Forge Links With ZCID

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Forge links with ZCID, TIZ urges Govt

By Times Reporter

TRANSPARENCY International Zambia (TIZ) has urged the Patriotic Front (PF)Government to work with stakeholders such as the Zambia Centre for Inter-party Dialogue(ZCID) to strengthen internal control measures to stop political parties from using launderedand criminally-sourced funding.

TIZ president Reuben Lifuka said in Lusaka yesterday that dubiously obtained politicalfunding had the potential of leading to private interests holding the country captive. MrLifuka said the ongoing probe into the MMD campaign funds demonstrated the need for acomprehensive law which will cover political party financing.

In the interest of transparency and accountability, we want to challenge the Patriotic Front

(PF) Government, working with entities like the ZCID to initiate discussions with relevantstakeholders, particularly political parties on how to strengthen internal control measures andensure that money laundering and criminally-sourced funds do not enter the political partyspace in Zambia, he said. Mr Lifuka said the continued absence of a system to regulate

political party financing, makes the country vulnerable to the possible capture of the State byprivate interests.

This discussion is an important precursor to the potential debate on the proposed provisionin the draft constitution for State funding of political parties. It is our considered view that itwill not be prudent for the State to start funding political parties before they demonstrate theircapacity to be held accountable for such public funds, he said.

Mr Lifuka said since Zambias return to multi-party democracy in 1991, the country had notdeveloped an appropriate legal framework to regulate funding to political parties and to

promote greater transparency and accountability in political parties. It is a pity that partiesthat seek to form Government, operate in opaque financial systems where the majority ofmembers are left in the dark on how and where funds to meet operations and electionscampaigns are mobilised from, he said.

He said there was, therefore, merit in the internal probe of the MMD campaign fundscurrently being conducted by its members as this would help the party reposition itself anddeal with any negative perceptions of corruption in the former ruling party.

Mr Lifuka said, however, that in the event that laws were flouted and some underhanddealings identified, it would then be necessary to have an external probe by relevant lawenforcement agencies. The MMD national executive committee (NEC) is said to be currentlyundertaking a probe on the source of funding for the former ruling party during the lastgeneral elections.


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CHAPTER 14: PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION

"Everybody assists the institutions we have creatively redesigned to meet our varied needs;

we reach out across communities to strengthen our resolve to live with honesty, to be setagainst corruption and dehumanising actions."

Introduction

As theDiagnostic Reportof the National Planning Commission notes, poor governance canfatally undermine national development. Evidence gathered by the commission indicates thatSouth Africa suffers from high-levels of corruption that undermine the rule of law and hinderthe state's ability to effect development and socioeconomic transformation. The performanceof state systems of accountability has been uneven enabling corruption to thrive. Corruptionis not specific to the public sector, the private sector has been tolerant of and engages incorrupt practices. Although the entire country is harmed by corruption, the costs fall mostheavily on the poor through the impact on the quality and accessibility of public services.

Overcoming the twin challenges of corruption and lack of accountability in our societyrequires a resilient system consisting of political will, sound institutions, a solid legalfoundation and an active citizenry that is empowered to hold public officials accountable.

What has been achieved since 1994?

Corruption, which is often perceived as a post-1994 phenomenon, was also widespread in theapartheid era. Research by the Institute for Security Studies provides extensive evidence of"grand corruption" before 1994, concluding that "when the apartheid state was at its mostrepressive, it was also at its most corrupt". This in no way excuses corruption today, butSouth Africa cannot hope to tackle corruption without understanding its origins. [1 VanVuuren H (2006).Apartheid grand corruption. Report prepared for the second National Anticorruption Summit. Cape Town: Institute for Security Studies.]

In the democratic era, several significant steps have been taken to counter corrupt practicesand put in place accountability mechanisms. Appreciative of the role of transparency increating an accountable, responsive government, the drafters of the Constitution included theright to access information and the right to administrative justice in the Bill of Rights. Theserights are crucial to enabling the achievement of the other socioeconomic rights enshrined inthe Constitution. To give effect to these rights, the Promotion of Access to Information Actand the Promotion of Access to Justice Act were passed in 2000. These laws provide a

foundation for open, transparent and accountable government and, together with thePrevention and Combating of Corrupt Activities Act (2004), form a solid legislative basis tofight corruption.

In addition to progressive laws, South Africa has created a number of institutions that play animportant role in combating corruption. These include the oversight institutions established interms of chapter 9 of the Constitution to strengthen constitutional democracy, such as theAuditor-General and the Public Protector, which have played an important role in combatingcorruption and holding public officials to account. Several anti-corruption agencies areoperating with solid skills and political commitment.

Vision 2030


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Our vision for 2030 is a South Africa which has zero tolerance for corruption, in which anempowered citizenry have the confidence and knowledge to hold public and private officialsto account and in which leaders hold themselves to high ethical standards and act withintegrity. This South Africa has a resilient anti-corruption system in which anti- corruptionagencies have the resources, credibility and powers to investigate corruption, and their

investigations are acted upon.

How will South Africa achieve its Vision 2030?

The commission has singled out four areas of focus in which policies should be implementedto move towards an accountable state and zero-tolerance of corruption:

a Building a resilient anti-corruption system - The focus of anti-corruption efforts should beon creating a resilient anti-corruption system that can operate freely from politicalinterference and is supported by both public officials and citizens. A resilient system is onewhere the designated agencies have the capability and resources to investigate cases of

corruption, leaders take action when problems are brought to their attention, citizens resist thetemptation to pay bribes because they recognise that their individual actions contribute to a

bigger problem, the private sector does not engage in corrupt practices, citizens areempowered to speak out against corruption and the media fulfils its investigative andreporting function to expose corruption in the public and private sector.

Strengthen accountability and responsibility of public servants - South African publicservants should be made legally accountable as individuals for their actions,

particularly in matters involving public resources. Create an open, responsive and accountable public service - State information,

including details of procurement, should be made openly available to citizens.Furthermore an information regulator should be established to adjudicate appealswhen access to information requested is denied.

Strengthen judicial governance and the rule of law - Reform aspects of the judicialgovernance system to ensure the independence and accountability of the judiciary.Establish clear criteria for the appointment of judges and scale up judicial training toimprove the quality of judges in our courts. Consideration should be given to theextension of community service to law graduates in order to increase legalrepresentation for the poor and speed up the administration of justice in the lowercourts.

Building a resilient anti-corruption system

The commission proposes the following:

Strengthening the multi-agency anti-corruption system Strengthen protection of whistle-blowers Centralise the awarding of large tenders or tenders with long duration Give greater teeth to the tender compliance monitoring office to investigate both

corruption and the value for money aspect of tenders.

Strengthen the multi-agency anti-corruption system


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South Africa has a number of agencies mandated to fight corruption. These include theSpecial Investigations Unit, the Public Protector, the Public Service Commission, the AuditorGeneral, the Assets Forfeiture Unit, the Directorate for Priority Crimes Investigation, and theIndependent Police Investigative Directorate. Some have argued that the multiplicity of anti-corruption agencies undermines the fight against corruption by dividing resources and has

resulted in an uncoordinated approach to tackling corruption.

