID
LI Bo-lan Rebecca, Assistant Director, Rapporteur: Pauline Tamesis, UNDP
Operations Department, ICAC Hong Speakers:
Kong, China Marcel van den Bogaard, DAC GOVNET
Koh Teck Hin, Deputy Director ACTT
(Operations), CPIB, Singapore Merceditas Gutierrez, Ombudsman,
Melinda Quintos De Jesus, Executive Philippines
Director, Center for Media Freedom and So-yeong Yoon, Deputy Director, Anti-
Responsibility Corruption, International Cooperation
Division, Anti-Corruption and Civil Rights
Commission (ACRC), Korea
Clare Wee, Director, Integrity Division,
ADB
Anthony Kevin Morais, Deputy Public
Prosecutor at Attorney General
Chambers attached to ACA, Malaysia
Evening: Asia-Pacific Premiere of Ethicana

Friday, 28 November 2008
9:1510: 45 Closing plenary
Part I: Report and conclusions from workshops

Rapporteurs from each of the six workshops will present issues identified during
the workshop, the impact of these issues on anticorruption efforts and specific
actions.
Chair: Kathleen Moktan, ADB
Speakers: Rapporteurs of workshops 1 to 6
10:4511:15 Refreshments
11:1512:15 Closing plenary
Part II: The way forward

Presentation and discussion of the draft conference conclusions;
Adoption of conference conclusions and recommendations.
Panel: Soh Kee Hean, Director, CPIB, Singapore
Joachim Pohl, Project Co-ordinator, Anti-Corruption Initiative for Asia-
Pacific, OECD
12:1512:45 Closing remarks

Patrick Moulette, OECD
Peter Ho, Head Civil Service, Singapore

ADB/OECD Anti-Corruption Initiative for
Asia-Pacific Secretariat Contacts
I. Asian Development Bank (ADB)

Capacity Development and Governance Division
6 ADB Ave.
Mandaluyong City,
1550 Metro Manila, Philippines
Fax +632 636 2193
Kathleen Moktan
Director
Phone +632 632 6651
kmoktan@adb.org
II. Organisation for Economic Co-operation and Development (OECD)

Anti-Corruption Division
Directorate for Financial and Enterprise Affairs
2, rue Andr-Pascal
75775 Paris CEDEX 16, France
Fax +33 1 44 30 63 07
William Loo
Manager, Asia-Pacific Outreach Programme
Phone +33 1 45 24 94 44
william.loo@oecd.org

BLURB
Strategies for Business, Government, and Civil Society to Fight Corruption in
Asia and the Pacific
Bribery is bad for business, so why do businesses continue to bribe? What roles do
business, government, and civil society have in the fight against corruptionand
notably in the fight against bribery in business? The 6th Regional Anti-Corruption
Conference for Asia and the Pacific gathered experts from countries and
jurisdictions of Asia and the Pacific, OECD member countries, leading enterprises
and businesses associations, civil society, and development partners to respond
to these questions and to share their experiences in fighting bribery in business.
The conference, organized by the ADB/OECD Anti-Corruption Initiative for Asia

and the Pacific in late November 2008, explored (i) possible drivers and
incentives for anti-corruption reform; (ii) the role of criminal law standards and
corporate compliance mechanisms; (iii) the risks and countermeasures against
private-to-private corruption; (iv) preventing and managing conflicts of interest;
(v) international Initiatives to counter bribery; (vi) how development partners can
become involved in the fight against bribery and corruption.
The Asian Development Bank (ADB)/Organisation for Economic Co-operation

and Development (OECD) Anti-Corruption Initiative for Asia and the Pacific
supports its 28 member countries and jurisdictions in their efforts to establish
sustainable safeguards against corruption as set out in the Anti-Corruption Action
Plan for Asia and the Pacific. For more information, please visit
www.oecd.org/corruption/asiapacific

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ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Held in Singapore, 2628 November 2008, and hosted by the

Asian Development Bank

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Chapter 2 The role of international criminal law standards in

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Chapter 6 Private-to-Private Corruption: The Last Piece of the

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Expansion of Asian and Pacific economies and strengthened economic

The conference, hosted by the Government of Singapore and its Corrupt

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

ICC International Chamber of Commerce

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

The conference, hosted by the Government of Singapore and its Corrupt

The conference saw presentations by representatives of business,

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

The conference was organized by CPIBincluding Phua Meng Geh, who

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Associate Professor Ho Peng Kee, Senior Minister of State for Law

I am happy that Singapore is organizing this ADB/OECD Regional Anti-

We are living in an increasingly interconnected global world. The financial

In many countries, anti-corruption efforts have always focused on the

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

There is also an online business license service whereby businesses that

The government also aims to engage the public in a continual process to

To improve transparency, the Singapore Government has an electronic

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Internal control measures

Internal controls and governance in private companies is essential if the

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Anti-corruption agencies must therefore reach out to this sector by

The past few years have seen an increase in international platforms

I note that, our Corrupt Practices Investigation Bureau, or CPIB, has

At this conference, a wide array of experts and professionals from

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Lawrence Greenwood Jr.

On behalf of the Asian Development Bank, it is my privilege to welcome

Secondly, there is a growing appreciation that corruption can significantly

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

Finally, looking at corruption from the perspective of all stakeholders allows

The Role for Multilateral Cooperation

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

The Extractive Industries Transparency Initiative (EITI) is another important

Progress and Challenges

However, despite these significant efforts, barriers to progress remain:

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

The Role of the Asian Development Bank

ADB launched its Second Governance and Anticorruption Action Plan

ADB has a very robust program of projects and technical assistance

The Way Forward: Effective Partnerships and Continued

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

In particular, I want to extend our deep appreciation to the Government

We deeply appreciate the governments efforts to make this important

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific

I am deeply grateful to the Government of Singapore for hosting this