Graft still stunts global development, UN says

Developing countries are losing between $20 billion to $40 billion every year, making graft the greatest obstacle to economic and social development around the world, according to a report released this month by the United Nations Office on Drugs and Crime (UNODC).

Political and business leaders don’t yet realize that companies are reluctant to invest in countries where corruption exists, since the cost of doing business (i.e., the risk) is higher, the report said.

Local populations suffer because money is diverted from healthcare, education, clean water, sanitation, and housing, the report said.

Some of the UNODC findings included:

• In 2012, 50 percent of Afghan citizens paid a bribe while requesting a public service, and the total cost of bribes paid to public officials was $3.9 billion.

• The Western Balkans experience a great deal of bribery by percentage of business occurring there in a 12-month period. Serbia came in at 17 percent and Albania at 15.7 percent, but the most expensive bribes are paid in Kosovo at an average of €1,787 per bribe.

• Small and medium enterprises pay a much higher percentage of their annual revenues in bribes to public officials than large companies, fearing they need to do so to keep up and getting no assistance from their local governments.

UNODC partners with 168 states that have signed the U.N. Convention Against Corruption to focus on prevention, criminalization/law enforcement, international cooperation and asset recovery within both the public and private sectors.

It has also teamed up with the World Bank and the Stolen Asset Recovery Intitiative (StAR Initiative) to support efforts to end safe havens for corrupt funds. StAR works with developing countries and financial institutions to prevent the laundering of the proceeds of corrpution and to facilitate the timely return of stolen assets.

Information about UNODC and a copy of the report on corruption and development can be found on its website.

Details about UNODC’s upcoming session of the Conference of the States Parties to the United Nations Convention against Corruption in Panama City (November 25 to 29) are here.

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Julie DiMauro is the executive editor of FCPA Blog. She can be reached here.