There has been much debate about whether South Africa should have a single anti- corruptionagency. [2 Camerer L (1999). Tackling the Multi-headed Dragon -Evaluating prospects fora single anti-corruption agency in South Africa. Institute for Security Studies OccasionalPaper 38.] Hong Kong's Independent Commission Against Corruption is often cited as amodel for a single-agency system because of its well-publicised success in fightingcorruption. The Independent Commission Against Corruption model has been adopted in anumber of countries including Australia, Botswana and Singapore. While IndependentCommission Against Corruption has been a great success in Hong Kong, there are doubtsabout whether the model can be transposed to South Africa. Its success has largely resulted

from the specific conditions existing within Hong Kong, including "a relatively well-regulated administrative culture alongside a large, and again, well-resourced police forceunder a political and legal framework which supports anti- corruption activities".'

While there are ongoing efforts to develop South Africa's administrative capacity andimprove the criminal justice system, as detailed in other chapters in this plan, the countrydoes not have the institutional foundation in place to make the ICAC model a viable option.

Rather than focusing on the number of anti-corruption institutions, the emphasis should be onstrengthening the anti-corruption system. A functioning anti-corruption system requires"sufficient staff and resources with specific knowledge and skills; special legislative powers;high level information sharing and co-ordination; and operational independence"4.Independence entails insulating institutions from political pressure and interference. A singleagency approach is less resilient in this respect because if the lone anti-corruption body faces

political capture, the independence of the entire system is compromised. A multiplicity ofagencies provides checks and balance, that are essential in the South African context, anddevelops a systemic resilience against interference.

Strengthening the anti-corruption system requires increasing the specialist resources of anti-corruption agencies, improving coordination and cooperation between agencies and ensuringthat the independence of each of the agencies is maintained. There should be greater

emphasis on preventing corruption through public education drives. This should cover how itaffects the delivery of services essential to citizen's daily lives and the mechanisms throughwhich cases of corruption can be reported. While South Africans are highly aware of the evilsof corruption they must be encouraged to make the connection between the seemingly pettyincidents of corruption they participate in daily, such as the "cold drink" to a police officer toavoid a traffic fine, and the grand corruption they see reported in the Sunday newspapers. Theaim should be to create a shift in attitudes towards corruption. Greater citizen participation inanti-corruption efforts should be encouraged by amongst other things strengthening the

protection of whistle-blowers. An independent media also has a role to play in publicawareness by investigating and reporting on cases of corruption.

No effort to tackle corruption can succeed without political will and support for anti-corruption agencies. Political will refers to more than public statements of support, and


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includes a commitment to acting on that support by providing sufficient resources and takingaction against corrupt officials. Political parties must strive to maintain a high- level ofethical conduct amongst their members. Political leaders must remain conscious of the impactof their behaviour on the honour and integrity of the political office they hold.

Strengthen protection of whistle-blowers

Protection for whistle-blowers is essential to create a culture of disclosure of wrongdoing.While the Protected Disclosures Act (2000) provides some protection for whistle-blowers, itdoes not do enough. In fact, the percentage of people who identify themselves as prepared to"blow the whistle" has dropped by 10 percent over the last four years. [Ipsos Markinor(2010). Whistle blowing, the Protected Disclosure's Act, accessing information and the

Promotion of Access to Information Act: Views of South Africans, 2006-2010.]

Several weaknesses need to be addressed:

The scope of protection in law is too narrow. For example, the Protected DisclosuresAct is limited to whistle-blowers in a formal permanent employment relationship,excluding citizen whistle-blowers. It excludes all persons in other commercialrelationships with the relevant organisation. This needlessly restricts the scope of

protection to the employment relationship. Consider an employee who makes adisclosure about a client to her employer, and the employer transfers the employeerather than aritagonising the client. Such an employee would not be protected.

The range of bodies to which a protected disclosure may be made is too narrow. There is no public body tasked with providing advice and promoting public

awareness, and no public body dedicated to monitoring whistle-blowing. The possibility of conditional amnesty for whistle-blowers implicated in corruption is

not clear. Adequate security for whistle-blowers has not been established. Physical and

economic protection may be required in some cases. Opinions vary on whatconstitutes "adequate protection".

In response to these gaps, the commission recommends the following:

Expand the scope of whistle-blower protection under the Protected Disclosures Act toinclude those outside the traditional employer-employee relationship.

Permit disclosure to bodies other than the Public Protector and the Auditor- General

and strengthen measures to ensure the security of whistle-blowers.

Centralise the awarding of large tenders

The law governing public procurement in South Africa has become increasingly complicatedover the past decade. It is now so complex that there is reason to believe that it is impedingeffective government. When even honest and competent bureaucrats find it difficult tounderstand what their legal obligations are and how to comply with them, the law requiressimplification. The award of any tender is governed by numerous layers of law. Which ofthese layers applies in any given case depends on the context and the circumstances.

The complexity of procurement law also frequently works to the detriment of those who wincontracts to provide goods and services to the state. Organs of state seeking to escape


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contractual obligations now frequently argue that the process resulting in the contract did notlive up to the standards set by procurement law. It is often alleged by such organs of state thata competitive tender process did not occur, that the relevant signatory to the contract was not

properly authorised, or that the process was inconsistent with the law. The law ofprocurement in such instances provides an expedient route of escape for those wishing to

dodge their obligations.

The commission proposes a review and reform of procurement procedures. This wouldinclude legal reforms to simplify procurement, which ensure that accountability mechanismsremain in place and that the law retains proper safeguards for detecting corruption andmaladministration. The need for swift, effective service provision and a functioning oversightmechanism must be carefully balanced.

In addition, a tiered system of review for tenders, depending on their value, withdifferentiated safeguards and procedures should be considered. Such a system could haveautomatic safeguards built in, so that tenders above a certain amount are subjected to special

review by the Auditor-General and the Parliamentary Standing Committee on PublicAccounts, with a public hearing to exercise oversight over the tender award process.

Give greater teeth to the tender compliance monitoring office to investigate both probity andthe value for money aspect of tenders

The practice of outsourcing and tendering for services has increased considerably in the lastdecade. The vast range of tender opportunities in the public service has also come withincreased opportunities for corruption as both officials and contractors use the tender systemto enrich themselves. The government is conscious of these challenges and has put in placesome measures to introduce greater accountability in supply chain management practices.

The Office of the Accountant General in the National Treasury is responsible for promotingand enforcing the effective management of revenue and expenditure in departments, as wellas monitoring the proper implementation of the Public Finance Management Act (1999) andthe Municipal Finance Management Act (2003) by state institutions. This includes setting andmonitoring norms and standards with respect to procurement practices.

While this monitoring function is vital, the commission proposes strengthening the office toinvestigate the value for money of tenders. This would entail, for example, being empoweredto audit the bill of quantities for projects to ensure that the unit costs of materials is not

excessive and that the state institution in question derives the maximum utility from theservice procured.

Strengthen accountability and responsibility of public servants

There are three generally accepted principles of the state's liability to pay the litigation costsof a functionary. Thefirstis that the litigation costs are paid in circumstances where the stateor the functionary is being sued or charged - in other words as a defendant or an accused.

Thesecondis that the conduct of the functionary that is the subject matter of the litigation isconduct that falls within the course and scope of the functionary's employment or state

function. The thirdis that if the state does fund the litigation and the court determines that theconduct was not in the course and scope of the functionary's employment or state function, it


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is entitled to recover those costs from the functionary. In practice, there have been seriousdepartures from these principles that have resulted in the state paying unnecessarily for costlylitigation involving functionaries.

