Our Own Backyard

By Robert N. Walton & Michael L. Whitener

In its recent report on U.S. compliance with the OECD Foreign Bribery Convention, the OECD Working Group tasked with the review gave the U.S. high marks overall.  The report, which followed a six-month study, commends the U.S. “for its visible and high level of support for the fight against the bribery of foreign public officials, including engagement with the private sector, substantial enforcement, and stated commitment by the highest echelon of the Government.”

The Working Group also found a number of areas where the U.S. can improve anti-bribery enforcement.  These included: providing further guidance on facilitation payments; consolidating publicly available information on the application of the FCPA; and increasing transparency with respect to the use of non-prosecution agreements and deferred prosecution agreements in specific cases. 

But the OECD applauded the U.S. government’s steady increase in significant prison sentences, monetary penalties and disgorgement meted out in bribery cases.

The OECD’s praise was welcome and should come as no surprise. Newspaper headlines over the past several years tell the tale of increasing numbers of U.S. individuals and enterprises being held accountable, criminally and civilly, for transnational bribery and related offenses. This has been the case under both the Bush and Obama administrations and, indeed, current senior officials –- including the president himself, the secretary of state and the attorney general –- have publicly and forcefully spoken out on the scourge of corruption.

How, then, to explain the U.S.’s rather dismal showing in Transparency International’s just-published Corruption Perception Index (CPI)? 

The CPI ranks countries according to perception of corruption in the public sector. The 2010 edition gives the U.S. a score of 7.1 out of 10 and ranks it number 22 out of 178 countries reviewed.

This is a decline from last year’s position at number 19 and marks the first time the United States has fallen out of the top 20 ranking. It also puts it fourth among countries in the Americas, behind Canada, Barbados and Chile. The United Kingdom, which only recently has begun to take anti-corruption efforts seriously with the passage of the Bribery Act, ranks above the United States at spot 20. Even a country such as Qatar – which has made great strides in recent years but is not in a region renowned for its transparency – beats the United States, ranking at spot 19. 

While the CPI is just one tool for measuring corruption (and, as the name indicates, perceptions of corruption), it has proven useful because corruption is to a great extent a hidden activity, difficult to measure.  One must conclude that the U.S., despite its vigorous FCPA enforcement efforts, is perceived as lacking in transparency and accountability.

Several factors are probably at work in creating this perception. There’s the specter of the financial meltdown of the past couple of years, abetted by shady lending and trading practices at U.S. financial institutions.  There’s the money-driven U.S. political culture, with its flood of spending by (largely anonymous) corporate and special interest groups. And there’s the disclosure of Bernard Madoff’s Ponzi scheme and similar fraudulent operations. It amounts to what fairly has been described as an “integrity deficit” here.

In other words, despite the well-deserved praise for U.S. global anti-bribery efforts contained in the OECD report, this country has a lot of work to do in rooting out corruption – and the perception of it – in its own backyard.

Rob Walton is Transparency International-USA’s Senior Policy Director for Private Sector Initiatives. He can be reached here.  Michael Whitener is a principal and co-founder of VistaLaw International and can be reached here.