Professional Documents
Culture Documents
Corruption
The views expressed by the individual authors in this publication do not necessarily reflect those of the World Economic
Forum or all members of the Global Agenda Council on Corruption. The World Economic Forum and/or members of the
Global Agenda Council on Corruption undertake no obligation to publicly revise or update any statements contained herein,
whether as a result of new information, future events or otherwise, and they will under no circumstances be held liable for
any loss or damage arising in connection with the use of the information in this publication.
REF: 151109
Contents
Introductory remarks 10
By Cobus de Swardt and Mark Pieth
3
Today’s international anti-corruption governance landscape: its nature and where it should be 12
heading
By Tareq Bouchuiguir and Michael Pedersen
2. Recommendations to Business 17
How companies can best empower a chief ethics and compliance officer in preventing, detecting 20
and sanctioning corruption
By Keith T. Darcy
How business organizations can best encourage and support companies in fighting corruption 24
By François Vincke
3. Recommendations to Governments 27
Parliamentary oversight of the electoral process; political campaign financing; who can mind the 32
store?
By John G. Williams
What can the OECD Anti-Corruption Convention contribute to reducing commercial corruption? 34
By Mark Pieth
INTERPOL calls on the business community to support the world’s first International Anti- 36
Corruption Academy
By Ronald K. Noble
How civil society can best recognize public and private sector players that demonstrate 40
leadership in fighting corruption
By Cobus de Swardt and Peter Eigen
Businesses and multilateral development banks – a key partnership in the fight against 46
corruption
By Ngozi N. Okonjo-Iweala
Global Agenda Council on Corruption
5
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption
1. Introduction
Global Agenda Council on Corruption
The World Economic Forum’s Global Agenda Council on Corruption (GAC on Corruption) is
comprised of leaders from across regions and stakeholder groups. Drawing on the World
Economic Forum platform and convening power, the Council is uniquely positioned to shape the
global agenda on corruption.
Co-Chairs:
Mark Pieth, Chairman, Working Group on Bribery, Organisation for Economic Co-operation and
Development (OECD), Paris
Cobus de Swardt, Managing Director, Transparency International, Germany
*Alan Boeckmann, Chairman and Chief Executive Officer, Fluor Corporation, USA
Keith T. Darcy, Executive Director, Ethics & Compliance Officers Association (ECOA), USA
**Hussain Dawood, Chairman, Dawood Group, Pakistan
*Peter Eigen, Chair, Extractive Industries Transparency Initiative (EITI), Germany
**Jorge Hage Sobrinho, Minister of State, Office of the Comptroller General of Brazil (CGU),
Brazil
*Mo Ibrahim, Chairman, Mo Ibrahim Foundation, United Kingdom
José Miguel Insulza, Secretary-General, Organization of American States, Washington DC
*Eva Joly, Special Adviser, Norwegian Agency for Development Cooperation, Norway
*Donald Kaberuka, President, African Development Bank (ADB), Tunis
*Georg Kell, Executive Director, Global Compact Office, United Nations, New York
* Irene Khan, Secretary-General, Amnesty International, United Kingdom
**Hassan Marican, President and Chief Executive Officer, PETRONAS (Petroliam Nasional),
Malaysia
*Luis A. Moreno, President, Inter-American Development Bank, Washington DC
William T. Loris, Director-General, International Development Law Organization, Italy
Ronald K. Noble, Secretary-General, International Criminal Police Organization (Interpol), Lyon
Ngozi Okonjo-Iweala, Managing Director, World Bank, Washington DC
Robert I. Rotberg, Director, Program on Intrastate Conflict, John F. Kennedy School, Harvard,
USA
David T. Seaton, Senior Group President, Fluor Corporation, USA
**Peter Y. Solmssen, Executive Vice-President, General Counsel and Member of the Managing
Board, Siemens, Germany
François Vincke, Chair, Anti-Corruption Commission, International Chamber of Commerce
(ICC), Paris
Dimitri Vlassis, Chief, Corruption and Economic Crime Section, United Nations Office on Drugs
and Crime (UNODC), Vienna
John G. Williams, Chief Executive Officer, Global Organization of Parliamentarians Against
Corruption (GOPAC), Morinville
7
1 trillion paid in bribes each year. Because of corrupt practices, half of each year’s
US$ 50 billion in development aid does not reach its intended recipients.