The State Liability Amendment Act (2011) makes provision for the principle of

accountability of public servants.

The commission recommends that:

The provisions in sections 13 (a) and (b) of the act be strictly enforced and monitoredby the Public Service Commission.

An accountability framework should be developed linking the liability of individualpublic servants to their roles and responsibilities and job descriptions in proportionwith their functions and seniority. It should be made illegal for civil servants tooperate or benefit from certain types of business.

Restraint of trade agreements should be considered for senior civil servants and

politicians in all spheres of government. Exit interviews and proper record keepingwould enable this practice.

Create an open, responsive and accountable public service

The importance of transparency to public accountability has been demonstrated in theory andin practice. Dissatisfaction about lack of access to information on service delivery hasemerged as a factor in public protests. In developing countries such as India, Bangladesh andMexico, the right of access to information is used as leverage by communities to help themclaim socioeconomic rights.

Section 32 of the Constitution enshrines the right of access to information. In practice,requests for information are routinely ignored, despite the existence of the Promotion toAccess to Information Act, which aims to give effect to this section. There is endemic lack ofcompliance. [The South African Human Rights Commission's 2009/10 report states that "Ananalysis of compliance with section 32 reports for multiple levels of government over thedecade since PAIA's passage into law has provided clear evidence of poor levels ofcompliance with its provisions. These levels of compliance point to a low level of awareness,a lack of accountability for non-compliance and the importance (or lack thereof) accorded toPAIA in the sector." (Page 158).]

There are many reasons for the lack of effective implementation of the Promotion of Accessto Information Act, including wilful neglect, lack of appreciation of the importance of theright, an institutional culture of risk averseness and/or secrecy and a lack of training. TheAsmal report on Chapter 9 institutions identified this as a serious challenge and diagnosed theabsence of a useable enforcement mechanism as one of the primary obstacles.7 Unlike mostmodern access to information laws, the act does not create a specialist adjudicatory body,such as an information commissioner or commission. The Asmal report recommended thatsuch a body be established to dispense quick, accessible and inexpensive access to justice forthose appealing decisions to withhold information, or so-called "deemed refusals" where noanswer comes in response to a request. [Asmal et,al. (2007).Report of the ad hoc committeeon the Review of Chapter 9 and associated institutions. Report to the National Assembly of

the Parliament of South Africa.]


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The Protection of Personal Information Bill that is being discussed in Parliamentseeks to establish an information regulator covering certain aspects of information and

personal data. This body should be equipped with the necessary resources to do its job

properly and independently. The body should strike the right balance between itsresponsibilities to protect personal data, while providing recourse to those claimingtheir right of access to information.

More "open data" should be made available. Open data is information that is madeactively available without a request from an individual. This is also provided for inthe Promotion of Access to Information Act, but generally not implemented due tolack of expertise. Some departments and municipalities have made an effort to makesome information available. The Department of Mineral Resources has attempted to

put all new order mining licenses on its website. Although many links are broken, thesite attempts to make the data generally available. In addition, companies that holdthose rights should make the information available. Other examples of information

that should be made available would be beneficiary lists for housing projects, often asource of deep tension in communities, tender information, and environmental impactassessments.

Strengthen judicial governance and the rule of law

Without a reliable, honest, efficient court system, there can be no access to justice - asenshrined in the Constitution - no confidence on the part of investors and other major playersin the economy, and little prospect of holding powerful private and public actors to account.

South Africa's rule of law is generally in good shape, although more could be done to realisethe transformative promise of the Constitution. Challenges such as inefficiencies in the courtadministration that denude people of the right to access to justice, and judicial appointmentsthat call into question the impartiality of selection processes, must be addressed.

For the Constitution, and the law in general, to be an agent of change, rather than an obstacleto socioeconomic transformation, the law must be interpreted and enforced in a progressive,transformative fashion. This requires a judiciary that is progressive in its judicial philosophyand legal inclinations.

The selection and appointment of judges is of crucial importance, not just to the rule of law

and the independence of the courts, but to socioeconomic transformation. At present, there islittle or no consensus in the Judicial Service Commission (JSC) or in the legal fraternity moregenerally, about the qualities and attributes needed for the bench.

Judicial governance concerns both the independence and the accountability of the judicialbranch of government, and encompasses issues such as judicial selection and appointment,and judicial ethics, the leadership and management of the judiciary, and the administration ofthe courts. The selection and appointment of judges is the responsibility of the JSC, a bodyestablished under the Constitution; the administration of the courts falls under the Departmentof Justice. The previous chief justice established a body to examine judicial reforms, and itsforthcoming report will deserve serious consideration.


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It is important for the JSC to lead a process to build consensus on the qualities and attributesof the "ideal South African judge". [Cowen S (2010). Judicial Selection: A Timely Debate.Available at http://www.dgru.uct.ac.za/usr/dgru/downloads/J udicial%2OSelectionOct2OlO.pdf (accessed 3 August 2011).]

The criteria should encompass a range of qualities and attributes, including a progressivejudicial philosophy and an understanding of the socioeconomic context in which the law isinterpreted and enforced. While the JSC published a list of criteria for judicial appointmentsin September 2010, these criteria are quite broad and will require further development, and aclearer understanding of their meaning and application.

The training of judges also requires attention. The Judicial Training Institute is yet to get offthe ground. It needs to be launched soon to improve the lives of South Africans, and to ensurethat the South African Constitution and jurisprudence retain their international standing.Further reforms that can be considered include the composition of the JSC itself, which isargued by some to be too large to function effectively, and to be hamstrung by political

interests. The JSC's increasing role in enforcing the Judicial Code of Conduct is one exampleof how its role is expanding, and consideration should be given to whether it is optimallystructured to fulfil its various roles and responsibilities.

Access to justice and speedier resolution of court cases require more attention. This isparticularly important for working people who struggle to get time off from work to attendcourt. In addition to the burden of long court rolls, which lead to unnecessary delays and

postponements, many poor people cannot afford the costs of transport to courts. The cost ofjustice for the poor can present a major barrier to accessing justice; it can also lead tounintended miscarriage of justice when bail cannot be afforded and the accused notadequately represented. Law graduates should be viewed as a resource for the promotion ofthe rule of law. An audit of unemployed graduate law students should be done to ensure

proper placement in much-needed areas.


Accelerate reforms to implement a judiciary-led independent court administration. The JSC should lead a process to establish clear criteria for appointment of judges,

with emphasis on the candidates' progressive credentials and transformatory judicialphilosophy and expertise.

Scale up judicial training dramatically and as quickly as possible.

Consider whether the current form and structure of the JSC is adequate to allow it tofulfil its constitutional mandate.

Consider the extension of community service to law graduates. This will increaseaccess to legal representation - especially for the poor - and speed up theadministration of justice in the lower courts.

Conclusion

Accountable governance requires leadership. For institutions to be transformative andcapable, they must be well led at all levels. Leadership in the public service is essential forthe national development plan and for South Africa. Leadership that is devoted and

dedicated, capable and committed, and self-sacrificial and not self-serving. South Africaneeds a national conversation about the qualities of leadership that are required in all areas of


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public life. The first national plan provides an excellent opportunity to provoke thatconversation and to identify the leadership attributes that are essential to build a just andequal nation.

