• Public-private linkages

Public-private linkages

Despite preventative measures, many multinational corporations from the U.S.A. Europe and Japan manage to pay their way out of complying with ethical and environmental constraints and evade anti-corruption laws, using sophisticated payment mechanisms to buy the favour of government ministers and their families. This paper argues that the measures currently in place to combat bribery and corruption are a sham, and that reforms are badly needed. It provides recommendations for ensure that foreign direct investment is used for ethical, pro-poor development purposes.

Some of the paper's recommendations are:

• international adoption of a corruption definition along the lines of the OECD Guidelines for Multinational Enterprises would give arbitral panels a standard to decide whether an investor is entitled to protection in a dispute with host authorities
• the Extractive Industry Transparency Initiative (EITI) must be steadily expanded in geographical scope, and broadened to cover infrastructure projects as well as mining and petroleum investments
• the EITI must be used to put pressure on all investors to 'publish what they pay' in terms of taxes and fees paid to host governments while host authorities also reveal how they dispose of the revenues
• in order for this to work, all companies – including state-owned companies and privately-held companies from all countries – must submit their payment records for independent audit
• the endorsement and participation of developing country authorities – requiring all potential investors to take meet the same standards - is also vital, as is the role of developed countries in encouraging developing countries with whom they have special relationships.

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