Contents
Contributors ix Acknowledgements xviii EditorÕs note xix Acronyms and abbreviations xxi
Introducing the Global Corruption Report Peter Eigen 1 Eva Joly, Preventing corruption: empowering the judiciary 2 Ron Noble, Policing corruption 4
Part one: Access to information
Access to information: whose right and whose information?
Jeremy Pope 8 Ann Florini, Campaigning for access to information 10 Richard Calland, Whistleblowing in South Africa 17
E-government and access to information
Subhash Bhatnagar 24 Valeria Merino Dirani, EcuadorÕs first steps towards e-procurement 29
Corporate transparency in the fight against corruption
Harriet Fletcher 33 Nicholas Shaxson, Company disclosure in the oil industry 36 Ian Byrne, Surveying transparency and disclosure in business 40
The mediaÕs role: covering or covering up corruption?
Bettina Peters 44 Mark Whitehouse, Media sustainability in Southeast Europe and Eurasia 46 Josias de Souza, Caught on camera:
regional Brazilian media moguls discredited 50 Alasdair Sutherland, Cash for editorial: unethical media practices
revealed 53
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Freedom of information legislation: progress, concerns and standards
Toby Mendel 57 Edetaen Ojo, Facing obstacles in Nigeria:
the ongoing struggle for access to information 58
Yukiko Miki, Revealing corruption
through JapanÕs Information Disclosure Law 60
Part two: Regional reports
Western Europe
Vronique Pujas 64 Catherine Courtney, Confronting cash for contracts in Britain 66 Bjrn Rohde-Liebenau, Blacklisting in Germany 71
North America
Phyllis Dininio with Frank Anechiarico 77 Jermyn Brooks, A large dose of Enronitis: the need for global reform 80
Central America, Mexico and the Caribbean
Pablo Rodas-Martini 90 Roxana Salazar, Election campaign monitoring in Costa Rica 93 Mary K. King, Trinidad and Tobago:
from airport corruption to the collapse of government 97
South America
Eduardo Wills Herrera and Nubia Uruea Corts with Nick Rosen 103 Roberto Cosso, Channelling money abroad?
Jersey versus Brazil in the case of Paulo Maluf 107
The Pacific
Mark Findlay 115 Peter Rooke, Police corruption thriving in Australia 117 Rachael Keaeke, Papua New Guinea media declare war on corruption 120
East Asia
Xiaobo Lu 128 Liam McMillan, Floodgates of corruption: ChinaÕs Three Gorges dam 131 Andrew Jennings, Goodbye Mr Clean 134
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Southeast Asia
Emil Bolongaita 140 Stefanie Teggemann, The poor speak up: corruption stories from Indonesia 143 The Center for Social Development, Teaching integrity in CambodiaÕs
schools 146
South Asia
Gurharpal Singh 153 Gopakumar Krishnan, Paying to see your own baby 157
Commonwealth of Independent States
Alena Ledeneva 165 Robert Templer, Tough lines in Central Asia 166 Larysa Denysenko, Censorship by death: Ukraine silences critics 168
Central and Eastern Europe and the Baltic states
Martin Brusis, Iris Kempe and Wim van Meurs 177 Inese Voika, Political party funding in Latvia 180 Emlia Sic ̆kov, Pursuing conflict of interest legislation in
Slovakia 183
Southeast Europe
Dejan Jovic 190 Zsolt-Istvan Mato, RomaniaÕs anti-corruption body: more than a political
tool? 195
Middle East and North Africa
Reinoud Leenders and John Sfakianakis 203 Charles D. Adwan and Mina Zapatero, Cutting through red tape in Lebanon 206
West Africa
Niyi Alabi 215 Charles Diplo, Corruption and distrust in the Ivorian police:
a deep-rooted problem 218 Nassirou Bako Arifari, Formal and informal customs in Benin 221
Central Africa
Claude Kabemba 227 Samuel Nguiffo, Corruption in CameroonÕs forests 230
East Africa
Andrew Mwenda 237 Mwalimu Mati and Wanjiru Mwangi, Measuring the burden of bribery 242
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Southern Africa
Tom Lodge 248 Christine Munalula, Corruption in ZambiaÕs electoral process 254
Part three: Data and research
Johann Graf Lambsdorff, 2002 Corruption Perceptions Index 262 Fredrik Galtung, 2002 Bribe Payers Index 266 Marie Wolkers, National surveys on corruption in francophone Africa 269 Volkhart Finn Heinrich, Transparency and corruption within civil
society organisations 271 Juan Pablo Guerrero and Helena Hofbauer, Budget transparency in
Latin America 274 Richard Rose, Corruption and trust in the New Europe and
New Russia Barometers 278 Marta Lagos, Public opinion of corruption in Latin America 282 Martin Dimov, Corruption in Balkan countries 285 Rafael Di Tella and Ernesto Schargrodsky, Controlling corruption
through high wages 289 Mireille Razafindrakoto and Franois Roubaud, Wages and corruption:
the case of Madagascar 292 Stephen Knack and Omar Azfar, Gender and corruption 295 Karina Litvack and Robert Barrington, The governance of corruption:
a survey of current business practice 298 Daniel Kaufmann and Aart Kraay, Governance and growth in the
very long run: updated indicators, new results 302
Stephen Knack, Mark Kugler and Nick
Manning, ÔSecond generationÕ
governance indicators 306 Julius Court and Goran Hyden, World Governance Survey:
a new approach to assessing governance 310 John van Kesteren, The International Crime against Businesses Survey 314 Ugo Panizza, Electoral rules and corruption 317 Jnos Bertk, Managing conflicts of interest in OECD countries 320
Index 323
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Contributors
Charles D. Adwan is the executive director and a founding member of the
Lebanese Transparency Association, TIÕs chapter-in-formation in Lebanon.
Niyi Alabi has published several books on the media and on parliamentary
democ- racy in West Africa. He consults on media and governance for a number of
interna- tional organisations.
Frank Anechiarico is the Maynard-Knox professor of government and law at
Hamilton College, New York. He is the author of numerous articles on corruption
control in the United States, and is co-author of The Pursuit of Absolute
Integrity (Chicago: University of Chicago Press, 1996).
Omar Azfar is a research associate at the Center for Institutional
Reform and the Informal Sector, University of Maryland. His recent research has
focused on the determinants of corruption, and the effects of decentralisation
on the quality of health and education services.
Nassirou Bako Arifari teaches at the universities of Abomey and Cologne.
He is a member of LASDEL (Laboratoire de recherche sur les dynamiques sociales
et le dveloppement local), Benin and Niger.
Robert Barrington is the director of the Governance and Socially
Responsible Investment department of ISIS Asset Management plc (formerly
Friends Ivory & Sime), an asset management company based in London.
Jnos Bertk is principal administrator for the OECD Public Governance
and Ter- ritorial Development Directorate. He authored ÔTrust in GovernmentÕ, a
review of the implementation of the OECD recommendation on improving ethical
conduct in public service.
Subhash Bhatnagar is professor of information technology at the Indian
Institute of Management, Ahmedabad. He was recently with the World Bank on a
two-year assignment, leading an initiative on e-government.
Emil Bolongaita is a senior public sector governance specialist with
Development Alternatives, Inc. Previously he was assistant professor at the
National University of
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Singapore and manager of the World Bank Global Distance Learning
Programme on Combating Corruption in Asia-Pacific.
Jermyn Brooks is the acting managing director of TI and a professional
accountant. His main focus is on corporate governance and the role of the
private sector. He was previously global managing partner of
PricewaterhouseCoopers.
Martin Brusis is a senior research fellow at the Center for Applied
Policy Research, Munich University. He specialises in comparative government
with a focus on Eastern Europe.
Ian Byrne is the business development director of the global governance
services group of Standard and PoorÕs. He has spoken and written on corporate
governance in Europe, Asia and the Americas.
Richard Calland is executive chair of the Open Democracy Advice Centre
and head of the Institute for DemocracyÕs governance programme, both in South
Africa. He is co-editor of The Right to Know, the Right to Live: Access to
Information and Socio- economic Justice (Cape Town: Open Democracy Advice
Centre, 2002).
The Center for Social Development is a non-profit organisation that
seeks to promote democratic values and improve the quality of life of the
Cambodian people through practical research, advocacy, awareness-raising and
public debate.
Roberto Cosso is a special reporter for the Folha de S. Paulo (Brazil).
He won the Folha Journalism Prize 2001 and was a finalist for the Esso
Journalism Prize in the same year.
Julius Court is a research officer at the Overseas Development
Institute, in London. He previously worked in the Office of the Rector at the
United Nations University in Tokyo.
Catherine Courtney is a former researcher with TI United Kingdom.
Larysa Denysenko is the executive director of TI Ukraine. She is an
attorney-at-law and former chief of the international legal department of the
ministry of justice of Ukraine.
Martin Dimov works at the Center for the Study of Democracy, in
Bulgaria. His main interests are the empirical study of corruption, the grey
economy and percep- tions of democracy in Central and Eastern Europe.
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Phyllis Dininio is a faculty member of the Transnational Crime and
Corruption Center at American University, Washington, D.C. She also consults on
governance and anti-corruption issues for the World Bank, USAID and other
organisations.
Charles Diplo is communications secretary of Transparence et Integrit
en Cte dÕIvoire. He is also sales director for FILTISAC JUTE in Abidjan.
Rafael Di Tella teaches at Harvard Business School. His research
interests include corruption, the media industry and the determinants of
happiness.
Peter Eigen is chairman of TI. He holds teaching positions at Harvard
UniversityÕs John F. Kennedy School of Government and Johns Hopkins
UniversityÕs School of Advanced International Studies. Prior to founding TI in
1993, Eigen worked at the World Bank for more than two decades.
Mark Findlay is professor of criminal justice at Sydney University. He
recently pub- lished The Globalisation of Crime: Understanding the Transitional
Relationships of Crime in a Global Context (Cambridge: Cambridge University
Press, 2000).
Harriet Fletcher was the operational policy manager at the Prince of
Wales Inter- national Business LeadersÕ Forum (IBLF) in London. She is
currently working as a consultant to the IBLF on a range of issues including
corruption and conflict.
Ann Florini is senior fellow in the Governance Studies Program at the
Brookings Institution. She is author of a forthcoming book on global governance
and editor of The Third Force: The Rise of Transnational Civil Society
(Washington, D.C.: Carnegie Endowment, 2000).
Fredrik Galtung is a founding staff member of TI, where he is now head
of research. He has published widely on corruption and has been affiliated with
Wolfson College, Cambridge, since 1997.
Juan Pablo Guerrero is a professor and researcher at the Center for
Research and Teaching in Economics (CIDE), Mexico.
Volkhart Finn Heinrich is project manager of the CIVICUS Civil Society
Index. He has published several articles and reports about civil society and
the South African transition to democracy.
Helena Hofbauer is executive director of Fundar, Centro de Anlisis e
Investigacin A.C., Mexico.
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Goran Hyden is professor of political science at the University of
Florida. He has published extensively on the relation between politics and development.
Andrew Jennings is an experienced investigative journalist and
film-maker who has produced several books and many documentaries on corruption
in sport, including The Great Olympic Swindle (New York: Simon and Schuster,
2000).
Eva Joly is an investigating magistrate. In 2001 she was awarded a TI
Integrity Award for her outstanding work in the Elf-Aquitaine affair. She is
currently special adviser to the Norwegian government in the fight against
corruption and money laundering.
Dejan Jovic lectures on Yugoslav and post-Yugoslav politics in the
Department of Politics at Stirling University. He is a regular contributor to
the Economist Intelli- gence Unit.
Claude Kabemba is a senior researcher at the Electoral Institute of
Southern Africa. He has written numerous research and consultancy papers on
democratisation processes, conflict and economic growth in South and Central
Africa.
Daniel Kaufmann is the director of global governance and regional
learning at the World Bank Institute. He works on governance and
anti-corruption issues, on investment climate and private sector development.
Rachael Keaeke is a press officer for TI Papua New Guinea (PNG). Before
joining TI, she was a reporter with The National newspaper in PNG.
Iris Kempe is a senior research fellow at the Center for Applied Policy
Research, Munich University. She specialises in EU enlargement, the
post-communist transi- tion and regional policy, particularly in Russia and
Ukraine.
John van Kesteren is a criminology consultant at the United Nations
Interregional Crime and Justice Research Institute, specialising in
international comparative crime and victimisation surveys.
Mary K. King is a founding member of the Trinidad and Tobago
Transparency Institute, a TI national chapter, and is an independent senator in
Trinidad and TobagoÕs parliament.
Stephen Knack is a senior research economist at the World Bank. He
previously worked at the IRIS Center at the University of Maryland. He has
authored numerous studies on the sources of good governance and its
consequences for economic performance.
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Aart Kraay is a senior economist in the World BankÕs research
department, where he works on governance issues; the links between trade,
growth and inequality; inter- national capital movements; and the Chinese
economy.
Gopakumar Krishnan is a programme manager at TIÕs Secretariat. He works
on issues related to public accountability and good governance in Asia.
Mark Kugler is a consultant to the World BankÕs Public Sector Group, and
is a PhD candidate in the political science department at George Washington
University.
Marta Lagos is founder and director of Latinobarmetro. Since 1994 she
has been director of MORI (Chile), a polling company associated with MORI UK.
Johann Graf Lambsdorff is associate professor of economics at Gttingen
Univer- sity. Recent publications include ÔMaking Corrupt Deals: Contracting in
the Shadow of the LawÕ, Journal of Economic Behavior and Organization 48, no. 3
(2002), and ÔCorruption and Rent-SeekingÕ, Public Choice 113, no. 1/2 (2002).
Alena Ledeneva lectures on Russian politics and society at the School of
Slavonic and East European Studies, University College London. She is author of
RussiaÕs Economy of Favours (Cambridge: Cambridge University Press, 1998).
Reinoud Leenders is doing research into corruption in Lebanon at London
Univer- sityÕs School of Oriental and African Studies, where he has also taught
courses on the politics of the Middle East and development.
Karina Litvack heads the Governance and Socially Responsible Investment
depart- ment of ISIS Asset Management plc (formerly Friends Ivory & Sime),
an asset man- agement company based in London.
Tom Lodge is professor of political studies at the University of the
Witwatersrand. He is the author of Politics in South Africa from Mandela to
Mbeki (Oxford: James Currey, 2002).
Xiaobo Lu is director of the East Asian Institute and assistant
professor of political science, both at Columbia University. He is author of
Cadres and Corruption: the Organizational Involution of the Chinese Communist
Party (Stanford: Stanford University Press, 2000).
Nick Manning is lead public sector management specialist for South Asia
at the World Bank. He previously served in the bankÕs Public Sector Group, with
responsi- bility for knowledge management in administrative and civil service
reform.
Contributors xiii
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Mwalimu Mati is deputy executive director of TI Kenya. Previously he
worked for the Public Law Institute, the Centre for Governance and Development
and the International Commission of Jurists (Kenya section).
Zsolt-Istvan Mato is the Romania correspondent for Transitions Online.
He cur- rently also freelances for Radio Free Europe/Radio LibertyÕs Newsline.
Toby Mendel is head of the law programme at ARTICLE 19, a leading
international human rights NGO based in London. He is the author of Public
Service Broadcast- ing: A Comparative Legal Survey (Kuala Lumpur: UNESCO and
AIBD, 2000) and A Model Freedom of Information Law (London: ARTICLE 19, 2001).
Valeria Merino Dirani is executive director of the Latin American
Corporation for Development, the Ecuadorian Chapter of TI.
Wim van Meurs is a senior research fellow at the Center for Applied
Policy Research, Munich University. His research interests include European
Balkan poli- cies, nation and state building, ethnic conflicts, EU enlargement
and the post- communist transition.
Yukiko Miki is executive director of Information Clearinghouse Japan, a
Tokyo- based NGO promoting access to public information.
Christine Munalula is president of the Foundation for Democratic
Process, TIÕs chapter-in-formation in Zambia.
Wanjiru Mwangi is head of communications at TI Kenya. Her experience as
a jour- nalist and communications specialist has included work for Population
Services International, the Intermediate Technology Development Group East
Africa and The People newspaper.
Andrew Mwenda is a senior reporter with the investigations desk of The
Monitor, UgandaÕs only independent daily.
Samuel Nguiffo is director of the Centre for Environment and
Development, an NGO based in Cameroon. He won the Goldman Environmental Prize
for Africa in 1999.
Ron Noble is secretary general of Interpol. His law enforcement career
includes service at the U.S. Departments of the Treasury and Justice and as
president of the Financial Action Task Force. He is also faculty director at
the New York University School of Law.
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Edetaen Ojo is executive director of Media Rights Agenda, an NGO that
has led the campaign for access to information in Nigeria. He is also
vice-chair of the board of directors of the Media Foundation for West Africa.
Ugo Panizza is an economist in the research department of the
Inter-American Development Bank. He has held academic positions at the
University of Turin and the American University of Beirut.
Bettina Peters worked at the International Federation of Journalists for
10 years, during which time she explored corruption in the media and corporate
media own- ership. She recently moved to the Maastricht-based European
Journalism Centre, where she is director of programmes.
Jeremy Pope, a lawyer, served as TIÕs first managing director and is now
director of TIÕs Centre for Innovation and Research. He is the author of the TI
Source Book – Confronting Corruption: The Elements of a National
Integrity System (Berlin: Transparency International, 2000).
Vronique Pujas is a research fellow for the CNRS (Centre National de la
Recherche Scientifique) and teaches at the Institut dÕEtudes Politiques in
Grenoble. She has written numerous papers and books, including Scandales et
dmocratie en Europe du Sud (Paris: LÕHarmattan, forthcoming).
Mireille Razafindrakoto is an economist at Dveloppement et insertion
interna- tionale (DIAL) in Paris. She has published articles on the monitoring
and evaluation of poverty, the voice of the poor, redistribution and the role
of the state.
Pablo Rodas-Martini has consulted for the International Development
Research Centre, Asociacin de Investigacin y Estudios Sociales, Facultad
Latinoamericana de Ciencias Sociales, and the Economic Commission for Latin
America and the Caribbean. He was on the United Nations Development Programme
panel of con- sultants for the Human Development Report in 1999, 2000 and 2001.
Bjrn Rohde-Liebenau is a member of the executive board of TI Germany.
He has worked as a lawyer and mediator for 12 years, six of them with the
German Privati- sation Agency for East Germany (Treuhandanstalt).
Peter Rooke was the co-founder of TI Australia in 1995 and is on its
board of direc- tors, as well as that of TI.
Richard Rose is director of the Centre for the Study of Public Policy at
the Uni- versity of Strathclyde. His latest book, with Neil Munro, is Elections
without
Contributors xv
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Order: RussiaÕs Challenge to Vladimir Putin (Cambridge: Cambridge
University Press, 2002).
Nick Rosen is a New York-based freelance journalist specialising in
Latin America. His work has covered a wide range of issues, including
international finance and economics and the civil war in Colombia.
Franois Roubaud is an economist at Dveloppement et insertion
internationale (DIAL), Paris, and director of the CIPRE/Institut de recherche
pour le dveloppe- ment (IRD) Research Unit. He has written on the informal
sector in Mexico and macroeconomic perspectives in Cameroon and Madagascar.
Roxana Salazar, a prominent environmental lawyer with extensive
experience in civil society participation, has been president of TI Costa Rica
since its inception in 1997.
Ernesto Schargrodsky is a professor at Universidad Torcuato Di Tella in
Buenos Aires. His areas of interest include the study of corruption and crime.
John Sfakianakis is a research and teaching fellow at the Center for
Middle Eastern Studies at Harvard University. He is associate researcher at the
Interna- tional Institute for Strategic Studies, London, and has worked as a
consultant for the World Bank.
Nicholas Shaxson is the author of country reports on Angola and Gabon
for the Economist Intelligence Unit and a regular contributor to the Financial
Times, Financial Times Energy, Business Day and Reuters.
Emlia Sic ̆kov has been running TI Slovakia since 1998 and is a
member of the TI board of directors. She is currently finishing her doctoral
studies, focusing on issues of transparency and accountability.
Gurharpal Singh is a professor at the University of Birmingham, holding
the Nadir Dinshaw Chair in Inter-Religious Relations. He has a special interest
in South Asia and has published on political corruption in Indian politics.
Josias de Souza is director of the Brasilia office of Folha de S. Paulo
(Brazil), a leading Brazilian newspaper.
Alasdair Sutherland is an executive vice-president of the global public
relations firm Manning Selvage & Lee. He founded the Campaign for Media Transparency
in 2001, during his year as president of the International Public Relations
Association.
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Stefanie Teggemann is working for the World Bank on anti-corruption and
gover- nance reform. She is co-author, with Ratih Hardjono, of The Poor Speak
Up: 17 Stories of Corruption (Jakarta: Partnership for Governance Reform,
2002).
Robert Templer is the Asia programme director at the International
Crisis Group. He is author of Shadows and Wind: A View of Modern Vietnam
(London: Little Brown, 1998).
Nubia Uruea Corts is professor and director of the Public Management
Area and Study Group on Corruption at the Universidad de los Andes. She has
published arti- cles on combating corruption in police forces, and in judicial
and electoral systems.
Inese Voika is the founder and current president of DELNA, the Latvian
chapter of TI. She is an investigative journalist and professor at the Latvian
University.
Mark Whitehouse is director of the Media Development Division at the
Interna- tional Research and Exchanges Board (IREX). He previously worked at
USAID and the Carter Center Commission on Radio and Television Policy.
Eduardo Wills Herrera is associate professor at the Universidad de los
Andes. He has written several articles on strategies to fight corruption and
the relationship between the decentralisation process and corruption in
Colombia.
Marie Wolkers is a programme officer at TIÕs Secretariat, where she
coordinates pro- grammes in francophone Africa.
Mina Zapatero is project manager of the Lebanese Transparency
Association, TIÕs chapter-in-formation in Lebanon.
Contributors xvii
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xviii
Acknowledgements
Many different people have been involved in helping produce the Global
Corruption Report 2003, and we thank them all.
Primarily, we wish to thank our contributors. We would also like to
thank the various artists – Xavier Bonilla (ÔBonilÕ), Julio Briceo
(ÔRacÕ), Daryl Cagle, Gary Clement, Alex Dimitrov, Nicolae Ionita, Bojan
Jovanovic, Sam Sarath and Jonathan Shapiro (ÔZapiroÕ) – who shared their
creative and original artwork with us. Thanks as well to Janine Vigus for her
inspired cover design.
Thanks are also due to the many people who voluntarily devoted their
time and energy to referee the contributions. Among many from within the TI
movement who have helped, we give particular thanks to Cludio Weber Abramo,
Shirley van Buiren, Hansjrg Elshorst, Fredrik Galtung, John Githongo, Roslyn Hees,
Jeff Lovitt, Carin Norberg, Jeremy Pope and Frank Vogl. In addition, we thank
Adel M. Abdellatif, David Abouem, Carol Adams, Muzaffer Ahmad, Hu Angang,
Claude Arditi, Ron Berenbeim, Peter Birle, Lala Camerer, Ledivina Cario, B.C.
Chikulo, Sheila Coronel, Chris Cramer, Ron Crocombe, Wayne Dillehay, Ralph
Espach, Odd-Helge Fjeldstad, Marlies Glasius, se Gr¿deland, Amy Hawthorne,
Richard Heeks, Bruce Heilman, Clement M. Henry, Paul Heywood, Irungu Houghton,
Michael Johnston, John-Mary Kauzya, Peter Larmour, Neville Linton, Stephen Ma,
Gnther Maihold, Maureen Mancuso, John Mbaku, Dana Mesner Andolsek, Philippe
Montigny, Steve Morris, Kumi Naidoo, Vijay Naidu, Olga Nazario, Dele Olowu,
Katarina Ott, Paul Oquist, Richard Robison, Steven Rood, Kety Rostiashvili,
Alan Rousso, Charles Sampford, Savenaca Siwatibau, Helen Sutch, Mahaman Tidjani
Alou, Boyko Todorov, Chris Toensing, Samarth Vaidya, Shyama Venhateswan,
Alberto Vannucci and Laurence Whitehead.
The Global Corruption Report 2003 would not have been possible without
the support and assistance of the entire staff at the TI Secretariat in Berlin.
In addition, we thank the TI national chapters, many of whose members provided
articles, ideas and feedback on this yearÕs report. We also want to thank the
interns who provided support to the GCR team over the past year: Daniel Large,
Katie Mills, Claire Naval, Rachel Rank and Julia Schweizer.
We are particularly grateful to Michael Griffin for his indispensable
editing, Denise Groves for her excellent editorial assistance, Barbara Meincke
for her careful research, and NetScript for their unfailing website support.
Very special thanks go to Jessie Banfield, who helped shape the report in many
ways.
The Global Corruption Report receives financial support from the Utstein
Group, comprised of the governments of Britain, Germany, the Netherlands and
Norway.
Global Corruption Report 2003
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EditorÕs note
The Global Corruption Report 2003 is Transparency InternationalÕs second
annual report on the state of corruption worldwide. It concentrates on the
events and devel- opments that shaped the struggle against corruption from July
2001 to the end of June 2002, the period immediately following that covered by
the Global Corruption Report 2001.
Transparency International defines corruption as the misuse of entrusted
power for private gain. This definition includes public and private sector
corruption, at both petty and grand levels.
The Global Corruption Report 2003 is divided into three main sections.
The first focuses on access to information, a core issue for the
anti-corruption movement. TI executive director Jeremy Pope introduces the
section, emphasising the need for transparency in view of the demise of trust
in public and private institutions. Each of the other reports explores a
different aspect of the theme: e-government, corpo- rate transparency, the role
of the media and freedom of information legislation.
The theme of access to information is also explored in the following
section, which considers global corruption trends in 16 regional reports. The
sequence of regional reports begins with Western Europe and North America,
emphasising the prevalence of corruption in the developed world. Written
largely by academics and independent researchers from the regions, the reports
provide summaries and analy- sis of prominent events relating to corruption and
the fight against it during the period under review. The authors have
illustrated their assessment of trends in their regions with key country
examples; the fact that not all countries in a region are given equal
prominence does not reflect judgement on their corruption levels.
The regional reports are composed of four sections, each with a
distinctive focus: international and region-wide developments; national
developments involving gov- ernments, public administration, parliaments and
political parties; the private sector; and civil society. A region-specific box
on access to information links each report to the central theme of the Global
Corruption Report 2003. The section is sup- plemented by essays and personal
accounts contributed by the staff of Transparency International national
chapters, independent journalists and NGOs from around the world. In discussing
the effect of recent trends in corruption on their countries, they give a sense
of the local challenges that characterise todayÕs fight against corruption.
The final section of the Global Corruption Report 2003 showcases the
latest research on the dynamics of corruption around the world. The data and
research described in this section provide snapshots of ongoing or recently
completed pro- jects undertaken by international organisations, governments,
the private sector,
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NGOs and academics. Our selection criteria prioritised research that is
compara- tive, involves innovative methodology or has significant implications
for anti- corruption policy.
The Global Corruption Report 2003 also gives a voice to prominent figures
in the struggle against corruption – the distinguished prosecutor Eva
Joly and the secretary general of Interpol, Ron Noble – who provide
insight and inspiration for the anti-corruption movement as a whole.
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Acronyms and abbreviations
ADB Asian Development Bank APEC Asia-Pacific Economic Cooperation BPI Bribe Payers Index CIS Commonwealth of Independent States CPI Corruption Perceptions Index CSO Civil society organisation EBRD European Bank for Reconstruction and Development ECOWAS Economic Community of West African States EU European Union FATF Financial Action Task Force (on Money Laundering) FDI Foreign direct investment G8 Group of eight major industrial democracies (Britain,
Canada, France,
Germany, Italy, Japan, the Russian Federation and the United States) GDP Gross domestic product
GNP Gross national product GRECO Council of Europe Group of States against Corruption HIPC Heavily Indebted Poor Countries IDB Inter-American Development Bank IGO Intergovernmental organisation IMF International Monetary Fund Interpol International Criminal Police Organization Mercosur Mercado Comn del Sur (Southern Cone Common Market) NEPAD New Partnership for AfricaÕs Development NGO Non-governmental organisation OAS Organization of American States OAU Organization of African Unity OECD Organisation for Economic Co-operation and Development
OSCE Organization for Security and Co-operation in Europe SADC Southern African Development Community TI Transparency International UN United Nations UNDP United Nations Development Programme UNICRI United Nations Interregional Crime and Justice
Research Institute USAID United States Agency for International Development WBI World Bank Institute WTO World Trade Organization
xxi
01 Global Corruption 27/11/02 3:15pm Page xxi
Introducing the
Global Corruption Report 2003
Peter Eigen, Chairman, Transparency International
The corrupt are running out of places to hide. That is the message that
runs through the Global Corruption Report 2003. Empowered by technology –
essential to the prompt and accurate flow of information – the media and
the public are increasingly calling businesses and politicians to account.
To help secure that flow of information, national chapters of
Transparency International have campaigned for freedom of information in
Germany, Lebanon, Mexico, Panama and many other countries. Under their scrutiny
and that of other civil society organisations and the wider public, governments
are taking steps to further the cause of transparency. From Chile and Brazil to
South Korea and India, the spread of e-government involves increasing use of
the Internet to disseminate public information and to open up the bidding
process in public tenders and privatisations.
But freedom of information is not enough. However professionally and
accu- rately information is processed, corruption will continue to thrive
without the vigi- lance of the media and civil society, and the bravery of
investigative journalists and whistleblowers in particular.
These champions of transparency are as essential in the developing as
they are in the developed world. The regional reports section of this volume
opens with reviews of Western Europe and North America, from where the Enron
scandal sent shock waves through the global corporate sector and severely
damaged public trust in the integrity of business. Enron and the scandals that
followed heightened the perception of collusion between auditors, tax advisers,
lawyers and bankers and their corporate clients to massage accounts for the
short-term benefit of man- agers – in defiance of the trust placed in
them by shareholders, employees and the public at large.
To a certain extent, this type of unethical behaviour can be deterred by
interna- tional initiatives such as the 1997 Organisation for Economic
Co-operation and Development (OECD) Convention on Combating Bribery of Foreign
Public Officials. While its principal focus is to criminalise bribery of
foreign officials, the convention and related OECD instruments also deal with
accounting, auditing and corporate controls. TI has for some years urged the
OECD to press member states for improve- ments in these areas. The impact of
the convention is not yet satisfactory. Only a few cases are being investigated
under the convention, and in most OECD member coun- tries the political will to
prosecute major bribery cases is lacking. Furthermore, the
1
01 Global Corruption 27/11/02 3:15pm Page 1
Preventing
corruption: empowering the judiciary
The Global Corruption Report is not alone in calling attention to the
recent scandals surrounding Enron, WorldCom and other public companies in the
United States, and in demanding more effective reporting and control mechanisms
to prevent their recurrence. These cases revolved around private enterprises
under the control of external bodies that were themselves subject to conflicts
of interest between their auditing and consulting functions. Some of these industrial
groups, financial institutions and service providers exert more global
influence than many countries. Nevertheless, what has come to light in the
private sector may one day emerge in the public sphere with respect to a
stateÕs accountability to the public.
Transparency in government relies on parliamentary control, the
foundation of democracy, which is upheld by public funds. But there is often an
imbalance between the prerogatives of the executive branch and the capacity of
a parliament to truly exercise its regulatory powers over public spending and
the budget. How accurate, for example, are the figures that relate to budgetary
deficits, the balance of payments, growth rate calculations, extra- budgetary
investment in retirement funds or provisions to meet the stateÕs responsibility
in matters of public health?
Over the last few years, the magnitude of global corruption has been
characterised by the repeated implication of public officials in fraudulent
transfers
of public and private funds. Corruption can be prevented through greater
transparency in accounting and better control mechanisms, particularly in the
area of international intervention – be it with respect to aid or
disaster relief – and in relations between large corporations and states
regarding contracts for the exploitation of natural resources.
The battle against illicit financial transactions must be fought with
sound strategy, one that empowers the justice system as an indispensable
weapon. It is thus paradoxical that justice budgets represent only a small
share of public expenditure. In Europe, for instance, only 1–2 per cent
of the budget is allocated to the justice system in Spain, France and Germany.
In the current international climate, it is appropriate to reconsider
this allocation of resources since, without a functional and well-endowed
justice system, no major investigation can be successful. When an overloaded
and under-resourced justice system is confronted by international organised
crime, the latter is guaranteed impunity.
Without efforts to modernise legal institutions, new international
agreements will remain unrealised and our democracies will continue to be
threatened by our inability to track corruption and other criminal activities.
Eva Joly
OECDÕs monitoring process, which was designed to assure effective
implementation and enforcement of the convention by member governments, is
severely under- resourced and behind schedule. The convention will fail if the
OECD cannot press governments to prosecute foreign bribery cases.
Legislative reform is not the only means to promote transparency. Within
the corporate sector, many business leaders are also taking up the challenge to
curtail corruption. The Bribe Payers Index (BPI) 2002 reveals that companies
from leading industrial countries are seen as slightly less likely to bribe
than they were in the first
2 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 2
BPI, carried out in 1999. Companies from Britain and the United States,
however, were notable exceptions to the trend. But many businesses understand
that stopping bribery makes sound economic sense. A survey carried out by
Social Weather Sta- tions in late 2001 found that entrepreneurs in the
Philippines were willing to pay 2 per cent of their corporate net income to
fund anti-corruption programmes. They had estimated that preventing corruption
would result in a 5 per cent increase in net income and a 10 per cent saving on
contracts.
At the national level, progress in the fight against corruption is also
in evidence. Encouraging news has come from EU accession candidates in Central
and Eastern Europe, where – along with pressure from international actors
– political will and civil society efforts have promoted transparency and
good governance. Yet progress is slow to reverse the damage corruption has
caused to personal, public and cor- porate reputations. Throughout the world,
the public has suffered a tremendous loss of confidence in politicians. Trust
in political parties is lower than in any other public institution. New data
from the New Europe Barometer, presented in the data and research section of
this report, tells us that in Central and Eastern Europe as a whole only one in
eight people trusts political parties and only one in seven posi- tively trusts
members of parliament.
While there is much room for improvement, the past 12 months did witness
noticeable successes in the fight against money laundering and in the
repatriation of stolen assets. The events of September 11th prompted the U.S.
government and others to acknowledge the pernicious nature of money laundering
and to urge the OECDÕs Financial Action Task Force to further tighten its
anti-money laundering strictures. International cooperation between the
judiciary and police forces has increased, and in November 2001 the EU adopted
a new directive on money laun- dering that obliges member states to combat the
laundering of the proceeds of all serious crime, including corruption.
The Global Corruption Report 2003 also reflects a positive trend among
donor agencies. While their efforts to curb corruption were noted in the 2001
report, organ- isations have become more demanding in the last year, insisting
on a commitment to anti-corruption policies and procedures. This approach
dovetails with the opening up of public accounts to independent scrutiny.
Donors should also insist that civil society have full access to monitor
spending and verify that support reaches intended recipients and projects, such
as schools and hospitals.
As civil society organisations have begun to organise themselves more
effectively, especially in many countries on the African continent, they too
are making impor- tant contributions to the anti-corruption cause. Transparency
InternationalÕs national chapters in Africa are spearheading a campaign for the
repatriation of assets plundered by former dictators and deposited in bank
accounts in London, Zurich, New York and Liechtenstein. Nigerians finally saw
the return of US $1.2 billion in funds stolen from Nigeria by the late dictator
Sani Abacha, although the breakthrough necessitated dropping theft and money
laundering charges against
Introducing the Global Corruption Report 3
01 Global Corruption 27/11/02 3:15pm Page 3
Policing
corruption
Law enforcement should play a pivotal role in ensuring the protection of
fundamental human rights in a democratic society. Corruption can diminish the
ability of law enforcement to accomplish its mission and hinder the efficient
and fair functioning of society as a consequence.
This is particularly so when corruption influences the activities of law
enforcement itself. A corrupt law enforcement officer who obstructs the pursuit
of justice can render law enforcement ineffective in the fight against crime in
general. This in turn can undermine public confidence and trust.
Those involved in organised crime are generally motivated by one thing
– profit. Huge sums of money are generated through arms smuggling,
trafficking of human beings and narcotic substances, and financial crimes.
These monies are laundered so that they have the appearance in our financial
system of the proceeds of legitimate business activity. In many cases these
crimes are facilitated by corruption. Organised crime invests heavily to seek
out a Ôweak linkÕ, someone who can be persuaded or coerced to assist. Those
targeted may include bankers, lawyers, prosecutors or judges, politicians,
passport-issuing clerks, embassy officials and those engaged in law
enforcement, such as customs and police officers. Often the commodity that is most
targeted is information, the disclosure of which can critically compromise
police activities.
As Secretary General of Interpol, the only global police organisation, I
am committed to achieving excellence in the communication and use of police
information. I have prioritised our information exchange activities, such as
the real-time exchange of key police information, to combat a range of serious
crimes, including corruption.
The international community is still reeling from the events of
September 11th. Law enforcement agencies worldwide have
4 Global
Corruption Report 2003
rallied to evaluate their structures and systems so as to remedy the
weaknesses that may hamper their efforts to combat and prevent terrorism. That
future terrorist acts may be facilitated by police corruption cannot be ruled
out.
Part of the solution for law enforcement must be to ensure that national
and international integrity systems are in place. Where they exist we must
remain vigilant and refine or improve them to meet new developments. These
systems are designed to identify where corruption may exist, to prevent the
corrupt or those vulnerable to corruption from being recruited and, most
importantly, to increase the risk and the fear of being caught and exposed.
Interpol, through its Expert Group on Corruption, has developed an
integrity system for law enforcement. For our General Assembly in Cameroon in
October 2002, InterpolÕs 179 member-states were invited to adopt very
comprehensive ÔGlobal Standards to Combat Corruption in Police Forces and
ServicesÕ. Such standards, though not legally binding, are essential for an organisation
whose primary task is to exchange sensitive police information. Implementation
of the standards, which have already been adopted by a majority of InterpolÕs
member-states, will be monitored. We will support implementation by offering
training and practitioner exchange programmes.
I remain committed to ensuring that Interpol assists its members in this
way to provide effective service delivery, built on a foundation of sound
ethical values infused with a high degree of professional integrity. A focus on
efficient information exchange and an effort to strengthen the role of police
within integrity systems are crucial building blocks of the common cause
against corruption.
Ron Noble
01 Global Corruption 27/11/02 3:15pm Page 4
AbachaÕs son and one of his business associates. On this front, progress
has also been made in South America. In Peru, the government of Alejandro
Toledo has made sig- nificant efforts to right the wrongs of the Fujimori era.
For example, US $225 million in accounts belonging to FujimoriÕs intelligence
chief Vladimiro Montesinos and others implicated in corruption has been frozen
worldwide.
Civil societyÕs efforts to combat corruption are buttressed by the work
of inves- tigative journalists. In October 2001, Transparency InternationalÕs
Integrity Awards committee honoured the memory of four individuals who lost
their lives as a result of their tenacious efforts to root out corruption.
Three of them were journalists. Carlos Alberto Cardoso, an investigative
journalist in Mozambique, was assassi- nated in November 2000 while
investigating the largest banking fraud in the countryÕs history. Georgy
Gongadze, a Ukrainian journalist who highlighted the cor- ruption of the
government on his Internet news service, was brutally decapitated and burnt
with acid in autumn 2000. Norbert Zongo, an investigative journalist from
Burkina Faso and editor of the weekly newspaper LÕIndpendant, was mur- dered
in 1998; the case remains unsolved. In 2001, one in four of the journalists
killed died while investigating corruption. The killing has not stopped.
Yet we must also bear in mind that there is an abundance of cases in
which the media neglect their role of watchdog and instead nurture unsuitably
close ties with political leaders. In this context the media are not likely to
expose corruption. Indeed, a recent World Bank study finds that exposure is not
as common among state-owned media as it is among their private counterparts. In
the Middle East, many TV stations are owned by government ministers whose conflicts
of interest are not addressed. Journalists in the region continue to face
imprisonment for criticis- ing the political leadership, and most of the
regionÕs legislatures have yet to draft, pass and implement freedom of
information laws.
Political pressure and inappropriate relationships with public figures
are not the only factors that stand in the way of maintaining high journalistic
standards. In many countries, the concentration of private ownership is
increasingly threatening the vital role of the media in the fight against
corruption. Issues of conflict of inter- est and media concentration come into
sharp relief in Italy, where Prime Minister Silvio Berlusconi controls the
majority of private TV stations as well as the public television network.
Berlusconi had promised to resolve the conflict between his political role and
media interests within the first 100 days of his administration, but by
mid-2002 he still showed no signs of honouring his pledge. As a member of the
EU, Italy has set an appalling example to EU accession candidates that have
only recently escaped from the clutches of Stalinist censorship.
Civil society and international institutions fight corruption on many
fronts. Corruption – which continues to destroy trust in public and private
institutions – is a systemic problem; the means to fight it must also be
comprehensive and sys- temic. Laws and regulations against the misuse of power
must be used in this struggle. Restoring trust in public and private
institutions must involve access to
Introducing the Global Corruption Report 5
01 Global Corruption 27/11/02 3:15pm Page 5
information to promote transparency, perhaps the most important weapon
against corruption. Only by insisting on both access to information and greater
trans- parency in every sphere of society, from the local to the
intergovernmental, can civil society, business and government hope to forestall
and expose corruption, and ensure that the corrupt will run out of places to
hide.
