Corruption explained

Corruption is the abuse of entrusted power for private financial or non-financial gain. It diverts resources from their proper use, distorts competition and creates gross inefficiencies in both the public and private sectors.

What is corruption?

Corruption can occur in the form of bribery, bribe solicitation or extortion.

Bribery: is an offer or the receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something that is dishonest or illegal.

Bribe solicitation: is the act of asking or enticing another to commit bribery.

Extortion: when bribe solicitation is accompanied by threats it becomes extortion.

As a method of self-regulation for voluntary application by enterprises, the ICC published the "ICC rules of conduct".

Bribe solicitation

ICC has long argued that fighting corruption requires action against extortion as much as against bribery. Without effective action to address the "demand side" of corruption, the fight against corruption cannot be won. ICC's Commission on Anti-Corruption, in cooperation with ICC's specialized division Commercial Crime Services, is currently exploring ways to establish a facility where companies can voluntarily and anonymously report attempts of bribe solicitation by public officials.

Letter from ICC to World Bank on the ICC/CCS proposal for a bribe solicitation reporting centre

Private-to-private bribery

Private-to-private bribery refers to corrupt practices within and between enterprises.

It occurs, for example, when an employee accepts the advantage granted to him by a person from outside of the company, without informing the corporate bodies or persons.

As a consequence, the corrupted executive's or manager's freedom of judgment is abdicated in return for money (or other considerations).

There is a significant risk that purchases will be made at overstated prices (in order to recover the bribes) and under unfavourable conditions, and that the product sold will not be of the optimal, or even required, quality.

Private-to-private bribery and the OECD

Private Commercial Bribery

In 2003, ICC and Germany's Max Planck Institute for Foreign and International Criminal Law jointly published a comparative study of private-sector anti-bribery laws in 13 OECD countries. In addition to analyzing existing international instruments, the study covers the law in the Czech Republic, England and Wales, France, Germany, Italy, Japan, Korea, The Netherlands, Poland, Spain, Sweden, Switzerland, and the United States.

The project focuses on the criminal, civil and administrative measures against the bribery of public officials. The criminalization of private-sector bribery, especially if international aspects are present, is a recent development and there is still no unanimity about which policy goals private-sector bribery laws should vindicate. Regarding the use of civil law and its remedies as a method of compensating for private-sector bribery, the reports reflect a spectrum of results suggesting that general principles of tort/fault law have not always been implemented or vindicated in this field. The study also inquires about practices to stem private-sector bribery present in regulatory measures and/or developed internally by business enterprises.

Private Commercial Bribery is jointly edited by Thomas O. Rose, an American lawyer who led ICC's work on suppression of private sector bribery; Professor Günter Heine, Director of the Institute for Criminal Law and Criminology at Berne University, Switzerland, and Dr Barara Huber, Senior Research Fell at the Max Planck Institute for Foreign and International Commercial Law.

SMEs and the fight against corruption

Small- and medium-sized enterprises (SMEs) are very often solicited for "extra payments" from the lower ranks of bureaucracy and potential buyers of their goods and services. They often feel cornered and do not know what to do.

They know that:

  • it would be easy for the buyer to find an alternative source of supply
  • they are too small to be heard by top-management of the buyers company
  • they lack the legal expertise and management resources to file a complaint
  • they are too small to be heard by politicians and other authorities.

ICC's Commission on Anti-Corruption is currently exploring ways to assist SMEs in addressing anti-corruption issues and compliance procedures.

A chapter of the ICC publication Fighting Corruption: A Corporate Practices Manual is especially dedicated to the problems faced by SMEs. It provides guidance to SMEs for developing anti-bribery compliance programmes with limited time and resources.