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#Governance, Risk and Compliance

Corruption: perception and reality in Ireland

International Compliance Association

cash , corruption , CPI , euro , Ireland , legal , transparency international

Corruption can be defined as ‘Dishonest or fraudulent conduct by those in power’ and usually falls into three main categories: grand corruption, petty corruption and political corruption, which the anti-corruption campaign organisation Transparency International defines more specifically.

  • Grand corruption consists of acts committed at a high level of government that distort policies or the central functioning of the state, enabling leaders to benefit at the expense of the public good.
  • Petty corruption refers to everyday abuse of entrusted power by low and mid-level public officials in interactions with ordinary citizens...
  • Political corruption is a manipulation of policies, institutions and rules of procedure in allocating resources and financing by political decision-makers, who abuse their position to sustain their power, status and wealth.’

Scales of corruption

Let’s look at a simple example of corruption in everyday life. You’re caught speeding by a policeman, who explains the potential punishment for the offence: a fine, penalty points on your licence, perhaps a driving ban.

He offers you another option: give him ‘a small payment’ in cash and he’ll rip up your speeding ticket, so you pay the money and go on your way. The policeman has his money and you’ve avoided a potential driving ban. This sort of thing is practically accepted as part of life in some countries, but that does not make it right. In many ways it’s the worst type of corruption because it affects millions of innocent people every single day.

Research suggests that a significant majority of people think corruption is at least fairly widespread in Ireland, and we’ll return to that later, but first let’s examine another example of how corruption can have far-reaching implications.

I read an article recently comparing the earthquakes that took place in Haiti and Chile in 2010. The Haiti earthquake was measured at a magnitude of 7 on the Moment Magnitude Scale (MMS), and an estimated 200,000 people died. The Chile earthquake was 500 times stronger, measuring 8.8 MMS, but the death toll was in the hundreds. The fact that a much stronger earthquake resulted in a much lower death toll cannot just be down to chance – the disparity between the figures is too great.

The article drew a line between the outcomes of the earthquake and levels of corruption. In Haiti, the construction of buildings and infrastructure failed to undergo checks necessary to meet required quality standards, thanks to bribes, ‘corruption and carelessness [that] left such regulation all but nonexistent’.

In Chile, quality and safety checks and standards were much more rigorously enforced. The conclusion was that Haiti’s poorly constructed buildings collapsed much more easily in the earthquake, claiming many more lives: a very stark illustration of how corruption can have devastating and far-reaching consequences.

The Corruption Perceptions Index

Transparency International’s Corruption Perceptions Index (CPI) is an annual survey, ranking countries by perceived levels of public sector corruption, as determined by expert assessments and opinion surveys. Conducted every year since 1995, it is considered by many as a fundamental measure of corruption levels in the world today.

So what does it have to say about Haiti and Chile in relation to the theory above? The Corruption Perceptions Index (CPI) 2015 seems to give this some weight, with Haiti ranked at number 158 out of 168 countries and Chile at number 23.

In contrast, Ireland was ranked 18th in the 2015 index, up from 21st place in the 2013 index and since then has maintained a top twenty ranking.

The bigger picture in Ireland

So the CPI gives Ireland a fairly clean bill of health, but let’s dig a little deeper. According to the European Commission’s 2013 Eurobarometer public opinion survey on corruption (published in 2014), 81% of respondents in the general population thought corruption was fairly or very widespread in Ireland, which is actually above the EU average of 77%. What is even more discouraging is that 27% felt personally affected by corruption in their daily lives, which is 1% higher that the EU average of 26%.

On a more positive note, in a 2015 Eurobarometer survey of businesses’ attitudes towards corruption, 59% of Ireland’s respondents thought it was widespread in the country (lower than the 71% EU average); favouring family and friends in business was rated top of the practices considered most common. However, a substantial 31% thought corruption had prevented their company from winning a public tender or public procurement contract in the last three years (the EU average was only just higher at 34%). In terms of whether corruption represented a problem to doing business, only 17% of Ireland’s respondents considered that it was.