6 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 6
Access to information: whose right and whose information?
Jeremy Pope
A popular government without popular information, or the means of
acquiring it, is but a prologue to a farce or a tragedy or perhaps both.
Knowledge will forever govern ignorance, and a people who mean to be their own
governors must arm themselves with the power knowledge gives.
– James Madison, letter to W. T. Barry, 4 August 1822
MadisonÕs observation is as valid today as it was when he made it almost
200 years ago. Access to information is still a minefield across the world. As
Madison noted, knowledge is power, and those who possess it have the power to
rule.
The concept is problematic enough in many industrialised countries, but
it is particularly challenging where countries have been under forms of
colonial rule – systems marked by a preoccupation with secrecy, with
information of the most menial type being scrupulously guarded, and with
accountability not to their peoples, but to remote metropolitan capitals. There
was no element of trust.
On regaining independence, these countries inherited administrative
systems and officials obsessed with secrecy. The same holds true of the
transition countries of Central and Eastern Europe, and those elsewhere
emerging from various forms of dictatorship or feudalism. Sheltered by secrecy,
corruption, repression and human rights abuse abounded – and trust was at
zero. This climate persists in many coun- tries, as recent events from
Kazakhstan to Zimbabwe have made all too clear. In the former, the authorities
have beaten outspoken journalists, while in the latter the Mugabe regime has
crushed access to government information and a free press.1
An obsession with secrecy persists in leading industrial countries.
Witness the absurd spectacle of Sweden being accused by the European Commission
of breach- ing Community Law by making Commission documents available under
legislation the Swedes have enjoyed for nearly 250 years.2 Even
modest access proposals pro- voked a Ôbitterly fought and still controversial
compromiseÕ in the European Parlia- ment.3 Meanwhile, in the United States
(whose landmark freedom of information legislation has long been a world
leader) the White House has sought to block public disclosure of its meetings
with Enron and other energy industry officials – illustrat- ing the fact that
the struggle for information is, first and last, a struggle for account-
ability. At the Johannesburg summit on sustainable development, battle raged
over whether communities in the developing world should have rights to
information
8 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 8
that would empower them to hold multinational corporations to account if
and when they pollute the environment and damage the health of their people.4
In the developing world the perceived secrecy and lack of accountability
of aid donors and international financial institutions have fuelled peopleÕs
misgiv- ings. The donors have too often appeared to shore up secretive regimes
with loans and assistance, the details of which are kept from the citizens they
are ostensibly intended to help. In some countries, these citizens are now
expected to make good the loans plundered by their former leaders with the
apparent acquiescence of the lenders.
These abuses have been compounded by excessive bank secrecy, coupled
with offshore financial centres, some of whom advertise their mission as being
to help customers (corrupt political leaders among them) to Ôkeep their assets
away from prying eyesÕ.5
Matters are further complicated by the crisis in the industrialised
world over accounting practices in the private sector. There, the linking of
rewards for senior executives to stock prices – coupled with egregious
conflicts of interest on the part of auditors – has enabled scandalous
accounting practices and shameless insider trading. We have reached the point
now where the public can have no confidence that any given corporationÕs books
present a true and fair statement of its finan- cial affairs, with untold
consequences for the savings and pension schemes of a whole generation in much
of the developed world and for the sound operation of capital markets.
Behind a mask of apparent openness and accountability to which
once-trusted accountancy firms and business analysts were willing
collaborators, a raft of corrupt practices has undermined the livelihoods and
expectations of millions. Yet by blowing the whistle audit firms risk losing
fees as well as being questioned about their own role in devising opaque
corporate structures and offshore subsidiaries.6 Auditors were trusted to provide
honest accounts, and this trust was betrayed.7 Often, their activities were
supported by legal advisers, who helped to construct secret corporate
partnerships and offshore tax evasion schemes.8
Other passengers on the crowded secrecy bandwagon are research
institutes, with major cash-strapped universities embracing industrial
sponsors. Here there are incalculable risks when, as they invariably must,
business interests come into con- flict with central tenets of academic
inquiry. The funders of university research often claim the right to suppress
findings that might work to their disadvantage.9
The media, whose role should be to protect us from these abuses, often
let us down. True, some media organisations have played key roles in revealing
and inves- tigating corruption. But it is equally true that many media
organisations have been at the mercy of the advertising policies of business
and government alike, with advertisers (both private and public) prepared to
abuse their power to place and to withdraw advertising. Huge international
media conglomerates have evolved, at times all too willing to do the bidding of
governments in order to massage the size of
Access to information Access to information: whose right and
whose information? 9
01 Global Corruption 27/11/02 3:15pm Page 9
Campaigning
for access to information
Access to information has become the rallying cry for scores of
citizensÕ movements and civil society organisations around the world. From
grassroots village associations to transnational campaigns, civil society
groups are asserting the right of citizens to know what governments,
international organisations and private corporations are doing and how public
resources are allocated. Some of these demands directly reflect anti-corruption
concerns. Others are more broadly related to improving governance, but because
corruption flourishes in darkness, any progress towards opening governments and
intergovernmental organisations to outside scrutiny is likely to advance anti-
corruption efforts.
Campaigning locally: MKSS, India
One of the most successful civil society campaigns pressing for greater
access to official information is Mazdoor Kisan Shakti Sangathan (MKSS), the
Association for the Empowerment of Workers and Farmers, based in the state of
Rajasthan, India.
MKSS began its activities in the early 1990s in the mostly illiterate
village of Devdoogri. Although local citizens had witnessed spending
malpractices at first hand, they had no means to document them. With modest
funds provided by the community, a core group of activists began to walk from
village to village asking basic questions about how much money was supposed to
have been allocated to individual communities for development and how it had
actually been spent.
Many government officials insisted that no one had the right to demand
such information. Yet with the help of sympathetic officials, MKSS succeeded in
obtaining local government accounts. It then organised public readings that
made clear that monies were not spent as had been intended. Lists of those paid
to work on projects were read out, revealing that
10 Global
Corruption Report 2003
many of those being paid had died years before. Lists of project
expenditures were read out, but those present declared that the projects had
never been implemented.
The MKSS movement quickly expanded. More than 200 villages and 400
organisations participated in a 40-day sit- in in 1996 for the right to
information in Rajasthan, demanding transparency in accounts and the return of
missing funds.1 That action broadened into a state-wide campaign involving journalists,
politicians and other grassroots movements.
The campaign led to change in 2001, when the government of Rajasthan
passed an access to information law. Five other Indian states have since passed
similar legislation and the MKSS movement that began in Rajasthan has grown
into a National PeopleÕs Campaign.
Campaigning nationally: Grupo Oaxaca, Mexico The Grupo Oaxaca arose out of a conference on ÔThe
Right to Information and Democratic ReformÕ, convened in Oaxaca, Mexico, in May
2001. Scholars, lawyers, journalists and NGO representatives met there and
agreed to form a technical commission that would press for access to
information legislation. President Vicente Fox had included in his election
campaign a pledge to submit a law on access to information during his first
year in office, but no such law was under preparation at the time of the Oaxaca
meeting.
In October 2001, the group presented the Mexican congress with its own
draft law intended to guarantee citizens access to government documents, the
first time a civil society group had brought a bill to the legislature. The
government responded by promising to introduce freedom of information
legislation by December 2001.
The drafting of the law then fell to the governmentÕs anti-corruption
agency, SECODAM, but leaks revealed that
01 Global Corruption 27/11/02 3:15pm Page 10
SECODAMÕs draft was full of exemptions and loopholes. Responsibility was
transferred to the government secretariat (Secretara de Gobernacin),2 and the
proposals then became the subject of a month-long dialogue involving
congressional representatives. Both houses of the legislature eventually
approved a compromise bill unanimously in April 2002.3
Campaigning internationally: the World BankÕs disclosure policy Although the World Bank formulated a disclosure policy
in 1989 and revised it in 1993, partly in response to civil society pressure,
civil society activists argued that the policy was too restrictive. Much
information remained shrouded in secrecy, particularly concerning the bankÕs
plans for future projects and programmes. Moreover, Ôattempts to gain access to
information – by the public and particularly by people directly affected
by Bank projects and programmes – were consistently met with refusals and
red tapeÕ.4
In 2001 civil society groups renewed the campaign for reform. Among the
more active groups were the Bank Information Center (United States), Libertad
Ciudadana/Poder Ciudadano (Panama), Transparencia (Mexico), regional networks
such as the Central and Eastern European Bankwatch Network and chapters of
international NGOs such as ActionAid, Oxfam and Transparency International. In
April 2001, more than 550 such organisations from more than 100 countries
co-signed a letter demanding greater transparency and accountability from the
World Bank. In addition, more than 250 groups attended consultations in 19
cities around the world and many submitted written comments to the bank or to
their national governments. If the bank were serious about increasing
participation, they argued, it must release documents showing what projects or
policies were under discussion and release them in time
for those most affected to help shape them.
Ranged against the civil society campaign were some of the worldÕs more
corrupt and repressive governments, which were unimpressed by claims that they
had a responsibility to allow themselves to be held accountable for how they
conducted projects involving World Bank or other funding. Most surprising,
however, was the resistance from a number of large developing-world
democracies. They argued that releasing sensitive information during loan
negotiations could frighten markets and drive away private creditors.
A revised World Bank policy on disclosure, implemented in autumn 2001,
took some steps towards greater transparency,5 but in general civil society
organisations remain dissatisfied. The bank rejected the idea of releasing
draft documents that would enable people outside the institutionÕs immediate
circle to provide input into project preparation. It also refused to open
meetings of the board of directors to allow for more transparent
representation. As the Bank Information Center noted, ÔThe new policy ...
represents an unwillingness within the Bank to transform its rhetoric on
Òinclusive decision-makingÓ into concrete policy commitments.Õ6
The aftermath of September 11th
Though these three experiences involved successes, they also suggest
that civil societyÕs struggle for access to information faces obstacles at all
levels: local, national and international. Secrecy helps to keep the circle of
decision-makers small, saving administrators the trouble of explaining
themselves.
The events of September 11th further strengthened the willingness and
ability of governments to counter demands for transparency. The United States
reacted with particularly strong measures, such as the practice of ÔscrubbingÕ
websites: removing information that might aid terrorists in planning attacks.
Federal
Access to information Access to information: whose right and
whose information? 11
01 Global Corruption 27/11/02 3:15pm Page 11
agencies, including the Environmental Protection Agency, the Nuclear
Regulatory Commission and the Internal Revenue Service, as well as a number of
state governments, took steps to make information more inaccessible. Even civil
society groups engaged in scrubbing: the Federation of American Scientists, a
leading NGO proponent of government transparency via its ÔGovernment Security
ProjectÕ, removed information from its website concerning the location of
secure intelligence facilities on the grounds that such data were not available
elsewhere.7 The Canadian government also took action to limit information access,
enacting a Terrorism Act in November 2001 that allowed the attorney general to
overturn releases of information ordered by the information commissioner with
only limited judicial review.8
Yet the setbacks for access to information are likely to be limited,
especially outside the United States. As the recent Mexican legislative success
indicates, the right to access to information remains a powerful cause for
civil society actors. Although cultures of secrecy are deeply ingrained, what
has been most striking in recent years is not the success of governments in
retaining control over information, but the ability of civil society to wrest
away such control.
Moving forward
Enabling civil society to prevail requires help from many quarters. One
important step is for groups in different countries and regions to communicate
with one another, pooling ideas about strategies. Researchers could help
considerably by evaluating the transparency policies of governments and
international organisations, comparing them to one another and to absolute
standards.9 Though national campaigns should be sustained locally, foreign donors
are needed to support transnational networking among civil society groups.
Most important is the role played by civil society groups themselves
– they do not
12 Global
Corruption Report 2003
always provide information about their personnel, operations, funding
sources, expenditures or sometimes even their goals. The groups involved in
access to information campaigns tend to be more transparent than many of their
counterparts, but they still find themselves tarred by accusations of
unaccountability and opacity that are increasingly lodged against the entire
civil society sector. Those civil society groups promoting access to
information must also require themselves and other activist groups to provide
public accounting if, as proponents of openness, they are to safeguard their
own legitimacy and credibility.
Ann Florini
1 Safia
Sircar, ÔInformation Is My RightÕ, Indiatogether, May 2001,
www.indiatogether.org/stories/ncpri.htm.
2 Kate
Doyle, ÔFreedom of Information in MexicoÕ, Washington, D.C.: The National
Security Archive, 2 May 2002, www.gwu.edu/~nsarchiv/NSAEBB/
NSAEBB68/index2.html.
3 Washington
Post (US), 1 May 2002. 4 Lori
Udall, ÔThe World Bank and Public
Accountability: Has Anything Changed?Õ, in Jonathan A. Fox and L.D.
Brown, eds., The Struggle for Accountability: The World Bank, NGOs, and
Grassroots Movements (Cambridge, MA: The MIT Press, 1998).
5 The
most important was that Poverty Reduction Strategy Papers (PRSPs), which are
intended to be the outcome of national discussions involving civil society on
how best to reduce poverty, must now be disclosed locally before the World
BankÕs board can consider them.
6 Bank
Information Center, ÔThe On-going Struggle for World Bank Transparency: The
Outcome of the Information Disclosure Policy ReviewÕ (Washington, D.C.: Bank
Information Center, 4 November 2001).
7 Lou
Dolinar, ÔAccess DeniedÕ, Newday.com (US), 24 October 2001.
8 David
Banisar, ÔFreedom of Information and Access to Government Records around the
WorldÕ, July 2002, www.freedominfo.org/survey.
9 The
University of VictoriaÕs Centre for Global Studies put out a ÔRethinking
GovernanceÕ Handbook: An Inventory of Ideas to Enhance Participation,
Transparency and Accountability, which provides an excellent starting point for
evaluating the disclosure efforts of international organisations,
www.globalcentres.org/html/ inventory.html.
01 Global Corruption 27/11/02 3:15pm Page 12
their audiences and the potential for increased advertising revenue.
These networks have assumed incalculable political power, and they are
accountable to none but themselves. The saving grace here is that these
conglomerates operate in a competi- tive environment and there are still
independent media organisations that can and do bring to public attention the
most egregious instances of abuse by these global media leviathans.
Another danger is the mounting influence of the media oligarchs who have
emerged to use their power, not to inform but to serve blatantly partisan and
self- serving political and financial ends. The spectacle in Italy of a head of
government not only dominating the private media but also with the power to
gerrymander the state-owned media institutions bodes ill for democracy. It
points not only to the dangers of individual domination of the private media,
but also to the dangers inherent in most forms of state-owned and
state-controlled media. The often intensely close relationship between media
tycoons and powerful political leaders in developing countries and in Central
and Eastern Europe frequently blocks the media from fully informing the public
on major issues, while equally frequently ensuring that the public receives
news and views that serve the business interests of the media owners and their
political partners in corruption. The ongoing episodes of political efforts to
dominate the media in Central and Eastern Europe are part of a profoundly disturbing
trend.10
Within news corporations, from Latin America to Central Asia, are
individual journalists who have proved willing victims of offers of corporate
hospitality and bribes, and who have thought nothing of misusing their power to
private ends. Even in the leading industrial countries we have seen reporters
grow so close to major corporations that they have failed to do their duty
– so many were bullied by Enron that they chose to ignore for months the
fact that the demise of one of the worldÕs largest corporations was imminent.11 The
Financial Times is among those that com- plain of Ôpious protestations of
public interest from sensationalist newspapers that are unscrupulous in their
own professional practicesÕ.12
Ranged against these battalions has been a lonely and exposed band of
whistle- blowers: individuals who risk good reputations, careers and families
to bring both public and private sector abuse to public notice. To these we
should add the intre- pid journalists who have paid with their lives for their
dedication to the fight against corruption – providing further evidence
of the lengths to which some polit- ical elites are prepared to go to protect
the status quo. When the Voice of the People Communication Trust in Zimbabwe
succeeded in sidestepping a govern- ment ban on independent radio stations by
having its programmes beamed from the Netherlands, it was quickly the victim of
a Ôprofessional incendiary demolitionÕ that destroyed its computers, recording
equipment, files and tapes, leaving only the walls of its studios standing.13
Little wonder, then, that in societies around the world the notion of
ÔtrustÕ has shifted radically – be it in government, in the private
sector, in the professions, in the
Access to information Access to information: whose right and
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01 Global Corruption 27/11/02 3:15pm Page 13
media or in civil society. No longer do people accept the diktat ÔDonÕt
challenge me. You can trust meÕ. So frequently kept in the dark, so regularly
misled and so often betrayed, the people now tend to respond, ÔShow me! I must
see for myself.Õ Trans- parency has become a substitute for trust.14
Indeed, the public responds with demands to know not only the sources of
polit- ical party funding but also the assets, incomes and liabilities of
politicians and senior public servants, in a manner unheard of in the past.15 Paradoxically,
these demands are often met with claims that disclosure would represent an
unwarranted intrusion into privacy – a defence that further feeds
suspicions that politicians are selling out to the highest bidders and that
officials are siphoning wealth from the public purse.16 The claim
to privacy is basically the same cry of ÔTrust me!Õ But the fact remains that a
cynical public does precisely the opposite. In the absence of reli- able
information to the contrary, it simply assumes the worst.
If our objective is transparent, accountable and honest governance
– government we can trust and a private sector that is trustworthy
– then clearly the less informa- tion that is kept from us, and the
greater the confidence we can have in its accuracy, the more likely we are to
achieve our aim.
Information overload
Ordinary citizens need access to government-held information in order to
exercise their rights in just about every phase of their lives – whether
to gain entry to educa- tion, apply for a job, gain access to a poverty
alleviation scheme, build or buy a house, start a business or collect a
pension. Without it, they are ready prey to the corrupt and the abusive.
Above all, we need access to publicly held information if we are to have
confi- dence in our public institutions and be assured that they are working as
they should. Policies and practices of openness can, of themselves, provide
much comfort.
Yet the information we need can easily be engulfed in an avalanche of
irrele- vant information. What do we gain if we suffer from information
overload, if the information we receive is not truly informative, if we are
simply confronted by a flood of unverifiable ÔfactsÕ? In the United States, for
example, there is a plethora of data on who makes contributions to election
campaigns, yet critical information that provides insights into the political
influence gained by major contributors is largely absent.
If we ask for a needle, we do not want to have to look for it in a
haystack. That is where the mass media can serve as a filter, their role being
to sift and sort the infor- mation into manageable forms. Unfortunately, the
mediaÕs performance has often been inadequate.
The role of the media is hardly helped when governments use their power
and their courts to intimidate editors and journalists. Nor is the cause of
accuracy advanced when information is distorted by politiciansÕ Ôspin doctorsÕ.
A vivid
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01 Global Corruption 27/11/02 3:15pm Page 14
example was provided in Britain when a Ôspecial adviserÕ to a minister
proclaimed on 11 September 2001, a time when public attention was mesmerised by
the World Trade Center atrocity, that it was a Ôgood day to bury bad newsÕ.17
Access to information campaigns are often led by media interests, whose
claims to access should be beyond argument. Given our uncertain faith in the
media, however, we cannot yield to them exclusive ownership of the struggle for
access. Far from it. The claims of the citizen are much more compelling. If we
ask, ÔWho owns the information we demand?Õ the answer must surely be, ÔWe, the
people, not them, the state.Õ
Information is best viewed as being held by the state on behalf of the
people, for use in the best interests of the people. Indeed, the constitution
of Brazil goes so far as to enshrine every citizenÕs right to be provided by
public entities with information concerning a citizenÕs personal interest or
information of general or collective inter- est, the only exception being where
the confidentiality of information is essential to the security of the state
and society.18
Fighting poverty with information
The citizens of India – the worldÕs most populous democracy
– are among the most prominent proponents of access to information. In
particular, the civil society group Mazdoor Kisan Shakti Sangathan (MKSS)
– translated as the Association for the Empowerment of Workers and
Farmers – developed a radical interpretation of the notion that citizens
have a right both to know how they are governed and to partic- ipate actively
in the process of auditing their representatives.19
By encouraging supportive officials to make information available to
them unof- ficially, MKSS was able to begin documenting the nexus between local
politicians, local officials and local contractors, a linkage that was well
known but flourished under a veil of secrecy.20
What this example clearly demonstrates is that the right to information
has a real practical relevance to poor and marginalised people, particularly
where civil society activists can help them to access and use it.
Such was the success of the Ôsocial auditsÕ undertaken by MKSS that the
state of Rajasthan passed legislation requiring the holding of audits right
across the state. But because the public officials who conducted them were not
committed to the process, the official audits failed miserably. The officials
neglected to provide notice as to why or when the meetings were being held, and
made little effort to present information in a comprehensible form.21 The
wilful mismanagement of information by officials pro- tected the corrupt and succeeded
in frustrating well-intentioned reforms.
For information to be useful, it must not be aggregated, but made
available in detail. To be empowered, parents must know more than the size of a
stateÕs educa- tion budget; they must be able to ascertain readily the budget
for their own chil- drenÕs school. People must also have access to supporting
documentation as to how
Access to information Access to information: whose right and
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01 Global Corruption 27/11/02 3:15pm Page 15
a particular application was assessed under an anti-poverty scheme, or
as to how and to whom funds were disbursed; otherwise, the chances of exposing
bias in the handling of an application, or diversions in the disbursement of
funds in implemen- tation, are slight. Without rights of access to expense
receipts, employment and wage registers, and timely access to building sites,
fraud in public works projects also goes undetected. The information must also
be physically accessible. In rural areas it matters little what rights to
information a person may have if, to get it, he or she has to journey hundreds
of kilometres to a capital city.22
The Indian experience suggests that NGOs and other activists must be
willing to use the information they have gained in order to confront the
authorities and so impel public officials to take remedial action. Such
activism cannot be left to an unmotivated bureaucracy.
Legislating for access to information
Article 19 of the Universal Declaration of Human Rights – a
universal right of all Ôto seek, receive and impart information ...Õ – is
a starting point for legislating for access to information, but it only takes
us so far. It is aimed at curtailing government censorship rather than
promoting government transparency.23 Thus the task of the reformer is to
place flesh on the bones of Article 19, and to do so for social as well as
economic reasons.
Fundamentally, all information belongs to the public and it should be in
the public domain unless compelling reasons exist to withhold it. The ideal
approach is seen in Brazil: to create a legal requirement that official
information must be made available to anyone who seeks it unless there is good
reason to withhold it .24
Any freedom of information law will have to prescribe limits, and it is
easy for the Ôstate securityÕ card to be overplayed. An official secrets act
can follow hard on the heels of a progressive access to information act,
effectively reclaiming most, perhaps all, of the ground previously conceded.25 Singapore
even prosecuted the Business Times for publishing nothing more threatening than
an official prediction of the countryÕs likely economic growth – material
freely available in other industri- alised countries – and then curtailed
the circulation of the Economist when it criti- cised the move.26
Few recent debates about the opposition between the needs of a society
to have access to information and the demands of a state for security have been
as signifi- cant as those in the United States over the secrecy that the
Justice Department has forced in the name of the Ôwar on terrorismÕ. While
there may be a seemingly com- pelling logic to holding suspects and alleged
terrorists in secret, there is the danger that a greater societal imperative
will be undermined. Of great relevance is the recent opinion of Judge Damon J.
Keith of the U.S. Court of Appeals for the Sixth Circuit, who warns that
Ôdemocracies die behind closed doorsÕ. He writes that the First Amendment and a
free press protect the ÔpeopleÕs right to knowÕ that their gov-
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01 Global Corruption 27/11/02 3:15pm Page 16
Whistleblowing
in South Africa
One major obstacle in the fight against corruption is the reluctance of
individuals to Ôblow the whistleÕ on corrupt activities. Fear of retribution
from employers or colleagues dissuades many from reporting cases of corruption.
In South Africa, whistleblowers are often seen as troublemakers or, in the
South African vernacular, impimpis (apartheid-era informants). In addition to
being stigmatised as traitors, whistleblowers who reported misconduct before
the introduction of the Protected Disclosures Act in 2000 found no legal
protection or support from their government.
A parliamentary committee produced a draft law after a series of
scandals in which whistleblowers suffered because of their actions, including
several who were hounded from their jobs. Modelled on the British Public
Interest Disclosure Act of 1998, the law provides legal recourse to
whistleblowers who suffer professional loss as a result of their actions. The
Protected Disclosures Act, which came into force in February 2001, sets out
procedures by which both public and private sector employees who report
unlawful or corrupt activities by their employer or colleagues are protected
from reprisals. The law is intended to encourage honest employees to report
wrongdoing.
But for such a law to work at least three things must happen. First,
there must be the political will to confront a culture that scorns whistleblowers.
Second, employers must be trained to implement a viable whistleblowing policy
that allows
employees to raise concerns without fear of reprisal. Third, workers
themselves must know and understand their rights under the law in order to be
able to report misconduct in a proper manner.
After helping to draft the new law, the Open Democracy Advice Centre
(ODAC) is now addressing these three aspects in an effort to put the law to
work. ODACÕs mission is Ôto promote open and transparent democracy; foster a
culture of corporate and government accountability; and assist people to
realise their human rightsÕ. By offering free legal advice, ODAC seeks to help
individuals deal with the difficult choices they face when deciding whether to
blow the whistle or remain silent. The group monitors and advocates effective
implementation of the law and provides training for employers in both the
public and private sectors. To help whistleblowers, ODAC also established a
legal helpline (0800-Lalela, meaning ÔListenÕ in the Xhosa language), based on
the model employed by the British NGO Public Concern at Work.
The new law is essential to the promotion of access to information.
Under protection of the law, whistleblowers are better able to get information
about corruption out into the public domain. Civil society groups such as ODAC
and Transparency South Africa recognise the value of the law and are redoubling
their efforts to put the legislation into practice.
Richard Calland, www.opendemocracy.org.za
ernment is acting fairly and lawfully. ÔWhen government begins closing
doors,Õ he continues, Ôit selectively controls information rightfully belonging
to the people. Selective information is misinformation.Õ Further: ÔA government
operating in the shadow of secrecy stands in complete opposition to the society
envisioned by the framers of our Constitution.Õ27
Just as it is difficult to fine-tune limits on access to information in
the security arena, so too are there complications in terms of personal
privacy. The values societies
Access to information Access to information: whose right and
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01 Global Corruption 27/11/02 3:15pm Page 17
place on personal privacy are varied and often shaped by their differing
histories. The fact that in Sweden one can see the income tax return of a
next-door neighbour may be unlikely to convince others elsewhere of the
desirability of such openness.
Public figures often claim the right not to have their private lives
exposed in the mass media. As courts around the world are tending to the view
that public figures are, ipso facto, public, citizens and the media seem to be
winning this argument.28 Consequently, in a growing number of countries public
figures are having to put up with greater scrutiny of their private lives than
might be permitted in the case of ordinary citizens; politicians, in
particular, have to be more robust when it comes to defamation and be accorded
far less protection.
Pleas to secure Ôcommercially sensitive informationÕ by constraining
public rights to information are common. Yet, as a matter of principle,
citizens assuredly have the democratic right to know about the details of
commercial arrangements entered into between their government and its
suppliers, all the more so in an era of privatisation in which traditional
public sector activities are passing into private hands. Whereas
confidentiality may characterise lawful transactions within the private sector,
it may be utterly indefensible when public money is at stake.29
Perhaps the most problematic area of all is the extent to which citizens
should have access to policy advice. Advocates of limiting such access argue
that policy recommendations from civil servants to their ministers need to be
delivered fear- lessly; exposing such exchanges to public view would be
detrimental to an essen- tial atmosphere of confidence and would ultimately
undermine effective decision-making. Accordingly, internal official documents
are often exempted from freedom of information requirements. Yet the fact is
that countries that have made this information available tend not only to have
encountered few, if any, problems, but also to score consistently well in
Transparency InternationalÕs annual Corrup- tion Perceptions Index.30
In cases of dispute
Once we have a legal right to information with an appropriate breadth of
scope, how then should competing interests be resolved in any particular case
of dispute? How easy should it be for political, as opposed to public,
interests to intrude when a citizen – or a journalist – makes a
request?
In some countries, ministers enjoy discretionary power to decline
requests for information. Clearly, no minister should have this authority, as
it can be effortlessly abused. Information should never be withheld if its
release might be inconvenient or embarrassing to the minister or the
department. Nor should ministers be able to block access with claims that
information is none of the requesterÕs business, or that it could be
ÔmisunderstoodÕ.31
Some countries allow for a right of appeal to an independent information
com- missioner, an ombudsman or an appeals body. Systems of governance may
vary, but
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01 Global Corruption 27/11/02 3:15pm Page 18
there is always a wholly unacceptable conflict of interest whenever an
official is the judge in his or her own cause.
Information campaigns and records management
Should people always have to ask for the information to which they are
entitled? Public authorities should not simply wait until they are asked for
information. They should develop policies that take essential information to
the people before they ask for it. Such positive actions can be much more
cost-effective, and of greater practi- cal utility, than is the case when
departments wait passively for the submission of inquiries.32 Such a
proactive strategy is particularly advantageous to governments whose resources
are slender. By making information available in offices and other public
places, the calls on staff time to respond to individual queries can be greatly
reduced – and citizens can learn of their rights without even being aware
of their entitlement to know.33
When we campaign for greater access to information we must at the same
time campaign for improved records management. There seems little point in
having access to information that is chaotic and unreliable. Clearly there
needs to be sys- tematic, complete and dependable record keeping.
But as governments open up, reformers must be prepared to take the world
as it is, not as they would like it to be. Old records may be so chaotic as to
render rights of access highly time consuming, if not wholly fruitless. Indeed,
in Mexico, where a freedom of information law was enacted in April 2002, a
report stated that Ôpublic records, transcripts and notes from important
meetings have been purposefully kept from public view, leaving almost no
official record of how key decisions have been made. In many cases, official
records have been destroyed or taken home by officials when they left office.Õ34
In such cases, transitional arrangements are essential if citizensÕ
faith in their newly won rights is not to be lost as soon as they try to
exercise them. Rather than allowing existing poor records management systems to
be used as a reason to block reform completely, it may be better to draw a line
and start afresh, with rights of access not being retroactive in areas where
the existing system simply cannot deliver with reliability.
Whatever the course adopted, a clear duty must be imposed on the
providers that information be complete, coherent and understandable by its
target audience. Invariably, the cost factor is raised as an argument against
reform. Should those asking for information be required to meet the costs of
preparing the replies? If so, should there be limits? Obviously, high fees
deter requests and so undermine the whole purpose of the exercise. Fortunately,
governments are learning that the bene- fits of openness can outweigh any
related costs. Furthermore, wherever legislation has been passed, only nominal
processing fees tend to be required.
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Information and the private sector
The private sector, too, has its own needs for access to complete and
reliable publicly held information, notably that relating to public procurement
rules and exercises, which some countries are starting to make available
through the Internet.35
Even though information held by the private sector itself is governed by
consid- erations quite different from those applying in the public arena,
certain categories of information must be made available to consumers,
suppliers and employees. Examples range from accurately labelled food to
honestly prepared accounts, from professional audit and financial services to
employer-held personal files.
The public rightly expects greater accountability whenever private
entities carry out public functions or where a traditional state function is
privatised. Private agencies cannot be permitted to obscure political
accountability; on the contrary, citizens are entitled to know much more about
public–private undertakings than about activities that are entirely
confined to the private sector. After all, such state- funded activities
involve taxpayersÕ money.
Citizens are also entitled to expect honest financial information from
publicly listed corporations. We should look to private sector auditors to
discharge their duties independently of their clients and with a view to the
public interest rather than that of senior managers. The financial reports they
produce are vital to the welfare of citizens, and they perform a public
function by providing information that gives a true picture of the financial
health of the companies they audit.36
To their credit, leading corporations in their orthodox business role
are starting to accept the legitimacy of public concern and in some cases are
responding by pro- moting access to information policies.37 Indeed,
accountability by the private sector to the public at large lies at the very
heart of the growing corporate social responsi- bility movement.
A culture change
Even if the benefits of openness are rightly understood as overwhelming,
the prospect of rights of access to information can appear threatening to
officials accus- tomed to regarding their files as confidential and thus safe
from the eyes of an inquisitive public.
A culture change is needed among civil servants – from the most
junior staff through to the responsible minister. They must come to understand
that, although in the past their administrations may have seemed to function
adequately, the intro- duction of access to information policies can increase
the quality of administration significantly. Such policies foster a public
sector ethic of Ôservice to the publicÕ, enhance job satisfaction and raise the
esteem in which public servants are held by the communities they serve and in
which they live.
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01 Global Corruption 27/11/02 3:15pm Page 20
An agenda for reform
What, then, should be our aims? From our governments, we need clearly
articulated and extensively disseminated
policies on access to information that ensure the widest possible access
for citizens and media alike – at the local no less than the national
level.38 Our legal right to access public information must be formally
guaranteed.
Records management systems must ensure that the information to which
citizens are entitled is accurate, complete and readily accessible.
Essential information must be carried to the people in easily
understandable forms and languages. Public information policies must provide
for open political party funding practices, with the disclosure of donors and
donations. We must also have access to declarations of assets and interests by
senior public figures.
We must attain formal guarantees of freedom of speech, press freedom and
an absence of repressive libel laws. Honest journalists must be able to report
profes- sionally and be unaffected by ÔsponsorshipÕ and self-interest.
State-owned media, where its existence is justified to protect the public
interest, must be run indepen- dently of editorial control by a ruling party.
Given that the systems the chief archivist manages and the records he or she
holds provide the paper trails crucial for exposing mismanagement and
corruption, we must question why these posts are so junior and so
under-resourced. Let us ask why the post of chief archivist is not accorded
constitutional protection, and why it is not placed on a par with a supreme
court judge or a supreme audit institution, so vital is its role in
guaranteeing both accountability and public access.
At the international level, bilateral and multilateral agencies must
make full information available about their loans and development assistance
– not just in terms of total loans but also down to the level of the
local projects being funded by them. In a similar way, private sector policies
must promote access to the informa- tion held by corporations.
Nor must we overlook the need for formal guarantees to protect
complainants, should they be forced to act as whistleblowers.
Conclusion
Nearly two centuries on from James Madison, the struggle over access to
informa- tion, presently handicapped by September 11th and the Ôwar against
terrorismÕ, is set to continue. Secrecy still strikes at the concerns of civil
society everywhere, and most significantly it perpetuates an environment in
which corruption can flourish unhindered – a direct threat to every one
of us, and a menace that continues to undermine the democratic gains of the
past decade. Is it too much for us to hope that, as societies become more open,
trust in their institutions will flourish?
The playwright and thinker George Bernard Shaw asserted that Ôthe right
to know is like the right to live. It is fundamental and unconditional in its
assumption
Access to information Access to information: whose right and
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01 Global Corruption 27/11/02 3:15pm Page 21
that knowledge, like life, is a desirable thing.Õ39 For much
the same reasons, the architects of our global movement against corruption took
ÔtransparencyÕ to serve as the war cry on our battle-flag.
1 Washington
Post (US), 30 August 2002. 2 www.cfoi.org.uk/sweden1.html.
Freedom of information has been enshrined in Swedish law since 1766. The
Swedish government has continued to push the issue forward, most recently
through its Open Sweden initiative, intended to improve application of the law
and increase public awareness. See www.oppnasverige.gov.se/page/1/42.html.
3 Guardian
(Britain), 4 May 2001. 4 Guardian
(Britain), 29 August 2002. 5 See
ÔKeep Your Assets away from Prying Eyes ... Ten Good Reasons to Choose
DominicaÕ, an advertisement on
the website of Safe Haven Offshore Limited, June 2000,
www.safehavenoffshore.com/10reasons.htm. 6 The
International Accounting Standards Committee Foundation, the body likely to be
setting rules for all
European-listed companies from 2005, has been criticised for its failure
to disclose the names of more than 100 corporate donors. Concern emerged when
it appeared that Enron had considered donating to the committee if this would
enable it to help shape IASCÕs policies. Financial Times (Britain), 4 March
2002.
7 Enron
and Arthur Andersen were a case in point. Internal audit was combined with
external audit while tens of millions of dollars of debt were hidden and
millions in profits conjured up from business lines still in their infancy.
Wall Street Journal (US), 16 April 2002. Far from trusting private sector
leaders, the Securities and Exchange Commission proposed that such leaders be
compelled, under threat of criminal sanctions, to certify accurate quarterly
reports of their businessesÕ positions. Financial Times (Britain), 13 June
2002.
8 Former
SEC chairman Arthur Levitt writes: ÔLawyers, who can play crucial roles in
revealing or obscuring financial problems, should review their own ethics
codes. Under the American Bar AssociationÕs ethical standards, lawyers who
uncover wrongdoing by clients cannot report it to the SEC or local authorities.
This inherent conflict needs to be addressed.Õ New York Times (US), 17 January
2002.
9 Guardian
(Britain), 11 June 2002. 10 New
York Times (US), 31 August 2002. 11 ÔEnron
was also a failure of journalism. If business is more powerful, we need better
business reporting to hold
it to account ... The signs were there for anyone who cared to look ...
[but] most publications only started to take EnronÕs problems seriously ...
when the game was already up.Õ Richard Lambert, editor of the Financial Times
(Britain) from 1991 to 2001, critiqued the performance of his own profession in
ÔEnron and the PressÕ, Prospect Magazine (Britain), March 2002.
12 13
June 2002. 13 Times
(Britain), 30 August 2002. 14 The
reverse is the thesis of Prof. Onora OÕNeill in her 2002 Reith Lectures, namely
that Ôthe deluge of
information thrown at us in the name of openness leaves us less capable
of gauging the truth than everÕ. See ÔTrust Is the First Casualty of the Cult
of TransparencyÕ, Guardian (Britain), 24 April 2002. The lectures are published
by Cambridge University Press.
15 Mexican
president Vicente Fox has responded to such demands by voluntarily disclosing
his personal financial assets on the Internet. VOA News (US), 3 May 2002.
16 Financial
Times (Britain), 29 August 2002; www.transparency.org/cgi-bin/dcn-read.pl?citID=45105.
17 Spin
doctor Jo MooreÕs infamous comment helped trigger a reappraisal of the role of
politically appointed
Ôspecial advisersÕ in the British civil service by the Wicks Committee
(still sitting at the time of writing). Guardian (Britain), 9 October 2001. She
was later dismissed over timing the issuing of bad news on a day dominated by a
state funeral.
18 Brazilian
Constitution, Article 5, Item 33. 19 For
a full account, see Rob Jenkins and Anne Marie Goetz, ÔAccounts and Accountability:
Theoretical
Implications of the Right-to-Information in IndiaÕ, Third World
Quarterly, vol. 20, no. 3 (1999). 20 BBC
News (Britain), 14 June 2002. 21 ÔCritique
of State Government Initiated Social Audit Campaigns and Public Hearings (Jan
Sunwais)Õ, note
prepared for MKSS for the workshop on ÔInstitutionalisation of Social
Audit and Public VigilanceÕ held on 7
January 2002. 22 Compare
with a similar case in Tanzania, reported at the TI workshop ÔInformation for
Accountability
WorkshopÕ, Tanzania, 27–28 March 2000;
www.transparency.org/working_papers/thematic/proceedings.html. 23 See Jenkins and
Goetz. 24 Brazilian
Constitution, Article 5, Item 33. Such is also the case in New ZealandÕs
Official Information Act,
1982. The act reversed the principle of secrecy set out in the Official
Secrets Act 1951, which it repealed.
22 Global
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01 Global Corruption 27/11/02 3:15pm Page 22
25 Zimbabwe
combined the two approaches into one act, giving an apparently ÔliberalÕ title
to a highly repressive set of provisions. Licence fees set under the act are
described as Ôabsolutely outrageousÕ and likely to induce several international
agencies to close their Zimbabwe operations. Daily Telegraph (Britain), 17 June
2002. Others have been forced out, such as the BBC.
26 The
Singapore Business Times editor was prosecuted with others under the countryÕs
Official Secrets Act for publishing ÔflashÕ GDP estimates – early
calculations of the most recent economic growth – before they were
officially released. When the Economist commented mockingly on the
prosecutions, it set in train a confrontation with the government that led to
the magazineÕs circulation being curtailed in Singapore. ÔNewspapers: a Ban Is
Not a Ban unless RestrictedÕ by Francis T. Seow (former Solicitor-General of
Singapore), April 1998,
www.sfdonline.org/Link%20Pages/Link%20Folders/Press%20Freedom/seow.html.
27 New
York Times (US), 2 September 2002. 28 Times
(Britain), 29 March 2002: ÔThe Mirror was entitled to show that [Naomi
Campbell, a model] was lying
about not being a drug addict and receiving treatment. But the newspaper
went too far in publishing sensitive personal data.Õ Progress is far from
universal, as ZimbabweÕs laws forbidding criticism of its president make plain.
