The Nordic countries are often seen as world leaders when it comes to anticorruption, ranking at the top of Transparency International’s Corruption Perceptions Index (CPI). Yet critics have pointed out that while the Nordic countries have a sterling reputation for suppressing corruption at home, they have a much spottier record when it comes to dealing with exported corruption. This has been the case in Sweden and Denmark, and most recently, in Iceland, which has been widely criticized for its handling of the country’s first high-profile foreign bribery scandal.

The case in question was first exposed in November 2019 when three media outlets published joint investigative findings alleging that an Icelandic fishing company had paid millions of dollars in bribes to Namibian officials in order to gain access to the country’s valuable fishing zones (see here, here, and here). The reporting relied on thousands of leaked documents, which were dubbed the “Fishrot Files,” as well as first-hand testimony provided by a whistleblower, a former manager of the company’s operations in Namibia who admitted that he himself had played a role in bribing Namibian officials.

Though the scandal triggered public protests by Icelandic citizens, senior government officials in Iceland have sought to shift the blame to Namibia’s “weak” and “corrupt government.” Yet whatever governance weaknesses in Namibia may have contributed to the wrongdoing in the first place, it is notable that Namibian authorities moved swiftly to prosecute officials implicated in the scandal, including two high-level government ministers. These ministers were forced to resign and were subsequently arrested; they and eight other defendants now face charges of corruption, fraud, money laundering and tax evasion. In contrast, Icelandic authorities have yet to make any arrests or issue indictments in the case, more than three years after the initial revelations. To date, the executives implicated in the scandal have escaped official sanctions and have remained in their roles at the company.

In this instance, then, we see something rather unusual in foreign bribery cases: A strong response by a demand-side country in the global South (in this case Namibia), and a weak response by the supply-side country. Better understanding Namibia’s unusually strong response to the scandal is important in its own right, but for now, let’s focus on the question of why Iceland—which was one of the first signatories to the OECD Anti-Bribery Convention in 1998 and has readily available the legal framework necessary to handle the matter adequately—has been so ineffective in enforcing its laws against foreign bribery offences. Consider several possible explanations:

One explanation is complacency. Precisely because Iceland has such a good reputation for government integrity—with consistently high CPI rankings—the country may simply not invest much time and attention in addressing corruption issues, especially those involving misconduct abroad rather than at home. Indeed, the OECD Convention Working Group on Bribery’s Phase 4 report on Iceland noted that Iceland’s high ranking in the CPI could lead to complacency and warned that this might “undermine detection and awareness-raising efforts.” The report specifically noted that the ongoing investigation into the Fishrot case would “enable Iceland to demonstrate its commitment to implementing the Convention.” Yet while Iceland responded to the report by announcing that it would take action in order to enhance trust in Icelandic business affairs, in fact Iceland has not done much.

Another possible explanation is that Iceland is relatively inexperienced in dealing with foreign bribery cases, which can be complicated and challenging. While the Icelandic District Prosecutor (IDP) has admitted that three years is a long time for an investigation, he explained the delays by pointing to the complexity and scope of the case. Yet while the case is no doubt challenging, it is hardly accurate to portray Iceland, and the IDP in particular, as inexperienced when it comes to dealing with multinational financial crimes. After the 2008 financial crisis, Iceland’s approach to investigating prosecuting bankers was considered exemplary, gaining worldwide attention (see here and here). Is it really credible that the Fishrot case is too complex for a department that previously investigated hundreds of similarly complicated multinational crimes all at once?

A third explanation might be a lack of political will. The 2008 global financial crisis hit Iceland especially hard; the entire financial system crashed causing a severe economic depression. The immense pressure to react and punish those responsible paved the way for the establishment of the Special Prosecutor’s Office. In addition to providing the newly founded institution with funding and resources, the parliament passed special legislation to facilitate the investigations and even hired a foreign anticorruption specialist to aid the prosecutor’s team. The Fishrot Files are now being investigated by the IDP, which is led by the same prosecutor who fronted the crackdown of the bankers in the wake of the 2008 crisis. Now, though, there is notable lack of interest on the political front, and the IDP has complained of being underfunded. The government denies this, however, and has accused the political opposition (which has called for increased funding) of inappropriately wanting to intervene in an ongoing police investigation.

Regardless of the explanation, the fact remains that Iceland’s performance in cleaning up the Fishrot scandal has been lackluster so far. While the investigation is still ongoing, the mere fact that it has dragged on for so long is itself a problem. Apart from the obvious damage to Iceland’s international reputation, a lengthy investigation can result in increased difficulty in gathering evidence, sentence reductions for the accused if found guilty, and in the most extreme scenario, even impunity.

The trend of “clean” countries getting caught in exporting corruption without adequately dealing with it is troubling. While exported corruption hits the community of the demand side country, the adverse effects of the supply side are more subtle. It is far too easy for governments to turn a blind eye and blame another country’s weak government for their misfortunes. But that is not acceptable. In fact, it can be said to be in itself a form of corruption to willfully not detect corruption where it occurs, or to not provide investigators with necessary resources to investigate and prosecute corrupt actors. To reallocate revenues to provide necessary funding for investigators is not to intervene in an ongoing investigation. Not to do so, on the other hand, might just be.