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Collective Action and Corruption

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Preventing Corporate Corruption

Abstract

The chapter provides an analysis of the role of collective action in fighting corruption. It gives a preliminary overview of the historical background to such actions, describing the early experiments with collective action in relation to corruption and money laundering, and illustrating the first success represented by the initiative undertaken by the Wolfsberg Banking Group. The chapter then outlines the measures implemented between 2000 and 2003, when companies made impressive attempts to harmonize their compliance systems, and indicates the failures of such initiatives. Recent examples of collective action are offered, and, in particular, the chapter sets out the World Bank Institute’s classification of: anticorruption declarations, principle-based initiatives, integrity pacts, and certifying business coalitions. Finally, the chapter illustrates the main methods adopted in developing collective action, and reviews the possible applications of such instruments for the future.

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Notes

  1. 1.

    On the problem of collective action in general, see Bandiera et al. (2005); Holzinger (2003); Kingston (2005); Olson (1965); Reuben (2003); and Zürn (1998, p. 154). On citizens refraining from individually profitable actions for the sake of the common good, see Bandiera et al. (2005, p. 2). On prevalence of self-interest, see Holzinger (2003, p. 2).

  2. 2.

    See Olson (1965). See also Bandiera, Barankay, and Rasul (2005); Hardin (2012); Holzinger (2003); Nielsen (2009); Reuben (2003); and Sandler (2010, p. 4).

  3. 3.

    This was the goal of early collective action initiatives in the power systems and the defense industries between 2000 and 2003.

  4. 4.

    See Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions—November 26, 2009, OECD, Annex I.A, http://www.oecd.org/investment/anti-bribery/anti-briberyconvention/44176910.pdf, accessed 20 July 2013.

  5. 5.

    In particular, see Annex 1, Guidelines for Multinational Enterprises, OECD Declaration and Decisions on International Investment and Multinational Enterprises, OECD, http://www.oecd.org/daf/inv/investment-policy/oecddeclarationoninternationalinvestmentandmultinationalenterprises.htm, accessed 20 July 2013.

  6. 6.

    On advantages, see Black (2001); see also the introduction to Brütsch and Lehmkuhl (2007). On disadvantages, see Black (2001); Jenkins (2001, p. 26); Klauser (1994, p. 53); Pieth (2007, p. 94); Ruch (2004, p. 373).

  7. 7.

    FATF 40 Recommendations (FATF 1990). For all FATF recommendations, see the FATF Recommendations, Financial Action Task Force, http://www.fatf-gafi.org/topics/fatfrecommendations/, accessed 20 July 2013.

  8. 8.

    FATF, IX Special Recommendations (FATF 2002). For all FATF recommendations, see http://www.fatf-gafi.org/topics/fatfrecommendations/.

  9. 9.

    From the second 1996 edition of the FATF 40 Recommendations, http://www.fatf-gafi.org/topics/fatfrecommendations/.

  10. 10.

    For all FATF recommendations, see The FATF Recommendations, FATF website, http://www.fatf-gafi.org/topics/fatfrecommendations/, accessed 20 July 2013.

  11. 11.

    See the introduction to The OECD Convention on Bribery (Pieth et al. 2007, p. 11).

  12. 12.

    Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Paris, 17 December 1997, in force 15 February 1999, (1998) 37 ILM 1.

  13. 13.

    Revised Recommendation of the Council on Combating Bribery in International Business Transactions, 23 May 1997 reprinted (1997) 36 ILM 1061.

  14. 14.

    Council of Europe: Criminal Law Convention on Corruption, Strasbourg, 27 January 1999 in force 1 July 2002, 2216 UNTS 225, 173 ETS. See also Civil Law Convention on Corruption, Strasbourg, 4 November 1999, in force 1 November 2003, 2246 UNTS 3, 174 ETS.

  15. 15.

    Organization of American States: Inter-American Convention Against Corruption, Caracas, 29 March 1996, in force 6 March 1997, (1996) 35 ILM 724.

  16. 16.

    United Nations Convention Against Corruption, New York, 31 October 2003, in force 14 December 2005, 2349 UNTS 41 (2004) 43 ILM 37.

  17. 17.

    OECD 2005. See, further, Pieth et al. (2007, p. 36).

  18. 18.

    See Letter of the B20 Working Group on Improving Transparency and Anti-Corruption to President of Mexico, Felipe Calderón Hinojosa, Chair of the G20 Nations for the Los Cabos Summit, June 2012, International Chamber of Commerce (ICC), http://www.iccwbo.org/, accessed 20 July 2013.

  19. 19.

    See B20 Task Force Recommendations, June 2012, website of the B20, http://b20.org/documentos/B20-Complete-Report.pdf, accessed 20 July 2013.

  20. 20.

    The Basel Institute on Governance and TI.

  21. 21.

    See Anti-Money Laundering Principles, Wolfsberg AML Principles, http://www.wolfsberg-principles.com/, accessed 20 July 2013, at 243. See further Pieth and Aiolfi 2003, 243.

