Will South Africa’s ratification of the OECD anti-bribery convention have any sustainable impact on the country’s corruption perceptions index?

Dossier / Travail , 2007 , 25 Pages , Note: 87 %

Gestion d'entreprise - Ethique commerciale, Ethique économique

Corruption has become a serious issue in today’s corporate and political environment. More and more countries tend to condone, yet appreciate the giving of gifts in order to accelerate the materialising of larger contracts. In many cases this is done without taking the public’s point of view into account.
This essay will investigate the question, if the ratification of the OECD Anti-Bribery Convention, which has been recently signed by South Africa as the 37th member, has had any major impacts on corruption in other member countries. Moreover, it will give an estimate about the development of South African corruption statistics in the near future.
In order to answer this question, chapter 2 will give a clear definition of the term corruption, as well as an explanation about why corruption happens worldwide and how it affects economic growth.
Adjacently, a brief introduction of the OECD Anti-Bribery Convention will be stated, which will be followed by an elaboration on the effects of the ratification of the Act on a number of member countries. According to the underlying data, a forecast of future development on South Africa’s corruption statistics will be given.

Table of Contents

1. Introduction

2. What is corruption?
2.1 What are the reasons for the flourishing of bribery?
2.2 What impact does corruption have on economic growth?
2.2.1 What are the impacts of corruption expressed in figures?
2.2.2 Who pays for corruption?

3. Organisation for Economic Co-operation and Development
3.1 What is South Africa’s current situation regarding corruption?
3.2 What are the population’s expectations of effects after signing the Convention?

4. South Africa and the Anti-bribery Convention
4.1 How did CPI statistics from OECD Convention member countries change over the past decade?
4.2 What can South Africa expect from this development?

5. Summary:

6. References

7. Appendix

Abbreviations

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Tables and Images

Table 1 TRAC Transactional Records Access Clearinghouse (2006)

Table 2 Singh and Associates (2007)

Table 3 Singh and Associates (2007)

Table 4 excerpt from: Transparency International (1999)

Table 5 excerpt from: Transparency International (2006)

1. Introduction

Corruption has become a serious issue in today’s corporate and political environment. More and more countries tend to condone, yet appreciate the giving of gifts in order to accelerate the materialising of larger contracts. In many cases this is done without taking the public’s point of view into account.

This essay will investigate the question, if the ratification of the OECD Anti-Bribery Convention, which has been recently signed by South Africa as the 37th member, has had any major impacts on corruption in other member countries. Moreover, it will give an estimate about the development of South African corruption statistics in the near future.

In order to answer this question, chapter 2 will give a clear definition of the term corruption, as well as an explanation about why corruption happens worldwide and how it affects economic growth.

Adjacently, a brief introduction of the OECD Anti-Bribery Convention will be stated, which will be followed by an elaboration on the effects of the ratification of the Act on a number of member countries. According to the underlying data, a forecast of future development on South Africa’s corruption statistics will be given.

2. What is corruption?

The term corruption is commonly used in order to describe a wide range of social conducts, which are condemned and rejected by societies all over the world as disreputable and detrimental. Corruption refers to a large number of irregularities, which can be ranging from the granting of simple personal favours, such as the giving of gifts in order to precipitate certain actions, on to cases of maladministration. In severe cases corruption even leads to conspiracies, which can impair the welfare of entire countries.^[1]

Most importantly, the money paid and received as bribe is in most instances the least part of the resulting damage. In fact, if taken into the books of the corrupted company, they can even increase a country’s GDP, since the bribe money is seen as a disguised source of income. Bad or wrong decisions and choices resulting from corruption, however, can cost a country’s development prospects for years to come and amount to billions of dollars in wasted efforts or lost opportunities. In fact, bribery payments range, according to the International Monetary Fund, up to $ 1.000 bn. This sum equals a share of 3% of the world’s GDP.^[2] It is therefore almost impossible to estimate the factual impact corruption has on global development.

However, a close association between corruption and decrease in investment and economic growth has been proven. According to a regression analysis conducted by the Institute of International Economics using cross-country regressions to examine data from the years 1960 - 1985, the corruption index shows a very significant association between these two variables. Hence, the magnitude of the effect is, according to this examination, considerable.^[3]

2.1 What are the reasons for the flourishing of bribery?

There is a multitude of reasons why bribery occurs in the global business environment. One of them is certainly an increased global economic activity, combined with systemic weaknesses at country level.

To be more precise: The weak structure of the pertaining government increases the incentives and opportunities for corrupt practices. However, lack of transparency and accountability as well as lax financial and corporate regulations are further deficits, which make corruption an easy task to accomplish.

The fact, that public sector officials are often very inadequately remunerated also heavily contributes to an in increase in corrupt practices. If the common knowledge is that everybody does it, people tend to think: Why should I be any different?

Taking bribes has often become part of the routine work of policemen, customs officials and municipal workers. This vicious circle is very hard to break, because it has become ingrained in the culture of many countries and governs people's cultural code of behaviour.

Hence, it can be concluded, that as long as a person's normal income does not provide him with a decent living, the door will always be open to bribes.

Another reason for the blossoming of corrupt practices has been delivered by the United States in the 1990`s: Ineffective law enforcement.^[4]

In a country of close to 280 million inhabitants, where the booty of corruption can be enormously lucrative, US federal prosecutors have shown no great tendencies to bring such cases to trial. And in the few cases that have been reported, the sentences were very often not worth the effort: More than half of those convicted on corruption-related charges served no prison time.

In addition a brief statistical picture of federal law enforcement of corruption cases has been enclosed. This chart indicates that not even one third of the United States’ corruption prosecutions from the years 1993 to 1996 ended with a verdict of guilty. The average sentence per trial in these years was of 13 months imprisonment. This clearly proves that inefficient law enforcement another main reason for corrupt practices, as people do not fear the deterrent function of the law.

This may furthermore cause a so called snowball effect among the people of corruption condoning countries, because there is no other force than the personal conscience to keep people from acting in a corrupt way.

[...]

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^[1] Thomashausen, A. (2002), pg. 6 ff.

^[2] Korruption – Netzwerk von Gefälligkeiten (2004), pg. 14

^[3] Mauro, P. (2005), pg. 90 ff

^[4] for the whole argument: Williams, R., Moran, J., Flanary, R.; pg. 599

• Cours: BUSINESS ETHICS
• Note: 87 %
• Auteur: Manuel Baumgartner (Auteur)
• Année de publication: 2007
• Pages: 25
• N° de catalogue: V89058
• ISBN (ebook): 9783638059534
• ISBN (Livre): 9783638949712
• Langue: allemand
• mots-clé: Will, South, Africa’s, OECD, BUSINESS, ETHICS