Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What is meant by bribery?
R: The offence of bribery is committed in relation to conduct by a
public official who requests or accepts money or other undue
benefits in order to perform an action relating to or contrary to his
official duties.
The offence may also take the form of attempted bribery when the
public official has indicated that he is willing, for a reward, to
perform an action relating to his official duties (Art. 318 of the
Criminal Code) or contrary to these duties (Art. 319 of the Criminal
Code) and negotiations for this purpose have been initiated.
Bribery takes many forms at many different levels, ranging from
more or less valuable gifts to officials in order to obtain advantages
of all kinds, to enormous sums paid to government ministers.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What is the OECD Anti-bribery Convention?
R: Until the 1990s, bribery of public officials was only
prosecuted domestically, while bribery of foreign public
officials was considered “necessary” to remain competitive,
and money spent on bribes was even tax deductible in many
countries’ legislation.
In 1997, the OECD Member countries and other countries,
aware of the enormous economic and social costs of bribery,
adopted a convention to combat bribery abroad.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What are the risks involved in failing to comply with the
Convention?
R: Bribery in international economic transactions, by distorting
competition, is a factor that lowers civil and political standards
within countries.
Consequently, measures to combat bribery are being
implemented at a number of levels – criminal, commercial and
fiscal. The criminal aspects are undoubtedly predominant in all
States that have adopted the Convention.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Why is bribery also being combated abroad? (1)
R: For a number of different reasons of an economic, social and
business-related nature. Some of the economic reasons for combating
bribery are:
It wastes resources that should be used to ensure public welfare (for
example, when unnecessary and/or unprofitable infrastructure is built);
It distorts competition, resulting in an inefficient allocation of resources
(for example, when decisions are not based on the value for money of
bids submitted, but on “political favours”);
Companies listed on a stock exchange see the value of their shares fall
because of investors’ lack of confidence when this illegal activity
becomes known and are sometimes excluded from the stock exchange.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Why is bribery also being combated abroad? (2)
R: Among the social reasons, the following can be mentioned:
The damage caused by a conception of the “public sphere” as
something “private” belonging to public officials and used by
them illegally for their own personal enrichment;
Citizens’ loss of trust in government based on rule of law,
leading to attitudes of indifference and cynicism that
undermine the democratic conception of government;
Illegal activities fuelled by the proceeds of bribery and which
are often managed by organised crime.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Why is bribery also being combated abroad? (3)
R: Some of the business-related reasons for combating
bribery are:
Italian companies’ must assume criminal and administrative
liability not only in the country in which they are operating
but also in Italy;
Companies’ reputations are damaged in the eyes of their
business partners and public opinion;
Companies themselves also consider that employees who
engage in bribery are untrustworthy (as they may be likely to
embezzle money or accept bribes themselves).
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Are bribes tax deductible if the payment is made in
connection with a normal commercial transaction and is
correctly shown in the accounts?
R: In 1996, the OECD had already recommended that Member
States not consider amounts paid to foreign public officials (of any
country) as tax deductible. In fact, the possibility of considering
bribes as deductible costs encourages bribery and is tantamount to
recognising it as a legitimate practice. In Italy, bribes and costs
related to illegal activities are not included among the elements
qualifying for deduction from corporate income and do not meet
the requirement of being essential to the activity performed. Law
No. 289/2002 has formally specified that costs and expenditures
related to actions that can be qualified as illegal are not deductible.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
A concrete case (1):
The Italian company ABC is competing to build a hospital for
the Health Ministry of country XXXX. Its export director has
learned that the person in charge of the department that will
assign the work is willing to award the contract to the best
bidder willing to deposit on his behalf in a bank account in
country YYYY (a tax haven) an amount ranging between 10
and 15% of the value of the bid submitted. The representative
of the Italian firm knows that its competitors are willing to
offer between 10 and 12%.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
A concrete case (2):
The Italian company has set up a joint venture with a local
firm in country XXXX that is commissioning the construction
of the hospital in order to compete for the contract to provide
supplies. In addition, if it decides to pay the amount
demanded by the person in charge of the department that
will assign the work, the Italian company believes that it can
make the payment through a company that it will set up in
country YYYY (the tax haven), which is not an OECD Member
or even a signatory to the Convention, showing the foreign
partner as payer.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What action can the Italian company and its representative
take to prevent the offence?
