'Senior execs in know when corporates pay bribes'

Senior executives are mostly in the know when large corporates pay millions of dollars worth bribes to foreign public officials and a significant chunk of such money are shelled out to obtain public procurement contracts, says Paris-based think-tank OECD.
Presenting its detailed 'Foreign Bribery Report' today, the multi-lateral grouping said the average bribe amount was nearly USD 14 million, which is "without doubt mere tip of the iceberg".
According to the Organisation for Economic Cooperation and Development (OECD), most international bribes are paid by large companies, usually with the knowledge of senior management.
"In 41 per cent of cases management-level employees paid or authorised the bribe, whereas the company CEO was involved in 12 per cent of cases," it said.

The findings are based on an analysis for over 400 cases worldwide involving companies or individuals from 41 signatory countries to the OECD Anti-Bribery Convention who were involved in bribing foreign public officials.
These cases happened between February 1999, when the Convention came into force, and June 2014.

India is not a signatory to the Convention.
Noting that intermediaries were involved in three out of four foreign bribery cases, the report said these included local sales and marketing agents, distributors and brokers.
About 35 per cent of intermediaries were "corporate vehicles, such as subsidiary companies, companies located in offshore financial centres or tax havens, or companies established under the beneficial ownership of the public official who received the bribes".

As per the analysis, on an average bribe amount stood at nearly 11 per cent of total transaction value and "34.5 per cent of the profits - equal to USD 13.8 million per bribe".
Stating that most bribe payers and takers are from wealthy nations, OECD said bribes are generally paid to win contracts from state-owned or controlled companies in advanced economies, rather than in the developing world.
In 57 per cent of the instances, bribes were paid to obtain public procurement contracts, followed by clearance of customs procedures (12 per cent) while six per cent were given to gain preferential tax treatment.

Almost two-thirds of cases occurred in four sectors -- extractive (19 per cent), construction (15 per cent), transportation and storage (15 per cent), and information and communication (10 per cent).
"Bribes were promised, offered or given most frequently to employees of state-owned enterprises (27 per cent), followed by customs officials (11 per cent), health officials (7 per cent) and defence officials (6 per cent).
"Heads of state and ministers were bribed in 5 per cent of cases but received 11 per cent of total bribes," the report said.