The FACTI Panel was established last March to contribute to the implementation of the UN Sustainable Development Agenda by 2030. Its objective is to support the overall efforts undertaken by Member States to achieve the Sustainable Development Goals (SDGs) by making relevant recommendations.
The High-Level Panel is focused on such matters as the fight against illicit financial flows, improvement of existing international mechanisms, standards and commitments related to financial accountability, transparency and integrity as well as consideration of the possibilities and need to create additional instruments for legal regulation in these areas.
The publication of the respective report scheduled for February 2021 will be the main outcome of the FACTI activities in 2020.
So far, the Panel has published an interim report which will provide the basis for the final one. It analyses gaps and vulnerabilities in the national systems of different countries related to financial accountability, transparency and integrity, including the state of affairs in the fight against corruption.
For instance, the paper stresses that there have been massive changes in the policy and legal landscape of anti-corruption measures over the last three decades. In this context, the report highlights the role of the UN Convention against Corruption (UNCAC), by whose provisions States parties are being widely guided in developing their national legislation, and of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions which provides guidelines for drafting legislation to prevent foreign bribery.
The interim report also identifies a number of trends in the detection, prevention of and fight against corruption, such as:
- A trend towards greater transparency, with governments publishing documentation such as budgets, tenders and contracts. Almost 120 countries now have legal frameworks to enhance citizens’ rights to public information (freedom of information laws), and the number of initiatives to create and strengthen transparency is growing;
- An increasing prevalence of corporate social responsibility initiatives. Multinational enterprises’ contracts with governments increasingly include provisions under which the contracting firm provides benefits apart from the specific purpose of the contract in the context of its corporate social responsibility. These measures, such as supply chain development, or contributions to local education or health programmes, can contribute to SDGs achievement - but they may also be a way of distributing patronage and disguising payoffs;
- Grand corruption has been a core concern of Member States in negotiating the UNCAC. In spite of the fact that law enforcement improves, the assets allegedly stolen by high-ranking officials are still vast and the elements of corruption techniques have remained constant: corrupt officials use businesses, including shell companies, family members and other associates to take bribes or steal resources and move the money abroad;
- Major instances of corruption and other financial crimes are commonly brought to light by journalists, whistle-blowers and NGOs rather than law enforcement agencies. Many exposés have relied on leaked documents, with media working in cross-border partnerships to examine, analyse and publish leaked information.
The authors of the report also reveal major gaps and vulnerabilities in anti-corruption, accountability and integrity measures:
- International cooperation impediments: in the first place, these regard mutual legal assistance, sharing of special anti-corruption investigative techniques and transfer of convicted persons;
- Shortcomings regarding preventative measures, i.e. the measures that aim to prevent corruption;
- Scant resources for anti-corruption capacity building and education;
- Lack of independence of the anti-corruption framework: the lack of autonomy of the judiciary and judges, and impediments to prosecution;
- Subversion of independent anti-corruption agencies and workers, persecution of whistleblowers, and closure of independent media;
- Failure of political will: in spite of the fact that enhanced transparency and sharing of information allow the general public to know the details of grand corruption, in most cases this knowledge does not transform into real prosecution of offenders;
- Proactive foreign enforcement actions remain exceptional: sovereignty and the immunity of foreign officials are major jurisdictional obstacles;
- Scant engagement of non-state actors in anti-corruption which results in the absence of national coalitions against corruption;
- Exclusion of civil society from the review of implementation of international obligations (the UNCAC, in the first place);
- Lack of whistleblower protections.
In order to support the FACTI Panel’s deliberations, its secretariat has commissioned a number of background documents to expert consultants in financial accountability, transparency and integrity. Some of these papers are focused on anti-corruption:
- Background paper 5: anti-corruption measures. The document is centered on the financial mechanisms for the prevention and detection of corruption and money laundering: the progress in the implementation of corruption prevention measures (including the fulfillment of relevant obligations by the signatories of the UN Convention against Corruption), gaps and vulnerabilities in the existing international agreements, impediments to an effective implementation of anti-corruption measures and standards for financial institutions, their enablers and other stakeholders are analysed; recommendations on how to eliminate the detected flaws are also provided.
- Background paper 6: current trends in foreign bribery investigation and prosecution. The document reviews major issues arising from the enforcement of anti-foreign bribery laws. Particular attention is paid to the role of non-trial resolutions which are being actively employed by many countries to resolve cases related to the compliance with the anti-foreign bribery laws: models of these agreements existing in different countries are analysed with their pros and cons being highlighted.
- Background paper 7: recommendations for accelerating and streamlining the return of assets stolen by corrupt public officials. The paper examines the loopholes that make it possible to conceal illicit assets with the role of lawyers, real estate agents and other enablers being revealed. Besides that, the document makes recommendations on how to streamline and accelerate the return of assets.
- Background paper 8: peer review in financial integrity matters. The publication focuses on the role of expert peer reviews as the most widespread instrument for monitoring the adoption and implementation of international provisions on financial integrity at the national level employed by leading international organisations (the United Nations, OECD, OAS and others). The authors identify best practices in conducting expert reviews, reveal major challenges and vulnerabilities in existing peer review mechanisms and suggest measures for tackling them. Anti-corruption is one of the areas reviewed in the document with three implementation review mechanisms being analysed.
Survey of the private sector on the standards of financial integrity
In 2020, the FACTI Panel also conducted an anonymous online survey. A total of 141 valid responses from individual businesses headquartered in 65 different countries were received. The respondents were asked to express their perception of international standards of financial accountability, transparency and integrity, also in such areas as anti-bribery and anti-corruption, beneficial ownership transparency and asset recovery.
The findings of the survey are reflected in the respective report.
The analysis of responses showed that most respondents could not estimate the impact of international norms and standards on the level of corruption (3.11/5). At the same time, 39.5% responded that the current international anti-corruption framework was somewhat or completely inadequate to address the problem, while 32.1% of businesses indicated that it somewhat overburdened them and 12.4% felt it was balanced.
The respondents were also invited to make suggestions that they believed would help reduce corruption in international business transactions. Those included:
- Transparent reporting on the nature and amount of “commissions” paid by the large financial institutions;
- Creation of a global whistleblowing line;
- Enforcement, and other suggestions.