German Companies Do Too Little to Curb Corruption, Study Says | Business| Economy and finance news from a German perspective | DW | 22.04.2007
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German Companies Do Too Little to Curb Corruption, Study Says

Corruption in international business is on the rise, according to a recent study. Many German companies are getting burned by it. Some are also getting rich, while hardly any are getting caught.

German businesses are reluctant to crack down on corruption

German businesses are reluctant to crack down on corruption

Over a third of the German companies surveyed, and 43 percent of the total participants, said they had lost a contract in the last five years because rival firms had resorted to offering bribes. In the previous study, conducted five years ago, only a quarter of German companies had said the same, indicating that corruption is on the rise.

Consulting firm Control Risks and law firm Simmons & Simmons surveyed 350 companies in Brazil, Europe, Hong Kong and the United States on their approach to fighting corruption. Fifty of the participants were located in Germany.

A quarter of the respondents reported that bribes make international projects at least 5 percent more expensive, while a tenth of the bribes are said to amount to up to a half of the value of the business contract.

Korruption in Albanien

Corruption in an issue worldwide

"The numbers indicate that international measures taken against corruption are not as effective as hoped," Control Risks officials wrote in the report.

Anti-corruption mechanisms go unheeded

Indeed, more and more international anti-corruption measures have been put in place. In 2005, for example, an OECD (Organization for Economic Cooperation and Development) convention called on its member states to prosecute companies for paying bribes when conducting business abroad.

The same year, the United Nations drew up an anti-corruption convention expressing a commitment to prosecute both active and passive forms of bribery.

Germany didn't sign the UN document, but introduced an anti-bribery law of its own in 1998.

However, only half of German companies were aware of the existing law and only three cases had been prosecuted since it went into effect nine years ago, the study said.

Room for improvement

Deutschland Volkswagen Peter Hartz Prozess in Braunschweig

VW exec Peter Hartz was convicted of 44 accounts of corruption

Despite recent high-profile corruption cases at firms, including Siemens and Volkswagen, German companies seem reluctant to crack down.

"Those who want to fight corruption effectively have to be prepared for a drop in sales," corruption expert Hans-Hermann Aldenhoff from Simmons & Simmons told the Web site of German business daily Handelsblatt.

Only a quarter of the companies surveyed said they had a confidential telephone hotline where cases of corruption could be reported. And, according to handelsblatt.com, only a handful of German companies employ an ombudsman specially trained in investigating and resolving corruption-related problems.

Without effective anti-corruption mechanisms in place, improvements are likely to be slow in coming.

Forty-two percent of the survey respondents thought corruption levels would remain the same over the next five years. Still, a quarter said they thought progress would be made in the fight against corruption.

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