CORRUPTION

Corruption is both a major cause and a result of poverty around the world. It occurs at alllevels of society, from local and national governments, civil society, judiciary functions, largeand small businesses, military and other services and so on.

Corruption affects the poorest the most, in rich or poor nations, though all elements of societyare affected in some way as corruption undermines political development, democracy,economic development, the environment, peoples health and more.

Around the world, the perception of corruption in public places is very high:

World

map of the 2010 Corruption Perceptions Index by Transparency International.

Blue indicates less perception of corruption, whereas red indicates higher

perception of corruption. Image source

But it isnt just in governments that corruption is found; it can permeate through society.

The issue of corruption is very much inter-related with other issues. At a global level, theinternational (Washington Consensus-influenced) economic system that has shaped thecurrent form of globalization in the past decades requires further scrutiny for it has alsocreated conditions whereby corruption can flourish and exacerbate the conditions of peoplearound the world who already have little say about their own destiny. At a national level,

peoples effective participation and representation in society can be undermined bycorruption, while at local levels, corruption can make day to day lives more painful for allaffected.

A difficult thing to measure or compare, however, is the impact of corruption on povertyversus the effects of inequalities that arestructured into law, such as unequal tradeagreements, structural adjustment policies, so-called free trade agreements and so on. It is
http://www.transparency.org/policy_research/surveys_indices/cpihttp://en.wikipedia.org/wiki/File:World_Map_Index_of_perception_of_corruption_2010.svghttp://www.transparency.org/policy_research/surveys_indices/cpihttp://en.wikipedia.org/wiki/File:World_Map_Index_of_perception_of_corruption_2010.svg


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easier to see corruption. It is harder to see these other more formal, even legal forms ofcorruption. It is easy to assume that these are not even issues because they are part of thelaws and institutions that govern national and international communities and many of us will

be accustomed to itit is how it works, so to speak. Those deeper aspects are discussed inother parts of this web sites section ontrade, economy, & related issues.

That is not to belittle the issue of corruption, however, for its impacts are enormous too.

This web page has the following sub-sections:

1. Rich Countries involved in corruption abroad2. A Cold War Legacy: The Curse of Natural Resources; Inviting corruption3. Globalization, Multinational Corporations, and Corruption4. IMF and World Bank Policies that Encourage Corruption5. Corruption everywhere; rich and poor countries, international institutions6. Tackling corruption

1. Strengthen Democracys Transparency Pillar2. Address weaknesses in the global system3. Improve Government Budget Transparency4. Make it harder to embezzle billions5. Lessons from the past: USs New Deal in the 1930s6. Direct Grassroots Action

7. More Information

Rich Countries involved in corruption abroad

When asking why poor countries are poor, it is quite common to hear, especially in wealthier

countries that are perceived to have minimal corruption (at least domestically) that othercountries are poor because of corruption. Yet, corruption is not something limited to thirdworld despots. Rich countries too have been involved in corrupt practices around the world.

As Professor Robert Neild from Trinity College, Cambridge University writes inPublicCorruption; The Dark Side of Social Evolution (London: Anthem Press, 2002), Richcountries and their agencies commonly have been and are accomplices in corruptionabroad, encouraging it by their actions rather than impeding it. (p.209). Specific problemshe highlights include:

The impact of Cold War corruption (supporting dictatorships, destabilizing

democracies, funding opposition, etc); Firms from rich countries bribing rulers and officials from developing

countries to gain export contracts, particularly in the arms trade and inconstruction (even justifying it by suggesting bribery is customary inthose countries, so they need to do it to, in order to compete);

The corruption-inducing effects of the purchase, by the rich countries andtheir international corporations, of concessions in Third World countries toexploit natural deposits of oil, copper, gold, diamonds and the like.Payments made to rulers often violate local (and Western) rules, keepingcorrupt rulers in power, who also embezzle a lot of money away.

The drug trade. Neild suggests that international law and national laws in

rich countries that prohibit drugs may serve to produce a scarcity valueirresistible to producers, smugglers and dealers. Governments and civil
http://www.globalissues.org/issue/1/trade-economy-related-issueshttp://www.globalissues.org/issue/1/trade-economy-related-issueshttp://www.globalissues.org/issue/1/trade-economy-related-issueshttp://www.globalissues.org/article/590/corruption#RichCountriesinvolvedincorruptionabroadhttp://www.globalissues.org/article/590/corruption#AColdWarLegacyTheCurseofNaturalResourcesInvitingcorruptionhttp://www.globalissues.org/article/590/corruption#GlobalizationMultinationalCorporationsandCorruptionhttp://www.globalissues.org/article/590/corruption#IMFandWorldBankPoliciesthatEncourageCorruptionhttp://www.globalissues.org/article/590/corruption#Corruptioneverywhererichandpoorcountriesinternationalinstitutionshttp://www.globalissues.org/article/590/corruption#Tacklingcorruptionhttp://www.globalissues.org/article/590/corruption#StrengthenDemocracysTransparencyPillarhttp://www.globalissues.org/article/590/corruption#Addressweaknessesintheglobalsystemhttp://www.globalissues.org/article/590/corruption#ImproveGovernmentBudgetTransparencyhttp://www.globalissues.org/article/590/corruption#Makeithardertoembezzlebillionshttp://www.globalissues.org/article/590/corruption#LessonsfromthepastUSsNewDealinthe1930shttp://www.globalissues.org/article/590/corruption#DirectGrassrootsActionhttp://www.globalissues.org/article/590/corruption#MoreInformationhttp://www.globalissues.org/issue/1/trade-economy-related-issueshttp://www.globalissues.org/article/590/corruption#RichCountriesinvolvedincorruptionabroadhttp://www.globalissues.org/article/590/corruption#AColdWarLegacyTheCurseofNaturalResourcesInvitingcorruptionhttp://www.globalissues.org/article/590/corruption#GlobalizationMultinationalCorporationsandCorruptionhttp://www.globalissues.org/article/590/corruption#IMFandWorldBankPoliciesthatEncourageCorruptionhttp://www.globalissues.org/article/590/corruption#Corruptioneverywhererichandpoorcountriesinternationalinstitutionshttp://www.globalissues.org/article/590/corruption#Tacklingcorruptionhttp://www.globalissues.org/article/590/corruption#StrengthenDemocracysTransparencyPillarhttp://www.globalissues.org/article/590/corruption#Addressweaknessesintheglobalsystemhttp://www.globalissues.org/article/590/corruption#ImproveGovernmentBudgetTransparencyhttp://www.globalissues.org/article/590/corruption#Makeithardertoembezzlebillionshttp://www.globalissues.org/article/590/corruption#LessonsfromthepastUSsNewDealinthe1930shttp://www.globalissues.org/article/590/corruption#DirectGrassrootsActionhttp://www.globalissues.org/article/590/corruption#MoreInformation


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society in the third world are often undermined, sometimes destroyedby the violence and corruption that goes with the drug trade. This isprobably the most important way in which the policies of rich countriesfoster corruption and violence. Yet the effect on the Third World seemsscarcely to enter discussion of alternative drug policies in the richcountries. Legalizing drugs, a system of taxation and regulation,comparable to that applied to tobacco and alcohol might do more toreduce corruption in the world than any other measure rich countriescould take, he suggests. (See this sites section on illicit drugs for more onthat aspect.)

