Corruption's double standard: It's time to punish countries whose officials accept bribes

Theresa Tedesco: It’s hardly a secret that countries in the Middle East, Africa and some parts of Asia, which are perceived to be the most corrupt, habitually extend their hands out to collect billions

John Mahoney/Postmedia News

With its reputation in tatters, embattled SNC Lavalin Group Inc. is offering amnesty to employees willing to blow the whistle on corruption. The Quebec engineering multinational is now an international pariah blacklisted among an estimated 500 companies and individuals banned by multilateral development banks for alleged corruption. Meanwhile, the government of Bangladesh refused to investigate government officials alleged to be involved in taking bribes from the Canadian company. The upshot: the World Bank cancelled its US$1.2-billion share of the financing for the six-kilometre Padma Bridge, and SNC is under criminal investigation by the RCMP.

What about the demand side?

Dealing with rogue regimes and violating economic sanctions may be anathema, but Canadian companies are still exposed to the temptation and the risks of engaging in corrupt practices. Consider that the RCMP’s International Anti-Corruption Unit currently has 35 active cases on its docket.

Yet, there is a double standard at play. Even though there are two sides to a corrupt bargain, most of the initiatives to combat them have so far been aimed at the supply side — those entities willing to pay up to 10% to 15% of the total value of a project in bribes to snare a competitive advantage. What about the demand side? It’s hardly a secret that countries in the Middle East, Africa and some parts of Asia, which are perceived to be the most corrupt, habitually extend their hands out to collect billions in international development funds to build capital programs such as roads, bridges and dams. And yet, they still operate with impunity in cultures that permit corruption.

Most countries have laws on the books prohibiting bribery and corruption. It’s a standard fare of international business. What’s missing is the willingness or the ability to enforce them. Is it any wonder why there’s such a powerful demand for bribes and kickbacks. “This is such a big problem,” says Michael Robinson, a lawyer at Fasken Martineau DuMoulin in Toronto who specializes in anti-corruption law. “There needs to be greater co-ordination.”

Mr. Robinson, who will be monitoring a panel on corruption in government on Wednesday at the Transparency International Canada conference, said that almost all of the legal and economic anti-corruption pressures are aimed at companies such as SNC, Griffiths Energy International Inc. and Niko Resources Ltd., which were caught engaging in local corruption customs. The World Bank, and other global aid development agencies, as well as individual countries, led by the United States, have been aggressively pursuing corporate miscreants.

However, little, if anything, is being done to discipline those countries and government officials who extend their hands to receive illicit funds. Perhaps in the rarified world of diplomacy, it’s considered politically incorrect. After all, international financial institutions that provide loans are in the business of funding important projects in less-developed and poor countries that can’t afford to build the infrastructure. The World Bank, whose stated mandate is the reduction of poverty, is by its very nature implied to be humanitarian, and therefore, sensitive to the inevitable claims of discrimination, prejudice and racism.


Furthermore, there are concerns in legal and diplomatic circles that wielding a heavy hammer is contrary to the mandates of these development organizations, which were established to promote foreign investment and international trade. It is said that many of the countries that fund aid organizations such as the World Bank — including Canada — are privately uneasy about being seen to be cracking down hard on the less-advantaged nations they are supposed to be trying to help, even if it’s for the greater good.

Even so, those feelings of discomfort shouldn’t prevent aid agencies from using their influence and power to rein in corrupt regimes. The World Bank controls its own purse strings and can’t be compelled by the courts to advance funds. So what’s the problem with telling Bangladesh that unless it enforces its anti-corruption laws, the handouts will dry up? Why not apply the same sanctions by blacklisting countries whose government officials accept bribes as ineligible to be awarded contracts the same way they are vigorously applied to companies and individuals who supply the illegal inducements?

SNC is ineligible to be awarded a World Bank-funded contract for 10 years  following sanctions — the largest settlement to date — in the wake of allegations that two former employees were involved in bribing government officials in Bangladesh. By the way, that prohibition extends to procurements from five other multilateral development banks. All else being equal, the government of Bangladesh should be on that rogue’s list at least for refusing to investigate its own role in the corruption.

Clearly, a fairer approach is in order. The RCMP’s criminal cases against SNC, Griffith and Niko, as well as the federal government’s proposed amendments to toughen the 1999 Corruption ofForeign Public Officials Act have recently earned Canada praise from the Organization of Economic Co-operation and Development. At the same time, Canada is among the group of nations being assessed by the United Nations this year on how well it has adopted international anti-corruption conventions. With all this scrutiny and introspection, perhaps it’s time to finally consider giving equal treatment to both sides of the crooked deal.