Dimensions
• Nature: Perceptions on the nature of corruption vary. What different forms of
corruption exist and what are their underlying causes and drivers?
• Cultural contexts: The nature and magnitude of corruption differ across
cultures. Actions that are perceived corrupt in some cultures might be accepted
or even expected in other cultures. What is acknowledged as good ethical
conduct within and across cultures?
• Metrics: Corruption can hardly be measured. Most statistics on the issue are
based on surveyed perceptions. What is or should be measured, and how?
How can progress be determined? Is there a correlation between levels of good
governance and economic growth/foreign direct investments? And between a
company’s systems and controls, and its financial performance?
• Role of businesses: Companies are both part of the problem and its solution.
An increasing number of companies are demonstrating leadership in fighting
corruption by implementing anti-corruption programmes and adhering to various
initiatives that address the supply side of corruption at the global, regional or
industry levels. What best practices exist? What is the business case? How can
more companies be incentivized to fight corruption? How can the prisoner’s
dilemma be overcome? How can good ethical business conduct be turned into
a competitive business advantage?
• Role of governments: The international legal framework has been
strengthened during recent years with the adoption of the OECD and UN
conventions on corruption. But most governments must still fully implement all
provisions of these conventions and no supranational enforcement mechanisms
are in place, undermining their effectiveness. Most governments also have
passed anti-corruption legislation but few effectively enforce it. Why is existing
legislation often not enforced? What are the best practices? Which central
players can ensure effective enforcement, and how can they be incentivized to
demonstrate leadership?
• Role of civil society: Civil society organizations, including the media and
academia, play a key role in incentivizing businesses and governments to fight
corruption. Who are the central players? What are their best practices? How
can they be supported? How can they make use of new means of increasing
transparency, such as the Internet?
• Collective solutions: The most effective solutions to fight corruption are often
collective in nature. Such initiatives focus on public and/or private sector
solutions at a country, regional and/or global level, and/or at an industry, cross-
industry or multistakeholder level. What initiatives exist? What are the best
practices? How can initiatives be supported? How should they work together?
How should initiatives be held accountable?
Global Agenda Council on Corruption
The views expressed here emerged from the council meeting and do not
necessarily reflect the views of the World Economic Forum or those of all the
council members.
1) What is the state of the world on this issue and how is the economic crisis
impacting it?
8
The Global Agenda Council on Corruption expressed alarm at the slow pace of
the fight against corruption and highlighted the need for sustained and strong
leadership in this fight.
The Global Agenda Council on Corruption agreed on the crucial importance of:
• building public-private partnerships to strengthen anti-corruption initiatives
• creating and strengthening incentives which will encourage the fight against
corruption by all stakeholders
• grounding anti-corruption measures in accountability established through
democratic empowerment of the public
• establishing national strategies and promoting measures for combating
corruption which can be implemented and robust, and take into account the
state of development of the jurisdiction concerned
• ensuring that the current financial crisis does not impede progress in the fight
against corruption.
2) What should be done to improve the state of the world on this issue, and by
whom?
Open letter from the World Economic Forum Global Agenda Council on
Corruption
9
In the context of the World Economic Forum Annual Meeting 2009, please allow
us to bring to your attention the recommendations made by the World Economic
Forum Global Agenda Council on Corruption (GAC Corruption) at the Forum’s
recent Summit on the Global Agenda in Dubai.
Please find below a list of GAC Corruption members. You are welcome to contact
any one of the members during the Annual Meeting 2009 or afterwards. Should
you wish to communicate with the council as a whole, please contact Michael
Pedersen, Council Manager, at Michael.Pedersen@weforum.org.
Best regards,
Introductory remarks
“All that is necessary for the triumph of evil is for good men to do nothing.”