Rich countries have been used to it, too:

Bribery may be pervasive, but it is difficult to detect. Many Western companies do not dirtytheir own hands, but instead pay local agents, who get a 10 per cent or so success fee if acontract goes through and who have access to the necessary slush funds to ensure that itdoes. Bribery is also increasingly subtle. Until recently, bribery was seen as a normal

business practice. Many countries including France, Germany and the UK treated bribes aslegitimate business expenses which could be claimed for tax deduction purposes.

Dr Susan Hawley,Exporting Corruption; Privatisation, Multinationals and Bribery, TheCorner House, June 2000

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A Cold War Legacy: The Curse of Natural Resources;

Inviting corruptionProfessor Neild is worth quoting at extensive length on the impacts the Cold War had interms of encouraging or exacerbating corruption in the developing countries:

Many Western covert and overt military operation were motivated, in part at least, by theview, which may have been fearfully exaggerated, that the Wests supplies of raw materialsand oil were threatened by communist intrusion into Third World countries. A feeling ofvulnerability was understandable. The Soviet Union was largely self-sufficient ; theWest, in need of increasing supplies for its growing industrial production, depended heavilyon imports from Third World countries. Western governments used diplomacy plus overt

and covert military operations to counter the Communists. Meanwhile western firms paidrulers to obtain concessions to extract oil and minerals.

The business of obtaining oil and mineral concessions has aways been conducive to the useof bribes, omissions, gifts, and favors, and remains so since there are huge rents (i.e.windfall profits) to be shared by the parties to a deal. Third World governments rarely useauctions [for concession, which, when done honestly, removes the opportunity for buyers to

bribe sellers]. They commonly sell concessions by negotiation. For which there are somegood reasons. It is often necessary for the foreign company that buys a concession to buildinfrastructure, such as ports, pipelines, roads and dormitory towns for their staff; to make thisworthwhile, a whole oil field or major mineral deposit has to be given to one foreign

company, rather than split between many competitors; and that one company, which willbecome the source of a significant, perhaps dominant, part of the nations revenue, will
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acquire substantial economic powervis--vis the government. Hence strategic and diplomaticconsideration enter the calculation: the government will want to give the concession to acompany backed by a government which it believes will be helpful to it in its internationalrelationsand in supplying it with arms and mercenaries. But . there is [also] the prospectof bribes. Those who run a government that has a concession to sell will know that

negotiation creates a strong incentive to the potential buyers to offer them bribes: theywill know this from the point of view of the buyers, a sum that will only add a small

percentage to, say, a billion dollar deal, will be worth paying in order to win the concession.Once negotiation is adopted as the means of allocating concessions, the dominant incentive isfor bidders to engage competitively in the bribery of local rulers and fixers.

Robert Neild, Public Corruption; The Dark Side of Social Evolution, (London: AnthemPress, 2002), pp. 136-137 [Emphasis added]

But Neild feels that this same attitude has affected rich countries domestic political behavior,too. Of particular concern to Neild in this is

the apparent tendency for bribery, which is intense in the business of seeking resourceconcession and selling arms, to become a secret habit of western firms and politicians thatinfects their domestic political behavior. Of this there has been considerable evidence inscandals that have occurred recently in Britain, France and Germany.Le Monde publishedan outspoken editorial commenting on the [French company, Elf Aquitaine, corruption]affair:

For too long French policy in Africa has been neither moral nor effective.

It would be wrong to deny that corruption is indispensable in the obtaining of drillingconcession, though that does not mean that one should not try to stop it. M. Tarallo [a seniorElf Manager] is unfortunately right when he says that all petrol companies use it But thesins of others do not absolve Elf. Added to which Elf has used its money to keep in powerdictators whose principle aim has been not the development of their country but their

personal enrichment. In exchange, Paris could count on their support in its diplomatic battlesand could offer captive markets to French firms

This neo-colonialism was put in place during the presidency of General de Gaulle and hasbeen maintained by subsequent governments regardless of party

Looked at today the picture is not glorious. A former colonial power has taught corruption toits African clientswho were willing pupilsand there is nothing to persuade us that theyhave not rewarded their friends in Paris

In one case at least, lack of natural resources has apparently been an incentive toanticorruption policies: the tough ruler of Singapore, Lee Kuan Yew, is reported to have saidthat he came down hard on the corrupt because his tiny country with no natural resources hasto rely on its good name to remain a center of banking and technology.

Robert Neild, Public Corruption; The Dark Side of Social Evolution, (London: AnthemPress, 2002), p. 138 [Emphasis added]

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Globalization, Multinational Corporations, and

Corruption

Corruption scandals that sometimes make headline news in Western media can often be

worse in developing countries. This is especially the case (as the previous link argues) whenit is multinational companies going into poorer countries to do business. The international

business environment, encouraged by a form of globalization that is heavily influenced by thewealthier and more powerful countries in the world makes it easier for multinationals to make

profit and even for a few countries to benefit. However,some policies behind globalizationappear to encourage and exacerbate corruptionas accountability of governments andcompanies have been reduced along the way. For example,

For multinationals, bribery enables companies to gain contracts (particularly for public worksand military equipment) or concessions which they would not otherwise have won, or to doso on more favorable terms. Every year, Western businesses pay huge amounts of money in

bribes to win friends, influence and contracts. These bribes are conservatively estimated torun to US$80 billion a yearroughly the amount that the UN believes is needed to eradicateglobal poverty.

Dr Susan Hawley,Exporting Corruption; Privatization, Multinationals and Bribery, TheCorner House, June 2000

Dr Hawley also lists a number of impacts that multinationals corrupt practices have on theSouth (another term for Third World, or developing countries), including:

They undermine development and exacerbate inequality and poverty. They disadvantage smaller domestic firms. They transfer money that could be put towards poverty eradication into

the hands of the rich. They distort decision-making in favor of projects that benefit the few

rather than the many. They also

o Increase debt;o Benefit the company, not the country;o Bypass local democratic processes;o Damage the environment;o Circumvent legislation; and

o Promote weapons sales.

(See the previous report for detailed explanation on all these aspects.)

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IMF and World Bank Policies that Encourage Corruption

At a deeper level are the policies that form the backbone to globalization. These policies areoften prescribed by international institutions such as the World Bank and IMF. For years,

they have received sharp criticism for exacerbating poverty through policies such asStructural Adjustment, rapid deregulation and opening barriers to trade before poorer
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countries are economic ready to do so. This has also created situations ripe for corruption toflourish:

As Western governments and the World Bank and IMF shout ever more loudly aboutcorruption, their own policies are making it worse in both North and South. Particularly at

fault are deregulation, privatization, and structural adjustment policies requiring civil servicereform and economic liberalization. In 1997, the World Bank asserted that:

any reform that increases the competitiveness of the economy will reduce incentives forcorrupt behavior. Thus policies that lower controls on foreign trade, remove entry barriers to

private industry, and privatize state firms in a way that ensure competition will all support thefight.

The Bank has so far shown no signs of taking back this view. It continues to claim thatcorruption can be battled through deregulation of the economy; public sector reform in areassuch as customs, tax administration and civil service; strengthening of anti-corruption and

audit bodies; and decentralization.

