Multinationals free to give bribes – end this scandal!

Privatisation = mother of corruption

Privatisation gives lucrative business to multinationals, and provides great economic incentives to corruption.

Europe – homeland of corruption

Most of the multinationals in the dam scandal are based in Europe – a continent where corruption has become entrenched.

Concessions – a well-known problem

It is well known that concessions are a major source of corrupt practices by groups intent on winning favourable terms. A report by the French audit commission, the Cour des Comptes, in January 1997, said that the system of privatised concessions had led to widespread corruption – both Suez-Lyonnaise and Vivendi have been convicted of this.

Bribes and privatisation

Even the World Bank acknowledges “…the privatization process itself can create corrupt incentives.” All around the world there are reports of corruption where multinationals are seeking contracts. In Indonesia, the public authorities in electricity and water insist that the contracts given to multinationals under the old dictatorship were corrupt, and based on extortionate profits. Yet the multinationals, supported by their OECD governments and the World Bank, insist on the sanctity of these contracts.

Dam scandal – no prosecutions for paying bribes

One single Lesotho official, Masupha Sole, former chief executive of the huge Lesotho Highlands Water Project, has been charged with taking R12m in bribes from a dozen international companies over 10 years. Sole, the charge sheet states "did unlawfully, intentionally and corruptly accept bribe moneys, over the period February 1988 to December 1998, from Lesotho Highlands Water Project contractors". The charge sheets list the precise amounts of all the bribes supposed to have been received by this official have been published, naming the contractors from which the money came.

Instead, many of these multinationals are gaining new, profitable business from privatisation.

If this happened in Singapore, these multinationals would be prosecuted – and on conviction they, and all their subsidiaries, would be banned from bidding for any public sector contracts for 5 years.

The multinationals who are not being prosecuted - anywhere!

Multinational OECD Home country Company % owned Bribe listed in charges Consortium Comments

ABB

Sweden, Switzerland

ABB

 

FF250,000

(US$40,410)

   

Acres International

Canada

   

C$279,539

(US$185,002)

   

Alcatel

France

Sogreah

 

FF84,000

(US$13,578)

 

Owned by Alcatel at time of bribe, until 11.01.99

AMEC

UK

Spie Batignolles

41.6

FF738,630

(US$119,393)

 

See also consortium

LHPC

AMEC

UK

Spie Batignolles

 

DM105,639

(US$57,269)

Lesotho Highlands Project Contractors

41.6% owned by AMEC

AMIC (Anglo-American Industrial Corporation)

 

LTA

 

DM105,639

(US$57,269)

Lesotho Highlands Project Contractors

LTA is Controlled by AMIC (Anglo-American Industrial Corporation

BICC

UK

Balfour Beatty

 

DM105,639

(US$57,269)

Lesotho Highlands Project Contractors

Balfour Beatty is 100% owned by BICC

Bouygues

France

   

$733,404

Highlands Water Venture

 

ED Züblin

Germany

   

DM105,639

(US$57,269)

Lesotho Highlands Project Contractors

 

ED Züblin

Germany

   

DM819,862

(US$444,466)

 

See also consortium

LHPC

Group Five

South Africa

   

$733,404

Highlands Water Venture

South African owned

Impregilo

Italy

   

US$250,000

 

The controlling shareholder is Fiat (owns 5% plus 16% through Gemina)

Impregilo

Italy

   

$733,404

Highlands Water Venture

 

Kier Intl

UK

   

$733,404

Highlands Water Venture

Owned by employees since 1992 (management buy out)

RWE

Germany

Lahmeyer Consulting Engineers

100

DM16,000

(US$8,674)

   

RWE

Germany

Hochtief

 

$733,404

Highlands Water Venture

Hochtief is wholly-owned by RWE and owns 40% of Concor

RWE

Germany

Concor

 

$733,404

Highlands Water Venture

Hochtief is wholly-owned by RWE and owns 40% of Concor

Stirling Intl

UK

   

$733,404

Highlands Water Venture

 

Suez-Lyonnaise des Eaux

France

Dumez International

100

FF509,905

(US$82,422).

   

 

World Bank – partner, protector and employer of corrupt multinationals

James Wolfensohn, the World Bank’s director, makes fine speeches about the Bank’s opposition to corruption. But under his leadership the practice of the bank is quite different.

WORLD TRADE UNIONS SAY: END THIS SCANDAL!

PSI General Secretary, Hans Engelberts said:

"PSI welcomes the world's growing attention to corruption. However, corruption can only take place if there is both a supplier and a receiver of bribes. All too often it is only the corrupt governments and government officials that are scrutinised and exposed, whereas the supplier of the bribes is let off the hook lightly.
"If we are serious about doing away with corruption, it is time to expose both parties i.e. the suppliers as well as the receivers. It is time to make use of the instruments already in place to keep multinational corporations from supplying the bribes, keeping their contracts and continuing their dealings as if nothing wrong had happened".

PSI and SAMWU call on the South African government:

PSI and SAMWU call on Transparency International conference to:


Public Services International (PSI) is the International Trade Union Federation representing public sector trade unions in 144 countries around the world. The affiliated unions, 528 in number, cover some 20 million public sector members. PSI is an autonomous body, which works in association with Federations covering other sectors of the workforce and with the International Confederation of Free Trade Unions (ICFTU). PSI is an officially recognised non-government organisation for the public sector within the International Labour Organisation and has consultative status with ECOSOC and observer status with other UN bodies such as the UNCTAD and UNESCO.

(Much of the information in this leaflet is taken from an article “Privatisation, multinationals, and corruption”, appearing in Development in Practice Volume 9, Number 5 November 1999. For further details please contact PSIRU: psiru@psiru.org)