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Israel among few countries preventing foreign bribery, watchdog says

Anti-corruption monitor Transparency International finds only four countries out of 47 studied are enforcing rules designed to prevent companies paying bribes in foreign markets

Illustrative image of a payment (wutwhanfoto; iStock by Getty Images)
Illustrative image of a payment (wutwhanfoto; iStock by Getty Images)

BERLIN, Germany — An anti-corruption watchdog on Tuesday ranked Israel as one of the top four countries in the world in enforcing rules meant to prohibit companies from paying bribes in foreign markets, and said most other countries are doing next to nothing.

Berlin-based Transparency International said only four of 47 countries — the United States, United Kingdom, Switzerland and Israel — making up 16.5 percent of global exports — were actively enforcing legislation against foreign bribery in 2019.

That’s down from seven countries, making up 27% of exports, that were conducting active enforcement in 2018.

“Our research shows that many countries are barely investigating foreign bribery,” said Gillian Dell, the lead author of the Transparency report. “Unfortunately, it’s all too common for businesses in wealthy countries to export corruption to poorer countries, undermining institutions and development.”

The 1997 Organization for Economic Cooperation and Development convention prohibits bribes to win contracts and licenses or to dodge taxes and local laws.

In the report, TI noted that “Between 2016 and 2019, Israel opened 10 investigations and one case, and concluded three cases with sanctions.”

But it also noted that Israel did not publish statistics related to investigations or pending cases and does not have a central register of beneficial ownership information.

In 2018, Israel moved from TI’s lowest rung, where it was placed in 2015, to its highest, as it successfully concluded its first-ever foreign bribery case and opened a slew of new ones.

In December 2016, the Tel Aviv Magistrate’s Court convicted Israeli security company NIP Global of bribing a government official in Lesotho and levied a fine of NIS 4.5 million ($1.15 million) on the firm.

State prosecutor Jonathan Tadmor at the time said the first-ever ruling against an Israeli company operating abroad sent a message that the country was dedicated to “fight[ing] against economic delinquency and the phenomenon of corruption worldwide.”

Later that year, Israel arrested diamond-mining magnate Beny Steinmetz on suspicion of money laundering and bribing public officials in Africa, but he was later released. Authorities in the US, Switzerland, Guinea and Israel suspected that Steinmetz bribed the president of Guinea and his wife for metal mining licenses that generated hundreds of millions of dollars in profits for his company, BSGR Resources.

Steinmetz is due to stand trial over the affair, but only in Switzerland.

China, the world’s largest exporter and not a signatory to the convention, was found to conduct “little or no enforcement,” in a category that also includes India and convention members Japan and Korea.

Germany, the world’s third-largest exporter and also a signatory to the convention, only conducts “moderate enforcement,” as do other major exporters like France, Italy and Spain.

Germany and Italy both pursued fewer cases in 2019 than in the previous year, while France and Spain improved their performance.

The Netherlands, Canada and Austria — all signatories to the convention — are the biggest exporters in the category of those showing only “limited enforcement.”

“Too many governments choose to turn a blind eye when their companies use bribery to win business in foreign markets,” Transparency International head Delia Ferreira Rubio said. “G-20 countries and other major economies have a responsibility to enforce the rules.”

Transparency’s recommendations include ending secrecy in ownership of companies, which makes investigating foreign bribery difficult, and exploring increased liability of parent companies for the actions of their foreign subsidiaries.

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