Norway

Norway Corruption Report

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Snapshot

Norway_249x173.jpgNorway ranks among the least corrupt countries in the world, and business is conducted with a high level of transparency. Corruption does not represent a constraint to trade or investment, and administrative corruption and petty bribery are almost non-existent. The Norwegian Penal Code criminalizes active and passive bribery, trading in influence, fraud, extortion, breach of trust and money laundering. It applies to anyone who is registered in Norway and carries a penalty of up to 10 years’ imprisonment, even if the act is committed abroad. A company can be held criminally liable for corruption offenses committed by individuals acting on its behalf. Facilitation payments are prohibited, and gifts and hospitality can be considered illegal depending on their value, the intent and benefit obtained. These practices, however, very rarely occur. Law enforcement activities and the legal framework for combating corruption are strong, and anti-corruption laws are enforced. There are no reports of official impunity. Norway’s economic crime-fighting unit, Økokrim, has proven itself effective in investigating and prosecuting corruption in Norway and, to some extent, abroad.

Last updated: May 2018
GAN Integrity

Judicial System

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There is a low risk of corruption in Norway’s judiciary. The Norwegian judicial system enjoys high levels of public trust and has a long-standing reputation of independence, competence and integrity (GRECO 2014). Bribes and irregular payments in return for favorable judgments are seen as rare by companies (GCR 2015-2016). Likewise, public polls reveal that bribes and abuse are almost never experienced when dealing with the courts (European Commission, Feb. 2014), and very few citizens believe that the judicial system is corrupt (GCB 2013). Companies report strong confidence in the judiciary’s independence (GCR 2017-2018). The legal framework is considered efficient for settling disputes and challenging regulations (GCR 2017-2018). Only a small fraction of judges reports having experienced inappropriate pressure to decide a case in a certain manner (ENCJ 2017). Less than one in ten Norwegian judges believes that some promotions and appointments in the judiciary are done on other grounds than experience or merit (ENCJ 2017). The judiciary is considered efficient both in protecting property rights and in enforcing commercial contracts (ICS 2017). Enforcing a contract is significantly less time-consuming and costs only half of the OECD high income average (DB 2018).

Norway is a state party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and a member state to the International Centre for the Settlement of Investment Disputes (ICSID).

Police

There is a low risk of corruption in the Norwegian police force. The reliability of police services to protect companies from crime is considered very high (GCR 2017-2018). A public survey suggests that corruption is very rare in the country’s police services (GCB 2013). The Norwegian government has effective mechanisms to investigate and prosecute corruption among police officials (HRR 2017). Norway’s local police districts investigate less complex cases of corruption, while large cases of economic crime are handled by a special police and prosecuting unit, Økokrim.

Public Services

Companies are very unlikely to encounter corruption when interacting with the public administration or when obtaining public services in Norway. Norway’s public administration acts in a predictable way in accordance with the law (SGI 2017). Companies report that it can be somewhat burdensome to deal with government administrative requirements (GCR 2017-2018), but bribery payments almost never occur when obtaining public utilities, business permits or licenses (GCR 2015-2016). Almost one-third of surveyed citizens believe that bribery and abuse are widespread among officials issuing business permits, but none report to have paid bribes to officials in this sector (European Commission, Feb. 2014). Norway’s regulatory system is on par with the EU (ICS 2017), and regarded as efficient and reliable (SGI 2017). Government decision-making processes are generally inclusive; organized interest have access to and are incorporated into planning and implementation processes (SGI 2017).

Starting a business in Norway is significantly less time-consuming and costly compared to the OECD high income average (DB 2018). Dealing with construction permits is significantly less time-consuming than elsewhere in OECD high income countries (DB 2018).

Land Administration

There is a low risk of corruption in Norway’s land administration. Only a small fraction of Norwegians who had interacted with the land administration claimed to have paid a bribe (GCB 2013). Norway’s legal system protects and facilitates all aspects of property rights (ICS 2017). Accordingly, companies report confidence in the protection of property rights in Norway (GCR 2017-2018). Foreign investors are allowed to own real property, but there are restrictions on certain types of property, including for example mines (ICS 2017). Norway has a number of land consolidation courts which decide both on the division of land (mainly for agricultural purposes) and on real estate disputes (ICS 2017). There are no recently reported cases of unjust or improperly compensated expropriations (ICS 2017).

Registering property is dramatically less time-consuming and costly than the average of OECD countries (DB 2018).

Tax Administration

There is a low risk of corruption in Norway’s tax administration. Bribes and irregular payments very rarely occur when interacting with tax officials (GCR 2015-2016). Tax authorities have been active in a number of initiatives to counter tax crimes in the private sector and to enhance international cooperation (OECD 2013). Norwegian law explicitly prohibits the tax deductibility of bribes. A business survey reveals that two thirds of companies believe there is a high chance of being caught by the tax authorities for tax fraud or tax evasion (KRISINO 2017).

Companies in Norway make tax payments at only half the frequency and requiring only half of the time compared to the OECD high income average (DB 2018).

Customs Administration

There is a low risk of corruption in Norway’s customs administration. Companies indicate that irregular payments and bribes in customs procedures are rare (GETR 2016). Companies are satisfied with the time predictability and efficiency of the clearance process (GETR 2016). Companies cite burdensome import procedures as one of the most problematic factors for importing (GETR 2016). The time required to comply with import and export procedures in Norway is significantly lower than in other OECD high income countries (DB 2018). See the Norwegian Customs Service for information on customs regulations.

