Today more than a fifth of the world’s largest companies are state owned. State-owned enterprises (SOEs) play an important role in the global economy, particularly in key sectors such as public utilities, as well as natural resources, extractives and finance. They take different corporate forms – often combining commercial and non‑commercial objectives – with increasingly international operations. Good governance of SOEs is critical for ensuring a level playing field in the marketplace, safeguarding the integrity of domestic economies, and supporting quality public service delivery.

Corruption is the antithesis of good governance, and it is a direct threat to the purpose of state ownership. This report brings a comprehensive set of facts and figures to the discussion about the corruption risks facing state-owned enterprises (SOEs) and how they, and state ownership, go about addressing them. It is a first step towards developing guidance on anti-corruption and integrity in SOEs for the state as owners. This initiative is rooted in the OECD Guidelines on Corporate Governance of State-Owned Enterprises, the world’s sole internationally agreed standard for how governments should exercise its ownership rights over SOEs.

State-owned enterprises (SOEs) are a main conduit for states to exercise their role as economic actors. The benefits of SOE ownership are economic, political and social. So too are the costs of any mismanagement or abuse. Today, SOEs account for 22% of the world’s largest companies and are often concentrated in sectors with strategic importance for the state and society, including for development. More and more, SOEs operate like similar private firms, increasingly active internationally and accounting for a greater market share.

In 2015 the OECD revised its Guidelines for Corporate Governance of State-Owned Enterprises (the “SOE Guidelines”) which supplement and complement the G20/OECD Principles of Corporate Governance (2015a). In 2016, the Working Party on State Ownership and Privatisation Practices (“Working Party”) set out to explore whether state-owned enterprises (SOEs) are exposed to unique corruption risks and consequently decided that specific standards of integrity and corporate governance should be developed.

Based on a survey of 347 SOE respondents from 213 companies in 34 countries, this chapter outlines where corruption and other irregular practices in SOEs have occurred in recent years. It explores how SOE and respondent characteristics, such as the company’s sector or the respondent’s position, influences the perception of corruption-related risks. Data is deconstructed to understand more about the specific high-risk areas of public procurement, conflict of interest, influence in decision-making and bribery. Concluded cases of corruption and other irregular practices illustrate how such corruption risks can materialise.

This chapter explores obstacles to effective integrity and anti-corruption in the opinion of 347 SOE respondents in 213 companies across 34 countries. It incorporates the perspectives of SOE representatives and state ownership entities regarding challenges and good practices in implementing mechanisms to prevent and detect corruption. The analysis is framed using key elements of integrity, compliance or anti-corruption mechanisms and programmes, as outlined by the OECD and other international standard-setters – from prevention to detection and response.

This chapter offers the state as owner a range of policy responses to the key challenges to SOE integrity identified in chapters 1 and 2. Informed by consultation with 28 state ownership entities, it provides a comparison of broad policy and regulatory frameworks that SOEs are subject to with regards to integrity and anti-corruption and the variety of supporting activities that state ownership entities undertake. Ownership entities are encouraged to consider the adequacy of their existing approaches, capacity and the state’s own integrity to be active, professional, accountable and transparent owners, and to lead by example.