29 Guardian
(Britain), 18 June 2002: ÔFalse accounting exposes private cash for public
services as a theft from the taxpayer.Õ
30 The
Nordic countries and New Zealand invariably head the list as the worldÕs
cleanest countries. 31 New
Zealand State Services Commission, 1995. 32 Such
a requirement is now imposed on local authorities in Britain. See the website
of the Standards Board for
England at www.standardsboard.co.uk/guidance/guidance_index.htm. 33 For
example, in Indonesia, the World Bank has encouraged the erection of billboards
on development sites
carrying details of the particular project under way. The local
community can then follow the process and
monitor the undertaking. See Jenkins and Goetz. 34 Washington Post (US), 1 May 2002.
35 A
good example is the OPEN system of the South Korean city of Seoul;
www.transparency.org/building_coalitions/public/local_goverment/projects_topic/procurement.html.
For
more, see the essay on e-government in this volume. 36 ÔThe
ethical dimension – especially the question of the duties owed to people
other than their clients – does not
seem to have arisen,Õ wrote Peter Martin in ÔAccountantsÕ Moral DutyÕ,
Financial Times (Britain), 17 January
2002. See also Financial Times, 5 March 2002. 37 One such initiative
is by NIREX (www.nirex.co.uk/ipublicn), a corporation Ôworking to develop safe
and
environmentally responsible solutions for the management of radioactive
wasteÕ. Its web-based Ôtransparency policyÕ commits the corporation to Ôa
policy of opennessÕ. It also has a policy of responding to individual requests
and provides for a right of appeal to an independent review panel.
38 TI
Russia is one TI chapter that is working with local authorities to this end. In
Britain, legislation now requires local authorities to have proactive
information policies (Local Government Act 2000:
www.hmso.gov.uk/acts/acts2000/20000022.htm).
39 ÔPreface
on Doctors: the Flaw in the ArgumentÕ, in The DoctorÕs Dilemma, 1913.
Access to information Access to information: whose right and
whose information? 23
01 Global Corruption 27/11/02 3:15pm Page 23
E-government and access to information
Subhash Bhatnagar
Among the many tools being developed to fight corruption, there has been
much focus lately on e-government – the use of communications technology
like the Internet and mobile phones to open up government processes and enable
greater public access to information.1 E-government includes the
publication of informa- tion on a website so that citizens can download application
forms for a variety of government services. It can also involve the actual
delivery of services, such as filing a tax return or renewing a licence. More
sophisticated applications include processing on-line payments.
In developed countries, these services are offered in a self-service
mode through the Internet, often via portals that are a single point of
interaction between the citizen and a broad range of departments. In developing
countries, on-line service counters may operate in a department offering
services related only to that depart- ment. In some countries, citizen service
centres have been created at convenient locations where citizens can access
on-line services of several departments. At these counters, run either by
departmental or private operators, the public does not directly interact with
computer screens, and collection of payments is often handled through
conventional means.
The benefits from the on-line delivery of services include convenience
(location and time) and shorter waiting periods. E-government systems may also
lead to greater transparency and reduced administrative corruption. So far,
however, the reduction of corruption opportunities has often been an incidental
benefit, rather than an explicit objective of e-government.
Reducing corruption through e-government
The very process of building an on-line delivery system requires that
rules and pro- cedures be standardised across regions and made explicit and,
therefore, capable of computer coding. This reduces the discretion and
opportunity for arbitrary action available to civil servants when dealing with
applicants on a case-by-case basis. Moreover, as the possibility of exposure of
wrongdoing is enhanced, the fear of con- sequent embarrassment can be a
deterrent to corrupt practices.
Though there have been few independent audits of the impact of
e-government on corruption, several case studies in developing countries report
an impact.2 Many governments have chosen to go on-line in departments that have a
large interface
24 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 24
with the public or business and which are perceived to be relatively
corrupt. Surveys indicate that tax collection agencies are particularly prone
to corruption,3 and it is no surprise that a large proportion of documented e-government
applications are built for departments dealing with tax collection.4
To reduce corruption effectively, some features that lead to greater
transparency and accountability need to be consciously built into the design.
E-government applications must first increase access to information, then
ensure that rules are transparent and applied in specific decisions and,
finally, build the ability to track decisions and actions to individual civil
servants. If all these objectives are pursued, corruption can be reduced
significantly. Ignoring some of them can defeat the whole purpose. Numerous
government websites are ineffective because they focus on the single objective
of providing electronic access to information. Often the websites are little
more than electronic copies of printed brochures. Not enough effort is made to
ensure that transparency and accountability increase when government processes
go on-line.
OPEN, Seoul Municipality, South Korea
The OPEN system of Seoul Municipality exemplifies the impact on
corruption of making the decision-making processes and actions of individual
civil servants more transparent.5 The system enables on-line tracking of individual
applications for a variety of municipal licences.
Extensive municipal regulations in Seoul in the 1990s, spurred by the
expansion of the cityÕs bureaucracy, created new opportunities for corruption.
In 1998, the mayor declared an all-out war on corruption through preventive and
punitive mea- sures, increased transparency in the administration and enhanced
public-private partnerships. The introduction of e-government was one element
of a broader range of initiatives, many of them enacted prior to
computerisation. These included cutting and simplifying regulations and
actively involving citizens in anti-corrup- tion activities.
The e-government programme involved setting up a portal called OPEN
– Online Procedures Enhancement for Civil Applications. OPEN explains to
users elements of the anti-corruption drive, displays an anti-corruption index
on five services deemed most susceptible, offers citizens information on rules
and proce- dures and enables real-time monitoring of progress of an application
for permits and licences. By the end of 2000, the number of visits to the site
reached 2 million.6 To encourage greater usage, the system was made
accessible via mobile telephone in 2001.
The OPEN system has been evaluated in different ways. Results from a
survey of 1,245 citizens showed that 84 per cent believed that OPEN had led to
greater transparency. Surveys conducted by the South Korean chapter of
Transparency International in 2000 and 2001 indicate a growing interest in
OPEN, but a mar- ginal decline in user satisfaction over time.7 The
system is credited with saving
Access to information E-government and access to information 25
01 Global Corruption 27/11/02 3:15pm Page 25
time and facilitating access, but it was viewed as offering marginally
less improve- ment in terms of transparency and anti-corruption than the year
previously.
As a whole, the focus of SeoulÕs anti-corruption programme is not
information technology – technology for technologyÕs sake – but the
simplification of regulations and procedures, re-engineering of work practices,
transparency in procedures and effective communication with citizens. For
anti-corruption efforts to be effective, reformers must look beyond individual
instances of corrupt behaviour and target the structural factors that allow
corruption to develop. Seoul shows the success of a multipronged attack. Two
factors particularly contributed to the success in imple- mentation. First,
there was strong leadership by the mayor and, second, widespread citizen
participation.
Computerisation of land records, Karnataka, India
The Bhoomi (ÔlandÕ) project of on-line delivery of land records in
Karnataka, one of IndiaÕs 26 states, demonstrates the benefits of making
government records more open so as to enable citizens to challenge arbitrary
bureaucratic action. It also illus- trates how automation can be used to remove
discretion from civil servants.8
The department of revenue in Karnataka has computerised 20 million
records of land ownership for 6.7 million farmers in the state. Under the
manual, paper- based system, 9,000 village accountants maintained land records.
Farmers had to seek out the village accountant to obtain a copy of their
ÔRecord of Rights, Tenancy and CropsÕ (RTC) – a document essential for
obtaining bank loans. Village accoun- tants were not easily accessible. The time
taken to provide RTCs ranged from three to 30 days, depending upon the
importance of the record to the farmer and, there- fore, the size of the bribe.
A typical bribe could range from Rs.100 to Rs. 2,000 (US $2 to $40).
All Ômutation requestsÕ – requests to alter land records upon sale
or inheritance of a piece of land – had to be filed with the village
accountant, who was required to issue notices to the interested parties and
post the information at the village office. Often neither of these actions was
carried out and no record maintained. If no objec- tions were forthcoming
within a 30-day period, an update of the land records was to be carried out by
a revenue inspector, a practice that could take up to two years.
The Bhoomi initiative reduced the discretion of public officials by
introducing provisions for recording mutation requests on-line. Farmers can now
access the database and obtain a printed copy of the RTC on-line at 180
computerised kiosks for a fee of Rs.15 (less than US $1). A farmer can check
the status of his application on a touch screen provided on a pilot basis in
three of the computerised kiosks. Operators of the computerised system are made
accountable for their decisions and actions by the use of a system that
authenticates every log-in through a thumbprint.9 In the next phase of the project,
all the databases will be uploaded to a central, web- enabled database. RTCs
will then be available on-line at Internet kiosks, which are planned for rural
areas.10
26 Global
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01 Global Corruption 27/11/02 3:15pm Page 26
Nevertheless, since the project affects the work of the village
accountant but not the role of the revenue inspector in passing the mutation
order, corruption in the process may only decline in part. Ultimately, there is
no substitute for good management.
Implementation of land record computerisation has typically been
difficult in India. Bhoomi succeeded because there was a strong departmental
head in charge and because staff resistance was minimised through harnessing
political support. Extensive training coupled with a participatory style also
helped to diminish oppo- sition to the initiative. Overall, Bhoomi limited the
opportunities for bribery by land management administrators, while empowering
citizens to follow up and challenge the actions of petty civil servants.
Electronic procurement in Chile
Electronic procurement increases transparency and probity by keeping a
traceable record of government transactions on-line. A comprehensive
e-procurement system includes three main components: information and
registration, e-purchasing and e- tendering.11 The Chilean system focuses on the
first component, providing adequate public notification and facilitating
oversight.12 In contrast to other countries, a private company operates ChileÕs
system.
Following the introduction of a system of e-procurement, companies
hoping to do business with the public sector no longer have to search through
newspapers or the Internet for information about bidding opportunities. They
need only to register, indicating the areas that interest them – office
furniture, construction services, IT consulting, etc. Whenever a public agency
needs to purchase goods or services, it files a request in the system specifying
the job and including all necessary docu- mentation. E-mails are automatically
sent to all the registered contractors, min- imising response time and
providing an equal opportunity to all firms to submit their bids.13
The system also supplies on-line all information related to procurement
opera- tions, including the public organisationÕs full contact details and the
name of the officer in charge of the tender. At the conclusion of the bidding
process, the e-system provides the results: who participated, the proposals,
the economic and technical scores and, lastly, who won the contract. Historical
information about the organisa- tionÕs previous contracts is also made
available.
Entirely Internet-based, the e-system was launched at
www.compraschile.cl in October 1999. A new presidential act was passed that
allowed e-commerce transac- tions and replaced the main government procurement
agency with a smaller agency that provides technical assistance and
supervision. In the first phase, 454 suppliers in 75 separate business sectors
and 16 public agencies were registered in the e- system, but within a year the
number registered rose to nearly 4,000 firms.14
However, although participation in the e-system was expected to be
mandatory for all public organisations, less than 18 per cent of public
procurement was notified on the website after two years of operation.15 This was
attributed to weakening
Access to information E-government and access to information 27
01 Global Corruption 27/11/02 3:15pm Page 27
political support and resistance from within the administration. In the
absence of a systematic study, it is difficult to quantify the impact on
corruption, although savings ranging from 7 to 20 per cent have been reported
on public sector procure- ment enacted through the site.
Central Vigilance Commission, India
The launch of a website by IndiaÕs Central Vigilance Commission (CVC)
illustrates the kind of catalytic role the Internet can play in anti-corruption
efforts, especially in connection with print and electronic media whose greater
reach allows the digital divide to be overcome.16
In 1998, following a supreme court directive, the CVC was made a
statutory body with a mandate to launch investigations under the 1988
Prevention of Corruption Act. The commission launched a website in 1999
informing the public about its role and strategies and instructing citizens on
how to lodge complaints against corrup- tion without fear of disclosure. It
highlighted the performance of various depart- ments responsible for conducting
investigations. In an effort to focus media attention on corruption, the CVC
published the names of personnel in the elite administrative and revenue
services against whom investigations had been ordered or penalties imposed for
corruption.
By April 2002, three years after its establishment, only 180,000
visitors had logged on to the CVC site, prompting questions about the value of
the Internet as an anti-corruption weapon in countries like India, where there
is low computer pene- tration. But IndiaÕs vibrant free press and electronic
media used the CVC website for stories that they subsequently disseminated
across the country. The site had a much wider impact than might be expected
from its low visitor count.
The CVCÕs experience with the Internet highlighted the fickle nature of
the media, which, despite the large amount of information available, tended to
focus on the names of prominent politicians entangled in corruption inquiries.
The practice of Ônaming namesÕ, moreover, was controversial and many questioned
the fairness of publicly identifying civil servants who had not been proven
guilty. Nevertheless, polls revealed that 83 per cent of respondents believed
that the naming of charged officers would have a deterrent effect: Newsweek
magazine carried an article about the CVCÕs technique, dubbing it Ôe-shameÕ.17
Institutionalising transparency: lessons learned
The impact on corruption of e-government applications has been audited
indepen- dently only in a couple of cases.18 Systematic surveys of citizens and
other stake- holders could help establish linkages more clearly and provide
feedback on areas for improvement.
Corruption reflects the power distance between civil servants and the
public, particularly for citizens in remote areas. This gap in power can remain
after the
28 Global
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01 Global Corruption 27/11/02 3:15pm Page 28
EcuadorÕs
first steps towards e-procurement
EcuadorÕs constitution guarantees that all information about the
functioning of the state, with the exception of information that is restricted
for national security reasons, should be made readily available to the public.
For a variety of reasons, however, private and public institutions have only
limited access to information in practice. For example, the Public Contracting
Law states that every tender over a specified sum of money must be announced in
the press, but it is often hard for citizens to locate tender announcements
spread through the numerous newspapers in the country.
In an effort to improve the situation, the Latin American Corporation
for Development (CLD), the Ecuadorian chapter of Transparency International, in
collaboration with two groups of socially responsible entrepreneurs –
People for Change and Ecuador Positivo – launched a project in 2001 to
facilitate public access to information and increase transparency in public
procurement. When the lack of political will on the part of government officials
initially hindered the initiative, CLD and its partners adopted a more
innovative approach.
The team wanted to develop a source of public information that would be
widely available and employ state-of-the-art technology. The goal was to create
a website that would provide both businesses and citizens with timely
information on every bidding opportunity at a single, consolidated location.
The system needed to be cost effective and easily accessible. The result was
www.Licitenet.com, a website launched on 3 September 2001.
Licitenet.com is an Internet-based tool for the promotion of
transparency in public procurement in Ecuador. It serves the dual function of
making information about government contracts available to the public and to
private businesses. The site also provides information on awarded contracts,
the names of businesses with
Access to information
winning bids, the price paid, as well as subscriber access to ongoing
auctions and current contracting opportunities. Although 80 per cent of the information
on the site is available to anyone who visits it, parts of it can only be
viewed on payment of a fee, which allows the project to be sustainable.
By maintaining the website, CLD seeks to increase public awareness of
the importance of transparency in the public tendering process and to put
pressure on the government to implement e-procurement on a wider scale in
Ecuador. On 18 May 2002, the National Telecommunications Council invited
Licitenet.com to participate as a member of the Commission on On-line
Government in the development of a national agenda for connectivity.
Licitenet.com is constantly searching for ways to provide a wider range
of information to a differentiated audience. Several public institutions have
recognised the benefits of the website and cooperative agreements that may lead
to further e- projects have been signed with the national telecommunications
council, the solicitor-generalÕs office, the controller- generalÕs office and
the Ecuadorian association of municipalities. Licitenet.com is also consulting
with the National Commission of On-line Government to explore ways to establish
an official government site for e- procurement before December 2002.
This initiative encourages healthy competition, better pricing and a
higher quality of offers. While no website alone is sufficient to ensure
absolute transparency in government procurement, it is a valuable first step.
Furthermore, it creates opportunities to influence the direction of government
policy in the area of e- procurement and builds public and private sector
awareness of the negative effects of corruption in government contracting.
Valeria Merino Dirani
E-government and access to information 29
01 Global Corruption 27/11/02 3:15pm Page 29
introduction of e-government applications. It is important to supervise
and monitor the performance of newly installed e-government systems until
higher norms of service are instilled in civil servants. A further risk is that
the impact of new systems can weaken after a change in leadership or as corrupt
employees learn ways to beat the new system.
The publication of budgetary allocations and expenditure on the web,
systems for tracking the status of licence applications and sharing performance
data are known to increase accountability. But increasing the availability of
Internet-based information does not necessarily mean that citizens will use it
to demand greater accountability. The proportion of citizens who are prepared
to be consistently engaged in the process of governance is relatively small.
Even where there are high rates of Internet penetration, experience has shown
that creating a good website or on-line portal does not guarantee its use.
Extra efforts, through advertising and edu- cation, may be required to persuade
citizens of its value.19
Furthermore, intermediaries are often needed to analyse the information
pro- vided by governments. The Center for Responsive Politics in the United
States is one such agency.20 Its website illustrates the constructive role of
intermediaries in pre- senting information on campaign finance in a format that
helps citizens take action. The CenterÕs analysis is based on data in the
public domain that is not normally pre- sented in a form that highlights the
possibility of corrupt practice. As CVC illus- trated, traditional media can
also play this intermediary role, channelling the information provided by the
government to citizens in more direct ways, although journalists may need
workshops and seminars to be made aware of the scale of information that is
available on the web.
E-government can lead to transparency only if there is a legal framework
that supports free access to information. National secrecy laws must be
replaced by freedom of information legislation. At the same time, governments
need to address the risks of increased use of Internet applications to privacy
and security. Guidelines may be required to govern the release of public
information that may contain per- sonal or sensitive data.
Conclusion
E-government offers a partial solution to the multifaceted problem of
corruption. It reduces discretion, thereby curbing some opportunities for
arbitrary action. It increases chances of exposure by maintaining detailed data
on transactions, making it possible to track and link the corrupt with their
wrongful acts. By making rules simpler and more transparent, e-government
emboldens citizens and businesses to question unreasonable procedures and their
arbitrary application.
Combating corruption can be targeted as a specific objective of
e-government. The OPEN and CVC systems in South Korea and India were intended
to transform e-government into key components in broader anti-corruption
strategies enabling
30 Global
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01 Global Corruption 27/11/02 3:15pm Page 30
more effective communication and increased transparency. Service
delivery improvement initiatives were implemented in notoriously corrupt
departments.
Executives and senior civil servants require specialist training if they
are to be made aware of how best to initiate successful projects. The first
step is to identify pilot schemes in departments that have some exposure to
computerisation, a large interface with the public and a legacy of corruption.
The benefits of the pilot pro- jects need to be articulated in specific terms,
with transparency, corruption and poverty the underlying concerns.
In designing e-government applications that address these concerns,
system designers need to identify the processes that enable corrupt behaviour.
The tradi- tional analytical methods of consulting companies are often
insufficient since high levels of participation by citizens and civil servants
are necessary to make an appro- priate assessment: in successful projects, such
analysis tends not to be outsourced. In addition, specific benefits may need to
be provided to employees who will ÔloseÕ in the reduction of bribes.21 Strong
leadership at the political and administrative levels is essential for
introducing reform.
In countries where pilot schemes have been implemented and systematic
surveys have revealed a definite impact on corruption, projects have to be
rolled out on a wider scale to cover more departments and more locations.
Issues of weak techno- logical infrastructure, the absence of an enabling
policy framework and lack of funds will all have to be tackled for a wider
impact to be felt.
No developing country is fully ready to embrace a comprehensive
programme of e-government. In many areas, however, e-government applications
can be developed that enable a large part of government services to be provided
electronically and that deliver significant benefits in reducing corruption.
Rather than wait for total readiness, governments are advised to learn by
doing.
1 The
term e-government is sometimes confused with e-governance and the two terms are
often used interchangeably. E-governance is a broader concept that includes the
use of information and communication technologies by government and civil
society to promote greater participation of citizens in the governance of
political institutions. For example, it covers the use of the Internet by
politicians and political parties to elicit views from their constituencies in
an efficient manner, or the publicising of views by civil society organisations
that are in conflict with the ruling powers. E-government, by contrast, is
concerned specifically with improving access to government functions, whether
information or services. For definitions and scope of e-government see:
www.archives.nysed.gov/pubs/recmgmt/egovernment/definiti.htm; Roadmap for E-
government in the Developing World, Pacific Council on International Policy,
April 2002, www.pacificcouncil.org; E. Tambouris, S. Gorilas and G. Boukis,
ÔInvestigation of Electronic GovernmentÕ, www.egov-project.org/egovsite/tambouris_panhellenic.pdf;
J. Caldow, ÔThe Quest for Electronic Government: A defining visionÕ, Company
Report, IBM Corporation, 1997, www.ieg.ibm.com.
2 For
example, BeijingÕs Business E-park, the computerised interstate check post in
Gujarat (India), VOICE on- line delivery of municipal services in Vijaywada
(India) and Philippine customs reform. See
www1.worldbank.org/publicsector/egov.
3 Diagnostic
surveys of corruption in Romania,
www1.worldbank.org/publicsector/anticorrupt/RomEnglish.pdf, and a diagnostic study
of corruption in Indonesia,
www.partnership.or.id/data/pdf/DiagnosticStudy-eng.pdf.
4 Designers
of ASYCUDA (Automated System for Customs Data) report that their software is in
use in 80 countries for on-line processing of customs clearance. See www.asycuda.org.
5 See
english.metro.seoul.kr/government/policies/anti/civilapplications.
Access to information E-government and access to information 31
01 Global Corruption 27/11/02 3:15pm Page 31
6 Hong
Bin Kang, ÔCleaning up the City Government of Seoul: A Systemic ApproachÕ,
presented at Seoul Conference on Combating Corruption in the Asia-Pacific
Region, December 2000.
7 Transparency
International Korea, Special Report: Survey of the Seoul CityÕs OPEN System,
Newsletter, June 2001, ti.or.kr. Between 2000 and 2001 the percentage of
respondents familiar with OPEN grew by 19 percentage points to 74 per cent.
Nearly 90 per cent intended to use OPEN in future (up by 20 per cent), while
actual users grew to 16 per cent of respondents (an increase of 5 percentage points).
The proportion of satisfied users declined from 56 to 48 per cent and the
proportion of dissatisfied users grew marginally to 9 per cent.
8 Rajeev
Chawla and Subhash Bhatnagar, ÔBhoomi: Online Delivery of Land Titles in
Karnataka, IndiaÕ, www1.worldbank.org/publicsector/egov/bhoomi_cs.htm; Deccan
Herald (India), 8 June 2001; Indian Express, 14 June 2001.
9 In
a biometric log-in, a thumb impression is captured at every log-in by an
inexpensive electronic device and validated against a pre-existing stored image
of the thumb.
10 Internet
kiosks are being set up in rural areas by the department of agriculture, NGOs
and the private sector, but the numbers are very small. Hindu (India), 3 April
2002.
11 One
of the best-known and most comprehensive on-line procurement systems is
MexicoÕs CompraNet. Other initiatives (including at local government level)
have been implemented in Argentina, Bulgaria and the Philippines.
12 See
www.compraschile.cl. 13 Claudio
Orrego, with Carlos Osorio and Rodrigo Mardones, ÔChileÕs Government
Procurement E-SystemÕ,
www1.worldbank.org/publicsector/egov/eprocurement_chile.htm. 14
www1.worldbank.org/publicsector/egov/orrego_eProcurement.pdf. 15 Junghun
Cho, ÔPaths towards Transparent Electronic Procurement SystemÕ, Department of Economic
and
Social Affairs, United Nations (UNDESA), 2002. 16 For more details, see www.cvc.nic.in;
also Subhash Bhatnagar, ÔCentral Vigilance Commission Website: A Bold
Anticorruption ExperimentÕ,
www1.worldbank.org/publicsector/egov/cvc_cs.htm. 17 Newsweek
(US), 21 February 2000. 18 For
example, a report by PAC, Bangalore, India, ÔState of the Art as Art of the
State: Public Feedback on E-
governanceÕ, www.pacindia.org/default.asp?channelId=53. 19 Only 11 per cent of Canadians use their
governmentÕs on-line portal, whereas 60 per cent have access to the
Internet. To promote usage, every citizen that visits a department to
transact a service is provided with
training on how to use the portal. 20 The
Center is a non-partisan, non-profit research group based in Washington, D.C.
It conducts computer-
based research on campaign finance issues for the news media, academics,
activists and the public at large.
See www.opensecrets.org. 21 Such
benefits could be remodelled office space, less tedium in work and creating a
sense of pride in the
department by public appreciation of reform. See the case study on the
CARD project in Andhra Pradesh, India:
www1.worldbank.org/publicsector/egov/cardcs.htm.
32 Global
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01 Global Corruption 27/11/02 3:15pm Page 32
Corporate transparency in the fight against corruption
Harriet Fletcher1
Corporate transparency is essential to reduce the potential for illicit
dealings with public officials, to promote transparency in public accounts
where governments do not provide it, as well as to enhance accountability to
shareholders. Addressing cor- porate corruption requires corporate
transparency.
Businesses are naturally cautious about providing access to commercially
sensi- tive information for fear it may help competitors. However, the risk of
corruption is one among many factors that demand greater transparency from
businesses – indeed, there is a growing recognition that companies have a
wide impact on the environment, human rights and the stability of financial
markets. Businesses have a responsibility to address this impact, and the
public has a legitimate interest in being informed about it.
Businesses that wish to contribute to the fight against corruption can
turn for guidance to a growing number of initiatives to set high standards of
corporate trans- parency. There is a real opportunity for these initiatives to
be taken up widely since the business case for companies to tackle corruption
is being articulated more strongly than ever. A recent survey by fund managers
ISIS Asset Management (for- merly Friends Ivory & Sime) showed that a
significant number of their investee companies consider bribery and corruption
a serious business risk (see p. 298).2
Codes of conduct
One of the requirements of corporate transparency is that a company
disclose whether it has a code of conduct containing specific rules designed to
combat bribery, what the contents of that code are, and evaluations of internal
controls and its performance in implementing the code. Doing so allows a
company to be held to account if it does not meet its self-imposed standards.
While many companies that have anti-bribery codes of conduct have made them
public,3 the ISIS Asset Manage- ment survey revealed that many others are
reluctant to disclose such information.
Voluntary codes and guidelines run the risk of non-compliance; nothing
can be as effective as properly enforced legislation. But given the lack of
legislation or weak enforcement in many countries, voluntary programmes are
essential and com- panies should be applauded where they have stepped ahead of
legislation. Oil multi- national Shell, to name just one example, has a
Ôno-bribesÕ policy, backed up by
Access to information 33
01 Global Corruption 27/11/02 3:15pm Page 33
several assurance systems that apply to all Shell companies worldwide
and must be signed off at the country chairman level. All incidences of bribery
and corruption have to be declared and Shell publishes their number in the
annual Shell Report. ShellÕs primer, Dealing with Bribery and Corruption, gives
detailed guidance for staff and can be accessed by third parties on the company
website.4
Companies have been supported in their efforts to adopt voluntary
anti-bribery standards by a range of organisations: NGOs, private sector bodies
such as the International Chamber of Commerce and The Conference Board, as well
as inter- governmental bodies such as the World Bank and the European Bank for
Recon- struction and Development (EBRD). From the private sector, the large
accounting firms boast forensic accounting experts able to investigate fraud
and bribery and advise on systems to prevent them, including the provision of
verification services. Similar support in developing anti-bribery compliance
systems is provided by law firms in many countries. Each of these firms group
such services within the larger agenda of providing help to their clients in
improving corporate governance.
One such initiative is the Business Principles for Countering Bribery,
which brings together two yearsÕ work by private sector corporations, NGO
representa- tives led by Transparency International, labour unions and
international organisa- tions. This product is designed to facilitate the
implementation of anti-bribery policies and systems within the corporate
sector, with minimal tailoring to individ- ual company needs. Self-evaluation
and external verification modules are to be developed, while the principles
themselves encourage public disclosure. The initia-
34 Global
Corruption Report 2003
Clement, National
Post, Toronto, Canada
01 Global Corruption 27/11/02 3:15pm Page 34
tive was launched only in late 2002, but already the International
Federation of Inspection Agencies is considering requiring its members to adopt
the principles and to submit to external verification.
Another initiative that businesses can draw on is the Global Reporting
Initiative (GRI), which was established in 1997 with the aim of developing
globally applicable guidelines for reporting on corporate economic,
environmental and social perfor- mance. Convened by the Coalition for
Environmentally Responsible Economics in partnership with the United Nations
Environment Programme, it is a long-term, multistakeholder international
undertaking. The draft 2002 Sustainability Report- ing Guidelines explicitly
list Ôbribery and corruptionÕ as a core reporting element and participating
organisations are asked to describe their policies, procedures and management
systems for addressing them, including how the organisation meets the
requirements of the Organisation for Economic Co-operation and Development
(OECD) Anti-Bribery Convention. If a company wishes to state that its report is
pre- pared Ôin accordance withÕ GRI guidelines it must address bribery and
corruption in the report.5
Collective action
Voluntary action, of which codes of conduct are an example, may be most
effective when businesses work together on collective initiatives. By
eliminating the compet- itive advantage of non-compliance, cooperation reduces
the cost of compliance to a single business. Publicly sharing information may
be one means of enforcing such cooperation. In addition, the more transparent
the collective action, the less likely is it that companies will be seen as
collusive.
Several industry groups have developed sector-specific guidelines on
tackling corruption and promoting access to information. These initiatives
provide valuable models for sectors where corruption is common, or where it is
particularly costly for a single business to step ahead of the competition by
setting higher standards of integrity.
The International Federation of Consulting Engineers (FIDIC) has
produced guidelines for Ôbusiness integrity managementÕ in the consulting
engineering indus- try that are currently being tested in five countries. The
guidelines offer practical advice to members on how to implement an integrity
management system. FIDICÕs approach is that companies must back up claims of
integrity with concrete informa- tion: ÔBusiness integrity has to be documented
for it to be managed. Documenting information should be a continuous process, rather
than taking place on a single occasion, which runs the risk that important
events will be missed.Õ6
The Mining, Minerals and Sustainable Development (MMSD) project,
launched in April 2000, was a two-year process of research and consultation to
explore challenges faced by the mining industry. Managed by the London-based
International Institute for Environment and Development, the MMSD was supported
by the industry, but
Access to information Corporate transparency in the fight
against corruption 35
01 Global Corruption 27/11/02 3:15pm Page 35
Company
disclosure in the oil industry
Efforts to increase accountability in AngolaÕs oil industry have led to
a growing campaign that could have worldwide implications for accounting
practices for resource extraction companies. The campaign originated in
December 1999 with a report by the NGO Global Witness that outlined the large-
scale disappearance of Angolan state oil revenues.1 Global
Witness called for Ôfull transparencyÕ from foreign oil companies, which had
previously kept secret their tax and other payments to Angola, accusing them of
ÔcomplicityÕ with corrupt state officials. ÔBy not publishing what they pay,Õ
Global Witness said, Ôoil companies endorse a double standard of behaviour that
would be unacceptable in the North and make it impossible for ordinary Angolan
citizens to call their government to account over the management of revenues.Õ2
These calls had an important early impact, as evidenced by a promise
from BP to publish detailed information about its payments to Angola.3
Most oil company payments to Angola are hidden The problem is as follows. Multinational companies
filing reports in Britain or the United States, for example, are required only
to file a single set of amalgamated accounts for their worldwide operations.
These cannot be easily broken down to provide information on tax and other
payments in individual countries. Under current accounting rules, therefore, it
is impossible to use public information to work out how much money oil
companies pay to the government of Angola.
This is important because typically 80–90 per cent of Angolan
government revenues come from the oil industry, but up to 40 per cent of gross
domestic product in some years has bypassed the treasury and is channelled into
hidden funds.4 In addition to the flow of revenues
36 Global
Corruption Report 2003
from oil extraction, one-off non- recoverable Ôsignature bonusesÕ
(payments to Angola for individual ÔblocksÕ, or licence areas, that confer the
right to seek and extract oil from any deposits found there) have added over US
$1.5 billion since 1993. Only a small proportion of them are acknowledged in
the state budget. Angola claims the ÔmissingÕ funds have been used for legitimate
state activities and that the data it has published about these flows have
simply been inaccurately recorded because of poor technical capacity in the
ministries.5 The International Monetary Fund (IMF), among others, is not convinced by
the explanation.6
Companies give flawed justifications for secrecy Notwithstanding BPÕs positive response to the
campaign, other oil companies have given three reasons for not publishing such
data.
First, they have said that in AngolaÕs case the route to transparency
should be through the Ôdiagnostic studyÕ conducted by KPMG, under an agreement
with the IMF, which uses information from corporate and official sources to
build a detailed picture of the oil revenues accruing to the government.7 However,
implementation of the study entirely depends on sustained political will from
AngolaÕs leadership, which has so far refused to publish the studyÕs results.
Second, some companies argue that even if foreign companies published
information, total government revenues could still not be calculated because
oil revenues also accrue to the state oil company, Sonangol, which
traditionally publishes little data. This would mean a significant gap in the
calculations. But this argument, which does not shield companies from Global
WitnessÕs charge of ÔcomplicityÕ with AngolaÕs leaders, is also weakened by the
fact that a far better
01 Global Corruption 27/11/02 3:15pm Page 36
approximation of oil revenues could be made if all companies published
the information BP promised to provide. What is more, SonangolÕs share of oil
from its operations is a form of state revenue, so the government could still
be called to account on this.
Third, companies argue that the publication of such sensitive
information would breach legitimate confidentiality agreements. It may be
possible, however, to overcome the problem of confidentiality by amalgamating
data from different ÔblocksÕ to produce a single set of nationwide figures that
would be impossible to unpick into its constituent parts. It has also been
pointed out that while a confidentiality agreement may bind an oil company and
Sonangol, taxation and other payments to the government are not covered.
Sonangol responds angrily to BPÕs move on transparency BPÕs promise prompted a strong letter from Sonangol
threatening contract termination, which was copied to other companies operating
in Angola.8 Other companies maintained the wall of secrecy surrounding their Angolan
operations lest they lose out on future billion-dollar investments in the
country. Lee Raymond, head of ExxonMobil, claimed BP had Ôrun into deep
troubleÕ as a result of its policy on disclosure.9
Just over a week later, however, BP claimed a major victory in Angola
when it jumped ahead of ExxonMobil, TotalFinaElf and ChevronTexaco to win
approval for its primary investment in Angola, the Greater Plutonio development
in Block 18 northeast of Luanda. BP later claimed to have won backing for its
policy on disclosure from the highest levels of the Angolan government.10 BPÕs
gamble on greater transparency appears to have paid off, but no other company
has yet followed its lead. It is not clear what compromises BP may have made to
achieve this rapprochement.11
International regulation may be the answer Recognising that moves towards greater transparency
were stymied by strong corporate competition in Angola, Global Witness is now
advocating a different approach, putting the onus more on international
regulators such as the Securities and Exchange Commission in the United States
and BritainÕs Financial Services Authority. This has evolved into the Publish
What You Pay (PWYP) campaign, backed by a number of NGOs and the international
financier and philanthropist George Soros.12
PWYP now argues that instead of a voluntary approach regulators in
Europe and the United States should require resource extraction companies to
break down their accounts by country. This need not be complicated or
expensive, since companies already keep such accounts for internal purposes,
and it neatly solves various problems. By making the rules universal, such a
move would level the playing field in high-stakes competitive environments and
eliminate confidentiality concerns, since such contracts routinely contain
clauses that say they can be overridden by regulatory requirements. Such rules
would also at a stroke directly address the problem in all countries, and in
the case of AngolaÕs oil industry would capture all the major players.
These are still early days
AngolaÕs oil revenue accounts have been rendered even more opaque by the
practice of paying for foreign bank loans with future oil cargoes, which has
allowed for the diversion of state funds to irregular ends.13 There
have been no calls as yet to tailor requests for country-by-country disclosure
specifically to cover the accounts of banks involved in this form of
international lending.
The Angola focus of Global WitnessÕs original campaign has rapidly grown
to take on an international dimension. Activists in other oil-rich countries
have
Access to information Corporate transparency in the fight
against corruption 37
01 Global Corruption 27/11/02 3:15pm Page 37
mostly concentrated on the disclosure of information about the oil
industry by governments, not companies. In Kazakhstan, for example,
journalists, parliamentarians and campaigners are concerned about the
mechanisms governing an autonomous oil fund set up in mid-2001, whose
operations are a state secret. The issue of payments from foreign
multinationals is not yet high on the agenda, although public awareness of the
issues surrounding the oil industry is relatively new in Kazakhstan.
4 5
6 7
8
9 10 11
12 13
IMF reports on Angola 1996–2001. See www.imf.org. Government
communiqu on 11 April 2002, in response to the Global Witness publication All
the PresidentÕs Men.
See, for example, www.imf.org/external/np/ms/2002/021902.htm. ÔFinancial
Diagnosis and Monitoring of State Petroleum ReservesÕ, published on the
official Angolan government website, www.angola.org. Reproduced in Global
Witness, All the PresidentÕs Men. Interview in Financial Times (Britain), 12
March 2002. John Browne, group CEO of BP, speaking at Harvard University on 3
April 2002. See Financial Times (Britain), 1 August 2002. It is surely no
coincidence that just three days after sending its letter to Global Witness
promising publication, BP (then BP Amoco) said it had recruited (as Angola
country manager) Jos Patricio, formerly AngolaÕs permanent representative to the
United Nations and a member of the powerful MPLA Central Committee. See
www.publishwhatyoupay.org. See Economist Intelligence Unit, Angola Country
Reports, including 2/2002.
1 2 3
Nicholas Shaxson
Global Witness, A Crude Awakening, December 1999. Global Witness, All
the PresidentÕs Men, March 2002. BP appears to have subsequently weakened its
promise, raising the question of exactly how and when it will disclose this
information. In a response to questions from the Financial Times website on 1
August 2002, BP said: ÔWe are now talking with Sonangol and the Angolan
authorities about how
and when we will publish details of the payments we have made.Õ
38
remained independent of it. Tackling large-scale corruption was one
challenge iden- tified and a number of recommendations emerged, including a
call for mining com- panies to form national coalitions with industry and civil
society organisations to establish national and industry-wide guidance and
monitoring arrangements. MMSD encouraged individual companies and authorities
to publish basic informa- tion about wealth generated from projects and about
revenues received by govern- ments, as well as how the funds are then spent.7 The
International Council on Mining and Metals issued a declaration that broadly
supported the MMSDÕs final report at the Global Mining Initiative conference in
Toronto in May 2002 and asserted that Ôaccountability, transparency and
credible reporting are essentialÕ.8
A group of 11 major international banks, brought together by
Transparency International, have signed up to a set of global anti-money
laundering guidelines known as the Wolfsberg Principles. The guidelines focus
on the Ôknow your cus- tomerÕ principle, under which banks are obliged to
obtain full information about the real identity of each customer as well as the
source of his or her funds. While the banks do not disclose the information to
the public, they have agreed to comply with the anti-money laundering
provisions in all jurisdictions in which they are active. It is hoped that more
financial institutions will adopt similar principles, especially in financial
markets with less stringent supervisory structures and where no require- ment
exists to report suspicious transactions to the relevant authorities.9
Global Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 38
Blowing the whistle on bribery
When a companyÕs code of conduct commits it to full public reporting, it
may choose to disclose the cases of corruption in which it has been involved.
But management efforts are not always sufficient to uncover corruption
throughout an organisation; corporate transparency also needs whistleblowers
who are brave enough to expose corruption when they come across it.
Whistleblowers in turn need a legislative environment that protects them
and a corporate culture of openness, if they are to feel secure about reporting
incidents of bribery and corruption. But they also need to know where to go for
advice on the complex ethical dilemmas that sometimes arise.
Companies must provide helplines and establish internal procedures by
which employees can report or discuss concerns anonymously. The food and
beverages con- glomerate Diageo has a code of conduct that highlights the
existence of a free and confidential hotline which employees are encouraged to
use to report corrupt prac- tices, or when they are unsure of what action to
take. There is also a compliance risk office in the companyÕs legal department.10
Given the prevalence of corruption in Eastern Europe and the countries
of the former Soviet Union, the EBRD has recently instituted a reporting
hotline by which employees and outsiders can report their concerns to a
specialised external body, thus ensuring their anonymity and easing
whistleblowersÕ anxieties about reporting through internal company channels.
A major problem, however, is ensuring that hotlines are actually used.
The ISIS Asset Management survey identified several whistleblower hotlines in
European companies, but it was less clear that they were well advertised or
utilised.11 UK- based public interest consultancy Public Concern at Work (PCAW)
provides impar- tial advice and practical training to employers and government
departments.12 It also runs a confidential helpline for employees unsure whether or how
to raise con- cerns about corruption and other malpractices. But PCAW
acknowledges that developing whistleblowing policies that have resonance in
different countries and cultures is a real challenge for multinationals.
Financial reporting: to expose both private and public corruption
Post-Enron, there has been urgent interest in finding ways to tighten
regulations on financial reporting and on the role of auditors (see box on p.
