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fpclub [Date : 2018-03-28 00:00:00 ]   
Subject Maeil Economy – [Cover Story] “Corruption Punishment Is Generous in Republic of Korea... Companies Could Disappear After Insisting on Innocence Until the End in U.S.”

Mr. Drago Kos, Chair of the OECD Working Group on Bribery

―Why is a positive reward system important to prevent corruption?

▷Some companies do not invest in compliance and business ethics systems because they do not think economically beneficial. That is why voluntary corporate motivation is needed. Especially, pre-motivation is more essential than addressing post-action on the company that commits corruption crimes. For example, Italy is the most representative example by introducing the system preventing the company with an insufficient compliance system from participating in public procurement projects.

In addition, there are many more compensation schemes, such as granting additional points in public procurement tenders or specifying compliance as a requirement condition for getting export credits.

―Does compliance and business ethics help corporate performance?

▷It is known that the most ethical companies in the world are 20% more profitable than S & P 500 companies. This means that compliance and business ethics results in practical compensation. For a country as a whole, it can be found that GDP growth decreased by 0.13% if the corruption related index increased by one point. 

― Is there a company that makes good use of it?

▷Siemens is a good example. I once have asked Chairman of Siemens how profits have changed since Siemens decided not to give bribes, compared to give bribes in the past. Surprisingly, they said more profits followed after deciding not to give bribes. 

―What do you think about the South Korean law and regulation regarding anti-corruption?

▷The OECD Working Group on Bribery estimates that Republic of Korea has good laws and regulations, but it does not apply punishment and sanctions sufficiently. Looking at the actual penalty rate, South Korean judges tend to apply the weakest punishment. In 2014, we found that all five cases of corruption in Republic of Korea were sentenced to fines, not imprisonment. At that time, we concluded through our report that it was not enough. However, I am convinced that this trend will change due to the impacts of the unfortunate incident related to the former President last year. People's attitudes are also changing, as awareness and sensitivity towards corruption is increasing.

―One of former Presidents is also being investigated by the prosecution.

▷That is the evidence that the system is working well. There are many countries which do not think that they should investigate former and current presidents. When I was a Head of the Anti-Corruption Committee in my country, Slovenia, I had a chance to investigate the Prime Minister directly. At that time, the National Assembly asked me to resign three times. My whole family suffered from negative statements and articles. 

―Are there global changes or trends related to anti-corruption?

▷The 2014 report was very surprising. First of all, about the half of international corruption crimes occurred in developed countries. Also, 40% of the corruption crimes were approved by the board, and 12 % were bribed directly by the CEO. People think that corruption is done in working staff level, but it happened at the highest level. The last trend was that about 60% of corporate cases ended with a negotiated settlement. Companies acknowledge their guilt and do plea-bargaining, so that judicial proceedings do not go to the verdict by agreeing with a prosecutor or a judge. This is a desirable trend. It is effective to reduce the cost of judicial proceedings. In some countries, however, settlements are not carried out fairly and equitablly.

―Many South Korean companies tend to insist on their innocence until the end.

▷In my personal opinion, it would be because companies believe sentence can become not high, if they insist on their innocence until the end. The same phenomenon can be observed in Slovenia too. It means that the judicial system in Republic of Korea should be improved. A current trend is law application can not become a real threat, even if companies committing corruption crimes insist on their innocence until the end. However, since law application and the judicial system in U.S. are strict, companies may end up disappearance, if they insist their innocence until the end. Therefore companies choose to accept being guilty and pay fines.

―You are working very closely with the Foreign Corrupt Practices Act (FCPA) Department of U.S. Are there any recent trend related with the FCPA?

▷When Donald Trump was elected in the U.S., I feel pessimistic because he made critical remarks about the FCPA a few years ago. However, there was no negative change. Rather, there is a trend that the FCPA engages more actively in global corruption problems. It not only investigates and punishes bribery crimes, but also to establish but also sets up and develops the future standards that companies have to comply in relation with corruption crimes. It was the change that could not be seen until last year.

―Is there any movement in the OECD or other companies or organizations to use the block chain to prevent corruption?

▷I think the block chain has the potential to prevent corruption. For example, Russia uses an e-voting system utilizing the block chain. You can imagine Georgia uses the block chain for real estate registration and management. The OECD will also begin to research for specific applications.

▶▶ Who is Mr. Drogo Kos…

In 2014, he became the Chair of the OECD Working Group on Bribery. From 2003 to 2011, he was Chairman of the Group of States against Corruption (GRECO). He is an international anti-corruption expert. He is a Slovenian and worked as Chair of the Corruption Prevention Committee from 2004 to 2010. He even investigated the unsound tie between politics and business, in which the Slovenian Deputy Prime Minister and a large pharmaceutical company were involved. The OECD Working Group on Bribery, the organization under the OECD, oversees implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the first international treaty to define bribery in international commercial transactions as a crime.

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344   Maeil Economy – [Cover Story] “Corruption Punishment Is Generous in Republic of Korea... Com 1598 18/03/28 Admin  
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