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How Multinational Investors Evade Developed Country Laws

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  • Theodore H. Moran

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Abstract

How effective are G-8 and OECD efforts to combat bribery and corrupt payments when multinational companies bid on concessions in the developing world? Have the rich countries – and the United States, in particular – done what is necessary to restrain multinational investors from paying off daughters of Presidents and cronies of Ministers to secure favors for their activities? This paper argues that the answer is no. Multinational corporations from the US, Europe, and Japan have devised sophisticated payment mechanisms, as documented and described here, to evade home country anti-corruption laws, including the US Foreign Corrupt Practices Act, with impunity. According to this paper, some US companies have laid these payment arrangements out before the US Department of Justice, the Securities and Exchange Commission, and other US agencies, without arousing any objection whatsoever. Without reforms of the kind spelled out here, the OECD and G-8 campaign to prevent corrupt payments will turn out to be a sham. This working paper provides a preview of research included in a much broader forthcoming CGD monograph entitled Harnessing Foreign Direct Investment for Development: Policies for Developed and Developing Countries.

Suggested Citation

  • Theodore H. Moran, 2006. "How Multinational Investors Evade Developed Country Laws," Working Papers 79, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:79
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    File URL: http://www.cgdev.org/content/publications/detail/6113
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    References listed on IDEAS

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    Cited by:

    1. Gabriel Donleavy & Kit-Chun Lam & Simon Ho, 2008. "Does East Meet West in Business Ethics: An Introduction to the Special Issue," Journal of Business Ethics, Springer, vol. 79(1), pages 1-8, April.
    2. Joseph McKinney & Carlos Moore, 2008. "International Bribery: Does a Written Code of Ethics Make a Difference in Perceptions of Business Professionals," Journal of Business Ethics, Springer, vol. 79(1), pages 103-111, April.
    3. Johann Graf Lambsdorff, 2013. "Corrupt intermediaries in international business transactions: between make, buy and reform," European Journal of Law and Economics, Springer, vol. 35(3), pages 349-366, June.
    4. Nwapi, Chilenye, 2015. "Corruption vulnerabilities in local content policies in the extractive sector: An examination of the Nigerian Oil and Gas Industry Content Development Act, 2010," Resources Policy, Elsevier, vol. 46(P2), pages 92-96.
    5. Ananya Reed & Darryl Reed, 2009. "Partnerships for Development: Four Models of Business Involvement," Journal of Business Ethics, Springer, vol. 90(1), pages 3-37, May.

    More about this item

    Keywords

    G-8; OECD; corruption; concessions; multinational companies;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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