80). Central to EnronÕs collapse was its managementÕs ability to hide huge
losses off the balance sheet, with the complicity of its auditors, Arthur
Andersen, which also provided consultancy services to Enron, compromising their
independence. The issues involved are central to the fight against bribery.13
The Enron scandal provoked a debate in the U.S. and European media on
the rel- ative merits of different accounting standards, and standards have
been reviewed elsewhere. It has been argued that U.S. accounting standards
emphasise the ticking
Access to information Corporate transparency in the fight
against corruption 39
01 Global Corruption 27/11/02 3:15pm Page 39
Surveying
transparency and disclosure in business
Transparency involves the timely disclosure of adequate information
about a companyÕs operating and financial performance and its corporate
governance practices. For well-governed companies, standards of transparency
are high, enabling shareholders, creditors and directors to monitor management
and assess operating and financial performance.
Although the need for timely and accurate corporate reporting is global,
there is no universal benchmark for evaluating levels of disclosure.
Recognising the gap, Standard & PoorÕs, a leading provider of independent
financial information and risk assessments, launched a major survey of
transparency and disclosure in 1,600 companies around the world.
The purpose of Standard & PoorÕs Transparency and Disclosure Survey
is to provide investors with an objective ranking of the corporate reporting
practices of large companies and to help them understand the differences in
reporting levels across markets and business sectors.
The survey uses the latest company annual reports and accounts, the most
accessible source of information for the investor. Standard & PoorÕs
identified 98 separate pieces of information that should be disclosed in
reports and accounts when best practice is followed. The survey scores
companies according to how many of these pieces of information they disclose.
The 98 questions fall into three groups:
× Ownership structure and investor
relations. (For example, does the annual
report identify shareholders? Does it
describe shareholdersÕ voting rights?) × Financial transparency and
information
disclosure. (For example, is financial information prepared in
accordance with internationally recognised accounting standards? Does the
company disclose the name of its auditor? Does it disclose how much it pays the
audit company both in audit fees and non-audit fees? Does it reproduce the
auditorÕs report?)
× Board and management structure and
processes. (For example, does it disclose details of directorsÕ pay?)
The first two phases of the survey, completed in August 2001, covered
more than 350 of the largest companies in Asia and Latin America. Later surveys
will cover Europe and the United States. Companies were scored according to the
proportion of disclosure items they included in their latest annual report: from
the first decile at the bottom (in which less than 10 per cent of items were
disclosed) to the 10th decile at the top (in which more than 90 per cent of
items were disclosed). The country score shown in the figure is the average
decile in which companies from each country appear.
No company made it into the ninth or 10th deciles (none disclosed more
than 80 per cent of items). The only countries surveyed in which some companies
made it into the eighth decile were Australia and Singapore. In both countries,
companies were on average in the seventh decile.
In developing Asian countries, only a handful of companies were in the
seventh decile or above. Taiwanese companies are
40
of boxes to show corporate compliance with specific rules, and that this
made pos- sible EnronÕs aggressive accounting practices. Advocates of the
International Accounting Standards (IAS), to which EU countries are converging,
argue that the IAS emphasises substance over form, demanding a more flexible
assessment of
Global Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 40
Country decile rankings
7 6 5 4 3 2 1 0
by far the largest constituents of the bottom two deciles, with no
Taiwanese company making it into any of the top six deciles. The scores of
companies from other countries in developing Asia were more evenly distributed.
Companies in the Latin American region fared even worse. No companies
were in the seventh decile or above. In the Latin American region, of the six
highest company scores, three were from Brazil, two from Chile and one from
Mexico. No one country stood out as a clear laggard, although the
highest-scoring companies in Argentina and Peru only made it to the fourth
decile.
From results so far, it would appear that the country dimension is an
important
influence on the transparency and disclosure of firms. The listing
requirements in each country are likely to be an important factor. Looking at
the China-based companies in the sample, for example, three-quarters are listed
on the Hong Kong Stock Exchange, and more than half have listed American
Depository Receipts on the New York Stock Exchange (NYSE), both of which have
relatively high disclosure standards.
The methodology employed in the survey, the questionnaire and the
results are available on: www.governance.standardandpoors.com.
Ian Byrne
whether a companyÕs accounts give a fair view of its finances.14 Perhaps
the clearest conclusion of the debate is that there are vulnerabilities in all
existing standards.
The fact that standards vary from country to country may itself be a
problem. Peter Wyman, deputy president of the Institute of Chartered
Accountants in
Access to information Corporate transparency in the fight
against corruption 41
01 Global Corruption 27/11/02 3:15pm Page 41
Taiwan
Peru Mexico
Philippines Argentina
Chile Brazil
Pakistan Indonesia
India Malaysia
South Korea Thailand
China Hong Kong
Japan Singapore
Australia
Average decile ranking
England and Wales, has called for a set of global standards: ÔWe have
global compa- nies and global investors, but national rules and national
standards – which is crazy.Õ15 Variation between national standards
prevents a level playing field in inter- national business. More importantly,
companies wishing to hide illicit transactions may attempt to take advantage of
weaker standards, wherever they are found.
Improving standards of financial reporting can also help expose public
sector corruption in countries where there is little or no access to government
financial information. In such countries, the disclosure of information about
legitimate cor- porate payments to governments may be the only effective means
of finding out the real level of public revenue. This can provide a useful
means by which civil society can ascertain the extent to which public revenue
is disappearing. Equally, compa- nies can expose cases of extortion by public
officials, particularly when companies act together. Some major companies are
beginning to understand that they can become a force for good in fighting
corruption in countries where they operate.
In Indonesia, for example, the U.S.-based Newmont Mining Corporation,
the worldÕs largest gold producer, issues news releases to the local media
every time it makes a royalty payment to the government.16 In
Angola, BP announced it would make public detailed information about the taxes
and levies it pays to the govern- ment, although it has yet to publish the
information. The NGO Global Witness argued that if other companies were to
follow suit, it would be possible to reveal the true extent of corruption in
the Angolan government. As part of the Publish What You Pay campaign, Global
Witness and others are now calling for regulatory author- ities to require
multinational resource extraction companies to break down their accounts on a
country-by-country basis (see box, p. 36).
Conclusion
Although the corporate sector needs to protect commercially sensitive
information, some companies are increasingly open to different forms of
disclosure. This progress has come partly in response to the reputational and
legal risks of non-disclosure, and partly as a result of more enlightened
attitudes to building good reputations and, ultimately, cutting costs.
A collective response by businesses in a single sector may be
particularly effec- tive, although the role of legislators and pressure groups
should not be underplayed. The enabling environment for promoting transparent
business transactions requires multifaceted approaches. Such approaches
include: regulation and oversight; vol- untary codes and guidelines;
awareness-raising campaigns; training and a host of practical management
systems; and internal controls, sanctions and incentive schemes to ensure that
corruption is monitored and reported throughout company operations. This
article has tried to highlight some of the policies, practices and ini-
tiatives to which companies can sign up if they are to ensure full disclosure
and address corruption.
42 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 42
1 Harriet
Fletcher is a consultant to the International Business LeadersÕ Forum (IBLF) on
a range of issues including corruption and conflict. The IBLF has an ongoing
programme to engage the private sector in practical initiatives to combat
bribery and corruption. Business round tables on corruption have been held in
the Czech Republic, Poland, Russia and Turkey, and are planned for Indonesia,
the Philippines and possibly China and India. The IBLF has also begun work on a
series of practical manuals to help companies develop and implement
anti-corruption policies, which will be co-produced with various expert
organisations. For further information, please contact Tiffany Butterfield (tiffany.butterfield@iblf.org)
or Jonas Moberg (jonas.moberg@iblf.org).
2 ISIS
Asset Management (formerly Friends Ivory & Sime), The Governance of Bribery
and Corruption: A Survey of Current Practice (London: Friends Ivory & Sime,
2002).
3 See,
for some examples, the Anti-Bribery Toolkit on the website of TI USA,
www.transparency- usa.org/Toolkit.html.
4 Shell,
Dealing with Bribery and Corruption: A Management Primer, 1999. 5
www.globalreporting.org/GRIGuidelines/2002/DraftSRG2002.pdf. 6 International
Federation of Consulting Engineers, Guidelines for Business Integrity
Management in the
Consulting Industry (Lausanne: International Federation of Consulting
Engineers, 2001). 7 Mining,
Minerals and Sustainable Development (MMSD) project, Breaking New Ground:
Mining, Minerals
and Sustainable Development (London: Earthscan Publications, May 2002).
8 International
Council on Mining and Minerals, ICMM Toronto Declaration, 15 May 2002. 9
www.wolfsberg-principles.com.
10 Diageo
plc, Code of Business Conduct (London: Diageo, 2001). 11 ISIS
Asset Management. 12 www.pcaw.co.uk. 13 States
that sign the OECD Anti-Bribery Convention, for example, are required to ensure
that their accounting
and auditing laws and regulations Ôprohibit the establishment of
off-the-books accounts, the making of off- the-books or inadequately identified
transactions, the recording of non-existent expenditures, the entry of
liabilities with incorrect identification of their object, as well as the use
of false documents, by companies subject to those laws and regulations, for the
purpose of bribing foreign public officials or of hiding such briberyÕ (article
8, paragraph 1, OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions, 1997). See also K. Drew,
Enron, the Foreign Corrupt Practices Act and the OECD Convention (London:
University of Greenwich/UNICORN Global Trade Unions Anti-Corruption Project,
2002).
14 Financial
Times (Britain), 21 February 2002. 15 Euromoney
(Britain), March 2002. 16
www.newmont-indonesiaoperations.com/news/info.cfm?id=52.
Access to information Corporate transparency in the fight
against corruption 43
01 Global Corruption 27/11/02 3:15pm Page 43
The mediaÕs role: covering or covering up corruption?
Bettina Peters
Introduction
Information allows people to scrutinise activity and is the basis for
proper, informed debate on that activity. In this context, the contribution
made by journalists is clear: by providing the public with timely and accurate
information on the affairs of gov- ernment, business and special interests, the
media can shape the climate of democ- ratic debate and help the establishment
and maintenance of good governance. That the media must be able to access
public information in order to play this role is today widely appreciated.
Freedom of the press, including free access to informa- tion, is fundamental to
open, democratic society. This view has found its way into international legal
norms and, in numerous countries, the mediaÕs rights are upheld and guaranteed
in freedom of information legislation.
In spite of the international recognition of press freedom, journalists
and media organisations throughout the world continue to face obstacles in
reporting. Obstruction is reflected in the presence of active censorship or
restrictive regula- tions on journalistic work, limited or blocked access to
official information, a legal landscape that inhibits the ability of
journalists to inquire and report freely – such as the application of
draconian defamation and sedition laws – and a cen- sorious abuse of essential
media services, such as broadcasting, printing facilities and distribution
systems. In addition, the lack of training, poor professional stan- dards and a
dearth of investment into investigative reporting make it difficult and
sometimes impossible for journalists to access, impart or disseminate accu-
rate information.
A difficult relationship between journalism and political power is a
hallmark of democratic society. To that extent, a tendency to manipulate news
and shape the agenda of public debate exists in all societies. In countries
where democratic culture is not well established, restrictions on media tend to
be more explicit and pro- foundly damaging to debate or public engagement.
Where the affairs of government or powerful interest groups are protected by secrecy,
journalists face considerable obstacles – and physical risk – if
they embark upon investigations that could lead to exposing corruption. Yet the
media also face challenges within their own ranks. Civil society has been
monitoring developments in ownership concentration, the role of advertising and
corrupt journalistic practices that undermine the mediaÕs ability to adhere to
internationally accepted standards.
44 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 44
Nicolae Ionita, Romania
Since the events of September 11th, new measures to block, reduce or
slow down the flow of information – while increasing surveillance of
access itself – have threat- ened to restrict media freedom. In Jordan,
for instance, new amendments to the penal code subject journalists to prison
terms for publishing material that Ôcould breach national unity, divide the
population or damage the image and reputation of the stateÕ. In Saudi Arabia,
all Internet service providers must now keep records of their users in order to
track access to forbidden websites. The United States has begun withholding
information deemed detrimental to Ôinstitutional, commercial, and personal
privacy interestsÕ. Increased surveillance of the Internet, e-mail and
telephone conversations was authorised in both Britain and Canada, while new
French laws effectively criminalise the encryption of electronic messages. In
Germany, a new anti-terrorist law grants intelligence services the right to
access stored telecommunications data and trace the origins of e-mail.1 For
additional region-specific details on advances and setbacks in the struggle for
access to infor- mation, see the access to information boxes in the regional
reports.
Covering corruption: a dangerous assignment
Simply by doing their jobs well, independent-minded journalists have
played a central role in promoting democracy for many years. Many put their
lives or freedom at risk to promote transparent and accountable governance and
corporate behaviour. Of the 68 confirmed cases of murders of journalists in
2001, 15 were
Access to information The mediaÕs role: covering or covering up
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01 Global Corruption 27/11/02 3:15pm Page 45
Media
sustainability in Southeast Europe and Eurasia
In a drive to gauge the development of sustainable independent media,
the International Research and Exchanges Board (IREX)1 evaluates
characteristics of the media as well as the political and legal environment in
which they operate. IREX applied its first annual Media Sustainability Index2 (MSI) to
20 countries in Southeast Europe and Eurasia in May 2001. Given that the index
may be applied to any country or region of the world, IREX may expand its
application to other regions in the future.
The MSI asked local media professionals and international media
development experts to evaluate five key aspects of media systems: the quality
of journalism; the legal and regulatory environment; the plurality of news
sources; the mediaÕs financial sustainability; and the development of
media-related associations, NGOs and unions.
All five aspects of a media system contribute to the mediaÕs ability to
play its role in combating corruption. Financially stable media are in a
position to maintain editorial independence and can afford investigative
reporting; free-speech NGOs can support courageous media and journalists who
take on corruption; and a plurality of news sources means that citizens have
access to multiple points of view and that no one source can dominate.
Two categories of the index are particularly indicative of how prepared
the media are to combat corruption. One measures how well legal and social
norms protect and promote free speech and access to public information, while
the other considers whether journalism meets professional standards of quality
(see figure). Respondents evaluated features such as how well the right to
access to information is enforced and how established investigative journalism
is in specific countries.
The results of the MSI indicate that media throughout the region are
still
46 Global
Corruption Report 2003
struggling to fulfil their role in combating corruption. Regional
variations are apparent. Media in Central Asia and Belarus engage in little
investigative reporting, face governments unfriendly to a free press and enjoy
limited support or protection from the legal system. Other countries in the
Commonwealth of Independent States face similar obstacles, although repression
may be subtler. In Southeast Europe, by contrast, there are more positive
signs. Bulgaria, Croatia and Romania have demonstrated progress towards a
climate that encourages the media to play the role of watchdog. Like other
countries in Southeast Europe, however, they have not consolidated these gains.3
General trends are also apparent across the region. Since the fall of
communism, skill levels have improved considerably, but better-quality
reporting is often limited to the capitals and media are reluctant to engage in
investigative reporting.
Repressive regimes continue to hold power in many states, while less
repressive ones often use more subtle forms of intimidation, which lead the
media to self- censorship. Murder and threats against investigative journalists
and the media that support them occur throughout the region.4
State media remain timid and tied to the government of the day and many
private media shun serious investigative reporting, either through lack of
resources, lack of skills, self-censorship or owing to the political ties of
owners.
While the legal framework has generally improved, journalists and media
in many of the countries surveyed still face legal challenges to in-depth,
investigative reporting. Libel and defamation laws do not meet generally
accepted international standards. The concept of access to public information
is still the exception, rather than the norm, and tax, customs and other
01 Global Corruption 27/11/02 3:15pm Page 46
Professional journalism
Croatia Bulgaria Romania FYR Macedonia
Kosovo Armenia Russia Georgia Azerbaijan Moldova FRY – Serbia Albania BiH
Kyrgyzstan FRY – Montenegro Belarus Uzbekistan Tajikistan Ukraine
Kazakhstan
Note
2.50
2.12 2.02
1.89 1.78
1.78 1.75
1.57
1.57 1.44
1.43 1.40
1.37
1.36 1.34
0.93 0.93 0.92
0.90 0.78
01234
Unsustainable Unsustainable Near Sustainable
Anti-free press Mixed
system sustainability
The measure of professional journalism
includes factors such as whether reporting is well sourced, fair and balanced;
whether journalists follow recognised and accepted ethical norms; whether they
practise self- censorship; whether they cover key events and issues; and
whether they offer investigative reporting.
laws are used as means of intimidation. Despite these challenges,
courageous journalists are still struggling to ensure that the media serve as a
corruption watchdog at regional, national and local levels.
Mark Whitehouse
1 Based
in Washington, D.C., IREX has implemented media development and education
programmes since the early 1990s.
2 See
www.irex.org/publications- resources/msi_2001/index.htm. The MSI is funded
by the United States Agency for International
Development. 3 Croatia
has the highest scores with an average MSI
of 2.44, which indicates it is nearing sustainability of a free media
system but remains in danger of backsliding. Bulgaria is 2.39 and Romania 2.38.
Since the 2001 MSI was completed in June 2001, Romania has witnessed both
positive (the passing of freedom of information legislation) and negative
developments (libel and slander were not removed from the criminal code,
although penalties were reduced).
4 See
Committee to Protect Journalists, Attacks on the Press in 2001, posted on
www.cpj.org/ attacks01/pages_att01/attacks01.html.
Access to information The mediaÕs role: covering or covering up
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01 Global Corruption 27/11/02 3:15pm Page 47
related to their investigative work on issues of corruption.2 This is
an alarmingly high number.
One victim was Parmenio Medina Prez, producer at Costa RicaÕs Radio
Monu- mental. On 7 July 2001, he was shot three times by unknown assailants
just outside his house; he died upon arrival at hospital. Prez had produced a
weekly satirical radio programme called La Patada (The Kick), known for a
hard-hitting approach to official corruption. One report accused a local
Catholic radio station and its director, Minor de Jess Calvo Aguilar, of
fiscal improprieties. The Catholic Church subsequently closed the station and
fraud investigators started examining AguilarÕs finances. Prez began to
receive death threats shortly thereafter.3 In the meantime, a judge ruled in
favour of Aguilar and ordered the station back on air.
In another case, Georgy Sanaya, a popular Georgian journalist, was found
dead in his Tbilisi apartment on 26 July 2001. He had been shot in the head at
close range. Sanaya had anchored Night Courier, a nightly political talk show
on independent television station Rustavi-2 on which he interviewed GeorgiaÕs
leading politicians. Rustavi-2Õs executive director claimed that the murder was
probably intended to intimidate the station, which is known for its
investigative reporting on the abuse of power.4 Although Sanaya did not receive any
personal threats, the station was fre- quently the target of government
harassment. The police arrested a suspect in August 2001, but released him for
lack of evidence.5 One of the most significant results of SanayaÕs murder
case has been a heightened public awareness of the threat to GeorgiaÕs
independent media. This case and others prompted major public demonstrations
against government interference in the media, inducing President Eduard
Shevardnadze to dismiss his entire cabinet in early 2002.
Killings continue. Edgar Damalerio, managing editor of the Filipino
weekly newspaper Zamboanga Scribe, was shot dead on 13 May 2002. His colleagues
are convinced that Damalerio, known for his critiques of corruption among local
politicians and the police, was killed for his journalistic work. Valery
Ivanov, editor of the newspaper Tolyatinskoye Obozreniye in Togliatti in south
Russia, was killed on 29 April 2002. The newspaper was well known for its
reports on organ- ised crime and official corruption. In Bangladesh, Harunur
Rashid, a reporter for the daily newspaper Dainik Purbanchal, was killed after
writing several stories on official corruption and links between criminal
syndicates and outlawed Maoist guerrilla groups. Orlando Sierra Hernndez, a
columnist for the Colombian news- paper La Patria, was shot in the head on 30
January 2002, and died two days later. His columns frequently attacked
government corruption and human rights abuses by left-wing guerrillas.6
Silencing journalists with laws
Apart from direct physical threats against journalists, the media in
many countries face legislation that prevents them from gaining access to and
imparting informa-
48 Global
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01 Global Corruption 27/11/02 3:15pm Page 48
tion. Repressive defamation laws that put the burden of proof on
journalists and grant special protection to public officials exist across Eastern
Europe, Africa, Asia and parts of Latin America. These laws often forbid truth
as a defence in defama- tion cases, signalling that the reputation of public
officials is deemed worthier of protection than the publicÕs right to know.
Such laws – and the concomitant threat of prison sentences – create
a climate of fear that discourages investigative report- ing and the exposure
of corruption.
One example of severely repressive legislation is KazakhstanÕs libel
law, which is used to financially weaken media critical of the political and
commercial oligarchy. AlmatyÕs independent weekly Nachnem s Ponedelnika is
known for its in-depth reporting on state officialsÕ involvement in the oil
trade and other contracts. From 1998 to 2001, the weekly was sued 17 times for
defamation, chiefly by officials or company executives with close links to
government.
In three cases, the paper was found guilty of slander and fined a total
of 25,935,000 tenge (about US $180,000). Since Kazakh libel law does not
recognise truth as a defence, Nachnem s Ponedelnika was fined for harming the
reputation of public officials, without due consideration of possible evidence
of their involvement in bribery. Two plaintiffs subsequently dropped their
suits but the 12 remaining cases are still pending in the courts.7 The sheer
volume of cases filed suggests systematic harassment of the weekly and the
abuse of privacy laws by some state officials.
Media concentration: dissuading corruption coverage
A recent World Bank analysis of media ownership structures in 97
countries found that state-owned media tend to be less effective than private
media in monitoring government. ÔCountries that have reduced government
ownership of the media have often experienced rapid improvements in the amount
and quality of coverage. For example, MexicoÕs partial privatisation of
broadcasting in 1989 led to a sharp increase in coverage of government
corruption scandals.Õ Compared to other regions, Latin America and the Caribbean
have low levels of state ownership of the media, yet both television and the
press are concentrated in the hands of only a few private owners. This highly
concentrated private ownership, combined with the restrictive regulations found
in many Latin American countries, tends to restrain the media.8
No analytical reports have identified corrupt practices in media giants.
In some cases, however, private media owners themselves can have a strong
influence on whether corruption is covered, especially if they pursue greater
profits rather than principles of free reporting or access to information.
One such example revolves around a major deal struck in September 2001
between the Chinese government and the media giants AOL Time Warner and Rupert
MurdochÕs News Corporation. The deal grants both companies the right to
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Caught on
camera: regional Brazilian media moguls discredited
Media ownership is highly concentrated in Brazil, where congress holds
the licensing authority for broadcast media. It is hardly surprising,
therefore, that politicians often obtain these licences. Yet over the last
year, a reinvigorated public prosecutorÕs office has arrested three such
ÔtelepoliticiansÕ on corruption charges in a trend that is precipitating the
downfall of BrazilÕs regional oligarchies. Ironically, the moguls concerned
have fallen prey to their own local media empires in the process.
Roseana Sarney, daughter of former president Jos Sarney, was a
presidential hopeful for the 2002 election. Yet her reputation suffered
irreparable damage when her own TV channel showed federal police uncovering 1.3
million reais (US $400,000) in cash in a raid on one of her firms. Her husband
and business partner ultimately admitted that the money had been earmarked to
finance her campaign, in a clear violation of funding regulations. The ensuing
scandal forced Sarney to drop out of the presidential race in April 2002.
Former senator Jader Barbalho is another well-known Brazilian who
combines politics with media ownership. His share of the TV audience must have
been surprised to see the police ringing his doorbell with a warrant for his
arrest. The camera panned around his elegant apartment, zooming in on Barbalho
as he struggled to hide his handcuffed wrists behind a book. Facing
investigations into numerous allegations of corruption, he had already resigned
as senator and president of the senate. After 13 hours in jail, however, he was
a free man again, released by a court order.
The trial of Antnio Carlos Magalhes, for more than 40 years a name
synonymous with power in the northeastern state of Bahia, was also exposed on
his own TV station. His constituency watched as he stood before a senate
inquiry, accused of violating the secrecy of electronic ballots in a senate
vote over which he had presided.
50 Global
Corruption Report 2003
In an affront to parliamentary decorum, he had allegedly obtained a list
of the secret ballots of his colleagues. In anticipation of a ban from the
higher assembly, he resigned as senator in May 2001.
The three telepoliticians have much in common. Their regional
oligarchies command small communications empires in TV, radio and local newspapers
– organs that have long promoted them while deriding their opponents. Yet
the tables have started to turn. For financial reasons, the three politicians
had affiliated their broadcast media with the large national networks. Since
they made few programmes of their own, they ran soap operas, newscasts and
other programmes produced by BrazilÕs top broadcasting corporations.
Consequently, they found themselves showing uncut footage that has seriously
harmed the reputation of their owners.
The impetus behind their downfall, however, had its origins in a key
provision of the 1988 constitution that was introduced after the fall of the
military dictatorship, at the beginning of BrazilÕs redemocratisation process.
At the heart of the changing atmosphere is the public prosecutorÕs office,
composed of attorney- generals and prosecutors whose responsibilities include
monitoring and inspecting the behaviour of public office- holders. The
relatively newly won independence of these prosecutors permits the office to
make extraordinary contributions to curbing corruption and other arbitrariness
by law-makers in Brazil. Rejuvenated with young prosecutors who must pass
through a rigorous selection process, the public prosecutorÕs office and its 26
state offices continue to be the source of lawsuits brought against the
powerful, among them Roseana Sarney, Jader Barbalho and Antnio Carlos
Magalhes.
Josias de Souza
01 Global Corruption 27/11/02 3:15pm Page 50
broadcast television programmes in China in exchange for beaming Chinese
gov- ernment-sponsored material into the United States.9 The
arrangement was criti- cised by press freedom organisations, as was MurdochÕs
decision to remove the BBC World Service from his network after Beijing
complained about BBC coverage of internal politics. The International
Federation of Journalists (IFJ) argued that the landmark deal with China
Ôsidelines human rights and press freedomÕ while showing indifference to the
plight of journalists and programmers in Chinese jails.10 The
actions of AOL Time Warner and News Corporation sent out a message that
promoting access to information – the basis for exposing corruption
– was not a pri- ority consideration in their decision-making.
Such conflicts of interest fall into sharper relief when media control
and politi- cal power are combined in a single individual. One of the clearest
such embodiments is ItalyÕs prime minister Silvio Berlusconi, who commands
large real estate holdings, owns several major newspapers and also controls
most of ItalyÕs private television market. As head of the government, he can
now control the countryÕs public televi- sion market since he effectively
nominates the director of Radio Televisione Italiana (RAI). Berlusconi had
promised to resolve the conflict between his political role and commercial
interests within the first 100 days of his administration. This period has long
since expired and at this writing Berlusconi had yet to install an effective
fire- wall between his dual roles of prime minister and media mogul.
RAI and BerlusconiÕs media enterprises enjoy a certain editorial
independence under a collective national agreement. In reality, however,
journalists reporting too aggressively on the prime ministerÕs business
interests risk inconvenient transfers or the permanent loss of their jobs.
Journalists have delivered confidential reports to the national press
association concerning newsroom practices that discourage criti- cism of the
government.11
In the United States, where media organisations undertake major lobbying
efforts to promote their business interests, not all media espouse the role of
inde- pendent watchdog. Both major parties receive donations from the media,
which also sponsor members of Congress who support their objectives. Between
1993 and June 2000, the media provided a total of US $75 million to
politicians.12 It was money well spent. One of the most remarkable – and least
publicised – media events in recent years was the decision in 1996 to
make a free gift to broadcasters of portions of the digital spectrum developed
for digital data transfer, a deal worth an estimated US $70 billion. This
exchange of donations and gifts raises critical questions about the nature of
the relationship between the media and government and the mediaÕs ability to
retain independence.
Mixing the message: advertising and editorial content
This independence is also compromised by advertising. Although vital to
media companiesÕ financial performance, advertising has had an increasingly
pernicious
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01 Global Corruption 27/11/02 3:15pm Page 51
impact on editorial departments (see box, p. 53). Journalists are
increasingly expected to produce material to suit sponsors and advertisers,
blurring the line between advertising and editorial content. Some media
companies increase rev- enues by passing off advertising as editorial content;
others make favourable cover- age of an enterprise contingent upon paid
advertising.
Among many private newspapers in Africa, the relationship between
journalism and advertising is more straightforward. Since advertising
departments are often understaffed, reporters are expected to solicit
advertising while on assignment, earning a share of the fee if successful.13
ÔNot many journalists will admit it directly,Õ said Gabriel Baglo,
former president of TogoÕs independent press union, Ôbut what happens is that
journalists go to report on a company. Because they ask them to place an ad at
the same time, a deal is struck to ensure favourable coverage of the companyÕs
performance.Õ14 Similarly, a Tanzan- ian journalist reports: ÔThe credibility of the
news coverage is rightly questioned. This is especially the case in
broadcasting: virtually all radio news in private media is sponsored.Õ15
Corruption in the media
Corruption also exists within the structure of media organisations and
in the way journalists carry out their reporting tasks. Many engage in a host
of corrupt prac- tices, ranging from Ôchequebook journalismÕ to news tailored
to suit advertising or commercial needs. JournalistsÕ codes of conduct condemn
such corrupt activities, but the reality of the profession does not mirror its
aspirations, especially when underpaid – or unpaid – journalists resort
to accepting payment in order to make ends meet.16
Such situations arise in many developing countries and countries in
transition, where pay levels are low. While bribes may be small, they can
influence the story the journalist writes or broadcasts. In a 2001 seminar in
Kursk, Russia, local newspaper journalists reported that they had accepted
payments from a local businessman to write favourable articles about his
ventures and investments.17
In the developed world, the practice of freebies is well established.
Journalists enjoy free air travel from airlines and hospitality at hotels and
then write glowing travel articles. In Europe, members of media organisations
often expect hotels and meals to be complimentary when they attend press
conferences; they may even count on sponsors to provide gifts.
Such practices can have a direct effect on media coverage, as came to
light in the wake of the Enron scandal. Unethical links between financial
journalists and the energy giant resulted in uncritical coverage of the
companyÕs activities. Irwin Stelzer, a contributor to the Weekly Standard in
the United States and the Sunday Times of London, who complimented Enron in
November 2001 for Ôleading the fight for competitionÕ, publicly disclosed his
association with Enron and that of Weekly
52 Global
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01 Global Corruption 27/11/02 3:15pm Page 52
Cash for
editorial: unethical media practices revealed
Taking cash for editorial content and other unethical media practices
are prevalent around the world, particularly in Southern and Eastern Europe and
Latin America. A survey by the International Public Relations Association
(IPRA) concludes that no region is immune.
The study, published in July 2002, polled 242 public relations and
communications professionals in 54 countries. The respondents, mostly senior
practitioners in local or international consulting firms, provided information
on their perception of who ultimately determines editorial content.
Nearly two-thirds (63 per cent) of respondents in Eastern Europe believe
that zakazukha – a Russian word referring to the acceptance of bribes by
journalists in exchange for editorial content – is common in their
countries. Only 13 per cent of respondents in Eastern Europe believe that
editorial content is ÔusuallyÕ or ÔalwaysÕ based on editorial judgement rather
than bribery. In Southern Europe, Africa and the Middle East, 40 per cent of
respondents believe that editorial content is generally influenced by bribes.
Even in regions where the media appear more transparent, the percentage
of respondents who say that editorial control is influenced by third parties is
considerable: between 13 and 21 per cent in Asia, Australia, North America and
North/West Europe.
Asia is perceived to be home to the worldÕs most transparent media, with
68 per cent of respondents agreeing that editorial control is usually or always
based on editorial judgement rather than bribes. North America follows with 65
per cent, Australia with 60 per cent and North/West Europe with 59 per cent.
The survey also indicated that advertising often appears disguised as
editorial matter. Almost 60 per cent of Latin American respondents feel that
material which appears in print as a result
of payment is in general not clearly identified as advertising or
promotional material, and is disguised as editorial. Confidence is not much
higher in Eastern Europe, where 52 per cent of respondents say that promotional
material is generally not identified as such.
With regard to the journalistic practice of accepting complimentary
gifts in exchange for favourable coverage, otherwise known as ÔfreebiesÕ, 87
per cent of respondents from Eastern Europe and 85 per cent from Southern
Europe say that publications ÔseldomÕ or ÔneverÕ refuse free travel,
accommodation or products. Seventy per cent of respondents in North America
believe that publications generally have written guidelines restricting the
acceptance of free samples, gifts or discounted materials from outsiders. In
Africa and the Middle East, by contrast, 80 per cent of respondents believe
that publications rarely or never have such guidelines.
Do editors and journalists accept bribes not to run a story? In Latin
America, 41 per cent of respondents say such bribes are often accepted, while
no respondents think this practice is common in Australia or North America.
The U.S.-based Institute for Public Relations is releasing a biennial
international index of bribery in the media to support IPRAÕs continuing
Campaign for Media Transparency. Meanwhile, IPRA is encouraging media and
broadcast organisations to sign up to its Charter on Media Transparency (see
www.ipra.org).
Alasdair Sutherland
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Standard editor William Kristol. Stelzer never disclosed how much he was
paid for his work; Kristol received more than US $100,000 for a consultancy
contract for the company. ÔIÕm a little unhappy to have had an association with
people who turned out to be not entirely honourable in other dealings,Õ Kristol
said later.18
In an effort to curb such activities, some media groups have begun to
hold jour- nalists to ethical standards. RussiaÕs journalism union, for
example, distributes press cards only to media houses and journalists that
adopt its official code of conduct, which condemns corrupt practices and
provides for editorial independence.
Supporting investigative journalism and editorial independence
To promote openness in society and expose corruption, media owners,
publishers, editors and journalists must resist pressures to report what is
beneficial to political and private interests. They must also overcome
obstacles to free reporting, espe- cially in the absence of effective freedom
of information legislation (see p. 57).
Editorial independence – the mediaÕs right to take editorial
decisions according to conscience and codes of conduct – lies at the
heart of promoting independent journalism. Journalists and media freedom groups
need to lobby media owners and management, regardless of whether they are
private or state-owned, to recognise principles of editorial independence that
allow journalists to pursue stories in the public interest, including exposs
of corruption.
When financially possible, editors and media owners should invest in
improved coverage and stop relying on companies or taxpayers to meet their
journalistsÕ travel costs. In many cases, refusing freebies or outright bribes
presents additional finan- cial hardship for media whose resources are already
limited. These media do not even have the resources to allow journalists the
time to engage in the extended research or investigations required for
professional coverage.
Given these circumstances, the international community cannot pass
responsi- bility for curbing corruption on to journalists and media
organisations alone. Although few programmes to support investigative
journalism exist, an important component in confronting corruption, a number of
specialist organisations do provide training. The Association of Investigative
Journalists, the World Bank and AustraliaÕs Centre for Democratic Institutions
(CDI) have developed training courses for journalists interested in covering
corruption. In March 2002, the CDI ran an election reporting workshop in Papua
New Guinea that included modules enti- tled Ôcovering corrupt politiciansÕ and
Ôminding your backÕ.19
Another initiative is the Journalists Against Corruption (PFC)
programme, which was established in 2000 by Probidad, an NGO in El Salvador
that promotes democratisation throughout Latin America. Probidad operates a
monitored e-mail system that facilitates the exchange of articles, opinions,
announcements, contacts and resources among Latin American journalists who
investigate corruption. Jour- nalists identify themselves to a moderator to
establish their credentials, but the
54 Global
Corruption Report 2003
01 Global Corruption 27/11/02 3:15pm Page 54
system guarantees anonymity to journalists who fear recrimination.20 Probidad
has not yet checked the general impact of its initiative, but more than 600
journalists have signed up to the service.21
A similar initiative is a website for African journalists reporting on
corruption. Established by the IFJ, with funding from the European Commission,
the IFJ-PA website offers free information and links to African journalists
reporting on finance and corruption issues.22 Journalists sign up as members by
providing references to the siteÕs moderator.
Both the Probidad and IFJ initiatives enable journalists to post
articles to other journalists or news organisations if their own editors reject
them.
Conclusion
If the media are to combat corruption in the public and private sectors
– as well as within the media world itself – they must be able to
rely on access to information. Where freedom of information legislation is
lacking or its implementation ineffec- tual, legal reform initiatives need to
be promoted by NGOs as well as public and private interests. In countries with
harsh defamation laws, legal defence funds can be instrumental in assisting
journalists and news organisations targeted by punitive libel laws.
Within the media, conflict of interest legislation must be advocated to
counter the concentration of media ownership and ensure the continuity of
multiple sources of information. JournalistsÕ initiatives to establish statutes
of editorial indepen- dence should also be supported by media owners,
governments and donor organisa- tions. Rules on corruption in the media should
be adopted by the industry, but journalists must also be paid adequate
salaries. A clear distinction must also be established between editorial and
advertising departments. Naming and shaming colleagues who take bribes or act
as consultants to companies they cover can also go a long way towards reducing
corruption. The international community, govern- ments and civil society should
step up efforts to train journalists to report and help curb corruption inside
and outside their industry.
1 www.freedomhouse.org/pfs2002/pfs2002.pdf;
see also Freedom House press release, 22 April 2002. 2 The
International Federation of Journalists (IFJ), List of Journalists and Media
Staff Killed 2001, Brussels,
December 2001. See also www.ifj.org/hrights/killlist/killoverview.html.
3 Information
from the IFJ, the Committee to Protect Journalists (CPJ) and the Inter-American
Press
Association; www.freemedia.at/wpfr/costaric.htm. 4 Interview with CPJ. 5 Information
from the IFJ, CPJ, World Association of Newspapers, European Journalism Centre.
6 www.rsf.org/rubrique.php3?id_rubrique-113. 7 Information
from a protest by the CPJ, January 2001. 8 World
Bank Group, World Development Report 2002. See news release 2002/074/S,
wbln0018.worldbank.org/news/pressrelease.nsf. 9 The companies agreed to
broadcast Chinese state-owned English-language channel CCTV-9 in the United
States. BBC News, 6 September 2001. 10 IFJ
press release, 6 September 2001.
Access to information The mediaÕs role: covering or covering up
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01 Global Corruption 27/11/02 3:15pm Page 55
11 See
statements by the FNSI general secretary at their World Press Freedom
conference in Florence, 3 May 2002.
12 Center
for Public Integrity, Washington, D.C.;
www.publicintegrity.org/dtaweb/home.asp. 13 There
are no official reports on this practice, but journalists from Africa have
spoken about it in many
meetings and seminars, such as the Status of Journalists conferences
organised by the IFJ in 1994, 1996–1998,
2000 and 2001. 14 Statement
made during a meeting at the Maison de la Presse in Lom, Togo, October 2000.
15 Reports
at the IFJ conference on the Status of Journalists in Eastern Africa, November
2000. 16 For
an overview of journalistsÕ codes of conduct, see
www.presswise.org.uk/ethics.htm. 17 IFJ
seminar on editorial independence, Kursk, Russia, 29–30 October 2001. 18 Joshua Lipton, ÔEnronÕs HelpersÕ,
Columbia Journalism Review, March/April 2002;
www.cpj.org/year/02/2/liptonenron.asp. 19 www.cdi.anu.edu.au. 20
www.probidad.org. 21 www.portal-pfc.org/english/index.html. 22 www.ifj-pa.org.
56 Global
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01 Global Corruption 27/11/02 3:15pm Page 56
Freedom of information legislation: progress, concerns and standards
Toby Mendel
Freedom of information (FOI) includes the publicÕs right to access
information held by public authorities and imposes an obligation on public
authorities to publish key categories of information. Many recently adopted
constitutions include specific guarantees of FOI, reflecting a growing
acceptance of this fundamental human right. Examples include the 1994 Malawi
constitution and the Thai equivalent three years later, as well as many recent
European constitutions.
Experience shows that constitutional provisions are not enough to ensure
the right to FOI in practice; implementing legislation is required. Countries
around the world are adopting such legislation, with Bosnia-Herzegovina,
Britain, Kyrgyzstan, Poland and South Africa among those to have done so since
2000. Draft laws are under consideration in Guatemala, India, Indonesia and
Nigeria and numerous other countries.
The trend is not limited to states: a number of intergovernmental
organisations (IGOs) have recently adopted FOI policies. The EU adopted the
Regulation Regard- ing Public Access in May 2001 and the World Bank revised its
Policy on the Disclo- sure of Information in September 2001.
Not surprisingly, legislation and practice vary considerably. Where laws
provide a good basis for openness, attention must now focus on implementation.
Some gov- ernments have responded to pressure to adopt legislation but limited
the right as much as possible. An extreme case in point is the recently adopted
Zimbabwean Access to Information and Privacy Act, which is more about
controlling the media than securing access to information.
Areas of concern
Key issues to consider in assessing whether legislation provides for
effective exer- cise of the right to FOI include exceptions and exclusions,
secrecy laws and the right of appeal.
× Exceptions are the most controversial issue in most
FOI laws. All FOI laws include a number of exceptions, many of which protect
important social interests such as national security and personal information.
If exceptions are too broad, however, they can effectively undermine the
legislation. Two safeguards can help prevent this problem.
