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Demonstrators march with a Colombia flag during a protest against the government in Cali May 30, 2012 REUTERS/Jaime Saldarriaga

(TrustLaw) – Paying bribes to public officials is widespread among private companies in Colombia, with many believing they would lose business if they did not pay up, according to a survey of business leaders by the national chapter of Transparency International.

The survey, by Transparency for Colombia and the Bogota-based Externado University of Colombia, interviewed 858 business leaders from small-, medium- and large-sized private companies in various sectors, including agriculture, mining and transport, in nine major cities across Colombia last year.

“Despite government efforts, bribery in the private sector and private companies with public sector partnerships is a growing concern and problem in Colombia,” Elisabeth Ungar, head of Transparency for Colombia, told TrustLaw in a telephone interview.

A vast majority of those surveyed – an “alarming” 94.4 percent – believe there is bribery in their business sector, she said.

Sixty-two percent believed that if they did not pay a bribe, they would lose a deal or contract. Private companies paid bribes that were 15 to 30 percent of the total value of a contract in order to secure it, the survey found.

Paying bribes to expedite bureaucracy, such as paperwork by customs officials, was the most common type of bribe paid by businesses. The practice was more common in small and medium companies than large ones, the survey found.

Despite the widespread practice of bribery reported, less than half of the businesses are raising anti-graft awareness at work.

“Only 46 percent of those surveyed said they are doing something in their own businesses to prepare employees against bribery and prevention programmes,” said Ungar.

The anti-corruption watchdog notes that bribery is an obstacle to doing business in Colombia, as it is elsewhere in the world where bribery is rife, because it does not allow for a level playing field, distorts markets and increases the cost of doing business.

CAMPAIGN FINANCING
Giving donations to individual politicians, political parties and campaigns was the second most common type of bribe, the survey found.

“It’s legitimate that the business sector participates in politics through campaign financing, but this should not be used as a mechanism to obtain contracts and favours from public officials,” Ungar said.

“What businessmen surveyed said is that campaign financing has become a form of bribery because there is the expectation that they will, and do, obtain something in return.”

Moreover, ahead of Colombia’s presidential and congressional elections next year, Ungar said it was worrying that only six percent of those surveyed said their businesses kept transparent and up-to-date records of contributions made to political parties and campaigns.

DONATIONS AS BRIBES
Donations from private companies to the public sector, such as giving money to public schools, hospitals and libraries, is one way of getting tax exemptions and is part of corporate social responsibility, Ungar said.

However, she pointed out, donations are also used to influence public officials with the expectation that a company will get something in return.

“I was shocked, and surprised, to learn from the survey that donations are being used a form of bribery to benefit a company and or a third party,” Ungar said.

The survey also found that nearly 60 percent of companies do not have mechanisms that allow employees to report possible cases of bribery in a confidential way.

“We always talk about the importance of governments taking action against bribery and other forms of corruption, but it’s also very important for the private sector to be more proactive, like providing better protection to whistleblowers in companies,” Ungar said.

GOVERNMENT RESPONSE
In recent years, the Colombian government has introduced a series of laws to combat corruption, which it says is a top priority.

Yet, nearly a third of interviewees did not know about the new anti-corruption laws passed in 2011.

In January, Colombia became the latest country invited to join the Organization for Economic Cooperation and Development’s (OECD) working group on bribery, a precursor to joining the Paris-based organization’s anti-bribery convention. It means Colombia’s anti-corruption laws and bribery in business will now come under greater international scrutiny.

According to Transparency International’s 2012 report on the perception of public sector corruption, Colombia ranks 94 out of 176 countries, with one being the least corrupt.

By Anastasia Moloney, TrustLaw