Study: Corporate Bribery and Corruption Grease the Gears of Global Capitalism

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Study: Corporate Bribery and Corruption Grease the Gears of Global Capitalism

The Organization for Economic Cooperation and Development reports that large multinational corporations, led by top managers, are behind majority of documented bribery cases

(Photo: Tax Credits/flickr/cc)

Though substantial, report authors say that the documented cases of corporate bribery are only "the tip of the iceberg." (Photo: Tax Credits/flickr/cc)

Large multinational corporations are behind the majority of documented bribes worldwide, with most payers and takers hailing from rich nations, according to a study released Tuesday by the 34-nation Organization for Economic Cooperation and Development (OECD).

The report, which evaluated data obtained from 427 bribery offense cases spanning the past 15 years, found that 57 percent of all bribes examined involved corporate efforts to obtain public contracts—mostly in western, more developed states. Customs and defense officials accounted for a significant proportion of bribe recipients, at 11% and 6% respectively.

According to the study, the average bribe amounts to 10.9% of the total value of the transaction, with the average payout calculated at nearly $14 million for the cases reviewed.

Regarding the impact such bribery is having on business and governance, the report states: "The true social cost of corruption cannot be measured by the amount of bribes paid or even the amount of state property stolen. Rather, it is the loss of output due to the misallocation of resources, distortions of incentives and other inefficiencies caused by corruption that represent its real cost to society."

When it comes to corporate bribes, the analysis found that these instances are generally not committed by lone low-ranking individuals. According to the report, 53 percent of known bribery cases directly involved high-level corporate managers or CEOs. “Most international bribes are paid by large companies, usually with the knowledge of senior management,” the study states.

Almost two-thirds of bribery cases occurred in just four sectors, the report revealed. The highest proportion of bribes occur in the extractive industries—such as fossil fuels and other mining activities— and account for 19 percent of all bribery cases. This was followed by the construction, transportation and storage, and information and communication sectors.

However, the report states that, due to the complex and secretive nature of global corruption, its findings are just "the tip of the iceberg."

 

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