A response from Transparency International Canada (TI-Canada)
30 April 2003
The following is a response to the desire of the Canadian Government “to strengthen Canada’s foreign policy capacities by improving planning and coordination among the many departments whose work extends to international affairs” (Minister Graham’s Message) and to parts of Question 4, which focuses on security measures, and to which we would add the scourge of corruption, and Question 8, which asks what Canada should do “to help make the benefits of globalization more widely shared within and among all countries?”
In order to effectively address these issues, it is necessary to address the problem of corruption.
“Corruption is one of the greatest challenges of the contemporary world. It undermines good government, fundamentally distorts public policy, leads to the misallocation of resources, harms the private sector and private sector development and particularly hurts the poor. Controlling it is only possible with the cooperation of a wide range of stakeholders in the integrity system, including most importantly the state, civil society and the private sector. There is also a crucial role to be played by international institutions.” (Rationale from Mission Statement of Transparency International, Annual Report 1997)
Indeed, corruption is a broad ranging issue. Transparency International (TI) is a global movement, with 90 National Chapters formed and forming, around the world. The area of focus of TI, since its establishment in 1993, has been on the corruption of the public sector by the private sector, using the definition of “the abuse of public power for private gain.”
As a coalition of the public, private and civil society sectors, TI recognizes the effect of corruption on all three pillars of sustainable development – social, economic and environmental. Without the containment of corruption, the disparity of wealth, between the rich and the poor, cannot be addressed. Without the containment of corruption, private sector development cannot reach its optimal contribution to social or economic development. Without the containment of corruption, the world’s resources will continue to be abused and sustainable development will continue to be an unreachable goal..
What tools are at hand to combat corruption? There are several international agreements, such as the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the Inter-American Convention against Corruption of OAS, and the Council of Europe Criminal Law Convention on Corruption. These, however, are only as good as their implementation. Even knowledge of these conventions, on the part of the business community, will require a concerted marketing effort from both the public and civil society sectors. The commitment of all nations of the world to put into place, and honour, a UN Convention against Corruption would go a long way toward containing corruption.
Other tools, such as living codes of ethics for the public, private and civil society sectors, the ICC Rules, the Wolfsberg Principles, to name a few, can also make a dent in the scourge of corruption. One particular tool we would like to emphasize is the Integrity Pact, created by TI in the mid-1990s. First created for the area of government procurement, this tool, used by the three-part coalition, can also be used for the hiring of consultants, the privatization of government assets, licensing and technical, financial and administrative support. Integrity Pacts prohibit the use of bribery, level the playing field and produce, if necessary, self-imposed sanctions, all without having to change the laws of any countries. The Canadian government can take a leadership role in the anti-corruption aspects of its foreign policy by insisting on Integrity Pacts, wherever the government is involved with procurement. (For more information, visit: www.transparency.org)
Government-Wide Anti-Corruption Plan
On 30 June 1999, members of TI-Canada met with deputy ministers and other senior officials of the Canadian government to discuss the implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Canadian legislation response to the Convention, Corruption of Foreign Public Officials Act. After thanking the Canadian government for meeting its public commitment to pass anti-corruption legislation by, the government was urged to take a proactive stance by developing a government-wide anti-corruption policy and initiatives to support the legislation.
It was noted that the Government had fulfilled the anti-corruption agenda set out by TI-Canada in a similar meeting a year and a half prior to this one, namely:
• ensuring the passage of the legislation required by the OECD Convention - approved in December 1998,
• assisting the Global Coalition for Africa to move ahead on its anti-corruption agenda - Canada is providing on-going support,
• encouraging the International Financial Institutions to take anti-corruption measures, and
• supporting TI and its programs - CIDA is providing on-going support for both TI-Canada and TI-Secretariat.
