Not So Clean in Chile

By John Barham, International Editor

A report released today criticizes Chile, the developing world's least corrupt country, for failing to crack down on bribes paid by its companies around the world.

In a report released today, the OECD said Chile has not followed through with promises made in 2004 to outlaw corruption by local companies.

The OECD said Chile “should promptly adopt the necessary national legislation to improve its compliance with its international obligations.” It said Chile should amend its legislation to “introduce corporate liability for foreign bribery. Currently, prosecution and thus conviction of companies that engage in bribery remains impossible because companies cannot be held liable for criminal offences.”

Chile should also increase the penalty for corruption committed by its citizens overseas with a significant “increase [in] sanctions for foreign bribery for natural persons.” Chilean courts must be given “territorial jurisdiction” over foreign bribery committed by Chilean nationals in foreign countries. The OECD also said the government should “facilitate” the lifting of bank secrecy in foreign bribery cases, including those involving requests for mutual legal assistance from investigators in other countries.

Although Chile is not an OECD member, it ratified the OAS Anti-Corruption Convention in 1998 and has participated in monitoring under that convention.

Chile has consistently ranked among the least corrupt countries in the world, according to Transparency International. It ranks Chile  in 22nd place out of over 160 countries, although in previous years it has ranked higher, beating even the United States. This reflects a growing unease over corruption in Chile.

Anti-corruption campaigners are shifting their focus away from domestic corruption of officials to the international arena, in which western corporations bribe foreign officials to win favors such as export contracts or preferential treatment by government regulators. An OECD official who helped write the Chile report commented that, “Chile is an important regional player in Latin America. Its companies have investments in many South American countries. The OECD is looking to create a level playing field for companies from all countries. It is really troubling that Chilean companies do not have any liability for bribing foreign officials.”

The OECD report noted that, “There have been no court decisions, prosecutions or investigations in relation to foreign bribery since the establishment of the offence in 2002.” Chile’s public prosecutor’s office told OECD officials that it was “preliminarily checking allegations of foreign bribery that had recently appeared in the foreign press” rather than initiating investigations of its own. The report said public officials in Chile had a “general duty” to report their suspicions of crimes to public prosecutors. However, the report found that “to date there have not been any reports by public officials to prosecutors of suspicions of foreign bribery.”

The OECD’s case has been weakened by the actions of full members, particularly the U.K., which have ignored demands to prosecute executives for bribing foreign officials. The British government last December ordered nominally independent prosecutors to shut down an investigation into suspicions that BAE Systems, the U.K.’s largest defense contractor, paid $2 billion to Saudi Arabia’s Prince Bandar Bin Sultan and other Saudi officials.

Unease over domestic corruption in Chile – which was not the focus of the OECD report – has also been growing. Media coverage and litigation have highlighted allegations of serious corruption in the government sports agency. A recent public opinion poll showed perceptions of domestic corruption are greater than during a major corruption scandal in 2002. In November 2006, President Michelle Bachelet announced an anti-corruption program and created a commission coordinated by the Minister of the Economy, which includes the head of Transparency International Chile, academics, and other officials.


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