R: Under the Convention, the company’s legal representative
can immediately contact our consular or diplomatic
authorities (or those of another signatory country to the
OECD Convention) or trade associations (Confindustria or
others) to present the situation and ask that action be taken
to re-establish the proper tendering procedure.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What are the risks for the Italian company and its representative if
they accept the proposal?
R: If the legal representative, or anyone acting on his behalf, were to accept
the proposal, he would be an accessory to the offence of bribery, which in
addition to exposing him to serious criminal penalties (imprisonment for up to
three years or longer in the event of aggravating circumstances), would
engage the liability of the company that he represents. The company might
then be liable not only for a fine proportional to the seriousness of the
offence, but also for disqualifying penalties, such as a ban on doing business,
suspension or withdrawal of permits, licences and concessions, a ban on
competing for government contracts and ineligibility for tax relief and
financing or loss of any such relief or financing already granted.
For the offence of ATTEMPTED bribery, the penalty is reduced by one-third to
two-thirds.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: If an agreement is reached on the basis of the proposal
made by the foreign official in the ministry awarding the
contract, what are the risks for the Italian company and its
representative?
R: The person who has acted on behalf of the company, if he
meets the conditions defined in Art. 9 of the Criminal Code – a
criminal offence by a citizen abroad – would be liable for the
offence of bribery, irrespective of the fact that the payment was
made to a tax haven that is not an OECD Member and that the
amount was paid by a foreign partner. The company would also
be liable for the offence under Art. 4 of Legislative Decree
231/2001 if the relevant conditions are met.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What measures can be taken by individual companies to
ensure that they do not become involved in corrupt practices?
R: The strategy for combating possible practices of bribery
includes organisational measures, measures concerning
corporate management and staff and, very importantly,
monitoring measures adapted to the size of the company
and the markets and/or sectors in which it is operating.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What are some of the organisational measures?
R: An initial general measure is based on identifying at-risk
activities and introducing a system of double monitoring of
the commitments undertaken.
A second measure consists of defining clearly the
responsibilities of staff involved in negotiations.
A last measure is to ensure transparency in business
processes by requiring a detailed report on negotiations and
the persons involved.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What are some of the management measures?
R: To ensure that staff, and especially the most exposed staff, is
made aware of problems of bribery by providing specific
information on the risks and consequences of corrupt practices.
To identify the critical points in business processes where
bribery is most likely to occur and to designate an internal
structure within the company to which staff can report
problems, potential dangers and persons suspected of bribery.
To adopt a “code of conduct”.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What should an anti-bribery code of conduct entail?
R: An anti-bribery code of conduct should become part of the
corporate “culture”. This has the advantage of making the
company’s staff aware of the problems and consequences of
bribery, enabling the staff itself to act appropriately if they
encounter corrupt practices.
The anti-bribery code can either be an independent
document or be incorporated into the general rules of the
company.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Where can information be found on useful tools for drafting
a code of conduct?
R: The OSCE-Organisation for Security and Co-operation in Europe
has drafted a WEB page on “Best Practices” in combating bribery
aimed primarily at governments.
The U4:Anti-Corruption Resource Centre makes available on-line a
great deal of information on tools for combating bribery in the
economic field.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Where can information be found on useful tools for drafting
a code of conduct?
R: “Transparency International”, a non-governmental
organisation engaged in combating bribery, makes available
on its site an “anti-corruption handbook” and “business
principles for countering bribery” that are useful tools for
preparing corporate rules of conduct for combating bribery.
These publications can act as a guide for defining a corporate
code of conduct for combating corruption.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: Which aspects of work activities can be treated in the code?
R: Some of the points to be treated may concern: (a) the
company’s general attitude towards bribery; (b) ethical
principles in negotiations with third parties; (c) the
organisational structures responsible for preventing corrupt
practices; (c) the penalties for bribery by company employees;
(d) definition of what can be accepted as a gift from third
parties (for example, ceilings on value); (e) rules of behaviour
to prevent bribery; (f) instructions to be followed when faced
with corrupt practices.
Direzione Generale per la Cooperazione
Economica e Finanziaria Multilaterale
Coordinamento OCSE-Corruzione
Advice on preventing bribery for companies operating abroad
D: What about monitoring measures?
R: The company’s business activity should be subject to
monitoring, at least on a sample basis. This means that steps
must be taken to verify compliance with negotiation
guidelines and the terms of contracts and to monitor the
accounting aspects of these contracts.
Another useful tool can be to study cases of corrupt
practices encountered previously in order to assess the
solutions adopted so that these can be used as a guide for
similar cases.