The meeting provided an opportunity to urge the government to take a leadership position
nationally and internationally in the anti-corruption movement. TI-Canada laid out a number of different activities which should form a government-wide anti-corruption work plan:
1. OECD Monitoring
The OECD has established a monitoring process for implementing the anti-corruption convention. It has two components:
1) Signatories to the Convention must first engage in a process of self evaluation. This requires that they respond to a detailed questionnaire whose purpose is to determine whether the legislation they have put in place meets the requirements of the Convention;
2) The legislation of participating countries is then to be evaluated by a small three person committee of experts, one appointed from the OECD Working Group on Bribery and two others from countries named by the Working Group. The purpose is to provide an objective basis for an assessment of the progress of the participating country in implementing
the Convention. The Working Group has indicated that it will provide a report on this process only when the legislation of all participating countries has been assessed.
Concerns: Transparency International identified several difficulties with this process. Under
OECD rules, only the final report of the OECD Working Group will be made public. All other aspects of the process are confidential - the questionnaire, responses of individual governments to the questionnaire, meetings and work of the three person committee of experts, the report of the committee to the Working Group and the deliberations of the Working Group itself. Transparency International and TI-Canada were concerned that the
process would not be credible unless it was more transparent.
Recommendations: TI-Canada requested that the Canadian government urge the OECD to:
• make the questionnaire public;
• make all individual country responses to the questionnaire public;
• provide monitoring reports on a periodic basis, not only at the end of the review; and
• involve INGOs such as Transparency International, The International Chamber of
Commerce (ICC), and the Trade Union Advisory Council (TUAC) in the monitoring process.
TI-Canada also requested that the Canadian government follow the example of the United States and Germany by making Canada’s responses to the questionnaire public
whether the OECD Working Group on Bribery changes its policy on this issue or not.
Finally, TI-Canada pointed out the need to broaden the Convention to include a number of outstanding issues such as:
¨ donations to foreign political parties and persons likely to stand for public office,
¨ subsidiaries and join ventures controlled by a national company,
¨ money laundering, and
¨ off-shore financial centres.
Canada had its review by the OECD Working Group on Bribery and Corruption, with peer examiners from Switzerland and the U. S., February 17 – 21, 2003. While the Canadian government response was not made public, it was made available to TI-Canada. TI-Canada played a central role in the Review and also made arrangements for meetings of the examiners with, among others, the Canadian Council for International Business (Canada’s member of the ICC), representatives of the Canadian Labour Congress and the National Union of Public Employees.
2. A Government-Wide Anti-Corruption Agenda
Recommendations:
1) Ensure that a uniform and consistent anti-corruption commitment is an element of all federal government agreements, loans, partnerships, grants, etc., where government and the private sector interact, for purposes of international business. This could be done by:
• putting explicit anti-corruption clauses requiring compliance with the Canadian Corruption of Foreign Public Officials Act in contracts issued by such departments and agencies as Public Works and Government Services, CIDA and EDC;
• recommending or requiring that companies and organizations whose work for the government has an international dimension have in place a code of conduct, staff education and training regarding the code, and monitoring and enforcement of the code,
including disciplinary measures (TI-Canada pointed to the Competition Bureau Guidelines and the TSE Governance Guidelines as possible models.);
• including government right-to-audit provisions in contracts and agreements;
2) Provide effective training programs for public servants responsible for managing anti-corruption programs;
3) Require reporting of anomalies relevant to government anti-corruption policies by contract administrators;
4) Develop a comprehensive research program designed to develop and evaluate the effectiveness of anti-corruption policies and tools such as voluntary ethics codes in both the private and public sectors. (The current Industry Canada study of voluntary codes is an
example of research that needs to be encouraged and integrated into a comprehensive research program.)
5) Continue to co-operate with the private sector on a model international business ethics code for Canadian companies and on code implementation strategies.
