Corruption

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Issue at a glance

  • The definition of noncriminal corruption is “the abuse of entrusted power for private gain”.1
  • Criminal corruption are illegal acts of corruption, as defined by each country’s domestic laws (e.g., bribery, fraud and trading in influence).
  • There are grey areas of corruption: some practices can be considered unethical or dishonest (i.e. noncriminal corruption), such as industry interference in policy (e.g. lobbying, creating front groups or funding science), but are not considered criminal acts of corruption.
  • International laws set norms and standards for what should be considered criminal corruption, which individual countries need to formulate into domestic law.
  • For tobacco industry interference tactics to be criminal acts of corruption, domestic laws would need to be changed to reflect this.
  • Instances of criminal corruption involving the tobacco industry mainly involve bribing public officials.

What is corruption?

It is important to have a clear definition of what corruption is so that it can be effectively detected, investigated, prosecuted and deterred. Although there are various definitions of corruption, a useful way to think about it is whether activities are being used for non-criminal or criminal purposes.2 The meaning of corruption also depends on where (i.e. in which jurisdiction), and at which level of governance (i.e. on the international or national level) the corrupt behaviour takes place.13

Non-criminal corruption

One of the most widely accepted definitions of non-criminal corruption is proposed by Transparency International as being, “the abuse of entrusted power for private gain”.1 Using this definition, corruption can:

  1. mean abuse of power for both financial and non-financial gain;3
  2. occur in the public, private or third sector;3
  3. be committed at different levels of government; by government leaders, such as politicians (i.e. ‘grand’ or ‘political’ corruption), or by street-level bureaucrats, such as public officials or civil servants (i.e. ‘petty’ or ‘administrative’ corruption).34

This definition is consistent with the United Nations Convention Against Corruption (UNCAC).5 The World Bank,6  International Monetary Fund (IMF)7 and Organisation for Economic Co-operation and Development (OECD)2 also use a similar definition. The non-criminal definition of ‘corruption’ is generally used colloquially to refer to any unethical or dishonest practice and may not always be committed by those who are performing their official duties.8 Although this use of corruption could be used for improving anti-corruption laws, strategies and interventions, it is not enough to enforce compliance and prosecute those committing corrupt behaviours.

Criminal corruption

Criminal corruption and domestic law

Criminal corruption are acts of corruption that domestic laws define as illegal, making them prosecutable and enforceable. To make acts of corruption illegal, countries must criminalise each corrupt behaviour. The major types of criminal corruption are: bribery (including facilitation payments), extortion, misappropriation (embezzlement), fraud, trading in influence (influence peddling), self-dealing, patronage, abuse of functions, creating or exploiting conflict of interest, creating or exploiting conflict of interest, favouritism (nepotism or cronyism), clientelism, illicit enrichment, money-laundering, concealment, and obstruction of justice.591011

At the national level, there is no single law for all criminally corrupt practices. Instead, each country has a variety of laws that may collectively pertain to, and overlap with, different corruption offences. National legislation also determines the sanctions and penalties for noncompliance, provides rules of evidence for prosecution, and decides which agencies and institutions are responsible for detecting, investigating or enforcing such laws.12

Due to the difference of each country’s anti-corruption laws, what may be considered criminal corruption in one country may not necessarily be considered criminal corruption in another country.313 For example, some forms of facilitation payments (i.e. payments “made to secure or speed up a routine or necessary process to which the payer is entitled anyway”9) are considered legal in Australia, New Zealand, South Korea and the USA.1415

The legal compliance of the private sector has relied primarily on self-enforcement and codes of conduct, which have not always been effective.3 This is due to various reasons, but essentially, if these behaviours go undetected, they may not negatively impact the business. As the sole reliance on legal means of enforcement is costly and ineffective, recent anti-corruption scholars argue that businesses should adopt mechanisms to create a culture of integrity and ethical conduct.16

Each corrupt offence needs to be comprehensively covered by domestic laws for corrupt activities to be prosecutable. Some practices may be considered corrupt, but there may be no existing legislation making that practice illegal. For example, according to Transparency International UK, the UK does not have any anti-corruption laws to adequately address cronyism, nepotism, and the revolving door abuse.9 Revolving door abuse could be defined as “[a]n individual who moves back and forth between public office and private companies, exploiting his/her period of government service for the benefit of the companies they used to regulate”.17 For examples of revolving door cases between the tobacco industry and regulators, see our Revolving Door topic.

Cronyism, nepotism, and the revolving door abuse are an exploitation of power for personal gain, which are unlikely to lead to decisions that take into consideration public interest.