10
Corruption, the abuse of entrusted power for private gain, is the single greatest
obstacle to economic and social development around the world. It distorts
markets, stifles economic growth and sustainable development, debases
democracy and undermines the rule of law. It robs local populations, particularly in
developing countries, of critically needed resources. Estimates show that
corruption’s price tag equals more than 5% of global GDP (US$ 2.6 trillion) with
over US$ 1 trillion paid in bribes each year.
The cost of corruption is undeniable, and the backdrop of the global economic
crisis provides a devastating impetus to end this plague in all its forms. Now is the
time for us to unite our expertise and capabilities. We must look ahead to forge a
future free of corruption through individual and concerted action, and by
recognizing and incentivizing leadership.
In its first year, the GAC on Corruption mainly focused on two overarching
recommendations that were shared in an open letter to participants in the World
Economic Forum Annual Meeting 2009 in Davos. Governments participating in
World Economic Forum activities were urged to demonstrate strong leadership by
ratifying and fully implementing the United Nations Convention against Corruption,
the OECD Convention on Corruption and relevant regional anti-corruption
conventions. Corporate Members of the World Economic Forum were called on to
demonstrate strong leadership by not only becoming signatories to the Partnering
Against Corruption Initiative (PACI), but also fully implementing the principles of the
initiative.
Each sector must also develop its own strategies for approaching the issue of corruption
within its internal structures and scope of operations. The GAC on Corruption members
put forward recommendations that respond to the specific needs and the areas
11
particularly vulnerable to corruption within each sector.
Business
• Ensure that CEOs adopt, promulgate and enforce strong codes of ethical behaviour
based on a philosophy of zero tolerance, for example by devising and implementing an
effective anti-corruption programme along the lines of the World Economic Forum
Partnering Against Corruption Initiative (PACI) Principles
• Incorporate anti-corruption standards as well as a range of other ethics and
compliance standards into risk management programmes
• Ensure the empowerment of chief ethics and compliance officers in preventing,
detecting and sanctioning corruption
• Seek industry specific solutions to effectively overcome the prisoner’s dilemma and
competitive disadvantages
Government
Civil society
• Work alongside businesses to address bribery and help instil transparency and
accountability into the very core of their operations
• Provide independent research on where reform is needed and how well governments
and businesses are performing
As business, government and civil society work to realize these recommendations, they
must also seek to build bridges and partnerships. Corruption is a collective problem and
lasting solutions must be collectively forged. The GAC on Corruption members spotlight
the achievements that collaborations have already accomplished, for example the power
unlocked by multilateral development banks in forming effective partnerships with
companies to promote anti-corruption measures. Similarly, the Extractive Industries
Transparency Initiative (EITI) and the International Anti-Corruption Academy serve as just
two inspirational cases of effective, existing public-private partnerships.
It is our hope that the ideas in this publication act as a catalyst to change traditional
mindsets and to elevate not only the discussion, but also the dynamism of the fight
against corruption.
Global Agenda Council on Corruption
* The views expressed in this article are the views of the authors and do not
12
Abstract
1
United Nations Convention against Corruption: http://www.unodc.org/unodc/en/treaties/CAC/index.html
2
Inter-American Convention against Corruption: http://www.oas.org/juridico/english/Treaties/b-58.html
Global Agenda Council on Corruption
The Council of Europe Criminal Law Convention (1998)3 and the Council of
Europe Civil Law Convention (2003)4
– Adopted by governments that are members of the Council of Europe
– Broad definition of corruption
– A common monitoring mechanism in place, GRECO, the Group of States
against Corruption
– GRECO monitors the implementation of the conventions through mutual
evaluation. It provides recommendations to governments perceived to not be
complying with the provisions laid out in the conventions
13
The African Union Convention on Preventing and Combating Corruption
(2003)5
– The convention has been ratified by 53 member states of the African Union
– Broad definition of corruption
– The non-discretionary provisions cover bribery of a public official
– The monitoring mechanism in place takes the form of an Advisory Board,
monitoring the progress of each state in complying with the convention. State