Yet the empirical evidence, much of it from the World Bank itself, suggests that, far fromreducing corruption, such policies, and the manner in which they have been implemented,have in some circumstances increased it.

Dr Susan Hawley,Exporting Corruption; Privatization, Multinationals and Bribery, TheCorner House, June 2000

Jubilee Research (formerly the prominent Jubilee 2000 debt relief campaign organization)

has similar criticisms, and is also worth quoting at length:

Rich country politicians and bank officials argue that because dictators like Marcos, Suharto,and Mobutu were kept in power with western arms and were given loans to squander on ill-

judged and repressive schemes, that the people of those countrieswho often foughtvaliantly against those dictatorscannot be trusted not to waste the money released by debtcancellation. This may seem confusing to people not familiar with the logic of the IMF andWorld Bank. In summary:

Creditors colluded with, and gave loans to dictators they knew werecorrupt and who would squander the money.

Creditors gave military and political aid to those dictatorsknowing armsmight be used to suppress popular opposition Therefore, successor democratic governments and their supporters, who

may have been victims of corruption and oppression, cannot be trusted.

To many people in the South, this seems irrational and illogicalthe logic of blaming thevictim. It is the logic of power rather than of integrity, and is used to benefit the rich ratherthan the poor in developing countries.

A similar logic argues that if the World Bank and government export credit agenciespromoted inappropriate and unprofitable projects, then southern governments proved their

inability to control money because they accepted the ill-advised projects in the first place.
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Thus, if money is released by debt cancellation, it must be controlled by agencies whichpromoted those failed projects.

This is the logic that says if people were stupid enough to believe cigarette advertising, thenthey are too stupid to take care of themselves and the reformed cigarette companies should

be put in charge of their health care.

The same institutions who made the corrupt loans to Zaire and lent for projects in Africa thatfailed repeatedly are still in charge, but their role has been enhanced because of their successin pushing loans. Can we trust these institutions to suddenly only lend wisely; to not giveloans when the money might be wasted?

Preventing new wasted loans and new debt crises, and ensuring that there is not another debtcrisis, means that the people who pushed the loans and caused this crisis cannot be left incharge.

The creditors or loan pushers cannot be left in charge, no matter how heartfelt theirprotestations that they have changed. Pushers and addicts need to work together, to bring toan end the entire reckless and corrupt lending and borrowing habit.

Joseph Hanlon and Ann Pettifor,Kicking the Habit; Finding a lasting solution toaddictive lending and borrowingand its corrupting side-effects, Jubilee Research, March2000

And in terms of how lack of transparency by the international institutions contributes to somuch corruption structured into the system, Hanlon and Pettifor continue in the same report

as cited above:

Structural adjustment programs cover most of a countrys economic governance.

The most striking aspect of IMF/World Bank conditionality [for aid, debt relief, etc] isthat the civil servants of these institutions, the staff members, have virtual dictatorial powersto impose their whims on recipient countries. This comes about because poor countries musthave IMF and World Bank programs, but staff can decline to submit programs to the boardsof those institutions until the poor country accepts conditions demanded by IMF civilservants.

There is much talk of transparency and participation, but the crunch comes in finalnegotiations between ministers and World Bank and IMF civil servants The country managercan say to the Prime Minister, unless you accept condition X, I will not submit this programto the board. No agreed program means a sudden halt to essential aid and no debt relief, sofew ministers are prepared to hold out. Instead Prime Ministers and presidents bow to thediktat of foreign civil servants. Joseph Stiglitz also notes that reforms often bring advantagesto some groups while disadvantaging others, and one of the problems with policies agreed insecret is that a governing elite may accept an imposed policy which does not harm the elite

but harms others. An example is the elimination of food subsidies.

Joseph Hanlon and Ann Pettifor,Kicking the Habit; Finding a lasting solution to

addictive lending and borrowingand its corrupting side-effects, Jubilee Research, March2000
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As further detailed by Hanlon and Pettifor, Christian Aid partners (a coalition of developmentorganizations), argued that top-down conditionality has undermined democracy by makingelected governments accountable to Washington-based institutions instead of to their own

people. The potential for unaccountability and corruption therefore increases as well.

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Corruption everywhere; rich and poor countries,

international institutions

It goes without saying, almost, that corruption is everywhere. Corruption in poor countries iswell commented on (sometimes used dismissively to explain away problems caused by otherissues, too). It would be futile to provide examples here (see also the sources of informationat the end of this document for more on this).

Rich countries, also suffer from corruption. Examples are also numerous and beyond thescope of this page to list them here. However, a few recent examples are worth mentioning

because they are varied on the type of corruption involved, and are very recent, implying thisis a massive problem in rich countries as well as poor.

The first example is the US government, accused of outsourcing many contracts without anopen bid process. Jim Hightower notes that An analysis by the Times found that more thanhalf of their outsourcing contracts are not open to competition. In essence, the Bushiteschoose the company and award the money without getting other bids. Prior to Bush, only21% of federal contracts were awarded on a no-bid basis.

Another example is Italy, where former Italian Prime MinisterSilvio Berlusconi and some ofhis close associates were held on trial for various crimes and corruption cases (thoughBerlusconi himself has not, to date, been found guilty of any charges). Many key teams in themassive Italian soccer league, Serie A were also found to be involved in a massive corruptionring.

In the United Kingdom, the arms manufacturer, BAE was being investigated for bribingSaudi officials to buy fighter planes, but the government intervened in the investigation citingnational interests. The Guardian also reported that BAE gave a Saudi prince a 75 airliner($150m approx) as part of a British arms deal, with the arms firm paying the expenses of

flying it. This seemingly large figure is small compared to the overall deal, but very enticingfor the deal makers, and it is easy to see how corruption is so possible when large sums areinvolved.

International institutions, such as the United Nations and World Bank have also recentlycome under criticism for corruption, ironically while presenting themselves in the forefrontfighting against corruption.

The recent example with the UN has been the oil for food scandal, where the headlines wereabout the corruption in the UN. In reality, the figures of $21 billion or so of illicit funds

blamed on the UN were exaggerations; it was $2 billion; it was the UN Security Council

(primarily US and UK) responsible for much of the monitoring; US kickbacks for corrupt oil
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sales were higher, for example. (This is discussed in more detail on this sites Iraq sanctions,oil for food scandal section.)

At the World Bank, headlines were made when its recent president, Paul Wolfowitz, wasforced to resign after it was revealed he had moved his girlfriend to a new government post

with an extremely high salary without review by its ethics committee.

Paul Wolfowitzs appointment was also controversial, due to his influential role inarchitecting the US invasion of Iraq. A former member of staff at the World Bank also notedconcerns of cronyism related to Wolfowitzs appointment way before the scandal that forcedhim to resign.

The US nominee for the next president is the former US Trade Representative and currentlyan executive at Goldman Sachs, Robert Zoellick. His nomination is also coming undercriticism. Bush supports it, saying Zoellick is the right man to succeed Paul in this vitalwork. Former World Bank chief economist, and Nobel Prize winner for economics, Joseph

Stiglitz feels that instead of a political appointee, it would be better to get an economist whounderstands development.

As also reported by the BBC, Paul Zeitz, executive director of the Global AIDS Alliance,said that he thought Mr Zoellick was a terrible choice because Zoellick has no significantexperience in economic development in poor countries, and that he has been a close friendto the brand-name pharmaceutical industry, and the bilateral trade agreements he hasnegotiated [for the US] effectively block access to generic medication for millions of people.