Additional proposals made in the course of the discussion included:
• setting up an enforcement infrastructure for Bill S-21, which might include a system so that Canadian companies have a way of channelling complaints when they lose contracts because of corruption on the part of their competitors;
• establishing a process through which the government could take up substantiated complaints at the OECD;
• adding accounting provisions such as those in the Foreign Corrupt Practices Act in the US (which have been the basis for most of the prosecutions under that Act);
• sanctions for companies found to pay bribes, such as exclusion from new government financed international contracts for a certain period of time and cancellation of any export credit insurance on contracts where bribery was involved;
• a comprehensive review of the Canadian legislation in two or three years’ time involving the government, academics, civil society and the private sector; and
• urging the adoption of international standards and procedures for the purpose, for example, of investigating the complaints of companies that believe they have lost contracts because of bribery or corruption with a view to ensuring a level competitive international playing field.
TI-Canada stressed that the government agenda should emphasize positive incentives designed to win compliance and cooperation with the government’s anti-corruption policy and legislation wherever possible, rather than relying exclusively on criminal law and other sanctions. The goal should be to create conditions that would enable developing countries to derive maximum benefit from international trade while helping to ensure a level playing
field for companies engaged in international business. TI-Canada recommended that systems put in place should be kept as simple as possible to avoid creating obstacles to participation in international markets on the part of small- and medium-sized companies.
TI-Canada also recommended that the Canadian government play an international leadership role, by exporting Canadian success stories, such as the electronic bidding system of Public Works and Government Services (MERX). TI-Canada is prepared to consider recommending that Transparency International advocate this approach to government procurement as a model system internationally.
Finally, TI-Canada recommended that Canadian representatives in the IFIs and elsewhere be asked to encourage the emulation of these kind of initiatives internationally.
While some of these recommendations, with the encouragement of TI-Canada, have been carried out, such as anti-corruption clauses in CIDA, EDC and Canadian Commercial Corporation contracts, and TI-Canada presentations to some Canadian trade commissioners, many of these recommendations have remained unfulfilled.
3. Reporting to Parliament
The Canadian anti-bribery legislation requires that the Government report annually to Parliament on the implementation of the Convention and Canadian legislation. The Government has indicated that it plans to report on two items only:
• the signatories added in the year under review and
• prosecutions in the previous year.
TI-Canada recommended that the government use its first annual report to Parliament as an opportunity to demonstrate Canada’s commitment to lead and shape the anti-corruption agenda both at home and abroad. TI-Canada also requested that the Government use the
occasion of its first annual report to address the broad range of issues raised by the Convention and by Transparency International. Finally, TI-Canada asked the Government to
lay out its government-wide anti-corruption agenda for Canada in its first report to
Parliament.
Four years later, none of these recommendations, made for the first annual report, has been carried out.
4. Corporate Social Responsibility (CSR)
TI-Canada recommended that the Canadian government promote corporate social responsibility by:
• encouraging the development of codes of ethics on the part of companies doing business
internationally;
• encouraging effective code implementation programs as recommended, for example, by the
Industry Canada voluntary codes initiative and the Competition Bureau Guidelines;
• endorsement of strong ethical standards for the conduct of Canadian companies doing business internationally;
• working with the private sector on the continued development of a model ethics code for the conduct of international business;
• encouraging the development of strong compliance and integrity programs; and
• research into effective monitoring and independent auditing systems for anti-corruption codes.
TI-Canada pointed out that a number of international initiatives are underway in these areas. It is important that Canada not leave leadership in these areas to others.
There has been some progress, with regard to these CSR recommendations. For example, EDC has quite a far-reaching anti-corruption policy, which encourages companies who do not have them to develop codes of ethics. There is much more the Canadian government can do, however, to educate the Canadian business community regarding the whole area of CSR.
TI-Canada has asked for follow-up meetings to explore its recommendations in more detail over the next few months. However, to date, although requests, on the part of TI-Canada, have been made, there have been no further meetings with the government, regarding these recommendations. While a desk officer level government-wide anti-corruption group has been established, there has been no senior-level group established, with which TI-Canada could meet.
TI-Canada would welcome the opportunity to meet with the Canadian government, to continue the dialogue established in 1997 and 1999. Addressing the issue of anti-corruption and the leadership role that the Canadian government could take is a fundamental requirement for the furthering of Canada’s three foreign policy pillars – security, prosperity and values and culture. |