Access to information 57
02 Global Corruption 27/11/02 3:15pm Page 57
Facing
obstacles in Nigeria: the ongoing struggle for access to information
When he was elected in 1999, NigeriaÕs President Olusegun Obasanjo
promised that Ôall rules and regulations designed to help honesty and
transparency in dealing with government will be restored and enforcedÕ under
his administration. Civil society groups were therefore surprised when he
failed to promote freedom of information legislation and they responded by
launching a campaign. With the support of other NGOs, Media Rights Agenda (MRA)
– an organisation that focuses on press freedom and freedom of expression
in Nigeria – has been spearheading efforts to promote a draft freedom of
information bill. Since its introduction in July 1999, however, the bill has
made only negligible progress through parliament.
Sponsored by three members of NigeriaÕs lower legislative chamber, the
bill seeks to provide the public with a legal right of access to government
records. If passed, the bill will specify time frames within which such
information – except that excluded under the law – must be released
to anyone who makes a request. In particular, the bill is expected to address
problem areas such as access to declarations of assets by public officers. The
1999 constitution had established a code of conduct bureau that is responsible
for receiving asset declarations by officials. Yet the lack of provisions under
which journalists and other members of the public may obtain information about
asset declarations has severely limited the bureauÕs impact.
The civil society campaign in support of the freedom of information bill
involved writing letters to each of the 469 members of the National Assembly
and informal meetings with at least half of them, including the leadership of
both legislative chambers and members of their relevant committees. MRA also
distributed briefing documents on a range of relevant issues and invited
legislators to seminars, conferences and workshops on freedom of information.
The advocacy strategy also
58 Global
Corruption Report 2003
involved a media campaign, which included placing advertisements and
articles in newspapers and magazines to heighten public awareness of the
issues.
Despite this vibrant campaign, the freedom of information bill found
little support in parliament. While progress was slowed by a drawn-out
political crisis between the executive and the legislature, the initial
enthusiasm with which legislators received the bill waned as they became
apprehensive about the consequences for their own political security.
Legislators recognise that a regime of freedom of information would subject
them to greater public scrutiny.
MRAÕs experience is symptomatic of the situation in most African
countries. To build on the lessons learned by other civil society groups
dealing with the issue, ARTICLE 19 and MRA, in collaboration with the Institute
for Democracy in South Africa, held an African regional workshop in Abuja in
September 2001. The meeting brought together the Bank Information Center, a
Washington, D.C.-based World Bank watchdog with a focus on freedom of
information; Partnership Africa Canada, a Toronto-based organisation that has
conducted pioneering research on the role of the illegal oil and diamond trade
in fuelling conflict and corruption; the Commonwealth Human Rights Initiative,
based in India; and the Access to Information Programme in Bulgaria. The
workshop underscored the fact that civil society organisations have an
important role to play in promoting freedom of information legislation.
With less than one year before the present legislature in Nigeria
reaches the end of its term in mid-2003, NGOs are recognising that, if the
process of passing the freedom of information bill is not hastened, the
campaign may have to start afresh.
Edetaen Ojo
02 Global Corruption 27/11/02 3:15pm Page 58
First, exceptions should include a Ôharm testÕ. It is not legitimate,
for example, to exclude all information relating to national security; only
information that would actually harm national security should be covered. In
practice, although harm tests are found in most recent FOI legislation, they do
not apply to all exceptions.
Second, all exceptions should be subject to a public interest override.
This approach provides for the release of information, even if it falls within
the scope of an exception, in cases where the overall public interest is served
by disclosure, for example where the benefits of disclosure outweigh the harm.
The public interest override should apply, for example, where personal
information regard- ing a civil servant exposes a ring of corruption.
Governments have proved reluc- tant to include public interest overrides in
legislation, and many FOI laws do not contain them. This issue proved divisive
in Britain, and the law finally adopted contains only a limited override.
× Exclusions refer to bodies entirely outside the ambit
of the law and under no obligation to disclose information. The bill currently
before the Indian parlia- ment, for example, excludes all intelligence and
security organisations, as does the British law. In some countries, exclusions
are provided for by an excessively narrow definition of public bodies. On the
other hand, some laws – such as the Polish FOI act – apply to a
broad range of public bodies.
In principle, all public bodies should be under a prima facie obligation
to dis- close information, subject only to the regime of exceptions.
× Secrecy legislation should not be permitted to extend
the regime of exceptions in an FOI law, which should be sufficiently
comprehensive to protect all legitimate interests. Wide-ranging secrecy laws
can significantly undermine FOI legislation and should, therefore, be
subordinate to it. Unfortunately, this is rarely the case in practice. A
disturbing trend in European countries is the adoption of secrecy laws as a
precondition for NATO membership. NATO refuses to disclose even the document
that sets out its secrecy standards, though there is no reason to keep such
information secret.
× Appeals processes enable individuals to contest any
refusal to disclose informa- tion. Independent oversight is essential where
public officials refuse to disclose information, especially if they are hiding
corruption or other wrongdoing. Indi- viduals in most countries have the right
to appeal to the courts, but this remedy is often inaccessible and the process
excessively time consuming. Many FOI laws provide for an appeal to an
administrative body, but these bodies can only be effective if they are truly
independent. In Japan, members of the appeals body, the Information Disclosure
Review Board, are appointed by the prime minister after the approval of both
houses of the legislature, a process that prevents control by any single
political party.
Access to information Freedom of information legislation 59
02 Global Corruption 27/11/02 3:15pm Page 59
Revealing
corruption through JapanÕs Information Disclosure Law
Since the Information Disclosure Law came into force in Japan in April
2001, the civil society groups that campaigned for its introduction have
started putting it to use. The law guarantees citizens the right to access
official information held by administrative agencies and the possibility of
appeal to an Information Disclosure Review Board when the government decides
not to disclose certain information. The provisions have enabled civic groups
to expose several cases of corruption.
One came to light when the newspaper Asahi Shimbun requested the records
of watashikiri expenses for post offices. Watashikiri expenses, which total
approximately US $60 million each year, are allocated to pay for operational,
promotional and other disbursements. However, the watashikiri budget is
typically allocated in a lump sum that does not require strict accounting.
When details of the use of watashikiri expenses were published in
December 2001, several examples of fraudulent accounting were discovered.
Records from one post office revealed that invoices had been issued by a
company that did not exist. In another case, the post offices in Kyusyu
district were found to have bought promotional goods from what was effectively
a corporation owned by the postmasters themselves – for more than 70
years. The corporation was estimated to have made almost US $9 million each
year.
Following these revelations, the post officeÕs internal inspectors
launched an investigation that led to the disciplining of several postmasters
and officials and the abolition of the system of watashikiri expenses in the
postal service.
The Information Disclosure Law also helped the local citizensÕ group
Sendai Citizen Ombudsman (SCO) uncover a case
60 Global
Corruption Report 2003
where government funds were fraudulently spent. In early 1999, an
official working in the public prosecutorÕs office tipped off SCO that
colleagues in his office were forging receipts from non-existent informers to
create a hidden fund for their own use. Acting on the tip, the SCO requested
access to the officeÕs Ôinvestigation activity expensesÕ.
Although the details of budget expenditures were not disclosed, the
overall figures for fiscal years 1998–2000 were, along with the totals
disbursed every month. The figures looked suspicious because the exact
allocation for investigation activities was spent as regularly as clockwork
every month – a sure indication of fraudulent accounting. One official in
the prosecutorÕs office confessed to the wrongdoing and further admitted that some
district offices had considered returning the money associated with the
accounts. The justice ministry rejected this suggestion but, to avoid future
misappropriations, it now publishes a handbook with guidelines for managing
investigative expenses. It has also reduced the budget for such expenses.
While the Information Disclosure Law enables citizensÕ groups to expose
corruption, the arbitrary application of the law remains an obstacle.
Government officials still retain discretionary powers in deciding which information
is eligible for disclosure. The Information Disclosure Law is to be reviewed by
2005. The review will provide civil society groups with an opportunity to press
for loopholes to be closed. In the meantime, civil society groups need to
continue to be vigilant and to campaign to ensure that the existing law is
fully implemented.
Yukiko Miki
02 Global Corruption 27/11/02 3:15pm Page 60
The need for standards
One reason for the varied effectiveness of FOI laws is the lack of
clear, authorita- tive standards. The non-governmental organisation (NGO)
ARTICLE 19 has taken a step towards defining FOI standards with its publication
ÔThe PublicÕs Right to Know: Principles on Freedom of Information LegislationÕ.
The UNÕs special rap- porteur on freedom of opinion and expression and the
Committee of Ministers of the Council of Europe have also advanced general FOI
principles, but much more needs to be done. The adoption of a declaration on
FOI by the UN would go some way to addressing this problem and would help to
provide an impetus for the adoption of national legislation.
Greater openness also needs to be promoted within IGOs such as the World
Bank, the International Monetary Fund and the World Trade Organization, as well
as regional bodies like the European and African Unions. Institutions of global
gov- ernance, no less than national governments, need to be transparent. The
need for corporate openness is increasingly crucial, particularly among
transnational com- panies. Standards need to be developed for corporate
transparency and corpora- tions need to be convinced to implement them. ARTICLE
19 also proposes a global campaign involving NGOs and supportive governments
around the world to promote FOI goals. Civil society needs to work together to
elaborate authoritative FOI standards and to ensure that governing bodies, both
national and international, respect them fully.
Access to information Freedom of information legislation 61
02 Global Corruption 27/11/02 3:15pm Page 61
Middle East and North Africa
Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon,
Libya, Morocco, Oman, Palestinian Territories, Qatar, Saudi Arabia, Syria,
Tunisia, United Arab Emirates, Yemen
Reinoud Leenders and John Sfakianakis
Overview
The incidence of grand corruption in the Middle East and North Africa
(MENA) declined in 2001–02 owing simply to reduced opportunities for
ÔcommissionsÕ as a result of an economic recession. Global slowdown, reduced
investment in emerging markets and a fall in oil prices resulted in declining
capital investment and a slump in construction and arms procurement.1 With
the decline in real income, however, petty corruption was on the rise.
Corruption among senior state officials and politi- cians was still considered
rampant throughout the region.
International efforts to curb corruption in the MENA region were
hampered during the year by concerns about security, with Ôgood governanceÕ
conditionality rarely applied with great effect. Governments trumpeted the
anti-corruption cause, but initiatives to curb corruption generally lacked
sincerity. In a widespread climate of authoritarian rule, the root causes of
corruption have failed to be addressed. Anti-corruption strategies are unlikely
to achieve greater success in the future without the initiation of far-reaching
political reform. Numerous corruption cases were brought to the publicÕs
attention in 2001–02, but they were usually driven by a governmentÕs need
to improve its image or settle political scores, and did not signify real structural
change.
Civil society anti-corruption initiatives rarely translated into
tangible change owing to the low levels of civil rights, freedom of expression
and political participa- tion that are prevalent throughout the region.
Nevertheless, public opinion surveys suggest increasing public concern about
corruption, and several NGOs across the region have focused on the issue.
The MENA business community also indicated its concern about corruption,
particularly because of its impact on foreign direct investment in the region.
It is, however, often difficult to separate private sector venality from that
in the public domain, given the intimate links between the family networks that
hold power and the principal business interests in the region.
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04 Global Corruption 27/11/02 3:16pm Page 203
International and regional
Strategic and security interests have dominated the MENA countriesÕ
relations with the international community, often to the detriment of
anti-corruption efforts. Fol- lowing the attacks of September 11th, the United
States pressed for the adoption of stricter legislation against money
laundering to stem the flow of financial support from the Gulf to terrorism
around the world. Prior to the attacks, only Bahrain, Israel and Lebanon had
enacted legislation against money laundering, but Egypt, Iran, Oman, Qatar,
Saudi Arabia and the United Arab Emirates (UAE) rapidly fol- lowed suit.
Nevertheless, the Financial Action Task Force (FATF) removed only Israel and
Lebanon from its blacklist of countries deemed ÔuncooperativeÕ in adopt- ing
effective steps against money laundering.2 Egypt remained on the FATF black-
list and, in other countries, banks were widely used to conceal the proceeds of
corrupt or illicit activities.3
Donor conditionality is very rarely applied as a tool to fight
corruption in the MENA region. In February 2002, donors committed more than US
$10 billion in aid to Egypt for 2002–04 but, as in the past, transparency
did not feature among the con- ditions attached to the package.4 By
contrast, the United States put intense pressure on the Palestinian Authority
(PA) to effect deep reforms in its administration and security forces,
including measures to fight corruption.5 Few Palestinians would argue with
the need for reform in the PA, but there were suspicions that WashingtonÕs
interest in corruption was dictated more by Israeli policy or the desire to
remove Pres- ident Yasser Arafat from office than regard for transparency and
good governance.6
International organisations and donors launched a number of initiatives
to counter corruption but they were too disparate, low-level or inadequately
rein- forced to make any discernible impact. EU association agreements with
Algeria and Lebanon in April 2002 broadened the scope of the Euro-Mediterranean
Partnership to further economic cooperation. The agreements contained generally
phrased com- mitments to fight corruption and money laundering, but it was
unclear how such measures would be enforced. Little has emerged from the
anti-corruption compo- nent of ratified EU agreements with other partners in
the region, notably Israel, Morocco, the PA and Tunisia.
World Bank efforts to strengthen privatisation programmes in Algeria and
Lebanon have done little so far to ensure fair or transparent bidding. Similar
attempts were launched more successfully in Jordan and Morocco.7 In
collaboration with the United States Agency for International Development, the
Bank helped Morocco to improve the functioning of commercial courts, but a poll
by the U.S. Chamber of Commerce in Casablanca showed that 78 per cent of
foreign entrepre- neurs continued to believe that the Moroccan judicial system
was inefficient and prone to corruption.8 The World Bank launched a comparable
programme in Yemen aimed at strengthening the judiciary. Judicial independence
has yet to be realised, although initial results included a purge of more than
20 judges on corruption charges in September 2001.9
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Corruption Report 2003
04 Global Corruption 27/11/02 3:16pm Page 204
An affiliate of the United Nations in the region was accused of
corruption in July 2001. Indian members of the United Nations Interim Force in
Lebanon (UNIFIL) peacekeeping forces allegedly took bribes to turn a blind eye
to HizbollahÕs seizure of three Israeli soldiers in October 2000.10 UNIFIL
strongly denied the allegations.
National
Corruption continued to thrive in virtually all domains of economic,
administrative and political activity across the region. The period under
review saw numerous examples of increased restrictions on freedom of
expression, non-transparency in government and the lack of judicial
independence.
Corruption in MENA countries stems from a few key factors. First, the
lack of institutional reforms accompanying economic liberalisation programmes
has created new opportunities for rent seeking. The granting of private
licences for providers of mobile phone networks, for example, failed to put in
place impartial and effective regulators in Algeria, Lebanon, Syria and
Tunisia.11 This explains the wide levels of discretionary powers enjoyed by private
providers and state officials, which often degenerate into corruption.
Second, the prevalence of authoritarian rule in the region constitutes a
major hindrance to transparency and accountability at both state and private
sector levels. State budgets are insufficiently itemised to permit close
scrutiny, while important state revenues are managed in extra-budgetary funds
or parallel institutions that allow for discretionary spending. LibyaÕs oil
revenues, for example, constituting 95 per cent of the nationÕs exports, are
held in secret funds controlled exclusively by Colonel Muammar al-Qaddafi and
his associates.12 Furthermore, most MENA gov- ernments compensate for
low popular support or poor legitimacy by granting opportunities for bribery to
leading families or cliques to ensure political survival.
The installation of democratic institutions would help in promoting
account- ability but would not be sufficient to eradicate all forms of
corruption. This princi- ple is amply illustrated by Israel, which, despite
strong institutions and a robust civil society, is no stranger to corruption.
During 2001–02, allegations of impropri- ety incriminated licensing
agents in the municipality of Jerusalem, involving Minis- ter without Portfolio
Sallah Tari and Minister of Labour Shlomo Benizri, the management of army
veteran funds and senior officials in the Construction Workers Pension Fund.13 Corruption
in Israel is closely associated with the thriving black markets in intellectual
property rights, arms, narcotics and labour.14
Endemic corruption
The regionÕs state banks and financial institutions repeatedly fell prey
to corruption in 2001–02. In February 2002, a US $150–168 million
scam was discovered in JordanÕs banking system, allegedly involving 72
prominent businessmen and public officials, including a former agriculture
minister, a senator and the son of a former
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04 Global Corruption 27/11/02 3:16pm Page 205
Cutting
through red tape in Lebanon
According to an article in the Daily Star, LebanonÕs largest
English-language newspaper, Ôbribes should not be confused with official fees,
[which are] usually payable on top of the bribeÕ.1 The satirical and well-researched
article on baksheesh (bribery) informed readers how much must be paid in bribes
for different kinds of bureaucratic transactions. For example, a replacement
driving licence requires a US $7 bribe, car registration US $27 and passport
renewal almost US $70. The baksheesh for a building permit for a residential
house can cost more than US $2,000.
Obtaining a construction permit is one of the most difficult
bureaucratic procedures in post-war Lebanon. If you are a foreign investor, the
Investment and Development Authority of Lebanon will take care of the mountains
of paperwork at a fixed cost. But the average citizen has to rely on specialist
brokers, no matter how simple the case, because obtaining a permit involves
five different institutions and several departments within each. It can take up
to a year to acquire a permit at prices almost double the official rate. Some
stages may be undertaken for free, but the paperwork can be held up for years
without money to speed up the process. Distinguishing between what is an
official and unofficial fee is difficult because of the misleading instructions
given by state employees.
The corruption maze turns every simple administrative procedure into a
challenge. ÔBecause I refused to pay the bribe, the employee couldnÕt find my
land title,Õ complained one victim of bureaucratic corruption. ÔNow I have to
get a new land title, which will cost me US $200, and IÕm still no closer to
getting a building permit.Õ
The Lebanese Transparency Association (LTA) has now published a booklet
that simplifies the procedures necessary to obtain a construction permit and
features the documents, fees and average time required. Research for the
booklet entailed visits to the relevant
206 Global
Corruption Report 2003
agencies and interviews with professionals in the field, as well as
citizens who had encountered difficulties. Distributed free to citizens, NGOs,
municipalities, architects, engineers and lawyers, the bookletÕs purpose is to
make transactions transparent and to empower the public by setting out its
rights with regard to the administration. It also seeks to equip applicants
with the tools and knowledge needed to bypass the corrupt practices of state
employees. Any deviation from the official description of the transaction,
detailed in the booklet, can be used by the applicant to hold the official
accountable.
Research for the booklet has made it possible to identify the roots of
corruption in the acquisition of construction permits. These include: citizensÕ
ignorance of their rights; the indifference of civil servants who consider
bribery a bonus for efficient work; a lack of monitoring and control; weakness
of public complaint mechanisms; and the dissipation of responsibility due to
the high number of public institutions involved in the acquisition of a permit.
These factors all unnecessarily complicate the transaction and allow for a high
level of corruption.
These conclusions, along with suggestions for improvement, were included
in a report presented to several government offices, including the office of
the minister of state for administrative development, the urban planning
directorate, the association of architects and engineers and parliament. It is
too early to determine what impact the report will have on the administration
since discussions are still ongoing but, judging by the enthusiastic response
LTA has received, the booklet is having a very positive effect on the
corruption-weary citizens of Lebanon.
Charles D. Adwan and Mina Zapatero
1 Daily
Star (Lebanon), 6 September 1999.
04 Global Corruption 27/11/02 3:16pm Page 206
prime minister.15 In collusion with public officials, businesspeople
were alleged to have obtained loans from private banks without collateral on
the pretext of provid- ing information technology services for the countryÕs
intelligence services. In Morocco, evidence emerged of corruption in the
state-owned investment bank Crdit Immobilier et Htelier following the
completion of a parliamentary investi- gation into a US $41 million fraud in
early 2001.16 The revelations, which implicated leading public officials, accorded
with reports of systematic abuse of powers for self-enrichment during the reign
of the late King Hassan II.17 A similar pattern of embezzlement depleted the
resources of MoroccoÕs official trade unionÕs social insur- ance fund.18
State procurement is also rife with corruption opportunities. In Egypt,
the national assembly is reviewing a report by the central auditing office on
the man- agement of local council services and development funds nationwide.19 It is
widely reported that most of the US $270 million allocated was misappropriated
in dubious transactions and investments.20
In several MENA countries, mobile phone network licences were allegedly
granted under circumstances of conflict of interest, or after the payment of
large kickbacks. SyriaÕs Makhluf family, which is related to President Bashar
al-Assad, was reported to have benefited from regulations giving it an unfair
advantage over the business competition.21 AlgeriaÕs first private mobile phone
network licence went to Orascom, an Egyptian company, amid allegations of
bribery in the press.22 Plans to grant a licence to a third network operator
in Lebanon were delayed fol- lowing revelations of conflict of interest.23
Accusations of election fraud are frequently voiced across the region,
but prose- cutors rarely carry out investigations. In Iran, suspicions were
fuelled by the court confession of prominent businessman Shahram Jazayeri, who
admitted he had given US $700,000 to the campaign of President Mohammad Khatami
during the presi- dential elections in June 2001.24 Jazayeri had already been charged
with bribing reformist parliamentarians and government figures, and of
undertaking fraudulent transactions through some 50 front companies.
In Israel, the police fraud squad questioned Prime Minister Ariel Sharon
and his son, Omri, on whether they had used fictitious companies to transfer US
$1.3 million in illegal donations to the Likud Party leadership elections in
1999 and prime ministerial elections two years later.25 Former
prime minister Ehud Barak was cleared of similar accusations in May 2002,
though police pressed charges against four of his aides for channelling illegal
funds into bogus charities during the 1999 elections.26
The incidence of grand corruption in the MENA region appears to have
decreased in 2001–02 because of the reduced opportunities for
ÔcommissionsÕ. Expenditure on capital investment contracted sharply in Lebanon
as a result of budgetary constraints: ÔcommissionsÕ in the post-war
reconstruction programme traditionally exceed 20 per cent of the contractÕs
value.27 In the PA, an already
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04 Global Corruption 27/11/02 3:16pm Page 207
lacklustre economic performance reached catastrophic dimensions because
of the damage to infrastructure caused by the Israeli army and IsraelÕs
decision to with- hold revenues owed to the PA. Such factors triggered a sharp
decline in investment in activities that are particularly prone to corruption,
such as construction and the import of cement, fuel and luxury goods.28
The incidence of petty corruption has a tendency to soar when real
incomes are falling since public servants attempt to compensate for the loss in
purchasing power by demanding more bribes. Independent evidence tends to
confirm that petty bribery (baksheesh) has been rising.
The Index of Economic Freedom registered an increase in corruption by
low- ranking officials in Algeria, Lebanon and Tunisia.29 In
Algeria, a parliamentary commission investigating large-scale rioting in the
minority Berber region of Kabylia since the spring of 2001 found evidence of
widespread municipal corrup- tion.30 Meanwhile, a poll by Transparency
Maroc revealed that more than 80 per cent of business respondents admitting to
giving baksheesh Ôto avoid hassleÕ from traffic police and the gendarmerie.31
Government reforms?
Virtually all MENA governments acknowledge that corruption is an
impediment to good governance and there has been no shortage of official
promises to curb it. Indeed, leaders have been competing for coverage of their
pledges to combat cor- ruption, but the motives are varied and the promises are
often mere rhetoric. Where anti-corruption campaigns involve concrete measures,
they are more often than not used to eliminate business rivals or settle
political scores. In Syria, trumped-up charges of tax evasion and smuggling
were invoked to silence critics of the regime, including the parliamentarians
Riyad Sayf and MaÕmun al-Humsi, arrested in late 2001 and sentenced to five
yearsÕ imprisonment.32
In Libya, President Muammar al-Qaddafi authorised investigations into
corruption in the state-owned airline, oil-related procurement and the public
transport sector, but the findings were neither made public nor did they lead
to any prosecutions.33
Official anti-corruption committees often constituted little more than
talk shops. Transparency Maroc withdrew from MoroccoÕs ÔCommission for the
Moralisation of Public LifeÕ in protest at its lack of purposeful action and
branded its public aware- ness campaigns ÔbanalÕ and ÔcounterproductiveÕ.34 JordanÕs
ÔHigher Committee to Fight CorruptionÕ, established by royal decree in July
2000, was increasingly side- tracked by a similar body in the intelligence
service, the ÔAnti-corruption Direc- torateÕ, itself the focus of corruption
allegations regarding a financial scandal of early 2002.35
Anti-corruption actions by judiciaries are also becoming more common
across the region, and here too it is essential to question motives. The
Iranian judiciary, for example, launched a campaign against corruption in
December 2001 that netted
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Corruption Report 2003
04 Global Corruption 27/11/02 3:16pm Page 208
some 50 people close to members of parliament and government. Litigation
by the conservative judiciary in Iran, however, is often politically motivated
and directed against supporters of the reformist president.36
Judiciaries in the MENA region are as much part of the problem as the
solution, with judges regularly accused of accepting bribes and courts denied
independent powers to act against prominent politicians and entrepreneurs.
Promises of judicial reform to remedy such deficiencies amounted to little of
practical value. Ambitious plans in Algeria to restore judicial efficiency were
stalled in committee, while the justice ministry blamed judges themselves for
the lack of progress.37 Judicial reforms met similar obstacles in Morocco.
A financial scandal in Jordan in February 2002 seemed to provide a test
case of the governmentÕs political will in granting the judiciary full and
independent powers. King Abdullah sent a widely publicised letter instructing
investigators to bring those responsible to justice,38 but
recent precedents give few grounds for con- fidence. Other corruption scandals
that came to the judiciaryÕs attention, including alleged graft at the
state-owned Jordan Phosphates Mines Company, were not fol- lowed up.39
Corruption and the role of political opposition
Corruption has become such a potent symbol of governmentsÕ lack of
legitimacy across the MENA region that it is hardly surprising that opposition
parties and political activists have adopted the fight against it as part of
their credo. In response, MENA governments often employ excessively repressive
measures to silence political opponents.
Opposition figures that spoke out against the corruption and nepotism of
the Syrian regime faced unfair trials on charges that included Ôendangering
state unityÕ and Ôtrying to change the constitution by illegal meansÕ.40 The
Palestinian member of parliament Hussam Khadr, a forthright campaigner against
corruption, faced prosecution after he described the PA in a television
interview as Ôa bunch of thieves protected by 70,000 policemenÕ.41 State-owned
Voice of Palestine radio responded with a scathing attack in which Khadr was
accused of Ôserving Israeli interestsÕ. Faced with repressive actions,
political dissent against corruption across the region is largely muzzled.
Islamist political groups, many of them banned, have attempted to
combine notions of ÔIslamic governanceÕ with a broad anti-corruption stance.
Rooting out corruption became a rallying cry for BahrainÕs Al-Wifaq National
Islamic Associa- tion, which won the overwhelming majority of votes in
municipal elections of May 2002, widely seen as a dress rehearsal for
parliamentary elections in October. In Kuwait, Islamist member of parliament
Nasser as-SanÕa continued to criticise the ruling Al-Sabah family for
corruption, while Palestinian Islamist and anti-corrup- tion activist Abdul
Sattar al-Qassem announced his intention to run against Arafat in the
presidential election in January 2003.
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Access to
information in the MENA region
Private sector
210
Private sector involvement in corruption in MENA countries can usually
be attributed to systematic collusion between public and private actors. In
fact, the very distinction between ÔpublicÕ and ÔprivateÕ domains is difficult
to make since power is exercised through networks of families and individuals
with parallel stakes in politics and business. A case in point is Saudi Arabia,
where entire businesses are monopolised by princes and their affiliated
partners in the private sector.
Nevertheless, a growing number of companies and entrepreneurs believe
that corruption is harmful to business. A recent poll found that businesspeople
through- out the region consider red tape and corruption the third-most
important hurdle to their operations after high tariffs and taxes.42 Moroccan
businesspeople surveyed by Transparency Maroc said corruption was the
second-most important challenge facing them after high taxes.43 Entrepreneurs
polled by the World Bank in Palestine cited corruption as the second-largest
constraint to growth after Ôpolitical instabil- ity and uncertaintyÕ.44
Global Corruption Report 2003
The struggle against corruption in the MENA region is hampered by the
chronic lack of information. No country has introduced freedom of information
legislation, although some governments have expressed an interest in developing
forms of e-governance. Jordan is spearheading efforts to inform citizens about
government regulations and administrative procedures via the Internet.
Disclosure of corporate information is equally poor. A major drawback is
that business in the region is primarily based on family ownership, while more
transparent shareholding of capital is still in its infancy. In Egypt, several
listed companies received an official warning in September 2001 following their
failure to release financial records in time.1
Press freedom is seriously curtailed and substantial reporting on
corruption scandals is extremely rare, although both Lebanon and Morocco enjoy
relatively lively media. Meanwhile, the Iranian press has evolved into a
battlefield for the continuing conflict between reformists and
hardliners. Scores of newspapers have been banned and many journalists
harassed or imprisoned for revealing corruption.
The lionÕs share of the regional media is either state-owned or owned by
wealthy politicians. In mid-2001, two Algerian newspapers began publishing on
their own printing presses. All other dailies are dependent on state-owned
printing houses which often suspend service if the government disapproves of a
newspaperÕs editorial stance. Over the year press regulations were
significantly tightened on the pretext of fighting opinions sympathetic to terrorism.
Following amendments to the Algerian code, journalists face up to one year in
prison and fines of up to US $3,200 for libelling state and army officials. The
new measures further discourage journalists from investigative writing on
corruption.
A new Syrian press decree in September 2001 subjects all printing
material and means of communication to strict controls. The law banned
04 Global Corruption 27/11/02 3:16pm Page 210
Ôpropaganda publicationsÕ financed Ôdirectly or indirectlyÕ with foreign
funding and imposed harsh sentences for libel and loosely defined offences such
as Ôpublishing falsehoodsÕ.2 Jordan also joined the trend towards muzzling media
when it adopted an unreasonably strict press law in October 2001.
Under such conditions, the role of domestic media in creating awareness
of corruption has been partly taken over by satellite television, which
governments find harder to manipulate. Qatar-based Al- Jazeera is an
increasingly popular source of views – and facts – on issues of
public interest. Other Arab satellite stations are much less vocal owing to
their ownership by governments or local tycoons.3
Increasing use of the Internet to communicate anti-corruption messages
is another means of circumventing government restrictions. With the exception
of Israel, Lebanon and the Gulf states, only a small proportion of the regionÕs
population has Internet access, with penetration rates as low as 1 per cent in
Algeria and Egypt.4 Several Middle Eastern sites contain information on
corruption, while others, such as www.cggl.org, run by the Campaign for
Good Governance in Lebanon, are exclusively devoted to it. The Saudi government
has been at pains to prevent citizens from accessing sites that criticise the
royal family. As a last resort, governments act against ÔvirtualÕ critics in
the same way they do against critics in the press – by arresting them.
The former Jordanian member of parliament Tujan Faisal was arrested in February
2002 and charged with breaching the penal code after she posted an essay on a
Texas-based website (www.arabtimes.com) in which she accused the government of
corruption. She was granted a royal pardon Ôon humanitarian groundsÕ in June
2002.
1 Alam
Al-Yawm (Egypt), 21 September 2001. 2 Human
Rights Watch, Syria: Clampdown on Free
Expression; see www.hrw.org/press/2002/02/
syria0211.htm. 3 Naomi
Sakr, Satellite Realms: Transnational
Television, Globalisation & the Middle East
(London: 2002). 4 For
figures on Internet use in the region and
elsewhere, see International Telecommunication Union, www.itu.int/ITU-
D/ict/statistics/at_glance/Internet01.pdf.
Despite this unease, business confederations and local chambers of
commerce have played only a marginal role in countering corruption since
government or its cronies usually control such groups. Among the notable
exceptions are the Lebanese Chamber of Commerce, Industry and Agriculture and
the Moroccan Confederation of Employers, both of which have drawn up codes of
ethics on cor- porate governance.
There is evidence to suggest that the regionÕs high levels of corruption
deter foreign investors. Extremely low foreign direct investment in Lebanon was
associ- ated with entrepreneursÕ perceptions of widespread corruption.45 International
companies that operate profitably in the region frequently tap into local
networks of commercial power to obtain contracts where the payment of
commissions is the rule. In 2000 the British government launched an inquiry
into claims that British- American Tobacco had boosted sales through a
worldwide tobacco smuggling racket. In December 2001, the British media
publicised new allegations that a prominent role in the racket had been played
by Easa Saleh-al-Gurg, UAE ambas- sador in London.46
Regional reports Middle East and North Africa 211
04 Global Corruption 27/11/02 3:16pm Page 211
Civil society
Civil society anti-corruption initiatives and criticism of government
corruption often meet with state repression. Tunisian human rights activist and
magazine editor Sihem Ben Sedrine was arrested and detained after she spoke out
against corruption on the London-based Al-Mustaqilla television station in July
2001. Moncef Marzouki, another Tunisian critic of human rights abuses, met a
similar fate after revealing corruption in a public charity. Both were
eventually released, but they face charges of defamation and threatening state
unity. In Saudi Arabia, writer Abdul Mohsen Musalam was jailed in March 2002
after he published a poem in the newspaper Al-Madina on 10 March 2001.47 MusalamÕs
poem, ÔThe Corrupt on EarthÕ, accused several judges of graft. Saudi Interior
Minister Prince Nayef ordered the sacking of Al-MadinaÕs editor-in-chief for
allowing the poem to be published.
Nevertheless, corruption has increasingly become an issue of public
concern. A public opinion survey conducted by Transparency Maroc revealed that
87 per cent of the population views corruption as the third most important
problem in the country. A recent survey in the PA showed 95 per cent support
for the dismissal of ministers accused of corruption.48 Developments
in popular culture confirm the finding, while raising awareness of its
prevalence. Television dramas, pulp fiction and cartoon books increasingly
feature corrupt officials frustrating the everyday life of the main characters.
A sitcom aired on Syrian state television during Ramadan, Maraya Hakaya
(Mirrors of Tales), revolved around a senior official and his cronies and
satirised nepotism. Such populist forms of expression suggest that
ÔculturalistÕ accounts of corruption – explanations that hinge on the
prejudice that corruption is rooted in ÔArab cultureÕ or the regionÕs ÔmentalityÕ
– do not hold water.
Against great odds, NGOs have tried to organise these sentiments into
collective action against corruption. Transparency Maroc, the regionÕs most
active anti-cor- ruption NGO, issued a manifesto calling on political parties
in Morocco to disclose their electoral campaign funds to counter vote buying.
The Lebanese NGO La Fassad (No Corruption), a Transparency International
chapter-in-formation, drafted a code of ethics for NGOs and prepared a thorough
legal critique of the countryÕs privatisation law. In Yemen, the NGO Forum for
Civil Society is one of the most active local NGOs with a specific
anti-corruption agenda. An unofficial watchdog group in Bahrain, the Bahrain
Transparency Society, was established in January 2002.
1 World
Bank press release, Growth in Middle East Challenged by External Environment
(Washington, D.C.: 13 March 2002); Financial Times (Britain), 5 August 2001.
2 HaÕaretz
(Israel), 21 June 2002; Daily Star (Lebanon), 22 June 2002. 3 John
Sfakianakis, Middle East Report (US), spring 2002. 4 World
Bank press release no. 2002/201/MENA, 6 February 2002. 5 See
comments by U.S. National Security Advisor Condoleezza Rice in the New York
Times (US), 26 May 2002. 6 See
comments by Yazid Sayyigh and Henry Siegman in respectively: BBC World Service
(Britain), 12 May
2002; New York Times (US), 19 May 2002.
212 Global
Corruption Report 2003
04 Global Corruption 27/11/02 3:16pm Page 212
7 IMF,
Morocco: 2001 Article IV Consultation, June 2001; Maroc Hebdo International (Morocco),
1–7 February 2002; World Bank, Privatization: The Jordanian Success
Story, (Washington, D.C.: October 2001).
8 American
Chamber of Commerce, A Survey of Executive Perceptions about Business and
Investing in Morocco (Casablanca: December 2001); see www.amcham-morocco.com/publications.html.
9 Middle
East International (Britain), 14 September 2001. 10 Jerusalem
Post (Israel), 13 July 2001. 11 In
Algeria, the operator continues to negotiate with the ministry of post and
telecommunications whereas the
competent authority, Algeria Telecom, exists only on paper. See
Al-Khabar (Algeria), 13 December 2001; El-
Watan (Algeria), 18 January 2002. 12 Middle
East Policy Council: Middle East Policy VII, no. 2, February 2000,
www.mepc.org/journal/0002_takeyh.htm. 13 Jerusalem
Post (Israel), 28 and 30 January 2002; Yediot Ahronot (Israel), 20 February
2002; Jerusalem Post
(Israel), 3 January 2002; HaÕaretz (Israel), 22 March 2002. 14 The
Heritage Foundation and the Wall Street Journal (US), The Index of Economic
Freedom 2002. 15 Jordan
Times (Jordan), 15 February 2002; Ad-Dustur (Jordan), 21 February 2002;
As-Sharq al-Awsat (Britain),
22 February and 1 March 2002. 16 Al-Hayat
(Lebanon/Britain), 17 August 2001; lÕconomiste (Morocco), 14, 17 and 26
September 2001, 3 and 10
October 2001. For extracts of the findings of the parliamentary inquiry,
see lÕconomiste (Morocco),
19 January 2001. 17 Abdeslam
Maghraoui, ÔPolitical authority in crisis: Mohammed VIÕs MoroccoÕ, Middle East
Report, spring
2001; Economist (Britain), 25 January 2001. 18 As-Sharq
al-Awsat (Britain), 20 January 2002. 19 Al-Ahram
(Egypt), 22 January 2002. 20 Al-Ahram
Weekly (Egypt), 7–13 February 2002. 21 Bassam
Haddad, ÔBusiness as usual in Syria?Õ, Middle East Report Press Information
Note (US), no.66 (7
September 2001); Middle East International (Britain), 14 September 2001.
22 North
Africa Journal (Britain), 21 July 2001. Other reports alleged that Algerian
businessmen and officials put
pressure on Orascom to allow them to share in its profits. See Al-Khabar
(Algeria), 13 December 2001. 23 Middle
East International (Britain), 17 May 2002. 24 Economist
Intelligence Unit, Country Report, 15 March 2002. 25 HaÕaretz (Israel), 23 April 2002; The Jerusalem Post (Israel),
1 October 2001. 26 Jerusalem
Post (Israel), 29 May 2002. 27 Reinoud
Leenders, ÔIn Search of the State: The Politics of Corruption in Post-war
LebanonÕ, in Barbara
Roberson and Nadim Shehadi, eds, Post-War Reconstruction in Lebanon
(London: 2002). 28 PA
budgets currently allow for only US $17 million per month for investment
expenditure, compared to US $54 million prior to the outbreak of the Intifadah.
The World Bank, Fifteen Months – Intifada, Closures and
Palestinian Economic Crisis. An Assessment (Washington, D.C.: March
2002). On corruption in the mentioned sectors and activities, see David Sewell,
Governance and the Business Environment in West Bank/Gaza (World Bank Working
Paper, no.23, May 2001).
29 The
Heritage Foundation and the Wall Street Journal (US), The Index of Economic
Freedom 2002. 30 Le
rapport prliminaire de la commission nationale dÕenqute sur les vnements de
Kabylie, 30 August 2001:
www.kabyle.com/article.php3?id_article=315. 31 For the pollÕs
results, see lÕconomiste (Morocco), 18 January 2002; As-Sharq al-Awsat
(Britain), 18 January
2002. 32 Human
Rights Watch press release, Dangerous Backlash in Syria, New York, 7 September
2001; Human Rights
Watch, World Report 2002 (New York, 2002). For SayfÕs reply to the
governmentÕs corruption allegations, see
Riyad Sayf, Tajriba Riyad Sayf, Hamum fi as-SanaÕa wa as-Siyasa
(Damascus, 1999). 33 Akhbar
Libiya (Britain), 2 and 17 October, 11 November 2001. 34 Transparency Maroc, press statement, 13 December 2001. 35 Even
by its own account, the Anti-corruption Directorate proved itself hardly
effective in the fight against
corruption. In January, it claimed that its work in the past year saved
the state treasury only US $5 million.
See Ad-Dustur (Bahrain), 17 January 2002. 36 Human
Rights Watch, Iran: Parliamentarians Convicted (Washington, D.C.: 4 January
2002). 37 El-Watan
(Algeria), 8 September, 9 and 10 October 2001. 38 Ad-Dustu
(Bahrain), 21 February 2002. 39 Jordan
Times (Jordan), 6 August 2001; Al-Hayat (Britain), 16 December 2001. 40 Human
Rights Watch, World Report 2002. 41 Khalid
Amayreh, ÔIs the PA Collapsing?Õ, Palestine Times (Palestine), November 2001.
42 Bernard
Hoekman and Patrick Messerlin, Harnessing Trade for Development and Growth in
the Middle East,
Council on Foreign Relations, Study Group on Middle East Trade Options,
2002. 43 LÕconomiste (Morocco), 18
January 2002; As-Sharq al-Awsat (Britain), 20 January 2002.