While the US typically gets its preferred nomination to head the World Bank, Europe hastypically got its preferred person to head the IMF. Critics have long argued that this lackstransparency and is not democratic. While not illegal as such, it does feel like a form ofcorruption.

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Tackling corruption

What can be done to tackle this problem?

Strengthen Democracys Transparency Pillar

One of the pillars of democracy is transparency; knowing what goes on in society and beingable to make informeddecisions should improve participation and also checkunaccountability.

The above-cited report by Hanlon and Pettifor also highlights a broader way to try and tacklecorruption by attempting to provide a more just, democratic and transparent process in termsof relations between donor nations and their creditors:

Campaigners from around the world, but particularly the South, have called for a more just,

independent, accountable and transparent process for managing relations between sovereigndebtors and their public and private creditors.
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An independent process would have five goals:

to restore some justice to a system in which international creditors playthe role of plaintiff, judge and jury, in their own court of internationalfinance.

to introduce discipline into sovereign lending and borrowing arrangementsand thereby prevent future crises. to counter corruption in borrowing and lending, by introducing

accountability through a free press and greater transparency to civilsociety in both the creditor and debtor nations.

to strengthen local democratic institutions, by empowering them tochallenge and influence elites.

to encourage greater understanding and economic literacy amongcitizens, and thereby empower them to question, challenge and hold theirelites to account.

Joseph Hanlon and Ann Pettifor,Kicking the Habit; Finding a lasting solution toaddictive lending and borrowingand its corrupting side-effects, Jubilee Research, March

2000

Address weaknesses in the global system

TheBretton Woods Projectorganization notes that the World Bank, under pressure of late,has suspended a number of loans due to concerns of corruption. These include loans to Chad,Kenya, Congo, India, Bangladesh, Uzbekistan, Yemen, and Argentina. The Bank has alsostarted internal investigations of Bank corruption. However, despite high-profile moves by

president Paul Wolfowitz, the root causes of corruptionunderpaid civil servants, an

acceptance of bribery by big business, and dirty moneyremain largely unaddressed.

TheBretton Woods Projectadds that the normalization of petty corruption in developingcountries has in part been driven by

IFI conditions; The aid industry for overpaying consultants and turning a blind eye to

corruption in some regimes; and The World Banks pressure to lend culture where staff are rewarded for

the volume of the portfolio they manage; The World Banks slow pace in investigating and disbarring companies

found guilty of corrupt practices such as bribery, fraud or malpractice; Failing to increase transparency of some of its own procedures; The IFIs central part of an international financial system which has both

actively and tacitly supported the global proliferation of dirty moneyflows including, for example, the financing of various despotic rulers thathave siphoned off a lot of money to personal offshore accounts.

To help address these problems, theBretton Woods Projectsuggests a few steps:

Greater transparency of World Bank processes, allowing greater visibilityfor elected officials and civil society in recipient countries;

Strengthening internal mechanisms within the Bank itself, to monitorintegrity of Bank functions, and allow truly independent audits of Bankoperations;
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Minimum standards in governance, transparency and human rights thatmust be fulfilled before approving oil, gas and mining projects ininstitutionally weak countries.

Not always tying loans with economic policy conditions in such a way thatsome governments surrender their policy-making space.

During the 2002 World Summit on Sustainable Development, theBBCbroadcast a minidebate on globalization, poverty, and related issues, and had a panel of around 30 experts,from both the developing and rich countries. One person on that panel was Vandana Shiva, avocal critic of the current form of globalization and its impact on the environment and peoplein the third world. She was asked why people should listen to concerns from the third worldwhen they cannot sort out the rampant corruption first. Her answer was simple: rich countriesneed to stop dictating policies that encourage corruption in the first place.

Like Shiva, Professor Neild feels that the solution is philosophically simple. However, asNeild acknowledges, in reality it is far harder to do, due to the power interests involved:

It is hard to see how the international economic agencies and their member governments canintroduce incentives that would cause corrupt rulers to [attack corruption] Not only are therich countries and their agencies in this respect impotent, they commonly have been and areaccomplices in corruption abroad, encouraging it by their action rather than impeding it.

It is hard to see any solution other than transparency and criticism. It would take anunprecedented degree of united dedication to the checking of corruption for the internationalcommunity to agree that the oil and mining companies of the world should boycott corruptregimes, somehow defined, let alone manage to enforce an agreement.

Robert Neild, Public Corruption; The Dark Side of Social Evolution, (London: AnthemPress, 2002), pp. 208-210, [Emphasis added]

Improve Government Budget Transparency

A trusted government is more likely to result in a positive political and economicenvironment, which is crucial for developing countries, as well as already industrialized ones.

Budget transparency rankings 2010, IBP. (Click for

larger view)
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The International Budget Partnership (IBP) is an organization that looks at public budgets bygovernments around the world. Why is this important? Produced every 2 years, in October2010, they released their 3rd Open Budget Survey report. These reports assess howtransparent and accountable the budgetary process for a number of countries around theworld (currently just under 100) and ranks them accordingly.

Their introduction (p.2) explained the growing importance of budget transparency:

Experts have increasingly concluded that making budgets transparent andbuilding adequate checks and balances into the budget process canenhance the credibility and prioritization of policy decisions, limit corruptand wasteful spending, and facilitate access to international financialmarkets.

Budget transparency has become central to a number of internationaldevelopment discourses, ranging from the financing of climate changemitigation, to country-level actions to meet international development

commitments like the Millennium Development Goals, to accounting forthe revenues from the sale of natural resources, and to examining theamount of international aid given to developing countries and how it isspent.

Of the 94 countries assessed, they had the following findings:

1. The overall state of budget transparency is poor. Only a modest minorityof countries can be considered to have open budgets while a large numberof countries provide grossly insufficient budget information.

2. The general trend toward open budgets is nonetheless favorable. Budgettransparency is improving substantially, especially among countries that

provided little information in the past.3. Budget engagement by the audit institutions and the legislature is

typically weak and is strongly correlated to the lack of budget informationmade available to these institutions and the public.

4. There are many simple steps to opening up budgets that governments arefailing to undertake. Such steps can be taken by the executive branch, thelegislature, and the supreme audit institutions alike.

Open Budgets. Transform Lives., IBP makes case for open budgets, October 15, 2010

In many cases, where budget documents were made public, essential information was often

absent, or some of the documents remained internal. Those that performed poorly on theirindex were also low income, low democracy, and/or dependent on aid or oil revenues. On the

plus side, the IBP found that some countries that fared very poorly in their earlier analysisfared much better this time, sometimes through the simple and cheap step of simply makingtheir budget documents available on their web sites.

As such, the IBP recommended that all key budget documents which are already producedshould be made available to the public, for free, while the authority, independence, andcapacity of budget oversight institutions should be strengthened. The IBP also recommendsstrengthening the voice of the public as a complementary check and balance. They evencalled for a global norm on budget transparency to be established.
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Make it harder to embezzle billions

For years, stories of people embezzling millions even billions away to tax havens andother financial centers, have caused uproar, but little ever seems to have been done about itdespite some various organizations and campaigns trying to highlight these deeper causes and

potential solutions for many years. A lot of powerful interests of course are what has alwaysmade corruption so difficult to address.