The legal framework

Currently, Ireland has the Prevention of Corruption Act 1889 – 2010 (PCA) under which the main bribery offences are set out. Under the Act, companies can be convicted of bribery; however they wouldn’t be liable if an offence is committed by an individual on behalf of the company when the company has no effective anti-bribery and corruption (ABC) polices in place. The Act also imposes accountability on an employee if the company commits the offence and it happens with the employee’s permission or the offence has happened because the employee has been negligible.

In 2012, the Irish government published the proposed Criminal Justice (Corruption) Bill, which will supersede the PCA and is more in line with UK and US ABC policies and procedures. For example, a company would be liable if an employee commits an offence on the company’s behalf, unless the company can prove that all reasonable steps were taken and due diligence carried out to prevent this happening. There are a few new offences and concepts in the Bill as well, for example any payment/gift made by an interested party to an Irish public official would be presumed as corruption/bribery; also, if an individual were to give a gift to a designated person, knowing that this could be constituted as a bribe, they would be committing an offence. The planned legislation is also designed to deal with bribing foreign public officials and to update the laws on giving and receiving bribes, as well as creating a new offence of failing to prevent bribery. Penalties include prison sentences, fines and the removal from office of public officials, with them not being able to hold office for up to 10 years.

This bill was originally set for release in late 2015, however in a list published by the Irish government in June 2016, it was described as ‘drafting continuing’. Therefore, it seems doubtful that it will be published before 2017.

Foreign bribery

Back in December 2013, the issue of foreign bribery was brought up by the Organisation for Economic Co-operation and Development (OECD), when it published a report advising Ireland to increase its resources to improve its fight against foreign bribery. It also states that at the time, in the 12 years since it became an offence, Ireland hadn’t prosecuted anyone in a foreign bribery case.

It urged Ireland to do more to make sure foreign bribery is investigated and prosecuted, to apply steps to be able to enforce Ireland’s foreign bribery offence more vigorously and to continue with the reform of its ABC policies and procedures.

By February 2016, an OECD follow-up report found that Ireland had made ‘significant’ progress, although legislation to address weaknesses in ABC policies still hadn’t been adopted. Additionally, it reports that Ireland urgently still needs to make sure it has the resources to be able to investigate and prosecute foreign bribery cases.

It also states that Ireland needs to deal with the OECD’s recommendation to update their laws to include ‘laundering the proceeds of bribery of foreign public officials in Ireland’ as an offence, even if the actual bribing doesn’t happen in Ireland.

It concludes that out of 27 recommendations, Ireland has not implemented 10 of them.

What is encouraging however, is that Ireland does have strong laws to protect whistleblowers, who can play such an important role in combating corruption. In 2014, the Protected Disclosures Act became law and this has a similar approach to laws in the UK and New Zealand. This legislation offers a ‘safety net’ to all workers for the first time in Ireland. The Act has widened the definition of worker and the range of ‘wrongdoings’ that can be reported. It also prohibits penalising workers for making protected disclosures. Furthermore, in May 2016, it was announced that the initiative ‘Integrity at Work’ would be launched in autumn 2016. This initiative involves employers pledging to treat whistleblowers fairly as well as providing free guidance for employers and whistleblowers.

The global picture

So overall, the picture in Ireland seems to be going in the right direction but does still have a way to go. However, at a global level, corruption is devastating, and the human cost enormous. The results from the 2015 CPI show that, broadly speaking, little significant change has occurred from a global perspective.

Some countries have improved over the last few years – Greece, Senegal and the UK; and others have experienced deterioration during the same period – Australia, Brazil, Libya, Spain and Turkey. The correlation between the most corrupt and those experiencing conflict is still there though – Afghanistan, Syria, Somalia, Iraq and Libya are examples of this. Where conflict isn’t present, inequality and poverty are apparent in those countries that rank poorly. Sub-Saharan Africa continues to experience difficulties in this respect with 40 of the region’s 46 countries showing a serious corruption problem. 

Five out of the six least corrupt countries in the 2015 CPI are from Northern Europe – Denmark, Finland, Sweden, the Netherlands and Norway. The fact that these countries, (and most others in Northern Europe that performed well) are not experiencing conflict, extreme poverty or inequality issues comes as no surprise, and perhaps gives some hope that corruption can end. It is a collective fight though, and everybody, people and countries alike, needs make their contribution. Only then can we hope to see real change. 

 

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