Regional reports Middle East and North Africa 213
04 Global Corruption 27/11/02 3:16pm Page 213
44 David
Sewell, Governance and the Business Environment in West Bank/Gaza, World Bank
Working Paper, no. 23, May 2001.
45 A.
Mansour, The Views of Foreign Investors in Lebanon (ESCWA, Beirut: 12–13
June 2001); Daily Star (Lebanon), 14 June 2001.
46 Guardian
(Britain), 17 December 2001. See www.guardian.co.uk/bat. 47 BBC World
Service, 20 March 2002. 48 Democracy
Index, Palestinian Centre for Policy and Survey Research (Nablus), 15–19
May 2002:
www.pcpsr.org/survey/polls/2002/p4a.html.
214 Global
Corruption Report 2003
04 Global Corruption 27/11/02 3:16pm Page 214
2002 Corruption Perceptions Index
Johann Graf Lambsdorff
Transparency InternationalÕs annual Corruption Perceptions Index (CPI),
now in its eighth year of publication, has since its inception facilitated
research into the causes and consequences of corruption. This year, as in
previous years, its methodology has again been improved. The CPI aggregates the
perceptions of well-informed people with regard to the extent of corruption,
defined as the misuse of public power for private benefit. The extent of
corruption reflects the frequency of corrupt payments, the value of bribes paid
and the resulting obstacle imposed on businesses.
This yearÕs CPI used data collected between 2000 and 2002. The CPI is a
compos- ite index. Altogether 15 data sources were used in the 2002 CPI, from
nine different institutions: the World Economic Forum, the World Business
Environment Survey of the World Bank, the Institute of Management Development
(in Lausanne), Price- waterhouseCoopers, the Political and Economic Risk
Consultancy (in Hong Kong), the Economist Intelligence Unit, Columbia
University, Gallup International on behalf of Transparency International, and
Freedom HouseÕs Nations in Transit.
One precondition for the inclusion of a source in the index is that it
must provide a ranking of nations. Another is that it must measure the overall
level of corruption. Ensuring these conditions is essential to guarantee that
we are not mixing apples with oranges. There exist sources that mix the level
of corruption with other vari- ables, such as xenophobia, nationalism,
political instability or expected risks due to changes in corruption. Including
such sources would distort the measurement of perceived levels of corruption.
We take a conservative approach, and only include sources that strictly compare
levels of corruption.
The strength of the CPI lies in the combination of multiple data sources
in a single index, which increases the reliability of each individual score.
The benefit of combining data in this manner is that erratic findings from one
source can be bal- anced by the inclusion of at least two other sources,
lowering the probability of mis- representing a countryÕs level of corruption.1
The high correlation of the different sources used in the CPI indicates
its overall reliability. The figure shows the 90 per cent confidence intervals
for each country included in the 2002 CPI, indicating how a countryÕs score may
vary, depending on measurement precision. Most countries are measured with
sufficient precision to allow a ranking of nations.
The index provides an annual snapshot of the views of decision-makers.
Com- parisons with the results from previous years should be based on a
countryÕs score, not its rank – a countryÕs rank can change simply
because new countries enter the
262 Global
Corruption Report 2003
05 Global Corruption 27/11/02 3:16pm Page 262
05 Global Corruption 27/11/02 3:16pm Page 263
2002 CPI and 90% confidence intervals
10 9 8 7 6 5 4 3 2 1 0
index and others drop out. However, year-to-year comparisons of a
countryÕs score result not only from a changing perception of a countryÕs
performance, but also from a changing sample and methodology – each year
different viewpoints are collected and somewhat different questions asked.
The robustness of the CPI findings is enhanced by the fact that
residentsÕ view- points were found to correlate well with those of expatriates.
The CPI gathers percep- tions that are invariant to cultural preconditions and
represent a global perspective. In the past, the expatriates whose views were
included in the CPI were often Western businesspeople, and the viewpoint of
less developed countries seemed under-repre- sented. For the 2002 CPI, however,
Gallup International on behalf of Transparency International surveyed
respondents from less-developed countries, asking them to assess the
performance of public servants in industrial countries. The results from this
group of expatriates correlated well with the other sources used in the 2002
CPI.
Contact: Johann Graf Lambsdorff (jlambsd@gwdg.de)
1 Some
technical adjustments were carried out this year to ensure that all reported
values, including those for the high-low range and the confidence range, remain
within the given scale from 0 to 10. This was achieved using a
matching-percentiles technique for standardising the data, a
beta-transformation for ensuring the year-to-year continuity of the data and a
bootstrap approach to determine the confidence range.
Data and research 263
2002 Corruption Perceptions Index
Rank Country
2002 CPI
score
Number of Standard
surveys used deviation
8 0.4
8 0.3
8 0.2
6 0.4
13 0.2
10 0.2
10 0.2
High-low
range
8.9–10.0 8.9–9.9 8.9–9.6
8.8–10.0 8.9–9.6 8.9–9.6 8.7–9.3
90%
confidence range
9.5–9.9 9.3–9.7 9.3–9.6
9.2–9.7 9.2–9.4 9.2–9.4 8.9–9.2 8.7–9.5
8.8–9.1 8.4–8.9 8.0–9.0 8.0–8.9 7.9–8.9
7.8–8.6 7.6–8.1 7.2–8.0 7.0–7.9 6.7–7.7 6.7–7.7
6.6–7.6 6.6–7.4 6.5–7.6 6.4–7.4 5.6–7.6
5.9–6.8 5.8–6.9 5.3–6.9 4.3–7.3 5.4–6.0
5.2–6.0 4.6–5.7 4.6–5.6 4.6–5.2 4.6–5.2
3.8–5.9 3.3–5.4 3.7–5.9 4.5–5.0 4.1–5.3
4.0–5.1 4.0–4.9 4.0–4.9 3.9–5.1 3.8–4.6
3.8–4.2 3.5–4.6 3.6–4.2 3.7–4.4 3.4–4.5
3.1–5.1 3.6–3.9 3.3–4.2 3.5–3.9 2.2–4.8
1 Finland 9.7 2 Denmark 9.5 New Zealand 9.5
4 Iceland 9.4 5 Singapore 9.3
Sweden 9.3
7 Canada 9.0
Luxembourg 9.0
Netherlands 9.0
10 United Kingdom 8.7 11 Australia 8.6 12 Norway 8.5 Switzerland 8.5
14 Hong Kong 8.2
15 Austria 7.8 16 United States 7.7
17 Chile 7.5
18 Germany 7.3 Israel 7.3
20 Belgium 7.1
Japan 7.1 Spain 7.1 23 Ireland 6.9 24 Botswana 6.4
25 France 6.3
Portugal 6.3
27 Slovenia 6.0 28 Namibia 5.7
29 Estonia 5.6
Taiwan 5.6
31 Italy 5.2
32 Uruguay 5.1 33 Hungary 4.9 Malaysia 4.9
Trinidad & Tobago 4.9
36 Belarus 4.8
Lithuania 4.8
South Africa 4.8
Tunisia 4.8
40 Costa Rica 4.5
Jordan 4.5
Mauritius 4.5
South Korea 4.5 44 Greece 4.2
45 Brazil 4.0
Bulgaria 4.0
Jamaica 4.0
Peru 4.0 Poland 4.0
50 Ghana 3.9 51 Croatia 3.8
52 Czech Republic 3.7
Latvia 3.7
Morocco 3.7
Global Corruption Report 2003
5 0.5 8.5–9.9
9 0.3
11 0.5
11 1.0 6.1–9.3
8 0.9 6.9–9.3
9 0.9 6.8–9.4
11 0.8
8 0.5 7.2–8.7
12 0.8
10 0.9 5.6–8.8
10 1.0 5.0–8.1
9 0.9 5.2–8.0
8 0.9 5.5–8.7
12 0.9 5.5–7.9
10 1.0 5.2–8.9
8 0.9 5.5–8.1
5 1.5 5.3–8.9
10 0.9 4.8–7.8
9 1.0 5.5–8.0
9 1.4 4.7–8.9
5 2.2 3.6–8.9
8 0.6 5.2–6.6
12 0.8 3.9–6.6
11 1.1 3.4–7.2
5 0.7 4.2–6.1
11 0.5 4.0–5.6
11 0.6 3.6–5.7
4 1.5
3 1.3 3.3–5.8
7 1.9 3.4–7.6
11 0.5
5 0.8 3.6–5.6
6 0.9
5 0.7 3.6–5.2
6 0.8 3.5–5.5
12 1.3
2.1–7.1
8 0.7 3.7–5.5
10 0.4
7 0.9 3.3–5.7
3.6–4.3 7 0.6 3.2–5.0
11 1.1 2.6–5.5
4 1.4 2.7–5.9
3 0.4
3.6–4.0
10 0.8
4 0.2
4 1.8 1.7–5.5
8.5–9.3 7.8–9.4
6.6–9.4
5.5–8.7
3.6–6.9
3.9–5.5
3.6–5.9
3.4–4.8
4 0.2
2.6–5.5 3.5–3.9
264
05 Global Corruption 27/11/02 3:16pm Page 264
Rank Country
Slovak Republic
Sri Lanka 57 Colombia
Mexico
59 China Dominican
Rep.
Ethiopia
62 Egypt El Salvador
64 Thailand Turkey
66 Senegal 67 Panama 68 Malawi
Uzbekistan
70 Argentina 71 Cte dÕIvoire
Honduras India Russia Tanzania Zimbabwe
77 Pakistan
Philippines
Romania
Zambia 81 Albania
Guatemala Nicaragua Venezuela
85 Georgia Ukraine
Vietnam
88 Kazakhstan 89 Bolivia
Cameroon Ecuador Haiti
93 Moldova Uganda
95 Azerbaijan 96 Indonesia
Kenya 98 Angola
Madagascar
Paraguay 101 Nigeria
102 Bangladesh
2002 CPI
score
3.7 3.7 3.6 3.6 3.5 3.5 3.5 3.4 3.4 3.2
3.2 3.1 3.0 2.9 2.9 2.8 2.7 2.7 2.7 2.7 2.7 2.7 2.6 2.6 2.6 2.6 2.5 2.5 2.5 2.5
2.4 2.4 2.4 2.3 2.2 2.2 2.2 2.2 2.1 2.1 2.0 1.9 1.9 1.7 1.7 1.7 1.6 1.2
Number of Standard
surveys used deviation
8 0.6
High-low
range
3.0–4.6
4 0.4
10 0.7 2.6–4.6
10 0.6 2.5–4.9
11 1.0 2.0–5.6
90%
confidence range
3.3–4.0 3.4–4.0 3.3–4.0
3.3–3.9 3.1–4.1 3.2–3.7 3.0–3.8 2.6–4.2
2.8–3.8 2.8–3.6 2.7–3.7 2.0–4.5 2.3–3.4
2.4–3.7 2.0–3.5 2.5–3.1 2.0–3.1 2.3–3.2 2.5–2.9
2.3–3.3 2.0–3.3 2.4–3.0 1.7–3.3 2.4–2.9
2.2–3.1 2.2–3.0 1.7–3.0 2.1–2.9 2.0–3.0
2.2–2.7 1.7–2.8 2.0–3.0 2.0–2.9 1.7–2.9
1.9–2.5 1.8–2.6 2.0–2.4 0.8–3.3 1.7–2.5
1.9–2.3 1.7–2.2 1.7–2.2 1.7–2.2 1.6–1.9
1.3–2.1 1.5–1.8 1.2–1.9 0.7–1.6
3.3–4.3
4 0.4
3.0–3.9
6 0.8
11 0.7 1.5–4.1
10 0.9 1.9–4.6
4 1.7 1.7–5.5
5 0.8 1.7–3.6
4 0.9 2.0–4.0
4 1.0 2.0–4.1
10 0.6 1.7–3.8
4 0.8
5 0.6 2.0–3.4
12 0.4
2.4–3.6
6 0.4
1.7–2.9
7 0.3
1.7–2.6
4 0.3
1.7–2.4
5 0.3
3 0.2
3 0.7 1.3–2.5
3 0.2
6 0.6 0.9–2.5
5 0.7
0.3–2.0
Notes 1 The Ô2002 CPI
scoreÕ ranges between 10 (highly clean) and 0 (highly corrupt). 2 ÔStandard
deviationÕ indicates differences in the values given by the sources. As
indicated by shading, values below 0.5 indicate
agreement (no shading), values between 0.5
and 0.9 indicate some agreement (pale shading), while values greater than or
equal to 1
indicate disagreement (dark shading). 3 ÔHigh-low
rangeÕ provides the highest and lowest values given by the different sources. 4 Ô90
per cent confidence rangeÕ provides a range of possible values of the CPI
score. This reflects how a countryÕs score may vary,
depending on measurement precision. This
interval, particularly when only three sources are available, should only be
regarded as a
rough guide.
3 0.5 3.0–4.0
7 1.3 1.7–5.3
12 1.0 1.5–5.0
4 0.7 2.0–3.4
6 0.5 2.0–3.3
3 1.2 1.7–4.0
11 0.6 1.7–3.6
7 0.8 1.7–3.6
4 0.5 2.0–3.2
3 0.8 1.7–3.3
6 0.6 1.7–3.5
5 0.7 1.7–3.4
10 0.5 1.5–3.2
3 0.7 1.7–2.9
6 0.7 1.7–3.8
7 0.8 1.5–3.6
4 1.1 1.7–3.9
4 0.7 1.7–3.2
3 1.7 0.8–4.0
4 0.6 1.7–3.0
1.9–2.6
4 0.3
12 0.6 0.8–3.0
2.0–4.2
2.0–3.4
1.7–2.5 1.6–2.0
1.5–2.0
Data and research 265
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2002 Bribe Payers Index
Fredrik Galtung
In 2002 Transparency International published its second Bribe Payers
Index (BPI) of leading exporting countries, which rates the likelihood that
companies will pay bribes when they do business abroad. While numerous surveys
study corruption in the public sphere, the BPI is the only major survey to
track corrupt practices among international businesses.
TI commissioned one of the worldÕs leading opinion polling companies,
Gallup International, to measure the supply side of international bribery for
the BPI. The questionnaire and sampling frame were developed by TI. The first
BPI, published in 1999, ranked the worldÕs 19 leading exporting economies in
terms of the degree to which their companies were perceived to be paying bribes
abroad. The 2002 BPI covered two additional economies, Hong Kong and Russia,
but otherwise remained consistent with the first survey.1
In the 2002 survey, interviews were conducted with 835 private sector
leaders in Argentina, Brazil, Colombia, Hungary, India, Indonesia, Mexico,
Morocco, Nigeria, the Philippines, Poland, Russia, South Africa, South Korea
and Thailand (the same as in 1999 with the addition of Mexico). These 15 major
emerging market economies account for more than 60 per cent of all imports into
non-Organisation for Economic Co-operation and Development (OECD) countries.
About 55 people were interviewed in each country; they were drawn from top
executives at major national and international companies, chartered
accountancies, foreign chambers of commerce, national and foreign commercial
banks and senior partners at com- mercial law firms.
Within the 21 leading exporting economies, Russian and Chinese companies
were perceived to bribe most frequently, and Australian, Swedish and Swiss
compa- nies least frequently (see table 1).
In a notable development, scores were found to have improved slightly
since the 1999 survey: companies are marginally less likely to bribe now than
three years ago. However, important exceptions to this trend were companies
from Britain and the United States, which are now perceived as slightly more
likely to bribe than they were in 1999.
The BPI was also intended to assess the implementation of the OECD Anti-
Bribery Convention. As there has been little or no enforcement of the
convention since it entered into force, except in the United States, it is
perhaps too early to evaluate its impact. But, surprisingly, awareness of the
convention has hardly improved in three years: only 7 per cent of all
respondents expressed ÔfamiliarityÕ
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Table 1 2002 Bribe Payers Index (BPI) Rank Economy Score
(0 = high bribery; 10 = low bribery)
1 Australia 8.5
2 Sweden 8.4
Switzerland 8.4 4 Austria 8.2 5 Canada 8.1 6 Netherlands 7.8
Belgium 7.8
8 Britain 6.9
9 Singapore 6.3
Germany 6.3
11 Spain 5.8
12 France 5.5 13 United States 5.3
Japan 5.3
15 Malaysia 4.3 Hong
Kong 4.3
17 Italy 4.1
18 South
Korea 3.9
19 Taiwan 3.8 20 China (excluding Hong Kong) 3.5
21 Russia 3.2
Domestic companies 1.9
Note
Respondents were asked: ÔIn the business
sectors with which you are familiar, please indicate whether companies from the
following countries are very likely, quite likely or unlikely to pay bribes to
win or retain business in this country.Õ The standard error in the results was
0.2 or less.
with the convention, compared to 6 per cent in 1999. Respondents with
the highest level of familiarity were the heads of bilateral chambers of
commerce (13 per cent). Even among commercial lawyers, the level of awareness
was only 12 per cent.
Transparency International also asked respondents to identify the
business sectors in which bribery most commonly occurs. As indicated in table
2, bribery was perceived to occur most often in public works contracts and
construction, followed by the arms and defence industry. On a scale of 0 to 10,
where 10 indicates negligi- ble bribery, even the cleanest business sectors
– agriculture, light manufacturing and fisheries – only obtained
passable scores of 5.9, indicating that international bribes are Ôquite likelyÕ
to be paid in those sectors as well.
In the 2002 survey a distinction was made between the frequency and the
size of bribes paid in certain sectors. Even when ranked by size, the extent of
bribery was seen to be greatest in public works contracts, followed by the arms
industry.
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05 Global Corruption 27/11/02 3:16pm Page 267
Table 2 Bribery in different business sectors Business sector Score
(0 = high bribery; 10 = low bribery)
Agriculture 5.9
Light manufacturing 5.9
Fishery 5.9
IT 5.1
Forestry 5.1
Civilian aerospace 4.9
Banking and finance 4.7
Heavy manufacturing 4.5
Pharmaceuticals/medical care 4.3
Transportation/storage 4.3
Mining 4.0
Power generation/transmission 3.7
Telecommunications 3.7
Real estate/property 3.5 Oil and gas 2.7 Arms and defence 1.9
Public works/construction 1.3
Note
Respondents were asked: ÔWhich are the
sectors in your country of residence where senior public officials would be
very likely, quite likely or unlikely to
accept or extort bribes?Õ The standard error in the results was 0.2 or less.
Views were evenly split regarding the question of whether corruption in
inter- national business was on the increase (23 per cent indicated an
increase, 27 per cent a decrease and 37 per cent said it remained the same).
The survey also asked respondents which governments they felt were most
likely to engage in unfair practices – such as diplomatic or political
pressure, financial and commercial pressure, tied foreign aid, or tied defence
and arms deals – to give their own companies unfair business advantages.
Respondents perceived the U.S. govern- ment to be the most associated with
unfair practices by far, followed by the govern- ments of France, Britain,
Japan, China and Russia.
For more details on the survey, see www.transparency.org/surveys/index.
html#bpi.
Contact: Fredrik Galtung, Transparency International
(galtung@transparency.org)
1 In
the 1999 survey Hong Kong was not distinguished from mainland China. The 2002
survey showed that Hong Kong companies are viewed more favourably than mainland
Chinese companies. Only the 21 major economies were covered because (a)
companies from the smaller exporters tend to have less of a global reach,
although some are major players within their respective regions; and (b) the
top 30 to 40 exporters would include the major exporters of oil and gas, which
do not have an international profile in manufactured goods or international
services.
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National surveys on corruption in francophone Africa
Marie Wolkers
Transparency International (TI) developed household and private sector
question- naires and commissioned local institutes in Madagascar, Morocco and
Senegal to carry out the surveys in 2001. The aim of the research –
coordinated by TI national chapters – was to produce data that could shed
light on the nature, causes, types and frequency of corruption in the countries
surveyed. Another important goal was to design a model for national corruption
surveys that could be used in other countries in order to produce consistent
and comparable data at the international level. These studies combined a
quantitative and qualitative approach.
The surveys were carried out by OSIPD and ECR in Madagascar, LMS and
CSA- TMO in Morocco and Orgatech in Senegal. The institutes were free to choose
the most appropriate methodology and to adapt TIÕs questionnaires to the
context of each country. One-on-one interviews were conducted anonymously with
heads of households and company representatives. In each country a sample of
more than 1,000 individuals was interviewed for the household survey, drawn
from both urban and rural areas, and between 400 and 800 representatives of the
formal and infor- mal private sector were interviewed for the company survey.
Corruption was seen to be one of the principal social problems facing
all three countries. In Morocco, 87 per cent of respondents saw it as one of
the countryÕs worst problems and 94 per cent of companies viewed corruption as
an important obstacle to the development of the private sector, second only to
the rate of taxation. In Madagascar, 64 per cent of private sector respondents
rated corruption as the prin- cipal problem they face. In Senegal, 40 per cent
of company executives considered bribery necessary to obtain a public contract,
while most respondents believed that vote buying is a common practice and that
access to certain public services is often conditional upon Ôgrease paymentsÕ.
Most respondents perceived corruption to have worsened, or at least not
improved, in the last few years. In Madagascar, 75 per cent of respondents said
that grand corruption had increased in the previous five years and more than 60
per cent said this of petty corruption. In Morocco, a significant proportion of
both house- holds and companies said that corruption had increased in the
previous three years (33 per cent and 40 per cent, respectively, for grand
corruption and 41 per cent and 44 per cent for petty corruption). Nearly 90 per
cent of respondents in Senegal observed that corruption is widespread and
reported hardly any improvement since the recent change of government.
Data and research 269
05 Global Corruption 27/11/02 3:16pm Page 269
Proportion of interviewees seeing corruption as an important problem in
different sectors
Madagascar Morocco Senegal
Households Businesses Households
Businesses Households
Businesses
Customs 31 87
Judiciary 76 83
Local administration 62 76
Police n/a n/a
75 95
69 88
76 92
82 99
68 86
80 78
n/a n/a
60 82 86 97
60 64
36 35
32 54
50 61
43 10
46 39
51 48
33 43
63 72
Politicians Public health Registry and
permit officials Tax collection Traffic police
54 77
66 72
65 84
42 83
82 94
Notes 1 Thefiguresarethepercentageofeachgroupofintervieweeswhosawcorruptioninagivensectortobeimportant
or very important.
2 ThepercentagesforSenegalarelowerduetoahigherproportionofintervieweesnotresponding.
Lack of punishment was seen as a central reason for ongoing corruption.
In Morocco, 80 per cent of households and 95 per cent of companies saw it as
the main reason for corruption. More than 80 per cent of respondents in
Madagascar identi- fied personal gain as the main motive for corruption,
followed by low salaries and the lack of punishment.
In comparing sectors, respondents in all three countries perceived the
traffic police to be the most corrupt, while other police officers and customs
officials were also seen as highly corrupt (see table). There were some
differences in the percep- tions of households and businesses. While business
respondents in all three coun- tries saw customs officials as among the most
corrupt, households, particularly in Madagascar, viewed them as less corrupt.
The results of the three surveys will be compared and compiled in a
forthcom- ing report. Similar surveys are planned for other francophone
countries in Africa in 2003.
Contact: Marie Wolkers, Transparency International
(mwolkers@transparency.org)
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Transparency and corruption within civil society organisations
Volkhart Finn Heinrich
The issue of ethical behaviour and accountability within civil society
organisations (CSOs) has become a focus of attention in recent years, triggered
as much by inci- dents of mismanagement and corruption within a small number of
CSOs as by a backlash against civil society itself. Many countries have seen
innovative and effec- tive responses, such as the establishment of
self-regulation frameworks and codes of conduct. Compared to other social
phenomena, however, there has been a distinct shortage of information on the
state of CSOs, including internal transparency and other corruption-related
issues.
To fill this gap, CIVICUS developed the CIVICUS Civil Society Index to
assess the state of civil society on a country-by-country basis.1 The
project provides a diag- nostic tool to assess the health of civil society and
develop knowledge-based strate- gies to strengthen civil society. By placing
ownership of the implementation process and research findings in the hands of
local civil societies, the index seeks to ensure an effective linkage between
research, reflection and action.
A key element of the project is national workshops among civil society
actors, which discuss and validate the research findings and develop action
agendas for the future. In 2000–01, CIVICUS, together with its respective
national partners, con- ducted the pilot phase of the project in 12 countries:
Belarus, Canada, Croatia, Estonia, Ghana, Mexico, New Zealand, Pakistan,
Romania, South Africa, Ukraine and Uruguay.
The research methodology employed a common framework for all countries,
but left ample space for country-specific adaptations of the indicators used.2 The data
collected stemmed mainly from surveys of civil society stakeholders,
supplemented by available secondary data sources. However, relying on
ÔsubjectiveÕ stakeholder assessments made it difficult to compare results across
countries since it is likely that respondents in different countries used
different yardsticks.3 The following analysis should be read with this
qualification in mind.
One dimension of the stakeholder surveys focused on the values of civil
society. Three indicators in this dimension were: public accountability,
financial trans- parency and perceptions of corruption (see table 1). Analysis
of these indicators revealed three somewhat distinct types of civil society. A
rather mature civil society was indicated by positive assessments of financial
transparency and public accountability, coupled with low levels of corruption.
This applied to CSOs in Canada and South Africa.4 A mixed type of civil society,
prevalent in Eastern
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Table 1 Survey respondentsÕ views of transparency and corruption among
CSOs (%)1
Public availability of general Financial
transparency Perception
of corruption
information about CSOs of
CSOs cases
among CSOs
Canada 69 64 –
Croatia 39 20 58
Mexico 44 19 84
Pakistan 26 10 83
Romania 62 27 60
South Africa2 65 46 –
Ukraine 58 26 62
Uruguay 32 11 84
Notes 1 Percentageofrespondentswhoheldthat,forthemajorityofCSOsintheircountry,(a)CSOsmakeinformation
about their general activities publicly
available; (b) CSOs make their financial statements publicly available; and (c)
there are cases of corruption or self-interest in internal management. For some
countries the answer scales had to be adjusted to enable cross-country
comparisons.
2 InSouthAfrica,respondentswereaskedabouttheirownorganisation,notaboutCSOsingeneral.Careshould
therefore be taken in comparing South Africa with other countries in the table.
Europe and, to a lesser extent, in Mexico, was indicated by perceptions
of relatively high levels of transparency and accountability but also perceived
mismanagement and corruption. Here, while the influence of foreign donors may
have introduced good accountability mechanisms, a donor-driven civil society with
weak local roots
272 Global
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Table 2 Comparing corruption in civil society and in the public sector
Averaged CIVICUS TI
Corruption Perceptions Index 2001
civil society indicators (0
= corrupt, 10 = clean)
Canada
Croatia Mexico Pakistan Romania South
Africa Ukraine Uruguay
66.5 8.9
38.9 3.9
48.9 3.7
39.6 2.3
49.9 2.8
55.5 4.8
48.6 2.1
42.3 5.1
Notes 1 ThecivilsocietycolumnistheaverageofthethreeindicatorspresentedinTable1(publicavailabilityofinformation,
financial transparency, perception of
corruption cases).
2 Correlationcoefficientofthetwocolumns=0.72.
05 Global Corruption 27/11/02 3:16pm Page 272
may have provided incentives for mismanagement and corruption. The third
type of civil society can be characterised as grassroots-driven, where less
attention is given to accountability and corruption issues. Uruguay and
Pakistan appeared to fall into this category.
When the CIVICUS indicators were compared with Transparency
InternationalÕs Corruption Perceptions Index, a relatively strong correlation
emerged, which may indicate that similar ÔcorruptingÕ factors are at work in
civil society as in the state bureaucracy (see table 2). However, the
responsibility for ensuring that CSOs are accountable and behave ethically
still lies with civil society itself. It is hoped that the CIVICUS Index can be
used to track the progress made by civil society actors as they further develop
mechanisms to ensure greater transparency and accountability and reduce
corruption.
The tools and methodology of the CIVICUS Index are currently being
refined and expanded. In 2003, a refined CIVICUS Index will be implemented in
up to 25 countries. For this endeavour, CIVICUS is seeking the cooperation of
national partner organisations.
Contact: Volkhart Finn Heinrich, Project Manager, CIVICUS Civil Society
Index (finn@civicus.org)
1 CIVICUS
is an international movement of civil society organisations, with more than 600
members in over 100 countries, promoting stronger citizen participation and a
greater role for civil society in governance and development. For more
information on CIVICUS, please visit www.civicus.org.
2 For
more information on the project approach and methodology, see Volkhart Finn
Heinrich and Kumi Naidoo, ÔFrom Impossibility to Reality: A Reflection and
Position Paper on the CIVICUS Index on Civil Society Project 1999–2001Õ,
2001, available on the CIVICUS website.
3 For
an elaboration of this problem and of Transparency InternationalÕs response to
it, see Johann Graf Lambsdorff, ÔThe Transparency International Corruption
Perceptions Index 2000 – Framework DocumentÕ, 2001, available at
www.transparency.org/cpi/2000/methodology.html.
4 Canadian
stakeholders assessed the level of corruption within CSOs as very low. Owing to
different question wording and answer categories, this indicator could not be
included in the table. In South Africa, the question about corruption was not
asked in the survey. Care should be taken in comparing South Africa since
respondents there were asked about their own organisation, whereas respondents
in other countries were asked about CSOs in general.
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Budget transparency in Latin America
Juan Pablo Guerrero and Helena Hofbauer
As part of an international initiative of non-governmental and
educational organi- sations that independently study the budget in their
countries (the International Budget Project1), academic and civic institutions
in five Latin American countries came together in 2001 to analyse transparency
in government budgets and public spending in Argentina, Brazil, Chile, Mexico
and Peru.2
The main objective of the study was to present an Index of Budget Trans-
parency that measured in a comparable form the degree of accessibility and use-
fulness of the information provided by national governments with respect to
finances, revenue and expenditures. The second objective was to generate knowl-
edge about the budget and the importance of transparency. The third objective
was to identify the most opaque areas of the budget so that governments could
find concrete ways to improve transparency. The study comprised two elements to
achieve these multiple objectives:
× a survey of experts and key users of budget
information in each country. The experts included members of the legislature
(participants in budget, defence, education and health committees), journalists
who write on budget issues for national newspapers or magazines, academics who
have published on the budget, and NGOs specialising in budget or transparency
issues. The survey included 78 questions that spanned many aspects of the
budget: the participa- tion of citizens and the legislature in the budget,
transparency in budget elabo- ration and allocation, budget oversight and
auditing, accountability during budget execution and access to budget
information.
× analysis of the legal framework for the budget,
prepared by an expert on bud- getary issues from each country. The purpose of
the analysis was to determine whether a lack of transparency was the result of
weak legislation or the deficient application of existing legislation. The
analysis involved answering 85 questions on different elements of the budgetary
framework.
To gain an overall assessment, experts in each country were asked to
score the transparency of their countryÕs budget after completing the
questionnaire. None of the five countries scored higher than 5.9 on a scale of
1 to 10, where 10 is Ôvery trans- parentÕ, indicating a general lack of budget
transparency. With a rating of 5.9, ChileÕs budget was considered the most
transparent. PeruÕs was seen as the least transparent, with a rating of 3.7
(see the figure).
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General index of budget transparency
0 = low, 10 = high
10
8
6
4
2
0
Argentina
Brazil
Chile
Mexico Peru
Only in the area of macroeconomic information did more than half the
survey participants rate the transparency of their countryÕs budget positively.
Reponses to detailed questions in the surveys revealed three areas in which
budget transparency was particularly weak: citizen participation,
accountability and supervision of federal officials (see table 1). These were
classified as Ôcritical areasÕ, since on average fewer than 30 per cent of
experts gave positive responses to questions in these areas.
The area rated most ÔcriticalÕ was citizen participation. Experts were
asked whether they agreed with a number of statements including: ÔMechanisms
exist, and are known by the public, to incorporate its opinion during the
approval of the budgetÕ; and ÔIn the event that there are substantial changes
in the approved budget during its execution, the executive branch sufficiently
informs the public about the changesÕ. Although there is a lack of citizen par-
ticipation in many countries, the particularly low scores in these five
requires a re-examination of the role of citizens, who finance and therefore
should benefit from public spending.
The second area classified as ÔcriticalÕ was accountability. Experts
were asked whether they agreed with statements including: ÔThe purchase prices
that the executive pays are public when large amounts of spending are
involvedÕ; and ÔData regarding the execution of the expenditures of whatever
type of decentralised organisation are included in the reports on the execution
of the budgetÕ.
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05 Global Corruption 27/11/02 3:16pm Page 275
Table 1 Three Ôcritical areasÕ of the budget process (% of positive
responses to questions)
Citizen participation Accountability Supervision
of federal officials
Argentina 8
Brazil 11 Chile 21 Mexico 8 Peru 6
25 20
24 33
39 37
24 17
19 26
Note
The percentages for each area indicate the
average proportion of experts who ÔagreedÕ or Ôtotally agreedÕ with a number of
statements. Each statement was worded so that agreement implies high
transparency, and disagreement low transparency.
Table 2 Analysis of the legal framework (scale 0 to 1,000; 1,000 is most
transparent)
Citizen participation Accountability
Argentina
Brazil Chile Mexico Peru
667 643
167 548
571 864
250 476
500 429
The third area that was classified as ÔcriticalÕ was supervision of
federal officials. Experts were asked whether they agreed with statements
including: ÔIn the event of an irregularity in the execution of the budget, it
is possible to identify those that are responsibleÕ; and ÔA functionary who
misuses the budget for his or her own benefit or the benefit of others is
penalisedÕ.
The analysis of the legal framework revealed that the deficient
application of legislation is a general problem. The ratings given for the
transparency provisions of legal frameworks were high relative to the ratings
given for the actual level of budget transparency. When the legal frameworks
were rated on a scale of 0 to 1,000, where 1,000 implied that there were full
provisions for transparency, Chile received the highest average score (770) and
Mexico the lowest (507). Table 2 shows the ratings for two elements of the
legal frameworks: citizen participation in the budget and budget
accountability. Both elements of the legal framework were given relatively high
ratings in Chile and Argentina. The gap between the legal framework and the
actual implementation of the framework is especially notable in the case of
Argentina.
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The Index of Budget Transparency will be presented every year, and the
2002 survey will include a larger number of countries.
Contact: Juan Pablo Guerrero, CIDE (juanpablo.guerrero@cide.edu), or
Helena Hofbauer, Fundar (helena@fundar.org.mx)
1 www.internationalbudget.org.
For more information on the Latin America study, see also
www.transparencia.org.mx/Temas.htm.
2 Poder
Ciudadano (in Argentina); El Instituto Brasileiro de Analices Sociais e
Economicas (IBASE) (in Brazil); El Departamento de Economa de la Universidad
de Chile (in Chile); El Centro de Investigacin de la Universidad del Pacfico
(in Peru); El Centro de Investigacin y Docencia Econmicas (CIDE); Equidad de
Gnero: Ciudadana, Trabajo y Familia; and Fundar: Centro de Anlisis e
Investigacin (in Mexico). The technical assistance of Pearson S.A. de C.V. was
used to develop the survey.
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Corruption and trust in the New Europe and New Russia Barometers
Richard Rose
The Centre for the Study of Public Policy at the University of
Strathclyde in Britain routinely carries out public opinion surveys aimed at
assessing change across the former communist countries of Central and Eastern
Europe, including Russia. In 2001, the centre conducted both the New Europe
Barometer, a nationally represen- tative survey in the 10 Central and East
European countries negotiating member- ship of the European Union, and the New
Russia Barometer. A total of 13,010 persons were interviewed.
The carry-over of communist practices, combined with new opportunities
for wealth, make corruption the chief threat to the rule of law in
post-communist coun- tries today. When citizens were asked how widespread they
think bribery and cor- ruption are among public officials, a majority in all
but one country said that ÔmostÕ or Ôalmost allÕ public officials are corrupt
(see figure 1). The perception of corruption was highest in two Baltic states,
Lithuania and Latvia. Corruption was not so widely perceived in Estonia or the
Russian Federation. Slovenia was exceptional in that more than half its
citizens rejected the idea that most officials are corrupt, while in Hungary
almost half did so.
To find out how people expect to deal with public officials, the New
Europe Barometer asked what people would do if they needed a government permit
and, instead of getting a prompt reply, were told to be patient and wait. Only
a quarter thought that officials would respond without prodding, while only a
fifth thought that writing a letter or making a phone call as a reminder would
be sufficient to get action. A substantial proportion thought the only way to
obtain what they wanted was to go outside the law (see figure 2). One in four
said they would use connections to get things done, one in eight would offer
cash, and 6 per cent would simply do what they wanted without bothering to get
a permit. In Latvia, Lithuania, Romania and Slovakia a majority was ready to go
around the law to get things done. In Poland, the Czech Republic and Slovenia
there were relatively high expectations that public officials would do what
they were supposed to without the need to invoke connections. The use of
connections to bypass the law is a reminder that social capital networks that
are said to promote civic democracy can also be used to promote ÔuncivilÕ
corruption.
Corruption and crime, combined with the legacy of despised communist
rulers, generate widespread civic distrust. The society of the communist era,
in which individuals sought to insulate themselves from government through
trusted face-
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Figure 1
Perceptions of corruption among public officials (%)
100 90 80 70 60 50 40 30 20 10 0
Note
95
92
88
80
75
74
69 66
63
54
42
Figure indicates the proportion of
interviewees who said that ÔmostÕ or Ôalmost allÕ public officials in the
country are corrupt.
to-face relations, remains important today. Most citizens do not trust
civil society institutions to act on their behalf in holding government
accountable. Instead, they look to informal friendship networks to protect them
from all types of political and social institutions.
When the New Europe Barometer asked whether people trusted or distrusted
a dozen different institutions, ranging from the army and police to television
and trade unions, only 30 per cent on average showed trust. Distrust was
greater for gov- ernmental than non-governmental institutions (such as the
media, churches and trade unions). Only 28 per cent trusted the police and 25
per cent trusted the courts. These figures reflect popular suspicions that the
police collude with criminals, rather than fight them.
Trust in political parties was lower than in any other public
institution; in Central and Eastern Europe as a whole, only one in eight
trusted parties and only one in seven positively trusted their members of
parliament. In Russia trust in politicians was lower still: only 7 per cent of
Russians trusted parliament and 7 per cent trusted parties. It is telling that
Boris Yeltsin and Vladimir Putin were both elected president by running as independents.
In contrast, 64 per cent positively trusted most people they knew. The
con- trast between interpersonal trust and civic distrust was especially great
in the three Baltic states and in Russia (see figure 3). In every country the
proportion
Data and research 279
05 Global Corruption 27/11/02 3:16pm Page 279
Slovenia Hungary
Estonia Czech Rep.
Poland
Bulgaria
Russia
Slovakia Romania
Latvia Lithuania
Figure 2 Citizens willing to break the law to get things done (%) 100
90 80 70 60 50 40 30 20 10
0
Note
68
55
53
51
50
45
35
31
29 29
26
The figure indicates the proportion of
interviewees who, when asked what they would do if they needed a government
permit but were told by an official to wait, said they would Ôoffer a tipÕ,
Ôuse a connectionÕ or Ôact without the permitÕ.
Figure 3 Comparing trust in people with trust in institutions (%)
100 90
80 77
70 60 50
40 30 20 10
0
Note
Trust in people Trust in institutions
75
6867
65 65
61
55 55
21
54
52
23 24 24
22 15 17
23
25
12
11
ÔTrust in peopleÕ indicates the
proportion of interviewees who said they trust most people they know.
Interviewees were also asked whether they trust 12 different social and
political institutions – Ôtrust in institutionsÕ is the average
proportion of interviewees who said they did.
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Poland
Bulgaria Slovenia
Czech Rep. Hungary
Estonia
Russia
Latvia Romania
Slovakia Lithuania
Bulgaria Romania
Russia Czech Rep.
Slovakia
Slovenia
Hungary
Poland
Estonia Lithuania
Latvia
trusting people they knew was double or triple those trusting major
institutions of society.
In such circumstances, people will readily help one another but are
hesitant about trying to make distrusted democratic institutions work. Furthermore,
inas- much as citizens perceive public officials to be helping each other to
obtain lucrative contracts and maintain expensive lifestyles, ordinary people
are encouraged to help themselves get what they want from government. If
following the rules does not work, they may well resort to cajolery,
connections or cash.
For more information about the surveys, see www.cspp.strath.ac.uk.
Contact: Richard Rose, FBA, University of Strathclyde
(o.j.robertson@strath.ac.uk)
Data and research 281
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Public opinion of corruption in Latin America
Marta Lagos
Latinobarmetro is an annual public opinion survey carried out in 17
Latin Ameri- can countries by the NGO Corporacin Latinobarmetro.1 There are
approximately 1,000 respondents in each national representative sample. One of
the core areas of the survey is corruption, both perceptions of its extent and
peopleÕs actual experi- ence of it.
In the 2002 survey, corruption was regarded as the most important
problem in the region by 11 per cent of respondents, second only to
unemployment, which was seen as the most important problem by 26 per cent.