Criminal corruption and international law

The United Nations Convention Against Corruption (UNCAC) is a legally binding international treaty that sets global anti-corruption norms and standards.5 Instead of providing a generic definition of corruption, the UNCAC specifies which exact corrupt behaviours should be considered criminal offences. With 186 signatories and widespread adoption of certain corrupt practices as unlawful, this treaty represents broad agreement on what consists of criminally corrupt behaviour.3

There are a variety of international and regional governance organisations that provide similar anti-corruption norms and standards, such as the OECD, Council of Europe, African Union Convention on Preventing and Combating Corruption, Inter-American Convention against Corruption and more.18

Why corrupt industry practices are a barrier to effective tobacco control

Tobacco industry interference in health policy

The World Health Organisation (WHO) Framework Convention of Tobacco Control (FCTC) is a legally binding international treaty to regulate tobacco products. In particular, Article 5.3 of the FCTC obligates signatories to protect their public health policies “from commercial and other vested interests of the tobacco industry in accordance with national law”.19 FCTC Guidelines for Implementation of Article 5.3 provide eight recommendations for Parties, including restricting public official’s interactions with the tobacco industry. Tobacco control researchers suggest that some forms of tobacco industry interference can be associated with corruption, as Article 5.3 Guidelines recommendations could be seen as good governance policies intended to address such corruption.20 However, for industry interference – as outlined in Article 5.3 Guidelines – to  be considered criminal acts of corruption, they would need to be defined as such in domestic laws.

Non-criminal corruption and industry interference

Article 5.3 of the FCTC was included in response to tobacco industry use of political activities to influence health policy in their favour.2122 These activities have been a major barrier for developing effective tobacco control prior to implementation of the FCTC.232425 Despite the existence of Article 5.3, parties to the FCTC continue to identify tobacco industry interference as one of the greatest obstacles to developing national tobacco control polices.26

The tobacco industry interference can fall within non-criminal or criminal forms of corruption. In terms of non-criminal corruption, the tobacco industry uses various strategies and tactics to influence the policy making, such as lobbying, creating front groups or funding science. Although practices can be seen as unethical and dishonest, they may not necessarily be instances of criminal corruption, because there may not be any existing laws to define these behaviours as unlawful.

Criminal corruption and industry interference

As implementation of WHO FCTC Article 5.3 progresses, there is a risk that the tobacco industry will use covert methods to influence policy. Such covert methods could involve acts of criminal corruption. Denormalization of tobacco smoking and of tobacco as an acceptable business enterprise – indicated by tobacco industry disinvestment – may also pressure the tobacco industry into using underhand means to further their commercial goals.2728

Instances of criminal corruption involving the tobacco industry shows that this trend is taking place; these acts of corruption mainly involve bribing public officials. For example:

  • In 2010, the U.S. Securities and Exchange Commission “charged two global tobacco companies with violations of the Foreign Corrupt Practices Act (FCPA) for paying more than $5 million in bribes to government officials in Thailand and other countries to illicitly obtain tobacco sales contracts”. The two companies in question were Universal Corporation and Alliance One International, two of the world’s largest tobacco leaf sourcing companies.29
  • Known as the “Dalligate” scandal, there is an ongoing trial concerning Silvio Zammit, who was an aide to an EU Health Commissioner John Dalli in 2012. Zammit is accused to soliciting bribes to influence the drafting of the Tobacco Products Directive.
  • A BBC report in 2015 “obtained hundreds of documents that reveal how BAT employees bribed politicians, public officials and even people working for a rival company in Africa”.30 As of 2017 the UK Serious Fraud Office announced that it will be “investigating suspicions of corruption in the conduct of business by BAT p.l.c, its subsidiaries and associated persons”.31
  • An Italian media outlet reported in 2020 that PMI may be put on trial for attempting to bribe the Italian Customs and Monopoly Agency to gain “confidential information on the prices of cigarettes on market competitors and on possible administrative controls”.32

These criminally corruption behaviours are not associated with a specific geographical region, which suggests that acts of criminal corruption by the tobacco industry is widespread. More transparency mechanisms are needed to detect and deter such behaviour, which Article 5.3. Guidelines offer.