In the wake of the global financial crisis that started in 2008, this issue has caught attention inthe mainstream more than usual.

This sites section on tax havens looks at this further, with links to other sites andorganizations that are highlighting the issues further.

Lessons from the past: USs New Deal in the 1930s

Another strategy for tackling corruption may come from history and seeing how the USNew Deal in the 1930s help remove a lot of corruption.

Before 1932, the administration of public relief in the US was widely regarded as politicallycorrupt. Political opponents of the New Deal often complained about the use of relief for

political purposes, but by 1940, these criticisms of corruption and political manipulation haddiminished considerably.

How this happened was detailed in a paper titledPolitics, Relief, and Reform ; RooseveltsEfforts to Control Corruption and Political Manipulation during the New Dealby JohnJoseph Wallis of the University of Maryland, Price V. Fishback of the University of Arizona,and Shawn Kantor of the University of California at Merced.

The authors of the paper asked New Deal reforms is often castigated as bureaucratic, butrarely corrupt. What changed? How did the country enter the Depression with a publicwelfare system riddled with political manipulation and emerge with one that was not?

Our answer is straightforward. The president, Franklin Roosevelt, and other members of theexecutive branch gained little or nothing from the kinds of local corruption involved in publicrelief. But they stood to incur enormous losses if the New Deal relief program was perceived

as politically manipulative and corrupt by the voting public. Roosevelt and the Democratsbrought relief to millions of families every month, and the gratitude of relief recipients wasRoosevelts political payoff.

Wallis, Fishback, and Kantor,Politics, Relief, and Reform; Roosevelts Efforts to Control

Corruption and Political Manipulation during the New Deal , Chapter 17 of Corruption

and Reform: Lessons from Americas Economic History (National Bureau of EconomicResearch Conference Report), University of Chicago Press, April 2006

Other politicianssenators, representatives, governors, and mayorswanted to control reliefand use it for political gain. They maneuvered, manipulated, and cajoled to get their hands

on a share of the billions spent each year on relief. So what did Roosevelt do?
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Although Roosevelt made substantial concessions to Congress and to state and localgovernments in the administration of relief, he sought to curb corruption at the state and locallevel by his influence over the discretionary allocation of relief funds, by establishing officesto investigate complaints of corruption, and, in the long run, by bureaucratizing theadministration of public welfare.

During the New Deal, when the relief programs were reorganized to give the Rooseveltadministration more control over the distribution of funds within states, it used that control tolimit state and local political manipulation and increased the responsiveness of the allocationof funds within states to the high-minded goals of relief, recovery, and reform.


Corruption and Political Manipulation during the New Deal , April 2006

The authors stress that it wasnt necessarily a superior morality that drove out this New Deal:

Politics was paramount in the structure of New Deal relief programs; it just turned out thatthe best political outcome meant a reduction in corruption at the state and local level. Thisdoes not mean that Roosevelt did not use the administration of relief for his own politicalends. There is ample evidence that presidential politics mattered in the distribution of relieffunds. Corruption by others was curbed because it was in Roosevelts political interest to seeit curbed.


Corruption and Political Manipulation during the New Deal , April 2006

Direct Grassroots Action

As the effects of the 2008 global financial crisis are felt more and more, as food prices aroundthe world increase, and other inter-related conditions get worse for many around the world,some of the resulting public unrest and disquiet is being channeled into anti-corruptionconcerns.

India, it seems, has had so much persistent corruption, that many are often resigned to it as asad part of life.

Inter Press Service noted the extent of corruption in India:

In November 2010, the Washington-based Centre for International Policy said in a study thatsince it gained independence in 1947, India may have lost 452 billion dollars in illegaltransfers abroad and estimated the current annual loss to be close to 20 billion dollars.

Julian Assange, founder of the non-profit media group WikiLeaks that collects and publishesclassified government documents, provided more evidence in an interview given to the Times

Now news channel on April 26. There is more Indian money in Swiss banks than any othernationality, Assange said.

Ranjit Devraj,India: Gandhism Returns to Fight Corruption, Inter Press Service, June11, 2011
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However, recently a number of high profile corruption cases, such as the illegal award ofcontracts for the 2010 Commonwealth Games, and many more have flooded Indianmainstream press, and this time citizens are less reluctant to just accept it.

A strong growing anti-corruption movement has emerged, with people such as Anna Hazare

capturing the imagination of many. Hazare, a 74 year old man has vowed to fast to death tosee corruption tackled.

His non-violent civil disobedience has created a mass of followers many of whom liken hisapproach and struggle to that of the iconic independence leader, Gandhi. Some of the public

protests against the governments attempt to weaken proposed anti corruption bills have seenhundreds of thousands gather and rally.

This non-violent form of protest appears of have been more effective in its short period thanvarious violent ones (on other political issues) that have plagued parts of India for manyyears.

Against such a force, the government seems to have responded quite poorly and there is greathope among many in the country that maybe corruption will start to be addressed like never

before:

As people across Indian cities and towns and villages rallied in support of Hazare, it was awarning to not just the centrally ruling Congress party but the entire political class thatIndias civil society was truly fed up with their corrupt ways.

The conflict between the government and civil society is taking place as Asias third largest

economy grapples with unprecedented levels of corruption that is said to be undermining theliberalisation-led growth of this nation.

With political parties of all shades losing credibility, the field opened up for civil society tomove in and Hazares campaign for a strong ombudsman gained extra power.

[Paranjoy Guha Thakurta, a prominent commentator on political and economic affairs] added

that rising food prices may have added to public ire. India has a huge food inflation on topof corruption scandals. So naturally there is popular discontent that we see surfacing as masssupport for Hazares movement.

Sujoy Dhar,India: Civil Society Shows Its Muscle, Inter Press Service, August 22, 2011

Nepal has also seen mass demonstrations, inspired by Hazares protests in India. Diversegroups such as former ministers, womenss groups and students have held public fasts againstcorruption and pressed the new government on post-monarchy reforms. The protests have notappeared as dramatic in their effect as has been in India, perhaps because Nepal is justcoming out of a long civil war. However, the inspiration is there to continue the protests as

some promising developments have occurred.
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Various organizations across numerous African countries are trying to come together totackle an emerging trend of various African countries considering setting up off-shore taxhavens, supposedly to kick-start their own financial sectors and streamline red-tape. Tax-havens are a major problem that can hide corruption and undermine democracies and isdiscussed more on this sites section on tax havens.

Brazil is also seeing a rise in action against corruption. It is thought that corruption, which isdeeply rooted in politics and economics in Brazil, is costing the economy some $43 billion ayear. Inspired by the rise in protests in Spain following the effects of the 2008 globalfinancial crisis on the country, many movements in Brazil have seen the rise accompanied byan explosion in use of social networks and technology to help organize and by-pass theinstitutionalized mainstream media avenues closed off for most citizens.

As an extremely severe global economic and financial crisis takes hold, corruption is likely toincrease. Many governments are considering New Deal or Keynesian style macroeconomic

policies to help stimulate their economies. It is perhaps a critical or at least opportune

moment to renew efforts to tackle corruption. Some politicians may have honest intentions,while others (many others, it may seem), may not. In either case, the rewards for stampingout corruption would be significant.
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