Academic journal article Law and Policy in International Business

The Law, Expectation, and Reality in the Marketplace: The Problems of and Responses to Corruption

Academic journal article Law and Policy in International Business

The Law, Expectation, and Reality in the Marketplace: The Problems of and Responses to Corruption

Article excerpt

It is an honor to be here among many colleagues with whom Transparency International (TI) has cooperated in promoting anti-corruption reform measures in this hemisphere. In just the past few years, we have made great progress in raising public awareness of the costs of corruption, in setting standards for transparency and accountability, and in achieving agreement on needed legal reforms.

I would like to briefly review this progress and then turn to the troubling dilemma raised in the title to this panel, The Law, Expectation and Reality in the Marketplace, for it is clear that in Latin America there is profound skepticism about whether, in reality, legal reform will meet our expectation of curbing illicit practices.

We must, of course, continue to press for legal reform so that there is an adequate legal base with which to prevent, root out, or sanction corruption. However, we must also address the widely-held public belief that, despite a plethora of anti-bribery and anti-corruption laws already on the books, little has changed to date.

Complementary reforms will be required, including reforms in the judiciary, the civil service, and the media, and the opportunity for participation by civil society in policy formulation and decision-making must be greatly increased.


These legal and non-legal anti-corruption reforms first received the imprimatur of the top leadership of this hemisphere at the Summit of the Americas in 1994. This was a watershed event, breaking the historical taboo against open discussion of the issue, its consequences, and the need for reform.

Until that time, there had been little support, if not outright resistance, within governments, international institutions, and the private sector to even admit to the problem of corruption, let alone to become involved in finding solutions. Reluctance to place blame, fear of impinging on sovereignty, concern for overriding geopolitical or commercial objectives, and a myriad of other reasons were used to support the status quo.

Since then, several factors converged, compelling us to set a new course. A wave of corruption scandals and severe economic crises took corruption out of the purely "political" or "ethical" realm and focused attention on its economic impact. They made clear the corrosive nature of corruption: corruption distorts market forces, undermines the rule of law, erodes public trust, and, ultimately, threatens political stability.

Moreover, the destructive impact was not confined within territorial borders. Failures of governance in one country reached beyond national boundaries to capital markets, international institutions, and the individual consumer or mutual fund-owner half-way around the world.

Leadership in setting a new course in the fight against corruption came first from within this hemisphere. Since 1994, the Clinton Administration has made fighting corruption a top foreign policy objective. It has actively pursued anti-bribery agreements and supported governance programs around the world.

But, it is important to note that this has not been solely an American initiative. At the 1994 Miami Summit of the Americas, leaders from across this hemisphere recognized that corruption was undermining progress in reaching their objectives of establishing competitive markets, equitable development, and democratic reform. They called for action.

Raising the issue at the highest political level set the stage for reaching agreement on regional anti-corruption standards. I was delighted to participate in this event on behalf of TI and encouraged by the breakthrough it represented.

For those who know our organization solely from the TI Corruption Perception Index, TI had been launched only the year before at a conference in Ecuador. Since then, national chapters have taken root in over 60 countries, including 15 in this hemisphere. …

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