References

  1. abcTransparency International, What is corruption?, undated, accessed October 2020
  2. abOrganisation for Economic Co-operation and Development, Corruption: A Glossary for International Criminal Standards, report, 2007, accessed October 2020
  3. abcdefgUNODC, Anti-Corruption Module 5 Key Issues: Corruption baseline definition, undated, accessed October 2020
  4. U4 Anti-Corruption Resource Centre, What is corruption?, undated, accessed October 2020
  5. abcUnited Nations Office on Drugs and Crime, United Nations Convention Against Corruption, New York, 2004, accessed October 2020
  6. J. Huther, A. Shah, Anti-corruption policies and programs: a framework for evaluation (English), Research working paper no. WPS 2501, Washington, D.C.: World Bank Group, 2000
  7. International Monetary Fund, Corruption: Costs and mitigating strategies, IMF Staff Discussion Note, May 2016, accessed October 2020
  8. U4 Anti-Corruption Resource Centre, Glossary, undated, accessed October 2020
  9. abcTransparency International UK, Corruption Laws: A non-lawyers’ guide to laws and offences in the UK relating to corrupt behaviour, report, 2016, accessed October 2020
  10. UNODC, Key issues: Manifestations and Consequences of public sector corruption, undated, accessed October 2020
  11. A. Graycar, Corruption: Classification and Analysis, Policy and Society, 2015;34(2):87-96, doi:10.1016/j.polsoc.2015.04.001
  12. Marie Chêne, U4 Anti-Corruption Resource Centre, International good practice in anti-corruption legislation, U4 Expert Answer, 24 February 2010, accessed October 2020
  13. UNODC, Anti-Corruption Module 5 Key Issues: Responses to private sector corruption, undated, accessed October 2020
  14. Marie Chêne, Transparency international, Anti-Corruption Helpdesk: Evidence of the Impact of Facilitation Payments, 1 July 2013, accessed October 2020
  15. Transparency International, Facilitation Payments, undated, accessed October 2020
  16. UNODC, Module 5 Key Issues: Preventing private sector corruption, undated, accessed October 2020
  17. Transparency International, The Anti-Corruption Plain Language Guide, July 2009, accessed October 2020
  18. Regional Anti-Corruption Initiative, International Standards, undated, accessed October 2020
  19. WHO Framework Convention on Tobacco Control, Guidelines for implementation of Article 5.3, 2008, accessed October 2020
  20. Corporate Accountability International, Southeast Asia Tobacco Control Alliance, Global Center for Good Governance in Tobacco Control, Anti-Corruption and Tobacco Control, GGTC website, October 2017, accessed October 2020
  21. S. Ulucanlar, G.J. Fooks, A.B. Gilmore, The Policy Dystopia Model: An Interpretive Analysis of Tobacco Industry Political Activity, PLoS Med, 2016;13(9):e1002125, doi:10.1371/journal.pmed.1002125
  22. WHO Framework Convention on Tobacco Control, Implementation of Article 5.3 of the WHO FCTC: evolving issues related to interference by the tobacco industry, Report of the Convention Secretariat, 14 July 2014, accessed October 2020
  23. K.E. Smith, A.B. Gilmore, G. Fooks, J. Collin, H. Weishaar, Tobacco industry attempts to undermine Article 5.3 and the “good governance” trap, Tobacco Control, 2009;18(6):509, doi:10.1136/tc.2009.032300
  24. Committee of Experts on Tobacco Industry Documents, Tobacco Company Strategies to Undermine Tobacco Control Activities at the World Health Organization, WHO report, July 2000, accessed July 2020
  25. World Health Organization, Tobacco industry interference with tobacco control, 2008, accessed October 2020
  26. WHO FCTC Convention Secretariat, 2018 Global Progress Report on Implementation of the WHO Framework Convention on Tobacco Control, 2018, accessed October 2020
  27. R.E. Malone, Q. Grundy, L.A. Bero, Tobacco industry denormalisation as a tobacco control intervention: a review, Tobacco Control, 2012;21:162-170, doi:10.1136/tobaccocontrol-2011-050200
  28. M.C.I. van Schalkwyk, P. Diethelm, M. McKee, The tobacco industry is dying; disinvestment can speed its demise, European Journal of Public Health, 2019;29(4):599–600, doi:10.1093/eurpub/ckz006
  29. U.S. Securities and Exchange Commission, SEC Charges Two Global Tobacco Companies With Bribery, press release, 6 August 2010, accessed October 2020
  30. The secret bribers of big tobacco paper trail, BBC News, 30 November 2015, accessed October 2020
  31. S. Boseley, J. Kollewe, Serious Fraud Office opens investigation into BAT bribery claims, The Guardian, 1 August 2017, accessed October 2020
  32. S. Caia, Philip Morris Italia a rischio processo: i pm di Roma chiedono il rinvio a guidizio per gli ex manager, accusati di corruzione, Il Fatto Quotidiano, 29 September 2020, accessed October 2020