Almost every country in the region was marked by a widespread perception
of rising corruption. When asked how they thought the extent of corruption had
changed during the previous 12 months, 80 per cent of respondents across Latin
America as a whole said that corruption had increased (as shown in table 1, 72
per cent said it had increased Ôa lotÕ and 8 per cent that it had increased Ôa
littleÕ). In Argentina and Paraguay, 90 per cent or more of respondents said
that corruption had increased Ôa lotÕ. Only in Honduras and Chile did fewer
than 60 per cent of respondents say this. The perception of change cannot, of
course, be equated with the actual level of corruption. In Mexico, where a
relatively small proportion stated that corruption had increased, the
perception may simply reflect the fact that cor- ruption has long been
recognised as a problem.
Every year a large proportion of respondents state that corruption is
increasing. Comparing responses in 2002 with those given in 2000 (see final
column of table 1), only Honduras and Nicaragua saw a significant fall in the
proportion of people who say that corruption is on the rise. In Honduras, only
38 per cent reported a rise in corruption in 2002, compared to 95 per cent in
2000, reflecting the impact on cor- ruption perceptions of the change in
government following the 2001 elections.
Respondents were also asked about their actual experience of corruption
(see table 2). In the 2002 survey, 27 per cent reported that they or members of
their fam- ilies had had direct experience of corruption during the previous 12
months. In 14 of the 17 countries, the proportion that reported direct
experience of corruption was between 13 per cent and 31 per cent, with the
lowest proportions in Chile and Uruguay. The three striking exceptions, in
which the proportion ranged between 41 per cent and 61 per cent, were Brazil,
Mexico and Nicaragua.
As a third indicator of corruption, Latinobarmetro asked respondents to
esti- mate what proportion of civil servants are corrupt (see table 3). Across
Latin
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Table 1 Perception of change in the level of corruption (%)
2000 – Corruption increased ...
a lot a
little
2002 – Corruption increased ... a lot a
little
Change:
2000 ÔincreaseÕ
to 2002 ÔincreaseÕ
Argentina 87 5
Bolivia 83 8 Brazil 85 5 Chile 60 15
Colombia 80 9 Costa Rica 89 5
Ecuador 87 5 El Salvador 72 14
Guatemala 63 13
Honduras 91 4
Mexico 56 19 Nicaragua 92 2
Panama 72 11 Paraguay 92 2 Peru 56 18 Uruguay 62 20
Venezuela 54 11
South America & Mexico 72 11
Central America 80 8
Latin America 75 10
90 3
80 8 78 6 58 13 85 4 83 6
82 9 74 7
84 5
27 11
61 14 65 5
79 10 95 3 62 10 63 19
73 7
74 9
69 7
72 8
+1
–3 –6 –4
0 –5 –1 –5 + 13 –
57 0 – 24 +6 +4 –2 0 + 15 0 – 12 –5
Note
The question asked was: ÔDo you think
corruption has Òincreased a lotÓ or Òa littleÓ; Òdecreased a lotÓ or Òa
littleÓ; or
Òremained the sameÓ in the last 12
months?Õ
America as a whole, 71 per cent of civil servants were regarded as
corrupt. The per- ception of widespread corruption in the public administration
is notable, given that only about a quarter of respondents report direct
experience of corruption. It is pos- sible that the perception of corruption
among civil servants reflects not just the extent of corruption, but also the
degree of social and economic inequality; that civil servants have greater
access to social and economic goods than the rest of the popu- lation. Even in
Chile and Uruguay, where the proportion of corrupt civil servants was perceived
to be lowest and where there was relatively little reported experience of
corruption, as many as 50 per cent of civil servants were perceived to be
corrupt.
In Argentina, which was marked by economic crisis and civil unrest
during 2001–02, a greater proportion of civil servants were perceived to
be corrupt (89 per cent) than in any other country in the region in 2002.
Argentina also saw the largest increase in this proportion from the 2001
survey, in which only 76 per cent of civil servants were perceived to be
corrupt, even though there was minimal change
Data and research 283
05 Global Corruption 27/11/02 3:16pm Page 283
Table 2 Direct experience of corruption (%)
Argentina
Bolivia Brazil Chile Colombia Costa Rica
Ecuador
El Salvador Guatemala Honduras
25 Mexico 59
20 Nicaragua 41
61 Panama 23
13 Paraguay 22
19 Peru 25
24 Uruguay 13
21 Venezuela 27 16 South America
& Mexico 27
31 Central America 26
23 Latin America 27
Note
Proportion of respondents who stated that
they or somebody in their family had had direct experience of corruption in
the last 12 months.
Table 3 Proportion of civil servants perceived to be corrupt (%)
Argentina
Bolivia Brazil Chile Colombia Costa Rica
Ecuador
El Salvador Guatemala Honduras
89 Mexico 77
76 Nicaragua 68
61 Panama 71
48 Paraguay 74
78 Peru 67
58 Uruguay 52
85 Venezuela 67 74 South America
& Mexico 71
79 Central America 71
74 Latin America 71
Note
Proportion of public employees that are
perceived to be corrupt.
between 2001 and 2002 in the proportion of respondents who reported
direct expe- rience of corruption (25 per cent).
Contact: Marta Lagos (mlagos@latinobarometro.org)
1 For
more information, see www.latinobarometro.org.
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Corruption in Balkan countries
Martin Dimov
Two independent, representative surveys of corruption in the Balkan
region were conducted in February 2001 and February 2002 by the Southeast
European Legal Development Initiative (SELDI).1 The surveys were administered in
seven countries: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia,
Romania and Yugoslavia (with Serbia and Montenegro also examined separately).
Sample sizes were greater than 1,000 for each country.
Although respondents noted a range of serious social and economic
problems in their countries, including unemployment and poverty, corruption was
perceived to be one of the foremost problems. Its continuing prominence
suggests that the public has not yet seen tangible results from anti-corruption
campaigns.
Questions on peopleÕs attitudes to corruption indicate that corruption
is not tol- erated in the Balkan region. This is particularly true in Bulgaria.
Tolerance of cor- ruption is somewhat greater in Serbia, Bosnia and Herzegovina
and Croatia. On a scale of 0 to 10, where 0 means low tolerance, the
Ôacceptability in principleÕ index value in Bulgaria in 2002 was 1.4, whereas
in each of Serbia, Bosnia and Herzegov- ina and Croatia it was 2.0 or more.
Across the whole region, however, in spite of a low tolerance of
corruption, citi- zens reported engaging in corrupt behaviour. The surveys
suggest that engaging in corrupt behaviour is motivated by consciously pursued
gains. Reasons given tend to be individual economic or institutional interests
or even practical necessity, rather than extortion by Ôcorruptive agentsÕ in the
public sector. The Ôcorruption pressureÕ index reveals relatively low levels of
extortion by public officials (between 1.4 and 4.3 out of a maximum of 10).
Comparing results in 2001 and 2002, it appears that the level of extortion has
risen in Macedonia (with a 0.6 rise in the index value) and in Bosnia and
Herzegovina (with a rise of 0.5).
The surveys indicate that corruption is sustained by a fairly small
section of the population. In most of the countries surveyed there has been a
decline in the pro- portion of respondents who report personal involvement in
corruption (see figure 1, in which 0 is the lowest level of corruption and 10
the highest). The change is most striking in Albania, where the index value
fell by almost a full point between 2001 and 2002 (from 2.8 to 2.0). Over the
same time period, however, the index value doubled in Macedonia, where
political instability and mounting ethnic tension may have affected peopleÕs
inclination to resort to corruption.
Perceptions of the extent of corruption among public sector employees
(see figure 2, in which 0 is the lowest level of corruption and 10 the highest)
are much
Data and research 285
05 Global Corruption 27/11/02 3:16pm Page 285
Figure 1
10
5
0
Actual involvement in corrupt practices
0 = low; 10 = high
2001 2002
Figure 2 Perception of the extent of corruption among public sector
employees
0 = low; 10 = high
10
8
6
4
2
0
2001 2002
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Serbia
Romania Montenegro
Croatia
Macedonia
Albania
Bulgaria Bos. & Herz.
Albania
Serbia
Romania Montenegro
Macedonia
Croatia
Bulgaria Bos. & Herz.
Data and research 287
05 Global Corruption 27/11/02 3:16pm Page 287
Perceptions of corruption among different occupational groups (%)
Albania
2001 2002
87 90
71 59 71 64
80 74 79 80 53 51
62 60
66 66
56 66 72 61 68 77 55 44
43 39 63 61 69 64
50 43
55 56
24 18 46 32
23 16
19 15 12 10
Bosnia & Herz.
2001 2002
Bulgaria
2001 2002
Macedonia
2001 2002
Romania
2001 2002
Croatia
2001 2002
51 52
45 45 30 37
38 47 41 48 28 42
33 41
47 47
47 48 53 48 37 41 39 44
41 40 33 40 48 48
42 48
28 41
34 27 40 31
14 15
23 20 19 16
Serbia
2001 2002
Montenegro
2001 2002
Customs officers
Lawyers Public prosecutors Judges Tax
officials Investigating officers Members of parliament Officials in ministries
Police officers Doctors Ministers Political party and coalition leaders
Businesspeople Administrators in the judicial system Municipal officials Local
political leaders Municipal councillors Bankers University officials or
professors Representatives of NGOs Journalists Teachers
Note
59 62 75
41 47 53 38 41 51
43 44 50 54 60 54 45 48 44
48 47 52
53 54 50
47 59 54 49 58 44 54 54 55 56 61 44
41 41 42 42 42 40
51 56 42
55 63 37
46 46 32
32 32 34 36 38 28
26 26 24
24 25 14 21 22 11
74
56 55 55 51 48 48 47 47 46 45 43 42 41 39
34 32 32 28 22 12 10
72 83 63
42 45 55 39 50 49
49 53 56 52 75 49 30 45 45
61 77 66
48 53 55
46 54 64 45 48 54 61 78 58 45 64 54
34 41 45 31 36 52
37 39 48
39 58 48
33 36 43
20 24 45 43 43 25
17 23 18
17 17 22 19 23 20
55
50 41 50 33 35 55 44 55 52 45 46 44 41 46
40 40 37 22 15 15 18
81 78 62 63
56 61 37 33 57 49 33 38
64 55 38 42 64 55 45 47 57 49 33 38
46 44 31 39
56 43 43 49
73 67 51 51 63 70 45 57 55 46 42 52 58 60 41 51
64 57 50 50 50 43 33 36
60 50 47 45
57 58 42 47
45 42 31 33
49 44 35 33 39 42 26 32
26 29 30 28
34 31 36 47 29 33 18 21
Percentage of people saying Ôalmost all of
them are involvedÕ or Ômost of them are involvedÕ.
higher than peopleÕs own experience of corruption. In most countries in
the region there has been a slight change in a favourable direction in peopleÕs
perceptions. The exceptions are Albania, Macedonia and Montenegro, where
perceptions of the rate of corruption rose in the year from 2001 to 2002.
Perceptions of the extent of corruption among different occupational
groups are compared in the table. Notwithstanding some differences between
countries, it appears that corruption is more common among certain occupational
groups: customs officers, those engaged in law enforcement and the
administration of justice (judges, prosecutors, investigators), and, with some
exceptions, representatives of the executive. There was variation across the
region in perceptions of corruption among doctors and police officers; in
Serbia and Montenegro they were ranked among the most corrupt professional
groups, whereas they tended to be placed in the middle of the ranking in the
remaining countries. Among the occupations per- ceived to be the least corrupt
in all the countries surveyed were journalists, teachers and non-governmental
organisation (NGO) representatives.
1 SELDI
was launched in 1998. It was initiated by the Center for the Study of Democracy
(Bulgaria) and the International Development Law Institute (Italy). SELDI
brings together various government organisations and experts from different
countries of Southeast Europe. See www.seldi.net.
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Controlling corruption through high wages
Rafael Di Tella and Ernesto Schargrodsky
One policy proposal to combat corruption is to increase wages in the
civil service. The idea is theoretically appealing because the temptation to
accept a bribe should be lower if one risks losing a high-paying job. However,
the hypothesis that high wages are associated with low corruption levels has so
far largely failed to find empirical support in studies that use data across
countries.1
A potential reason for this is the difficulty of isolating all the
relevant forces with the data available. There may be variables that should be
taken into account but for which no good country-level data can be produced.
One such variable is auditing intensity (table 1 sets out the expected
effects). It is expected that if there are no audit controls, civil servants
will tend to be corrupt regardless of the wage they receive. In contrast, if
there are intense controls civil servants will tend to be honest, even if wages
are low. Studies that do not take into account differences in auditing
intensity tend to reject the hypothesis that high wages reduce corruption, even
if it is in fact true for countries with intermediate levels of auditing.
A policy experiment in Buenos Aires in 1996–97 allowed the link
between wages and corruption to be examined in a situation where the intensity
of audit controls could also be taken into account.2 In August
1996, following allegations of wide- spread corruption under the previous
administration, the newly elected city govern- ment gathered data on the prices
paid by all public hospitals in the city for a number of basic supplies, such
as ethyl alcohol and hydrogen peroxide. These are homoge- neous inputs, so
variations in prices could not be attributed to officers legitimately buying
products of higher quality. Observing variation in the prices paid (an indica-
tor of corruption), the city government embarked on an anti-corruption
crackdown with close monitoring of hospital procurement.
Subsequent analysis showed that prices fell by an average of 15 per cent
follow- ing the introduction of the monitoring policy. As in previous, informal
accounts of
Data and research 289
Table 1 Expected effects
Intensity of audit controls
Low Intermediate High
Expected level of corruption High Medium Low
Expected effect on corruption of raising wages No change Fall
in corruption Little
change
05 Global Corruption 27/11/02 3:16pm Page 289
Table 2 Observed effects
Intensity of audit controls
Before crackdown Beginning
of crackdown End
of crackdown
(low audit intensity) (high
audit intensity) (intermediate audit intensity)
Prices paid for hospital inputs 1001 85 90
Effect of wages on prices 0 0 -0.22
Notes 1 Priceindex=100forthepre-crackdownperiod. 2
Thismeansthatpricesfallby0.2%foranincreaseof1%inwages.
corruption crackdowns, the estimated effects of the policy fell over time
as the intensity of auditing inevitably waned. After nine months, the average
prices paid by procurement officers crept back up, but were still 10 per cent
lower than during the pre-crackdown levels. Since the prices of these
homogeneous inputs responded to the anti-corruption initiative, they can be
taken as a reasonable proxy for the level of corruption.
Taking into account the change in audit intensity over time, the link
between officialsÕ wages and corruption was assessed using the prices paid for
hospital inputs as the measure of corruption. Relative to the pre-crackdown
period, the effect of wages on input prices was negative but insignificant
during the first phase of the crackdown, when audit intensity was likely to
have been at its greatest. The effect was larger (more negative) later in the
crackdown, when the monitoring intensity can be expected to have been higher
than in the pre-crackdown period but lower than during the initial phase. Table
2 summarises the findings. Given the volume of purchases made by these
hospitals, estimates for the later stage of the crackdown suggest that
anti-corruption wage policies would be cost effective even if the cost of
auditing the procurement officers were implausibly large.
This analysis provides empirical evidence that ÔcarrotsÕ and ÔsticksÕ
should be viewed as complementary tools in fighting corruption. The degree of
audit intensity (the ÔstickÕ) is crucial for the effectiveness of
anti-corruption wage policies (the ÔcarrotÕ). On the one hand, exclusive emphasis
on wage raises may be misplaced, as such policies only work if there are audit
policies in place. On the other, exclusive emphasis on auditing may be
difficult to sustain over time.
1
Contact: Rafael Di Tella (rditella@hbs.edu) or Ernesto Schargrodsky
(eschargr@utdt.edu)
See, for example, J. Rauch and P. Evans, ÔBureaucratic Structure and
Bureaucratic Performance in Less Developed CountriesÕ, Journal of Public
Economics, no. 75/1 (2000); and D. Treisman, ÔThe Causes of Corruption: a
Cross-national StudyÕ, Journal of Public Economics, no. 76/3 (2000). See also,
however, C. Van Rijckeghem and B. Weder, ÔBureaucratic Corruption and the Rate
of Temptation: Do Wages in the Civil Service
290 Global
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05 Global Corruption 27/11/02 3:16pm Page 290
Affect Corruption, and by How Much?Õ, Journal of Development Economics,
no. 65/2 (2001), in which there is
a smaller sample of countries. 2 The
research is presented more fully in Rafael Di Tella and Ernesto Schargrodsky,
ÔThe Role of Wages and
Auditing during a Crackdown on Corruption in the City of Buenos AiresÕ,
forthcoming in Journal of Law and Economics (April 2003).
Data and research 291
05 Global Corruption 27/11/02 3:16pm Page 291
Wages and corruption: the case of Madagascar
Mireille Razafindrakoto and Franois Roubaud
The findings of successive household surveys have shown a strong
negative correla- tion between civil servant wages and levels of petty
corruption in Madagascar. The surveys were conducted as part of the MADIO
(Madagascar-Dial-Instat-Orstom) project, which was designed in 1994 to analyse
the islandÕs transition from a social- ist regime to a democratic market
economy.
The project was implemented at MadagascarÕs national statistics office
in part- nership with the IRD,1 a Paris-based research institution specialising in
interna- tional development, and DIAL,2 a centre for research on economic
development. The MADIO team first attempted to measure corruption through a
household survey in 1995. The survey was repeated in 1998 and a corruption
ÔmoduleÕ has been included in the annual labour force survey since 2000.
Of the five standardised questions in the survey, four deal with
objective indica- tors (personal experience of corruption, types of corruption,
the public services involved and direct monetary cost). The fifth concerns the
evolution of perceived corruption over the year.
In terms of methodology, MADIO demonstrated that household surveys could
be a useful tool in monitoring petty corruption and formulating policy.3 The
objec- tive measurements of corruption yield indicators that are comparable
over time and more reliable than subjective ones, which are volatile and
sensitive to individ- ual perceptions.
Furthermore, since the survey employed large and representative samples
of the population, the results can be disaggregated according to different
categories.4 Dis- aggregation helps to demonstrate that the incidence of corruption
may not be uniform among disparate social groups. Results of the 2000 survey
show that 9 per cent of households in the poorest quartile of the population
were victims of corrup- tion, compared with 16 per cent among the wealthiest
quartile.
Disaggregated survey results also show that corruption affects all
sectors of the population: in 1998, 29 per cent of the urban population, 20 per
cent of rural households and 36 per cent of industrial operators were victims.
More than 90 per cent of the inhabitants surveyed – including civil servants
– saw an urgent need to combat corruption.
While the role of civil servant pay has been a controversial issue in
debates about the causes of corruption, empirical evidence from the surveys
highlights a strong negative correlation between the level of corruption and
state employee wages. The
292 Global
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05 Global Corruption 27/11/02 3:16pm Page 292
Civil servantsÕ wages and corruption levels in Madagascar,
1995–2001
50 Corruption
Civil servantsÕ real wages (right scale)
160 150 140 130 120 110 100
90
40
30
20
10
0
Note
1995 1996 1997
1998
1999
2000
2001
The corruption figures are an objective
indicator, reflecting the percentage of victims of corruption during the
previous year. The corruption module was not included in the survey in 1996,
1997 or 1999.
survey results show a steep and continuous decrease in the incidence of
petty cor- ruption, from 42 per cent in 1995 to 11 per cent and 10 per cent in
2000 and 2001, respectively. At the same time, wages increased by 50 per cent
in real terms from 1995 to 2001 (see figure). This relationship cannot be
formally tested because the time series are too short and because other factors
(such as inflation rates and polit- ical stability) may also influence corruption.
Nevertheless, the performance of the public administration can be argued to be
largely dependent on the salaries of its employees. This result contrasts with
other international findings based on cross- section regressions, which show no
significant link between the perception of cor- ruption and civil servant
wages.
If confirmed on a larger sample, the new finding could have important
implica- tions for administration reform in less developed countries. It could
also help explain the failure of the first generation of civil service reform,
which has been characterised by severe cuts in public wages.
By the end of 2001, the MADIO surveys had been adapted and launched in
the capitals of seven West African countries (Benin, Burkina Faso, Cte
dÕIvoire, Mali, Niger, Senegal and Togo) by their respective national
statistical offices, with the support of AFRISTAT5 and DIAL. In 2002–03, the
survey will also be adapted to the five countries of the Andean Pact (Bolivia,
Colombia, Ecuador, Peru and Venezuela).
Data and research 293
05 Global Corruption 27/11/02 3:16pm Page 293
%
Base 100 = 1995
294
For more information on the MADIO project, please see www.dial.prd.fr.
Contact: Mireille Razafindrakoto (razafindrakoto@dial.prd.fr) or
Franois Roubaud (roubaud@dial.prd.fr)
1 Institut
de recherche pour le dveloppement. 2 Dveloppement
et insertion internationale. 3 Only
petty corruption can be measured by household surveys. Other instruments (such
as enterprise surveys
and public finance audits) can be used to track grand corruption. 4 In
1995, 1,000 households were surveyed; 6,000 households were surveyed in 2000
and 2001. 5 Observatoire
conomique et statistique dÕAfrique subsaharienne.
Global Corruption Report 2003
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Gender and corruption
Stephen Knack and Omar Azfar
Several Latin American cities, including Lima and Mexico City, have
replaced male traffic police with women in an attempt to reduce the prevalence
of police stopping law-abiding motorists solely to solicit a bribe. There is
strong evidence to suggest that women are less tolerant of soliciting bribes
and that policies that increase womenÕs role in public life reduce graft.1
The table, based on data from the World Values Survey, summarises more
than 50,000 responses from several dozen nations to questions about the
acceptability of various types of behaviour that inflict costs on others,
including bribery. Across a range of issues, a significantly larger percentage
of women than men responded for every question that the uncooperative behaviour
Ôcan never be justified.Õ
The magnitude of these differences is not dramatic, but they are
statistically sig- nificant even when differences in age, education, employment
status and numerous other variables are taken into account. The differences,
moreover, are relatively con- sistent across countries. In 54 of the 61
national surveys conducted between 1981
Data and research 295
Gender and socially cooperative attitudes
% saying the behaviour Ôcan never be justifiedÕ
Male Female
1 Claiming government
benefits which you are not entitled to 2 Avoiding a fare on
public transport 3 Cheating on taxes
if you have the chance 4 Buying something
you knew was stolen
5 Taking and driving
away a car belonging to someone else 6 Keeping money that
you have found 7 Lying in your own
interests 8 Someone accepting
a bribe in the course of their duties 9 Fighting with the
police
10 Failing to report
damage youÕve done accidentally to a parked vehicle 11 Throwing away
litter in a public place 12 Driving under the
influence of alcohol
63.7 67.9
60.3 64.9
54.4 61.5
72.9 79.5
83.1 87.2
43.9 51.6
45.1 50.9
72.4 77.3
52.0 57.1 61.8 67.6 69.1 74.4
74.2 83.4
Note
Data are pooled from 61 national surveys.
Sample sizes vary between 52,107 and 83,532. All differences are
significant at the .0001 level.
05 Global Corruption 27/11/02 3:16pm Page 295
and 1990, women were more likely than men to say that accepting bribes
could Ônever be justifiedÕ.
Modest differences in attitudes towards bribery do not necessarily imply
that raising womenÕs profile in public life will affect corruption levels. This
question is better addressed using cross-country data. Regression analyses
using the Graft index from Kaufmann et al. (1999) showed that a larger share of
women in parlia- ment, in ministerial and sub-ministerial positions or in the
labour force were each associated with significantly reduced corruption levels.2 These
tests controlled for a host of other factors linked in other studies to
corruption, including per capita income, education, political liberties,
colonial heritage and religious composition.
While the Kaufmann et al. index has the broadest cross-country coverage
among existing corruption indicators, it is available only for the post-1998
period. The International Country Risk Guide corruption index3 was
therefore also used to conduct stronger tests examining changes between 1982
and 1997 in corruption and in womenÕs participation. Countries with larger
increases in womenÕs participation had significantly larger reductions in
corruption over the period, controlling for income growth and changes in
political liberties.
It is possible that part of the association between gender and
corruption reflects reverse causality. Corruption might lower the number of
women in government: if women are more averse to corrupt behaviour, as
indicated by the survey data, they might be less inclined to become government
officials in more corrupt countries. While some reverse causation certainly
cannot be ruled out, this argument cannot explain why a higher share of women
in the labour force is also associated with lower corruption.
It is also possible that these effects are transitory and that, with
modernisation, convergence in sex roles and socialisation processes will reduce
gender gaps in tol- erance of dishonest behaviour. However, gender gaps in
tolerance of bribery are not systematically larger among countries with low
income or education levels.
Findings from this study provide an additional justification for
policies aiming at increasing the role of women in politics and business.
Proposals to reserve for women a certain number of seats in parliament or
positions in the civil service are generally advocated to improve the
well-being of women. However, if such proposals also reduce corruption, they
may also indirectly improve menÕs well-being, because numerous studies link
reduced corruption to better economic performance.
These results show the impact on corruption of more women in the labour
force and in parliament, and do not necessarily imply that corruption will be
reduced where individual women emerge as heads of large corporations, political
parties or governments. The selection process for these top-level positions is
likely to have strong homogenising effects, with little difference on average
in attitudes between men and women who rise to the very top of the hierarchy.
Cor- ruption scandals involving female party or government leaders in recent
years in
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India, Turkey, Pakistan and the European Commission are consistent with
this cautionary note.
Contact: Stephen Knack (sknack@worldbank.org) or Omar Azfar
(omar@iris.econ.umd.edu)
1 For
more on the evidence presented here, see A. Swamy, S. Knack, Y. Lee and O.
Azfar, ÔGender and CorruptionÕ, Journal of Development Economics, no. 64
(February 2001).
2 D.
Kaufmann, A. Kraay and P. Zoido-Lobatn, ÔAggregating Governance IndicatorsÕ,
World Bank Policy Research Working Paper no. 2195, 1999.
3 This
index reflects not only observed levels of corruption but also corruption
anticipated from governments that have been in power for a long time. Although
imperfect, it is the only corruption indicator with good data coverage over
time.
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The governance of corruption: a survey of current business practice
Karina Litvack and Robert Barrington
The current business environment is changing to reflect both stricter
anti- corruption legislation and heightened expectations on the part of a range
of stake- holders, including shareholders. Fund management company ISIS Asset
Management (formerly Friends Ivory & Sime) carried out a study in 2001–02
to investigate how businesses are facing up to the risks posed by operating in
corrupt environments, with a view to enabling shareholders to gauge the
strength of inter- nal risk controls and disclosure practices.1
ISIS surveyed 82 companies (the Ôcompanies surveyedÕ) from its
pan-European portfolios, with specific questions regarding policies and
practical operational pro- cedures. The study raised serious concerns about how
companies are managing the risk of bribery and corruption.
The study achieved a 67 per cent response rate (the ÔrespondentsÕ). A
further 20 per cent of the companies surveyed positively declined to respond,
sometimes on the grounds that it was against company policy to divulge
information of this kind, while 13 per cent did not respond at all. A number of
companies were unwilling to make their codes of conduct available because they
considered the information com- mercially sensitive.
Eighty-seven per cent of respondents stated that they had a formal
written policy or code of conduct on combating bribery and corruption. However,
this rep- resents only 59 per cent of the total number of companies surveyed,
raising ques- tions about the 33 per cent of non-respondents.
Closer inspection of the codes and of the practical measures taken to
implement them revealed alarming deficiencies. The findings suggested that the
majority of companies might be relying on the presence of a code alone to
ensure sufficient pro- tection against corruption. Moreover, awareness and
understanding of codes may not reach beyond head office level.
When asked who was responsible for enforcing codes of conduct, 42 per
cent of the respondents said that responsibility lay with ÔothersÕ beyond the
board of direc- tors or management committee, and a further 16 per cent gave no
answer (see figure 1). A considerable number of companies in the ÔothersÕ
category noted that respon- sibility lay with Ôindividual managersÕ, indicating
that no one department had spe- cific responsibility for enforcing the
anti-corruption code of conduct. Lack of clarity in this regard is particularly
alarming, since it undermines accountability for the implementation of the
policy, allowing managers to Ôpass the buckÕ from department
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Figure 1a Responsibility for enforcing codes of conduct (total sample) Board of
directors 7%
Management committee 14%
Both 7%
Others 29%
The Ôno answerÕ category includes both
companies that had no code of conduct and companies that chose not to answer
the question even though they did have a code of conduct.
No answer 43%
Note
Figure 1b Responsibility for enforcing codes of conduct (respondents
only)
No answer 16%
Others 42%
Board of directors 11%
Management committee 20%
Both 11%
Note
The Ôno answerÕ category includes both
companies that had no code of conduct and companies that chose not to answer
the question even though they did have a code of conduct.
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Performance audit
Figure 2a Implementation of anti-corruption measures, % (total sample) 100
80
60
40
20
0
Note
Percentage of the total sample that
answered ÔyesÕ to the question: ÔDo you integrate anti-corruption measures in
...Õ
Figure 2b Implementation of anti-corruption measures, % (respondents
only)
100
80
60
40
20
0
Note
Percentage of the total sample that
answered ÔyesÕ to the question: ÔDo you integrate anti-corruption measures in
...Õ
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Staff training
Performance audit
Internal audit
Remuneration
Staff training
Internal audit
Remuneration
to department and making it hard for individuals to be certain of their
specific responsibilities.
Eighty-five per cent of the respondents used their internal auditing
system to supervise and enforce anti-corruption policies (see figure 2). As a
proportion of the entire sample of companies surveyed, this is only about half,
again raising questions about the quality of implementation among
non-responding companies. Staff train- ing was cited as a method for embedding
proper practice in the organisation by only 64 per cent of respondents. A mere
eight companies were experimenting with per- formance and remuneration
techniques that place corruption at the core of their management evaluation
policy.
Just under half of the respondents reported having a whistleblower
protection policy, and closer analysis revealed varying degrees of commitment
to it. While a number of companies went to great lengths to ensure the policy
had a high profile within the company and to guarantee the confidentiality of
any information given, others appeared to do little more than state that
whistleblowers are protected.
The survey suggested to ISIS that, as a shareholder, it needed to engage
both respondents and non-respondents to help define and promote good practice.
ISIS therefore launched an engagement programme with a focus on spreading good
prac- tice in the area of bribery and corruption.
A copy of the full study can be downloaded from the website:
www.isisam.com/ FIS/PDFs/1/Bribery_and_Corruption_130202.pdf.
Contact: Robert Barrington (robert.barrington@isisam.com)
1 The
study was carried out in collaboration with the Prince of Wales International
Business Leaders Forum.
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Governance and growth in the very long run: updated indicators, new
results
Daniel Kaufmann and Aart Kraay1
Per capita income and the quality of governance are strongly positively
correlated across countries. This can be seen in the figure, which plots two
measures of gov- ernance on the horizontal axis (Ôcontrol of corruptionÕ in the
upper panel and the protection of property rights, or Ôrule of lawÕ, in the
lower) against real per capita gross domestic product (GDP) – adjusted
for differences in purchasing power – on the vertical axis.
The measures of governance are two of a set of six composite governance
indi- cators, first constructed by World Bank researchers in 1997–98 and
recently updated to cover 170 countries for the period 2000–01.2 These
composite indicators are based on over 190 measures of perceptions of
governance compiled by 17 organisations worldwide. The six dimensions are:
control of corruption, rule of law, government effectiveness, voice and
accountability, regulatory quality and political stability.
One of the key innovations in these governance measures is that they are
accompanied by statistically sound margins of error for individual country
esti- mates. In the figure, the margins of error for selected countries are
shown as hori- zontal bars on either side of the countriesÕ estimated values.
An important qualification to keep in mind when using these or other measures
of governance is that the margins of error are substantial. As shown in the
figure, the statistically likely range of values for many pairs of countries
overlap (such as Nigeria and Russia, or Spain and the United States), indicating
that one should be cautious in ascribing much significance to differences in
the reported estimates of governance for such pairs of countries.
What might explain the strong positive correlation between per capita
income and the quality of governance? Logically there are three complementary
possibili- ties: (1) better governance exerts a powerful effect on income; (2)
higher income leads to improvements in governance; and (3) there are other
factors that both make countries richer and are associated with better
governance. Recent research is beginning to shed light on the first two of
these possibilities.
Consider first the effect of governance on income. As recently as 200
years ago, per capita income did not differ much between countries. As a result,
the wide gaps in per capita income that we see today reflect very different
growth rates over the last two centuries. Recent research has attributed much
of the difference in very long-run growth to deep historical differences in the
quality of institutions.3
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Comparing governance and per capita income worldwide
10
9
8
7
6
5
United States
Spain
Costa Rica
0.5 1.5 2.5
United States
Finland
Mexico
Philippines
Brazil
India
-2.5
-2.5
Russia
Nigeria
-1.5 -0.5
Russia
Nigeria
-1.5 -0.5
Control of corruption
10
9
Mexico Brazil
Spain
Costa Rica
0.5
Finland
1.5 2.5
Philippines
8
7
6
5
India
Rule of law
Note
The two panels plot measures of the
control of corruption and the rule of law in 2000–01 (horizontal axes)
against real per capita GDP in 1995 (vertical axis). The horizontal bars for
selected countries indicate the statistically likely range of values for each
index for those countries. The governance ratings are based on subjective
assessments from a variety of sources, are subject to substantial margins of
error and in no way reflect the official view of the World Bank, its executive
directors or the countries they represent.
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05 Global Corruption 27/11/02 3:16pm Page 303
log (Real GDP per capita at PPP) log
(Real GDP per capita at PPP)
Does causation also run in the opposite direction, from income to the
quality of governance? Conventional wisdom holds that it does, on the grounds
that richer countries are better able to afford the costs associated with
providing a competent public administration, sound rule of law and an
environment in which corruption is not condoned. Yet to date, this conventional
wisdom has not been subject to much empirical scrutiny. A recent study called
this conventional wisdom into question.4 A new methodology made it possible
to separate out the causal effect of per capita income on governance and
evidence was found that per capita income has a nega- tive effect on
governance.5 However, this effect was small relative to the large posi- tive effect
of governance on per capita income, so that overall the correlation between
governance and per capita income is positive, as shown in the figure.
This finding has two important implications. First, the strategy of
waiting for improvements in governance to come automatically as countries
become richer is unlikely to be successful. Second, there is unlikely to be a
Ôvirtuous circleÕ of better governance improving income, in turn leading to a
further improvement in gover- nance, and so on. Together, these two
implications point to the fundamental impor- tance of positive and sustained
interventions to improve governance in countries where it is weak.
When designing strategies to improve governance, it is important to
understand the possible reasons for the negative effect of income on
governance. One possible explanation is Ôstate captureÕ, defined as the illicit
influence of the elite in shaping the laws, policies and regulations of the
state.6 When the institutions of the state are ÔcapturedÕ in this way,
entrenched elites benefit from misgovernance and can successfully resist
demands for change even as incomes rise over time. In such an environment, the
focus of efforts to combat corruption needs to shift from a narrow emphasis on
procedures and compensation within the public administration to a broader
agenda of political accountability, transparency, independence of the media and
the establishment of effective mechanisms through which public opinion can be
heard.
1 The
views expressed here are the authorsÕ and do not represent those of the World
Bank, its executive directors or the countries they represent.
2 The
updated indicators are available interactively at
www.worldbank.org/wbi/governance/govdata2001.htm. For a description of the data
sources and methodology, see
www.worldbank.org/wbi/governance/pubs/aggindicators.htm;
www.worldbank.org/wbi/governance/pubs/govmatters.htm; and
www.worldbank.org/wbi/governance/pubs/govmatters2001.htm.
3 See,
for example, Robert E. Hall and Charles Jones, ÔWhy Do Some Countries Produce
So Much More Output per Worker than Others?Õ, Quarterly Journal of Economics
114, no. 1 (1999); and Daron Acemoglu, Simon Johnson and James A. Robinson,
ÔThe Colonial Origins of Comparative Development: An Empirical InvestigationÕ,
American Economic Review (2001).
4 See
Daniel Kaufmann and Aart Kraay, ÔGrowth without GovernanceÕ, Economia (2002),
available at www.worldbank.org/wbi/governance/pdf/growthgov.pdf.
5 In
order to identify both directions of causation between per capita income and
governance, it is necessary to find exogenous sources of variation in both
variables that can be used as instrumental variables. The existing literature
has used the exogenous historical determinants of governance to identify the
effect of governance on per capita income. However, it is difficult to do the
opposite since it is difficult to find convincing, truly
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exogenous determinants of per capita income to use as instruments.
Instead, this new study used information on the precision of the governance
indicators, reflected in the statistically likely ranges discussed above,
together with reasonable assumptions on the importance of other variables
driving both income and growth, in order to isolate the effects of per capita
income on growth.
6 Joel
Hellman, Geraint Jones and Daniel Kaufmann, ÔSeize the State, Seize the Day:
State Capture, Corruption and Influence in TransitionÕ, Journal of Comparative
Economics (2002), available at
www.worldbank.org/wbi/governance/pubs/seizestate.htm. See also recent evidence
from some Latin American countries, available at
www.worldbank.org/wbi/governance/tools.htm.
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ÔSecond generationÕ governance indicators
Stephen Knack, Mark Kugler and Nick Manning
So-called Ôfirst generationÕ indicators of the quality of governance,
such as the Freedom House measures of political and civil liberties and TIÕs
Corruption Per- ceptions Index, have been invaluable in drawing attention to
the importance of good governance for development. However, broad indicators
such as these have limited utility in pointing to particular public sector
reforms; they implicate many institutions and policies at the same time and do
not naturally suggest solutions, or who should implement them. A related
problem is their lack of country ÔownershipÕ – many developing country
governments object to donorsÕ use of indicators constructed from expert or investor
perceptions, which label coun- tries as badly governed but provide little
indication of what governments can do to improve their scores.
There is now a strong demand, therefore, for a set of Ôsecond
generationÕ gover- nance indicators which should be: (1) more specific in
measuring performance or institutional arrangements and (2) more transparently
constructed. The indicators should also be available for most developing
countries, with institutionalised proce- dures for regularly updating the data.
A World Bank project, supported by the British Department for International
Development and building on work by the Organisation for Economic Co-operation
and Development (OECD) Development Assistance Committee, has been examining
potential indicators. The project focuses primarily on identifying indicators
that have already been developed for other pur- poses, but which meet the
specified criteria. The aim is to establish a set of indica- tors for eventual
inclusion among the United Nations (UN) Millennium Development Goals.1
Second generation governance indicators fall into two broad categories:
indica- tors of capacity and indicators of accountability. Capacity indicators
measure the ability of governments to execute their functions efficiently (for
example, the degree of budgetary volatility). Accountability indicators measure
the degree to which gov- ernment policy reflects the positions advocated by
stakeholders (the degree of fiscal decentralisation and the level of delays in
the reporting of audits to the legislature).
Some indicators (such as measures of human rights or participatory
develop- ment) reflect aspects of good governance that are inherently valued.
Other indica- tors may be of interest only to the extent that they can be
linked – whether directly or indirectly – to valued development
outcomes, an important one being the reduc- tion of corruption. For the latter,
the project will empirically test links between the
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Figure 1 Budgetary
volatility and arbitrary decision making 0.3
0.2
0.1
0.0
-0.1
ZMB
CAN
BOL CHE FJI MEXGBRAUT
BGR
MFA MUS JOR
0.0
TUR POL
MYS
MAR
IRL IND
-0.5
ESP
HUN
MDG
-0.2 -1.5 -1.0
0.5
1.0
1.5
Arbitrariness residual (income)
relevant governance indicator and an appropriate ÔintermediateÕ outcome.
Two illustrative examples of candidate Ôsecond generationÕ indicators follow:
1 Budgetary volatility An
important aspect of the quality of government policy is its coherence and pre- dictability.
Volatile and unpredictable government policy reduces private invest- ment and
can lead officials charged with implementation not to take policy
pronouncements seriously. The budget is one key arena in which government
policy issues are played out: stable policy should be reflected in stable
budget allocations. One proposed Ôsecond generationÕ indicator is therefore
budgetary volatility.
The particular measure proposed uses data on fluctuations in expenditure
over a four-year period across the 14 functional classifications of the budget
used in gov- ernment reporting to the International Monetary Fund. If this
indicator does in fact reflect an uncertain policy environment, then we would
expect it to be correlated with alternative measures of unpredictable
policy-making. Consistent with this expectation, figure 1 shows that budgetary
volatility tends to be high in the same countries in which businesses report
that government policy-making is arbitrary and unpredictable, using data from
the World BankÕs World Business Environment Surveys. This relationship is not
simply capturing differences between rich and poor nations, as per capita
income is controlled for in the figure.
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05 Global Corruption 27/11/02 3:16pm Page 307
Volatility residual (income)
Figure 2
2
1
0
-1
Levels of government regulation and levels of activity in the unofficial
economy
ISR
LBN
GEO CZE
PAN THA
TWNKAZHRVMLIVEN BRA
GRC
IDN POL ROM
NGA LVA CHNPHL MEX
RUS
PER ARMURY
UKR JPN
COL FRA
PAK KEN
ZWE KGZ
USA HUN
GBR JAM LKA TUN
SVN EGY
TUR VNM
ESP JORECU
IRL GHA
CHE ZMB CANDNK
NOR NLD
MDG
MNGAUSNZL FIN
SWETZA MWI
CHL
MYS UGABGR
BFA MAR AUT DEU PRT
MOZ
SVK
KOR
BOL
ITA
ARG
-2 -10 -5 0 5 10
Small business start-up, residual
2 Obstacles to business start-ups The number of procedures and fees incurred in starting new businesses
varies dra- matically across countries. Excessive government regulation of
small businesses tends to increase the share of economic activity in the
informal sector, as hypothe- sised by Hernando de Soto in The Other Path, and
can enable regulators to collect bribes from potential entrants.