  22. 22.

    The original principles were made public in a well-attended press conference in Zurich on 30 October 2000.

  23. 23.

    See Wolfsberg Statement on the Suppression of the Financing of Terrorism 2002, and Wolfsberg Anti-Corruption Guidance 2011, Wolfsberg AML Principles, available at http://www.wolfsberg-principles.com/standards.html, accessed 20 July 2013.

  24. 24.

    Pub. L. No. 95–213, 21, 91 Stat. 1494 (FCPA 1977); Pub. L. No. 100–148, 102 Stat. 1107 (FCPA 1988); Pub. L. No. 105–366, 112 Stat. 3302 (FCPA 1998).

  25. 25.

    Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Paris, 17 December 1997.

  26. 26.

    Revised Recommendation of the Council on Combating Bribery in International Business Transactions, 23 May 1997.

  27. 27.

    The Clovis Principles for the Defence Industry, Paris 2007.

  28. 28.

    See DII Principles, Defense Industry Initiative on Business Ethics and Conduct (DII), http://www.dii.org/about-us/dii-principles, accessed 20 July 2013.

  29. 29.

    See International Forum on Business Ethical Conduct for the Aerospace and Defense Industry (IFBEC), IFBEC website, http://ifbec.info/, accessed 20 July 2013.

  30. 30.

    The trust generated through this original process was lost when misconduct by major competitors became obvious.

  31. 31.

    See ICC Rules of Conduct and Recommendations to Combat Extortion and Bribery (2005 Edition), International Chamber of Commerce (ICC), http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2004/ICC-Rules-of-Conduct-and-Recommendations-to-Combat-Extortion-and-Bribery-%282005-Edition%29/, accessed 20 July 2013.

  32. 32.

    See Business Principles for Countering Bribery, Transparency International (TI), http://archive.transparency.org/global_priorities/private_sector/business_principles, accessed 20 July 2013.

  33. 33.

    See Guidelines Manual, 15 September 2009, United States Sentencing Commission (USSC), http://www.ussc.gov/, accessed 20 July 2013.

  34. 34.

    OECD Recommendation 2009, Annex II: Good Practice Guidance on Internal Controls, Ethics, and Compliance, http://www.oecd.org/investment/anti-bribery/anti-briberyconvention/44176910.pdf.

  35. 35.

    In particular, the US Chamber of Commerce 2011. See also Peter J. Henning, Taking aim at the Foreign Corrupt Practices Act, New York Times, http://dealbook.nytimes.com/2012/04/30/taking-aim-at-the-foreign-corrupt-practices-act/, accessed 20 July 2013.

  36. 36.

    Such business associations are frequently shy of initiating a process, even if they may want to take it over once it is running (see, e.g., the defense industries).

  37. 37.

    For example, Wolfsberg, PACI, and the aeronautics industries.

  38. 38.

    Siemens, TNT, or UBS in their respective contexts, to name just a few.

  39. 39.

    Such as the early efforts in the power systems sector or the TI’s Business Principles, (http://archive.transparency.org/global_priorities/private_sector/business_principles), or the PACI Principles.

  40. 40.

    See, e.g., the EITI, discussed further in Brew and Moberg (2006, p. 128).

  41. 41.

    For example, The Makati Business Club’s activities in the Philippines under the Siemens Integrity Initiative, Siemens Integrity Initiative Slide Presentation, First Funding Round, February 2012, Slide 20.

  42. 42.

    World Economic Forum, PACI Annual Report 2010, Case Study 1, 13.

  43. 43.

    See The B20 Task Force Recommendations, June 2012, http://b20.org/documentos/B20-Complete-Report.pdf.

  44. 44.

    See International Centre for Collective Action (ICCA), ICCA website, http://www.collective-action.com/, accessed 20 July 2013.

  45. 45.

    The ICCA has received seed funding from the Siemens Integrity Initiative.

  46. 46.

    This chapter was originally published as Working Paper Series 13, Basel Institute on Governance, September 2012. It was reprinted in Mark Pieth (Ed.), Collective Action—Innovative Strategies to Prevent Corruption (DIKE AG, October 2012, ISBN 978–3-0371–474-0; www.dike.ch). It is reprinted here with permission.

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Authors and Affiliations

  1. University of Basel, Faculty of Law, Peter Merian-Weg 8, CH-4002, Basel, Switzerland

    Mark Pieth

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  1. Dipartimento di Giurisprudenza, Seconda Universita di Napoli, Santa Maria Capua Vetere, Italy

    Stefano Manacorda

  2. Facoltà di Giurisprudenza, Università Cattolica del Sacro Cuore, Milan, Italy

    Francesco Centonze

  3. Facoltà di Giurisprudenza, Università Cattolica del Sacro Cuore, Milan, Italy

    Gabrio Forti

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Pieth, M. (2014). Collective Action and Corruption. In: Manacorda, S., Centonze, F., Forti, G. (eds) Preventing Corporate Corruption. Springer, Cham. https://doi.org/10.1007/978-3-319-04480-4_6

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