The efficacy of multilateral anti-bribery convention with national government enforcement
| Date | 20 April 2020 |
| Pages | 885-895 |
| DOI | https://doi.org/10.1108/JFC-01-2020-0015 |
| Published date | 20 April 2020 |
| Author | Mushfiq Swaleheen,Marcus Tim Allen |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
The efficacy of multilateral anti-
bribery convention with national
government enforcement
Mushfiq Swaleheen and Marcus Tim Allen
Department of Economics and Finance, Florida Gulf Coast University,
Fort Myers, Florida, USA
Abstract
Purpose –The purpose of this paper is to investigate the role of multinationalenterprises’(MNEs) home
countrycorruption in their decision to bribe officials in foreign host countries.
Design/methodology/approach –A model that predicts MNE bribingby controlling for a multitude of
foreign host countryfactors is used. The information contained in the orthogonal residualsfrom this model is
exploited to see whether MNE’s home country factors, particularly the level of public corruption, work to
amplifyillegal behavior by respective MNE in abroad.
Findings –MNEs pay more in bribes when the foreign officialsthey face are more corrupt. This behavior
worsens whenMNE’s home country has more corruption.
Social implications –All UN member countries are signatoriesto the UN Convention against Corruption
that proscribes the bribingof foreign public officials by respective MNEs. The Convention’s relianceon home
country enforcement of stipulations againstthe bribing of foreign officials by respective MNEs exposes its
efficacyof the malfeasance of home country public officials.
Originality/value –This paper extendsthe literature to an examination of MNE’s use of bribes in a world
with a global anti-corruptionregime. Additionally, it ties MNE behavior in foreign countriesto corruption in
MNE’s home country.
Keywords Corruption, Multinational enterprises
Paper type Research paper
1. Introduction
In any given year, over a trillion US dollars are paid in bribes across the gl obe (Rose-Ackerman,
2004) some by multinational enterprises (MNEs) to foreign public officials (Lambsdorff, 1998;
Getz, 2006;Cuervo-Cazurra, 2008). The US Foreign Corrupt Practices Act (FCPA), 1977, is the
first instance of a country that criminalized the use of bribes to foreign officials by its residents
when doing business abroad. This unilateral step by the USA in 1977 eventually expanded into a
multilateral effort of legal sanction against the bribing of fo reign officials by countries in the
America (1997) and Europe (1999) and ultimately by all member countries of the United Nations
(2006). Table I presents a chronology of the global expansion of the anti-bribery regime. The
watershed years in this expansion are 1997, 1999,2003, 2005 and 2006.
The literature follows this chronological development to determine, inter-alia, the effect
of an expanded coverage of the anti-bribery regime on the use of bribes by MNEs. The
general consensus is that the Organization of American States (OAS) (in 1997) and
Organization for Economic Cooperationand Development (OECD) (in 1999) conventions led
MNEs from respective member countries to refocus on business in countries where
corruption is less acute (Cuervo-Cazurra,2008;D’Souza, 2012); but perceived corruption and
the use of bribes across the world are not significantly reduced (Getz, 2006), indicating the
Multilateral
anti-bribery
conventions
885
Journalof Financial Crime
Vol.27 No. 3, 2020
pp. 885-895
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-01-2020-0015
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