Combating Corruption: The Road to Mutual Prosperity

Thomas Jefferson once said: "Honesty is the first chapter in the book of wisdom." If he were a statesman today, he might also agree that honesty should be the first chapter in another tome: the book of global prosperity.
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Thomas Jefferson once said: "Honesty is the first chapter in the book of wisdom." If he were a statesman today, he might also agree that honesty should be the first chapter in another tome: the book of global prosperity.

Corruption poses a major threat to our global prosperity and security. The scale of its impact is staggering. The World Bank estimates that approximately $1 trillion is paid every year in bribes by the private sector alone; that as much as $6 trillion in untaxed wealth held in offshore tax havens is denying revenue to needy nations; and according to the IMF, money laundering is accounting for as much as five per cent of global GDP.

Yesterday in London, Secretary of State John Kerry joined Prime Minister David Cameron and other heads of state and high-level officials from over forty countries at the UK Anti-Corruption Summit calling for countries to make the fight against corruption a first-order priority. Countries agreed to work together to deepen efforts to combat corruption and follow through on already-high international anticorruption standards and principles.

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"Corruption, writ large," the Secretary told the audience, "is as much of an enemy, because it destroys nation states, as some of the extremists we are fighting or the other challenges we face."

As he explained, corruption contributes to trafficking in persons, drugs, arms and wildlife. People frustrated with a corrupt system often support or succumb to extremist ideologies and actions.

Ultimately, corruption corrodes the foundation of society, destroys the rule of law, and undermines freedom and government institutions.

At the Summit, Secretary Kerry called upon global leaders to show that "leaders at the highest level are not, in fact, part of the problem; they're part of the solution."

The United States has led by example with a long track record of promoting honesty and transparency in business and government.

The United States was the first country to prohibit the bribery of foreign officials. It was the first to criminalize money laundering. And it has some of the strongest corruption-related visa restrictions in the world.

Our companies have created some of the highest standards of excellence in corporate accountability and in working with governments and countries abroad to improve governance and competitive markets globally.

President Obama recently announced a new "beneficial ownership" bill and regulations to combat money laundering, corruption, and tax evasion. Financial institutions will be required to know and keep records of who actually owns the companies that use their services. New tax rules will close loopholes that allow foreigners to hide assets in the U.S. or to conduct financial activity behind anonymous entities. And all fifty states, for the first time, will share information on beneficial owners with law enforcement.

These efforts are critical to preventing criminals from using the global financial system to launder proceeds from corruption, finance terrorism, evade international sanctions regimes, or evade taxes.

Further, the State Department's Fiscal Transparency Innovation Fund works to boost governmental fiscal transparency and citizens' budget literacy.

In the OECD Working Group on Bribery, we encourage other member countries to adopt tough laws against foreign bribery and investigate their own companies, and we call on all major exporting countries that are not yet members to commit to the Anti-Bribery Convention.

We complement that effort by promoting anticorruption reforms in the G20, G7, APEC, Chamber of Commerce, and other forums, and by supporting treaties such as the UN Convention against Corruption. By enforcing our existing anti-corruption and foreign bribery laws and encouraging other countries to do the same, we are leveling the playing field for honest companies to invest and do business worldwide.

However, our anti-corruption efforts should not just be about punishing corruption, but also about preventing corruption in the first place. That is why Secretary Kerry has announced $70 million in anti-corruption programming to help countries deliver on their promises of reform. And in this arena, private companies have a leading role.

At the World Economic Forum in Davos, Secretary Kerry called all businesses to action, saying "It is everybody's responsibility to condemn and expose corruption ... with a standard that expects honesty as a regular way of doing business."

U.S. companies are already world leaders in responsible business conduct, including anti-corruption compliance. And for 17 years, the State Department has promoted those business practices worldwide through the Secretary of State's Award for Corporate Excellence.

Today, we want to work with our companies to help government create better financial management systems, online registrations and service delivery, and increase accountability and competitiveness.

By fostering a culture that refuses to tolerate corruption in any forms, companies not only maintain ethical and legal standards, they realize gains through decreased costs and increased efficiency.

It is incumbent upon all of us - not just governments, but also civil society and the private sector - to coordinate our efforts to strengthen our domestic enforcement and prevention efforts to combat corruption and bribery.

By closing doors to corruption, we can open new ones to greater economic productivity and mutual prosperity. We can remove the wedges between governments and people that have led to failed states and violence. And we can deepen our efforts to address our greater challenges, from tackling climate change and inequality to expanding access to decent education and healthcare.

Ultimately, we can all demonstrate that honesty and transparency reap more dividends for long term profitability and the benefit of citizens and consumers than corruption ever could.

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