Djankov et al. collected data on the number of procedures that are
officially required for a company to operate legally.2 Data were
also collected on the costs and on the minimum length of time required to
complete the process (assuming no delays by government officials). Because
costs and time can vary according to factors such as the size of the firm and
whether it engages in international trade, information was collected for a
hypothetical Ôstandardised firmÕ for which these and other firm characteristics
were carefully specified, facilitating cross- country comparison.
Figure 2 shows that even when controlling for levels of gross domestic
product, inflation, illiteracy and per capita income, there is a strong,
positive relationship between the number of procedures required to start a new
business and the level of unofficial economic activity.3
As part of the process of building consensus on a set of governance
indicators, candidate indicators identified by this project are being posted on
a public website
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Unofficial economy, residual
hosted by the OECD Development Assistance Committee:
www.bellanet.org/indicators/info.cfm.
Contact: Stephen Knack (sknack@worldbank.org)
1 The
UN Millennium Development Goals are a series of commitments adopted by the
member states of the UN in September 2000 to promote a broader vision of development
that focuses not only on economic development, but also on human development
and social progress.
2 Simeon
Djankov, Rafael La Porta, Florencio Lopez-de-Silanes and Andrei Shleifer, ÔThe
Regulation of Entry,Õ forthcoming in Quarterly Journal of Economics.
3 The
measure of the level of unofficial economic activity is taken from the Heritage
FoundationÕs Index of Economic Freedom.
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World Governance Survey: a new approach to assessing governance
Julius Court and Goran Hyden
UN Secretary-General Kofi Annan has stated that Ôgood governance is
perhaps the single most important factor in eradicating poverty and promoting
developmentÕ.1 If governance matters, so does the need for more reliable and valid data
on key gover- nance processes. The United Nations University (UNU) has begun to
address this need with a World Governance Survey (WGS). A pilot phase was
carried out in early 2001 and a larger round of country assessments is planned
for 2003.2
In the pilot phase, governance assessments were undertaken in 16
developing and transitional societies, representing 51 per cent of the worldÕs
population (see table). In each country, a national coordinator selected a
panel of experts to com- plete the assessment. The panel comprised persons with
extensive experience of the governance realm, including parliamentarians,
researchers, lawyers and civil ser- vants; around 35 people were interviewed per
country.
The project identified 30 indicators based on widely held ÔprinciplesÕ
of good governance: participation, fairness, decency, accountability,
transparency and effi- ciency. Respondents were asked to score each indicator
on a scale from 1 to 5; the higher the score, the better. In addition,
respondents were invited to provide quali- tative comments.
The table shows the median indicator rating for each country for the 10
indica- tors that relate particularly to accountability and transparency. It
also shows the total governance score for each country. The total governance
scores have a very robust correlation (0.77) with the country scores in
Kaufmann et al.Õs aggregate gov- ernance indicators, indicating the validity of
the results.3
One widespread finding was the low score for the accountability of
legislators. This indicator received the lowest average rating. In their
qualitative comments, local experts remarked that many legislators run for
office because of financial advantages, and that legislators tend to be more
accountable to their parties than to the public. Qualitative comments suggest
that the particularly low rating given to Togo reflects dissatisfaction with
the way elections have been administered and with the lack of effectiveness of the
national assembly after a long period of auto- cratic rule. The particularly
low rating given to Pakistan was a reflection of its mil- itary rulers, a point
strongly emphasised in comments.
A second finding was that civil servants are generally seen not to be
accountable and that the operations of civil services are seen to lack
transparency. India was an exception: qualitative comments confirmed the
reputation of the civil service as the
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Data and research 311
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Selected governance indicators for transition societies, 2001
Freedom of Government
expression open
to
public input
Accountability Accountability Transparency
of of civil in the legislators servants civil service
Respect for property rights
Equal application of regulations
Access to justice
Transparency in judicial process
Accountability of judicial officials
Total country governance score (min. = 30,
max. = 150)
Togo 2 1 1 2 2 3 3 2 2 2 62.5 Pakistan 3 2 1 2 2
3 3 2 2 2 65.0 Russia
3 2 2 2 2 2 2 2 2 2 73.0 Kyrgyzstan3
3 2 2 2 3 2 2 2 2 75.0 Philippines4
2 2 2 2 3 1 2 3 3 75.0 Indonesia
4 3 2 2 2 2 2 2 2 2 80.0 China
3 2 3 2 2 3 3 3 2 3 82.0 Peru
3 3 2 3 2 3 3 2 2 2 82.0 Argentina
4 2 2 2 2 3 2 2 2 2 83.0 Bulgaria
3 2 2 2 2 3 2 3 2 2 83.0 Mongolia
3 2 3 2 3 3 3 2 3 3 86.0 Tanzania
3 3 3 3 3 3 3 3 3 3 91.0 Jordan
3 3 2 3 3 4 4 4 4 3 97.5 India
4 3 3 3 3 3 3 3 3 3 98.0 Chile
4 3 2 3 3 4 4 3 3 3 99.0 Thailand
4 4 3 3 3 3 3 3 4 4 100.0 Average 3.31 2.50 2.19 2.38 2.38 3.00 2.69 2.50 2.56 2.56 83.25
Thailand
Chile
India Jordan
Tanzania Mongolia
Bulgaria Argentina
Peru China
Indonesia Philippines
Kyrgyzstan
Russia Pakistan
Togo
Total governance score: comparing 1996 and 2001
110
100
90
80
70
60
1996 2001
backbone of government in India. Local experts also held ThailandÕs
civil service in high regard.
The ratings and comments also suggest that transactions between govern-
ment and the private sector are marked by cronyism and bribery. This was high-
lighted as the number one problem in India. Russia and Indonesia were also
rated poorly in this regard. In contrast, comments and ratings from Chile
suggest that transactions between government and private sector there are rela-
tively free from corruption.
Local experts were also critical of the quality of justice systems,
observing that the rich have easier access to justice and that judges can be
bribed. Court cases were seen to be processed slowly and it was felt that many
poor and illiterate people fear the courts. However, there has been much
judicial reform in the pilot countries. Local experts in India felt there had
been a very positive impact from the reform of community justice institutions
such as Lok Adalats (PeopleÕs Courts), which allow the resolution of conflicts
that are not, or cannot be, taken to court. Local experts in Chile felt that
recent reforms would improve the administration of justice in the future.
Overall, there was significant variation in the total governance scores
(see final column of the table). Experts in Thailand and Chile rated their
countries as highest in the sample (100 and 99 out of a maximum of 150),
whereas Togo and Pakistan were rated lowest (just over 60, compared to a
minimum possible score of 30).
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The local experts were also asked to compare the present situation with
what they perceived it to have been five years previously (see figure).
Assessments of Indonesia and Peru indicated particularly impressive
improvements in governance, following the ouster of autocratic regimes. The
PhilippinesÕ governance was seen to have declined the most, partly because the
assessment took place at the time the senate was considering whether to impeach
former president Joseph Estrada.
There is an urgent need for more reliable, relevant and timely
cross-country data on governance issues in order to facilitate appropriate
policy-making. Developing such information will be of immense local and
international policy relevance. It is hoped that the WGS is a move in this
direction. Indicators of political participation, democracy and human rights
should eventually join the UN Millennium Develop- ment Goals and become part of
the Human Development Index.
The project website contains the findings and data as well as a
questionnaire: www.unu.edu/p&g/wgs.
Contact: Julius Court, ODI (j.court@odi.org.uk)
1 Kofi
Annan, Partnerships for Global Community: Annual Report on the Work of the
Organisation (UN, 1998). 2 The
World Governance Survey was directed by Julius Court (Overseas Development
Institute) and Goran
Hyden (University of Florida). Ken Mease (University of Florida) was
Senior Adviser. The project was carried out in partnership with local
institutions in assessment countries, with generous support from UNU and the
United Nations Development Programme.
3 Daniel
Kaufmann, Aart Kraay and Pablo Zoido-Lobatn, ÔGovernance Matters II: Updated
Indicators for 2000/01Õ, World Bank Policy Research Working Paper no. 2772,
2002.
Data and research 313
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The International Crime against Businesses Survey
John van Kesteren1
The International Crime against Businesses Survey (ICBS) involved asking
business managers about their experiences of crimes and their companiesÕ
reactions to those crimes. One of the main topics of interest in the survey was
corruption.
In 2000 the ICBS was carried out in eight capital cities in Central and
Eastern Europe. Managers of 4,000 companies were interviewed, 500 in each city,
and in such a manner as to ensure a representative sample of differently sized
companies and different business sectors.
More than 50 per cent of the companies interviewed believed that
corruption is a significant obstacle to business in their respective countries.
This opinion was par- ticularly widely held in Romania, Croatia and Bulgaria,
where approximately two- thirds of the managers stated this. By contrast, a
minority of managers in Hungary and Lithuania said that corruption was a
significant obstacle to business.
Businesses were also asked about their actual experience of corruption.
The figure shows the percentage of companies in each city that were requested
to pay
314 Global
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Percentage of businesses that were asked for a bribe in 1999
50
40
30
20
10
0
05 Global Corruption 27/11/02 3:16pm Page 314
Bucharest (Romania)
Zagreb (Croatia) Vilnius (Lithuania)
Moscow (Russia) Sofia (Bulgaria)
Kiev (Ukraine) Budapest (Hungary)
Minsk (Belarus)
Reasons given for not reporting a corruption incident to the police
Percentage of managers giving explanation
Police wouldnÕt have done
anything/wouldnÕt have been interested 28
Involving the police was not
appropriate/it was an internal matter 28
Lack of proof/evidence/witness 24
Not worth reporting/not serious enough 22
Police wouldnÕt have been able to do anything/slight chance of success 21
Not company policy 18
Lack of time/too much trouble 10
Fear of reprisals 10
Fear of negative publicity 10
DidnÕt bother because no insurance claim was involved 1
bribes in the year preceding the survey. The highest rates were 46 per
cent in Minsk (Belarus) and 29 per cent in Budapest (Hungary). The lowest were
10 per cent and 11 per cent in Zagreb (Croatia) and Bucharest (Romania),
respectively. Of those who said their companies had been asked for bribes, 40
per cent said it had happened more than five times during the year.
These findings reveal a negative, but not significant, correlation
(r=-.46, n=8, n.s.) between the actual experience of corruption and the
perception of corruption as an obstacle to doing business. The more frequent
the experience of corruption, the less likely it is to be seen as an obstacle.
One possible explanation is that where bribery is common, it is seen as the
ÔgreaseÕ that allows businesses to function, not as an obstacle. The
correlation has to be assessed with great care, however. Since data are only
available for eight cities, there is a good chance that the inverse relation
may be a coincidence. Further research is needed.
In cases where actual experiences of corruption were reported,
businesses were asked who had requested the bribes. Tax or revenue officials
were most frequently cited by managers (mentioned by 28 per cent of managers), followed
by police offi- cers (27 per cent), inspectors (25 per cent) and customs
officers (24 per cent). However, Ôprivate-to-privateÕ cases of corruption were
mentioned by almost half the managers.
When asked which areas of business activity were most likely to be
affected by corruption, more than half the managers mentioned customs, fitness
certificates for vehicles, municipal authorisations, business licences and
procurement of goods or services from government.
Of the 855 companies that said they had experienced corruption in the
previous year, only 13 said they reported the incident to the police, less than
2 per cent of the total. Some of the reasons why are indicated in the table.
Companies could give more than one answer. The most frequent explanations were
that the police would have done nothing or would not have been interested, that
it was an internal matter
Data and research 315
05 Global Corruption 27/11/02 3:16pm Page 315
316
or that the police were not the appropriate agency for reporting. Other
common reasons included a general distrust of the police, insufficient proof,
that the incident was not serious enough or that it was not company policy to
report.
Contact: icvs@unicri.it
1 Principal
researchers were Anna Alvazzi del Frate and John van Kesteren (United Nations
Interregional Crime and Justice Research Institute, Turin), plus national
coordinators in each of the participating countries. Data were collected by the
Gallup Organisation and its affiliates.
Global Corruption Report 2003
05 Global Corruption 27/11/02 3:16pm Page 316
Electoral rules and corruption
Ugo Panizza
Is there a relationship between corruption and electoral rules and, if
so, what kind of electoral rules are associated with lower levels of
corruption? A study carried out at the Inter-American Development Bank (IDB)
shows that such a relationship does exist and that electoral systems that limit
politiciansÕ incentive to cater to local interests tend to yield lower levels
of corruption.1
The aspect of electoral rules that was examined in this research was
their degree of Ôpolitical particularismÕ. This is a measure of politiciansÕ
incentives to build per- sonal support bases in particular geographical constituencies,
rather than adhere to party platforms.2 A high score on an index of
political particularism indicates that the system is Ôcandidate-centredÕ, while
a low score is associated with Ôparty- centredÕ electoral systems.
The index has three components. One captures the extent to which parties
can control how a candidate appears on an electoral ballot. The second measures
the extent to which a candidate can benefit from the votes of other candidates
belonging
Data and research 317
Figure 1
4.6 4.4 4.2 4.0 3.8 3.6 3.4 3.2 3.0
Political particularism and corruption
Political particularism
05 Global Corruption 27/11/02 3:16pm Page 317
Corruption (log(GRAFT)).
High value = low corruption.
Very high
High
Intermediate
Low
Very low
4.2
Low
4.6
3
Figure 2 Particularism, development and corruption
Political particularism
Level of development
to her party, reducing the need for candidates to build personal
reputations. The third measures the limitations on the number of individual
candidates that electors can support: where voters can choose only among
parties, and not among individu- als, legislators have less incentive to cater
to their home constituency.
The index of political particularism was compared with data on
corruption from Kaufmann, Kraay and Zoido-Lobatn, namely their GRAFT variable.3 The GRAFT
variable is not a perfect index of corruption, for example because it also
includes a component (the Political Risk Services survey) that measures
political instability, which, in turn, can be affected by electoral rules. But
it is an indicator that has been widely used in the literature on corruption
and is highly correlated with other cor- ruption measures. Furthermore, the
results of the research were found to be robust to the use of several other
indicators of government effectiveness and regulatory burden that are also
correlated with corruption.
Statistical analysis found a strong, non-linear relationship between
political particularism and corruption (see figure 1). The figure shows that
low and interme-
318 Global
Corruption Report 2003
05 Global Corruption 27/11/02 3:16pm Page 318
4.4
4
3.8
3.6
3.6
3.4
3
4.6
4
3.2
Low
H ig h
Mid
Very high
High
Very low
3.4
4.2
4.4
Corruption (log(GRAFT)).
High value = low corruption.
Intermediate
3.2
3.8
diate levels of political particularism tend to be associated with lower
corruption. At the same time, extreme levels of particularism (either very low
or very high) are associated with higher levels of corruption.
Why might this be the case? The finding is likely to reflect a tension
between the benefits of low particularism and the benefits of high
particularism. Where particularism is high, there may be excessive Ôpork
barrelÕ policies, such as spend- ing on special projects by legislators to
benefit their constituents disproportionally. On the other hand, high
particularism has a definite advantage in terms of repre- sentation and in the
incentives legislators have to gather information on the preferences of their
constituencies. Particularistic systems can also generate mech- anisms of
yardstick competition among legislators and improve the efficiency of the
political process.
Figure 2 shows that this relationship is particularly strong for
middle-income countries. No matter what their electoral system, poor countries
tend to have high levels of corruption and rich countries low levels. It is
only in middle-income coun- tries that electoral rules play an important role
in shaping good institutions and reducing corruption.
Since low-income countries tend to be characterised by relatively low
levels of democracy, it is not surprising that the precise electoral rules do
not seem to be important in these countries. The finding that electoral rules
are not important in high-income countries is more puzzling. It may be due to
the fact that countries with a longer democratic tradition have found ways to
mediate different political inter- ests that go beyond the simple electoral
rules examined here.
Data on political particularism can be downloaded from the website:
www.ugo. panizza.org/particular.zip.
Contact: Ugo Panizza, Research Department, IDB (ugop@iadb.org)
1 For
the full study, see Ugo Panizza, ÔElectoral Rules, Political Systems, and
Institutional QualityÕ, Economics and Politics, no. 13/3 (2001). The data set
is described in Jessica Seddon, Alejandro Gaviria, Ugo Panizza and Ernesto
Stein, ÔPolitical Particularism Around the WorldÕ, Inter-American Development
Bank, Research Department, Working Paper 463, 2002.
2 John
Carey and Matthew Shugart, Presidents and Assemblies: Constitutional Design and
Electoral Dynamics (Cambridge: Cambridge University Press, 1992).
3 See
Daniel Kaufmann, Aart Kraay and Pablo Zoido-Lobatn, ÔAggregating Governance
IndicatorsÕ, World Bank Policy Research Working Paper no. 2195, 1999.
Data and research 319
05 Global Corruption 27/11/02 3:16pm Page 319
Managing conflicts of interest in OECD countries
Jnos Bertk
Ensuring that the integrity of public decision-making is not influenced
by the private interests of public officials is a growing priority in
preventing corruption in government. To examine how successfully that goal is
being pursued, in 2001 the Public Management Service (PUMA) of the OECD
surveyed the mechanisms central governments use to prevent and resolve
conflicts of interest in the public service.
The objective of the survey was to select promising practices and
develop guiding principles for managing conflicts of interest. The central
governments of all 30 OECD countries provided answers to a survey
questionnaire.
The governments reported a growing emphasis on preventive measures. More
and more OECD countries are actively engaging in counselling and requesting
dis- closure of interest in a written form, so that potential conflict situations
may be identified. Eight OECD countries oblige all civil servants to declare
their financial
320 Global
Corruption Report 2003
Figure 1
30
25
20
15
10
5
0
Sources of conflict of interest
Secondary Partnerships Shareholdings In
an entity Investments In a political In trade unions In elected
employment in the private sector
with contractual or regulatory
relationship with the government
party
public entity
05 Global Corruption 27/11/02 3:16pm Page 320
Number of countries
Figure 2 Who can be consulted if an official is in doubt? 30
25
20
15
10
5
0
Manager
Dedicated person within the organisation
Dedicated person outside the
organisation
Telephone help desk
interests regularly. Although the governments argued that no single
instrument can be characterised as the most effective in avoiding conflicts of
interest, they identi- fied a combination of mechanisms – especially
those that raise awareness and ensure transparency – as effective in
several countries.
In countries that rely on individuals to disclose their private
interests, govern- ments named the following key mechanisms: the annual
updating of statements on private interests (in Australia, Poland, Portugal,
Spain and the United States) and training and consultation (in Australia,
Hungary, Norway and South Korea). In countries that rely less on individual
disclosure (for example, Austria and Germany), the maintenance of relevant
legal regulations was seen to be the key.
Figure 1 indicates which sources of conflict of interest were identified
as most problematic. Secondary employment in the private sector was seen to
hold potential for conflicts of interest by the largest number of governments
(26 out of 30). Many governments indicated that sources of conflicts of
interest also include partnerships, shareholdings, investments and involvement
in entities with a contractual or regu- latory relationship with government.
As indicated in figure 2, public officials in most OECD countries can
turn to their managers or immediate superiors when they are in doubt as to how
to resolve poten- tial conflicts of interest. In some countries, they can also
turn to dedicated person- nel or legal staff within the organisation, or to
external organisations (such as the Public Offices Commission in Ireland, the
State Services Commission in New Zealand and the Office of Government Ethics in
the United States).
Data and research 321
05 Global Corruption 27/11/02 3:16pm Page 321
Number of countries
Managers play a key role in monitoring whether their staff comply with
conflict of interest rules. In addition, an overall interest in monitoring the
implementation of policies is taken by central government organisations (for
example, the National Public Service Ethics Board in Japan and the Department
of Civil Service in Italy) and external institutions (such as IrelandÕs
Parliamentary Select Committee on MembersÕ Interest, the attorney-generalÕs
office and the constitutional court in Por- tugal). Bodies such as these also
monitor the compliance of senior public officials and parliamentarians.
Based on the results of this survey, the OECD Guidelines for Managing
Conflicts of Interest have been designed to help governments to review existing
solutions and to modernise mechanisms in line with good practice. The
guidelines and the full survey report (due out at the end of 2002) may be
viewed at the PUMA area of the OECD website at www.oecd.org/puma/ethics.
Contact: Jnos Bertk, principal administrator, Public Governance and
Territorial Development Directorate, OECD (janos.bertok@oecd.org)
322 Global
Corruption Report 2003
05 Global Corruption 27/11/02 3:16pm Page 322
Index
Countries discussed only in regional reports are not listed in the
index.
access to information 5–6, 8–62, 74–5, 86–7,
98–9, 112, 123, 136–7, 149, 161, 172–3, 186, 196–7,
210–11, 222, 232–3, 244, 256–7
campaigning for 1, 10–12, 58, 74; legislation 16–18, 60,
86–7, 112, 161, 256; see also disclosure of assets; e- government; freedom
of information legislation; free speech; private sector disclosure of
information
accounting 1, 2, 9, 80, 84 rules 36, 39–42, 77, 81–2
ADB/OECD Anti-Corruption Initiative for Asia-Pacific (2001) 129, 141,
142, 154, 155
Afghanistan 86, 153, 154, 155, 166–7 African Union 61, 246
draft convention on combating corruption 238
aid 9, 90, 91, 99, 105, 115, 122, 154–5, 166, 167, 229, 239, 248
conditionality 3, 104, 154, 204, 215, 216, 227, 228, 237, 238,
249–50; tied 118, 268
Albania 191, 192, 194, 196, 197, 199, 200, 285–8
Angola 36–7, 42, 248, 249–50, 251, 256 Argentina 41, 93,
104, 108, 266, 274, 276,
282, 283–4 arms 73, 105–6, 171, 227, 238, 239, 267, 268
procurement 137, 156, 158, 185, 203, 239, 241, 248, 252–3, 256;
smuggling 4, 108–9, 205
Asian Development Bank (ADB) 129, 141, 169
auditing 9, 20, 39–40, 80, 81–2, 85, 184, 289, 290
auditors-general 83, 121, 158, 241 Australia 40, 116–7, 119,
123–5
Bangladesh 48, 153, 154, 155, 156, 158, 159, 160, 161, 163
banking 38, 64, 72–3, 82, 95, 118, 154, 187, 198, 205–7,
248, 252, 255
Belarus 46, 165, 169, 172, 173, 175, 315 Benin 219, 221 blacklisting 71,
91, 140, 141, 204, 216
Bosnia and Herzegovina 190, 191, 192, 196, 197, 199, 200, 285
Brazil 15, 16, 50, 104, 105, 106, 107, 108, 110, 112, 282
Bribe Payers Index (BPI) 2–3, 73, 129, 266–8 Britain 3, 15,
66–7, 69, 72–74, 266, 268 budget transparency 30, 36, 60, 145, 149,
179, 205, 249–50, 274–7 Bulgaria 46, 193, 194, 196, 199,
200, 285,
314 Burkina Faso 5, 216, 219, 220, 222, 225 Burundi 227, 233, 235, 238
Cambodia 140, 144, 146, 148, 149, 151 Cameroon 228, 229, 230, 231, 233,
234, 235 campaign finance 14, 30, 50, 77, 79, 82–3,
88, 93, 100, 106–7, 108, 111, 119, 125, 144, 158, 160, 180, 192,
193, 207; see also elections; political financing
Canada 45, 77, 79, 83, 86–8, 271 censorship 131, 149, 168, 169,
172, 222, 235 Chile 27–8, 109, 274, 276, 282–3, 312 China 51, 128,
129, 130, 131, 132, 135, 136,
137, 138, 166–7, 268 civil service 14, 20, 70, 154, 158, 166,
182–4,
192–3, 220, 222, 234, 242, 282–4,
289–93, 310–12, 315, 321–2 civil society 3–4,
60, 61, 73, 76, 125, 136,
150–1, 154, 163, 165, 175, 215, 225 and access to information 87,
100, 111; anti-corruption 91, 100, 200, 237,
245–6; corruption in 258, 271–3; monitoring role 1, 44, 88, 111,
124, 235, 258; and transparency 12, 140; see also NGOs
codes of conduct 54, 177, 250 in business 33–5, 187, 298–301
conflicts of interest 9, 18–19, 55, 70, 82, 181, 183, 320–2
media 5, 49–51, 207 construction 16, 68, 71, 73, 83–4, 97,
107,
124, 128, 130, 131, 133, 135, 145, 177,
203, 206, 208, 217, 242, 252, 267 conventions see ADB/OECD; African
Union; Council of Europe; OAS; OECD; SADC
323
05 Global Corruption 27/11/02 3:16pm Page 323
corporate sector see private sector Corruption Perceptions Index (CPI)
18, 103,
109, 154, 262–5, 273, 306 Costa Rica 90–1, 93, 94, 96, 100
costs of corruption 3, 103, 96, 108, 143, 147,
165, 174, 198, 210–11 Cte dÕIvoire 215, 216, 218, 224 Council of
Europe 61, 74, 178–9, 191, 198
Civil Law Convention 179; Criminal Law Convention 67, 178–9; GRECO
67, 179, 191 198
Croatia 46, 191, 192, 196, 198, 200, 285, 314–5
customs 171, 177, 182–4, 190, 192, 197, 220, 221, 231–2,
234, 270, 287, 288, 315 Czech Republic 178, 179, 181, 184, 185, 186,
187, 278
democracy 2, 44, 90, 116, 145, 177 loss of trust in 103, 109, 111;
reform 205,
215, 227 Democratic Republic of Congo 227, 229,
231, 232, 233, 234, 255 Denmark 69, 76, 216, 249 disclosure of assets
14, 21, 144, 240, 248,
253 donors see aid
e-government 24–31, 75, 95–6, 140, 161, 210, 232
and transparency 1, 98–9, 112, 137, 145; see also Internet
e-procurement 27–8, 29, 99 Ecuador 29, 105, 108–9 editorial
independence 51–2, 53, 54–5, 75,
84–5, 86–8, 197 education 105, 143, 146, 232, 234, 258
elections 68, 75, 83, 115, 120, 153, 158, 159,
160, 169, 173, 182, 207, 219, 229, 231,
235, 241, 243, 244, 249, 251 anti-corruption platforms 90, 92, 94,
122–4, 128, 130, 132, 154, 182, 193, 195, 209, 248, 256;
monitoring 54, 93, 111, 120, 124, 125, 149, 158, 169, 259; rules 317–9;
vote buying 132, 144, 145, 212, 218, 224, 229, 231, 254, 269
Enron 1, 2, 8, 52–4, 64, 79–82, 84–5, 110 and
accounting standards 39–40, 72, 77,
85 Estonia 178, 184, 186, 278 European Bank for Reconstruction and
Development (EBRD) 34, 39, 167
324 Global
Corruption Report 2003
European Union (EU) 3, 57, 65, 66–7, 74, 169, 175, 177,
190–1, 192, 194, 200, 204, 216, 251
accession 3, 67, 177–8, 182, 184–5, 191
Financial Action Task Force (FATF) on Money Laundering 3, 65, 91, 118,
140, 141, 170, 204, 216; see also money laundering
forestry 123–4, 230, 235 France 2, 64, 68, 70, 75, 268 free speech
46, 99, 131, 205, 215, 222, 233,
239, 256 freedom of information legislation 5, 30, 55,
57–61, 98–9, 100, 136, 196–7 exceptions 57–9,
149, 257; exclusions 59;
lack of 54, 70, 74, 136, 141, 161, 210, 215–16, 222, 232; slow
implementation 74, 153, 161, 215–16, 257; see also access to information
freedom of the press 44–5, 87, 112, 137, 172, 210–11, 239;
see also censorship; journalists; media
gender 295–7 Georgia 48, 165, 167, 169, 170, 172 Germany 45,
68–71, 74 Ghana 80, 215, 216, 220, 222, 223, 224, 225 governance 3, 118,
140, 144–5, 165–7, 215,
223, 227, 248, 251, 302–4, 306–9, 310–13; see also
private sector
health 150, 157, 167, 177, 221, 244, 289–90 heavily indebted poor
countries (HIPC) 96,
217, 228, 249 Honduras 92, 95, 96, 282 Hungary 179, 181, 182, 184, 186,
187, 314–5
India 10, 15–6, 26–7, 28, 30–1, 59, 80, 84–5,
153, 156, 157, 158, 160, 161, 162, 310–2
Indonesia 42, 140, 141, 142, 143, 144, 145, 147, 149–51, 312, 313
integrity pacts 137–8, 163 Inter-American Development Bank (IDB)
90, 92, 104, 105, 109, 317 International Monetary Fund (IMF) 61, 155,
179, 193, 217, 227, 228, 229, 232,
249–50 Internet 1, 11–12, 45, 112, 136, 141, 211, 232
see also e-government investment 37, 80, 82, 85, 105, 140, 142, 147,
162, 166–7, 174, 185, 198, 203, 211, 228
05 Global Corruption 27/11/02 3:16pm Page 324
Iran 109, 207, 208–9, 210 Ireland 65, 69, 321, 322 Italy 5, 13,
51, 64, 66, 70, 75, 322
Japan 59, 60, 128–30, 132, 133, 135, 136, 137, 138, 167, 268, 322
Jordan 45, 205–6, 208, 209, 210, 211 journalists 1, 21, 44, 45,
46, 54–5, 74, 75,
101, 187, 200, 225 corrupt 13, 44, 52–4, 151; harassment of
210, 222, 233, 258; murders of 5, 13, 45–8, 99, 104, 111–2,
161, 168, 175, 197, 222, 252; reprisals against 46, 101, 111–2, 138, 149,
161, 168, 175, 196–7, 222, 227; self-censorship 168, 172, 235; training
44, 54, 120, 125; see also media
judiciaries 2, 72, 95, 170, 184, 204, 205, 208–9, 223, 228, 238,
240, 250
Kazakhstan 38, 49, 172, 173, 174 Kenya 238, 239, 240, 241, 242, 245
kickbacks 68, 71, 107, 110, 130, 135, 156,
207, 224, 234
Latvia 178, 179, 180, 182, 184, 185, 187, 188, 278
Lebanon 204, 205, 206, 207, 210, 211, 212
Lesotho 73, 251, 252, 257 Liechtenstein 65, 72, 134 Lithuania 179, 181,
184, 185, 278, 314
Macedonia, former Yugoslav Republic of 191, 192, 196, 199, 285, 288
Madagascar 256, 269–70, 292–3 Malawi 57, 249, 252, 255, 256,
258 media 1, 14–15, 44, 149, 237, 237–8,
256–7 anti-corruption role 5, 9, 104, 111–2, 120,
132, 138, 199–200, 215, 245; concentration 44, 49–52, 75,
87; corruption in 51–4, 55; independence 9–13, 51, 138, 227;
ownership 5, 13, 21, 70, 75, 87, 131, 137, 210; repression 161, 172, 197,
210–11, 222, 232–3; restrictions 48–9, 125, 140–1,
172–3, 215, 235, 238, 245, 249, 256–7; sustainability 46–7;
see also censorship; freedom of the press; journalists
Mexico 19, 49, 90, 95, 98, 100, 271–2, 276, 282
mining 35–8, 42, 219
money laundering 4, 70, 72, 100, 116–8, 121–2, 154, 190,
198, 204, 241
control measures 3, 38, 70–2; legislation 77, 140, 141, 170, 192,
193, 204, 250; see also FATF; Wolfsberg Principles
Morocco 204, 207, 208, 209, 210, 211, 212, 269–70
Mozambique 5, 248, 250, 251, 252, 255
national integrity systems (NIS) 4, 122, 215 New Partnership for
AfricaÕs Development
(NEPAD) 79, 248, 249 New Zealand 118–9, 122–4, 321 Nicaragua
90, 92, 95, 282 Nigeria 3, 58, 216, 217, 219, 220, 222, 224,
231 non-governmental organisations (NGOs) 77,
125, 128, 135–6, 137–8, 140–1, 150–1, 163, 165,
175, 177, 187–8, 199–200, 212, 225
monitoring role 100, 157, 235, 258–9; see also civil society
oil 33–4, 36–8, 49, 58, 84, 88, 110, 174, 185, 205, 208,
215, 227, 228–9, 231, 233, 234–5, 244, 249–50, 251, 252
ombudsmen 15, 133, 144–5, 153, 255 organised crime 2, 4, 64, 65,
116–18, 121–2,
177, 178, 216 Organization for Economic Co-operation
and Development (OECD) 142, 178,
191, 320–2 Anti-Bribery Convention 1–2, 35, 65, 69,
73, 104, 122, 178, 266–7; see also FATF Organization of African
Unity (OAU) see
African Union Organization of American States (OAS)
91–2, 99 Inter-American Convention against
Corruption 104
Pakistan 153, 155, 156, 158, 159, 160, 161, 161, 162, 163, 273, 310, 312
Papua New Guinea (PNG) 54, 116, 118, 120, 122, 123–4, 124–5
Paraguay 106, 112, 282 Peru 5, 41, 99, 103, 105, 110, 274, 313
Philippines 3, 140–2, 144–5, 147, 149–51, 313 police 4, 95,
117, 119, 163, 171, 193, 218,
220, 224, 241, 242, 259, 270, 288,
315–16 traffic 95, 171, 208, 220, 242, 270, 295
Index 325
05 Global Corruption 27/11/02 3:16pm Page 325
political financing 14, 21, 51, 68–9, 70, 71, 77, 79–83,
133, 144, 160, 177, 180, 181–2, 253–5; see also campaign finance;
elections
political will 1–2, 3, 67–8, 172–4, 227, 238,
251–2
Portugal 69, 322 poverty 15–16, 96, 143, 157, 227 private sector
20, 64, 85, 88, 98, 122–4, 128,
145, 154, 159–62, 166–7, 174–5, 187, 209–11,
234–5, 237, 243, 244, 255–7, 266–8, 312
disclosure of information 33–42, 77, 210, 255; governance 64,
80–2, 147, 162, 174–5, 255–6
privatisation 70, 109–10, 122–3, 177, 185, 198, 215, 224,
256–7
procurement 71, 133, 141–2, 150, 177, 184–5, 193, 207, 218,
228, 243
public works see construction
records management 19, 21 Romania 46, 191, 192, 194, 195, 196, 197,
198, 278, 314 Russian Federation 54, 116, 165, 166–7, 170,
171, 172, 173, 174, 268, 278–81, 312 Rwanda 229, 234, 235, 238
Saudi Arabia 45, 210, 211, 212 Senegal 215, 217, 220, 221, 224,
269–70 September 11th 4, 65, 75, 86, 150, 153, 239
and money laundering 3, 64, 78, 204; and transparency 11–12, 45;
see also Ôwar against terrorismÕ
Singapore 16, 40, 135, 140–2, 144–5, 148–50, 152
Slovakia 178, 181, 183, 184, 185, 186, 278 Slovenia 178, 179, 181, 188,
278 soccer 110–11, 134, 135 South Africa 17, 271, 252–3,
255–6, 257, 258 South Korea 25–6, 30, 128, 129, 130, 133,
135, 136, 137, 138 Southern African Development Community
(SADC), anti-corruption protocol 250–1 Stability Pact
Anti-corruption Initiative
(SPAI) 190, 191–2, 196, 199, 200 Sweden 8, 18
Switzerland 70, 72, 74, 134
Taiwan 118, 128, 129, 130, 132, 136, 137, 138, 253
Tajikistan 166, 167
326 Global
Corruption Report 2003
Tanzania 229, 238, 240, 241, 243, 244 taxation 9, 25, 107, 118, 160,
231–2, 243,
315 telecommunications 70, 110, 177, 182, 224,
252 Thailand 57, 140, 141, 142, 144, 145, 147,
149, 150, 312 Togo 52, 222, 223, 310, 312 traffic police see police
trust 3, 5–6, 13–14, 21, 90, 103, 111, 129–30,
188, 278–81
Ukraine 165–6, 168, 172, 173 United Nations (UN) 61, 70, 95, 105,
179,
192, 197, 205, 216, 229, 238–9, 251, 306,
310, 313 United Nations Development Programme
(UNDP) 143, 166, 167, 179, 216, 232,
245 United States 3, 8, 14, 16–7, 39–40, 45, 51,
77–9, 83–4, 88, 91, 92, 104, 121, 167,
169, 216, 268, 322 anti-terrorism measures 11–2, 16–7, 77,
78, 86, 204; private sector 84–5, 266; see
also Enron United States Agency for International
Development (USAID) 105, 191, 196,
204 Uruguay 105, 273, 282–3
Venezuela 73, 105, 108, 112
wages 170, 184, 289–90, 292–3 Ôwar against terrorismÕ 4,
16–17, 21, 45, 64,
77, 86, 192, 239 whistleblowers 1, 13, 17, 84, 117, 135, 200
protection 21, 39, 70, 136, 138, 250, 301 Wolfsberg Principles 38; see
also money
laundering World Bank 5, 34, 49, 54, 61, 67, 84–5, 92,
96, 104, 105, 106, 108, 110, 141, 143, 155, 165–6, 167, 169, 179,
192, 193, 194, 197, 204, 210, 218–9, 227, 228, 229, 230, 232, 235, 245,
262, 302, 306, 307
disclosure policy 11, 57
Yugoslavia, Federal Republic of 190, 191, 192, 193, 196, 198, 199, 200,
285
Zambia 248, 249, 251, 252, 254, 256–7 Zimbabwe 13, 57, 248, 249,
251, 253–5, 256,
258–9
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Publications available from Transparency International
TI Source Book 2000 Confronting Corruption: The Elements of a National
Integrity System
Jeremy Pope, 2000 (3rd ed., completely revised and updated), 364 pp.,
ISBN 3-980 5657-8-5. The TI Source Book is an indispensable guide to corruption
and efforts to combat it. It has become a manual for anti- corruption
practitioners and guardians of good practice in government and, increasingly,
in the private sector. The first edition has been translated into more than 20
languages.
Combating Corruption: Building a National Integrity System (in Chinese)
The TI Source Book is now available in Chinese, translated by the Anti-Corruption
Research Centre at the Public Management School in Tsinghua University,
Beijing.
Combattre la corruption – enjeux et perspectives
Edited by Djilali Hadjadj, Editions Karthala, 2002, 360 pp., ISBN
2-84586-311-X. This guide to confronting corruption is an adaptation of the
leading anti-corruption reference work, the TI Source Book, to the
socio-political and legislative environment of francophone Africa.
05 Global Corruption 27/11/02 3:16pm Page 327
Global Corruption Report 2001
Edited by Robin Hodess, introduction by Peter Eigen, 314 pp., ISBN
3-935711-00-X. The inaugural Global Corruption Report offers the first annual,
systematic analysis of corruption across the world. The report includes
assessments of every region in the world and key topics of global importance.
It also brings together empirical findings from leading researchers on
different aspects of corruption. The full text is available on the website
www.globalcorruptionreport.org.
Corruption FightersÕ Tool Kit: Civil society experiences and emerging
strategies
In print and CD-ROM, published by Transparency International. The
Corruption FightersÕ Tool Kit, first produced as an international edition in
CD-ROM format in 2001, is a compendium of practical civil society
anti-corruption experiences described in concrete terms and accessible
language. It presents innovative anti-corruption tools developed and
implemented by TI national chapters and other civil society organisations from
around the world. Now available in print and CD-ROM.
TI Q
TIÕs quarterly newsletter, available in English, French and Spanish,
highlights recent corruption scandals as well as reforms and initiatives
worldwide to increase transparency and accountability. The newsletter also
reports on the work of TI national chapters around the globe.
TI Annual Report
The TI Annual Report, available in English, French and Spanish, includes
a summary of the most important anti- corruption events of the year, highlights
the work of TI national chapters and describes the internal development of the
global TI movement.
05 Global Corruption 27/11/02 3:16pm Page 328
A full list of details and prices is available at:
www.transparency.org/publications/index.html.
For more information on how to order TI publications, please contact:
Transparency International Press Department Otto-Suhr-Allee 97–99,
D-10585 Berlin, Germany
Tel: +49 30 343 8200, Fax: +49 30 3470 3912, ti@transparency.org
The 11th International Anti-Corruption Conference, to be held
25–28 May 2003 in Seoul, South Korea, will provide a unique forum for
information exchange, training, agenda setting and networking. Speakers are
expected to include such recognised international figures as UN Secretary-
General Kofi Annan and the president of South Korea.
For more information regarding the 11th IACC programme, registration,
accommodation or other useful tips including visa and travel information,
please visit the conference website at: www.11iacc.org.
Or contact:
Organizing Office for GF III and 11th IACC #1303, ASEM Tower, COEX,
Samsung-dong, Gangnam-gu Seoul 135-798, Republic of Korea Tel: 82 2 551-2972-8
Fax: 82 2 551 2988 E-mail: iacc2003@moj.go.kr
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