Former police officer Eirik Jensen was sentenced to 21 years in prison for aiding drug smugglers and taking bribes (Euronews, Sept. 2017). Jensen was convicted of aiding a hashish smuggling ring for over a decade (Euronews, Sept. 2017).

Public Procurement

There is a moderate to low risk of corruption in Norway’s public procurement sector. Bribery is reported as uncommon in the process of awarding public contracts and licences (GCR 2015-2016). Likewise, companies indicate that favoritism in the decisions of government officials and diversion of public funds are both uncommon (GCR 2017-2018). In a business survey, a quarter of Norwegian businesses responded that they consider it likely that their organization will experience procurement fraud in the next two years (pwc 2016). More than half of respondents indicated that procurement fraud most commonly occurs in the vendor selection process (pwc 2016). Only a small fraction of respondents believe that their organization has lost out on an opportunity to a competitor they believed paid a bribe (pwc 2016). Some companies, primarily from the transport, hospitality and construction industries, claim to know about price-fixing and collusion activities within their industry (KRISINO 2017). The Complaints Board offers suppliers an inexpensive complaint process for bid challenges (ICS 2017). Norway has established legal conditions under EU procurement directives for mandatory exclusion of procurers who have been convicted for financial crimes and corruption; however, a national debarment register has not been established (OECD 2013).

Despite the low occurrence of corruption, companies should still ensure proper due diligence procedures are in place to eliminate the risk of corruption in Norway’s procurement process.

Natural Resources

Corruption does not hinder business in Norway’s resource industries. Foreign oil companies report there is no discrimination in the award of petroleum exploration and development blocks (ICS 2017). Norway is a fully compliant member of the Extractive Industry Transparency Initiative (EITI), which promotes the transparent publication of revenues and expenses from extractive industries. As a member of the Open Government Partnership, the Norwegian government has also committed itself to improving transparency in the management of oil and gas resources.

In a foreign bribery case, the Norwegian-based fertilizer company Yara International was found guilty of corruption and bribery, and was fined the largest corporate fine in Norwegian history of USD 48 million. Yara had entered into a joint venture with the National Oil Corporation of Libya and the Libyan Investment Authority, creating the Libyan Norwegian Fertiliser Co (Lifeco). During the formation of Lifeco, Yara and Yara’s Swiss affiliates approved several illicit transactions, including the transfer of USD 1.5 million into the Swiss account of the Libyan Oil Minister, Shukri Ghanem. The bribes were masked by overpaying for the fertilizer bought from Libya. Four people involved in the scam have been indicted on criminal charges in Norway, including Yara’s lawyer and former top executive who received a three-year prison sentence (Whistleblower Justice Network, 2015). Yara’s former CEO was ultimately acquitted in late 2016 by a jury in an appeals court (Reuters, Dec. 2016).

Legislation

The Norwegian Penal Code criminalizes active and passive bribery, fraud, trading in influence, extortion, breach of trust and money laundering. It applies to Norwegian public officials, companies, citizens, foreign companies and citizens who are registered in Norway, regardless of whether the offense is committed in the country or abroad. A company can be held criminally liable for corruption offenses committed by individuals acting on its behalf, and it can be sanctioned with fines. Indirect bribery through intermediaries and the use of facilitation payments are also criminalized, although exemptions may be made for facilitation payments paid to obtain services of which a person is legally entitled. Gifts and hospitality can be considered illegal depending on the value, intent, and benefit obtained. The Penal Code distinguishes between acts of ‘corruption’ and ‘gross corruption’. In deciding if the corruption is ‘gross’, importance is placed on whether the act involves a breach of office, the size of the economic gain, and whether false accounting information has been prepared. Gross corruption carries penalties of up to 10 years’ imprisonment, while sanctions for ‘ordinary’ corruption and trading in influence range from fines and up to three years’ imprisonment. Other corruption-related laws include the Anti-Money Laundering and Terrorist Financing Act, which establish financial reporting obligations primarily in the financial sector. The Norwegian Labour Law guarantees whistleblower protection to employees in all positions in both the public and private sectors. The Political Parties Act provides the legal basis for monitoring political financing. The implementation of the EU Procurement Directives in Norway has also established conditions for mandatory exclusion of economic operators who have been convicted of financial crimes, including corruption.

Norway is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC), the Council of Europe’s Civil and Criminal Law Conventions against Corruption and the Group of States Against Corruption (GRECO). Both law enforcement and the legal framework for combating corruption in Norway are considered very strong (NISA 2012). Norway’s efforts in cracking down on corruption and bribery committed by Norwegian companies abroad have been limited (Transparency International, Feb. 2015).

Civil Society

The government respects the freedoms of the press and expressions (FitW 2017). Norway has a large selection of media sources, and opinions are diverse, especially when seen in relation to the size of the population (FotP 2016). Norway has one of the highest newspaper readerships in the world, distributing more than 200 newspapers with a diversity of opinions, often subsidized by the government (FotP 2016). The number of defamation lawsuits against the media has steadily decreased in the last few years (FotP 2016). It has also been a key player in disclosing corrupt behavior among public officials and other actors, and increasing public awareness on corruption (NISA 2012). Norway’s media environment is considered ‘free’ (FotP 2018).

Norway’s civil society is diverse and is characterized by a large degree of participation by the Norwegian population (FitW 2016). Civil society organizations (CSOs) are subject to very little regulation by law, and state subsidies amount to a relatively small proportion of their income (NISA 2012). CSOs often voice criticism against public authorities without repercussion and can influence political debate (NISA 2012).

Sources

The site provides a wealth of practical anti-corruption resources to support a solid preventative approach, covering subject such as processes, due diligence, practical tools to support compliance program implementation and also compliance and integrity training.

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