parties are required to report their progress to the Advisory Board annually
– Calls on state parties to ensure the participation of civil society in their
monitoring process
3
Council of Europe Criminal Law Convention on Corruption: ttp://conventions.coe.int/Treaty/EN/Treaties/Html/173.htm
4
Council of Europe Civil Law Convention on Corruption http://conventions.coe.int/Treaty/EN/treaties/html/174.htm
5
The African Union Convention on Preventing and Combating Corruption: http://www.africa-
union.org/Official_documents/Treaties_%20Conventions_%20Protocols/Convention%20on%20Combating%20Corruption.pdf
6
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
http://www.oecd.org/document/21/0,3343,en_2649_34859_2017813_1_1_1_1,00.html
7
Combating Extortion and Bribery: ICC Rules of Conduct and Recommendations:
http://www.iccwbo.org/uploadedFiles/ICC/policy/anticorruption/Statements/ICC_Rules_of_Conduct_and_Recommendations%
20_2005%20Revision.pdf
Global Agenda Council on Corruption
8
United Nations Global Compact; Principle 10: "Businesses should work against corruption in all its forms, including extortion and
bribery." http://www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/principle10.html
9
Transparency International: Business Principles for Countering Bribery:
http://www.transparency.org/global_priorities/private_sector/business_principles
10
World Economic Forum Partnering Against Corruption Initiative: http://www.weforum.org/en/initiatives/paci/index.htm
Global Agenda Council on Corruption
Where Should Today’s International Anti-Corruption Governance
Landscape Be Heading?
15
Given the current nature of the landscape, the following changes would
substantially increase the effective implementation of international and regional
anti-corruption conventions as well as international, self-regulatory private sector
anti-corruption initiatives:
• Aligning measures in general and defining the issue of corruption more broadly
in particular (beyond bribes to public officials)
• Making all elements of all measures non-discretionary
• Getting all relevant players to endorse relevant measures, governments as well
as businesses
• Establishing review mechanisms with teeth, i.e. the possibility of imposing
sanctions on laggards
• Devising rewards for governments and companies demonstrating leadership
• Putting in place strong global and regional supranational enforcement
mechanisms, i.e. a specific International Corruption Court or extending the
scope of the International Criminal Court
2. Recommendations to Business
Global Agenda Council on Corruption
Alan Boeckmann, Chairman and Chief Executive Officer, Fluor Corporation, USA
Abstract
With bribery and other forms of global corruption placing CEOs and their
companies increasingly at risk, CEOs should create a culture of doing the right
thing, develop a comprehensive ethics and integrity programme and consider
18
While managing risk has always been a top agenda item for business leaders,
today’s CEOs face an extraordinary array of challenges in an environment of
intense public and legal scrutiny. They are increasingly accountable not only for
financial performance but also for lapses in ethics or judgement beyond their
immediate control. There is no better example than global corruption, and the
laws and codes of international conduct that constitute today’s serious effort to
discourage such activity.
Enforcement in the United States under such laws as the Foreign Corrupt
Practices Act of 1977 has risen sharply. The Department of Justice and the
Securities and Exchange Commission have become increasingly willing to charge
individuals. Under federal sentencing guidelines, companies with effective anti-
corruption programmes that cooperate with investigators and proceed to identify,
correct and report violations are much better off than those that ignore such risks
or give only lip service to anti-corruption initiatives.
First, and most important, the CEO must lend his or her imprimatur to a zero-
tolerance policy against corruption. She or he must lead by creating a culture
where everyone knows that it is okay to do the right thing, even when that might
mean losing money. Fluor has walked away from multimillion dollar projects in
countries where corruption is so institutionalized that there is no other way to
work. We believe that the sacrifice of today’s missed business opportunity is well
worth the long-term benefits of creating a more level playing field. And, it is this
type of leadership behaviour that helps employees feel safe in making equally
“right” decisions in the face of corruption. Above all, those of us at the top of the
organization must set an appropriate example.
Third, and finally, CEOs can gain from participation in sector, national or global
initiatives to end or at least minimize the scourge of corruption. Having seen first-
hand the damage that corruption can do, I was pleased to help establish the
World Economic Forum’s Partnering Against Corruption Initiative (PACI). Working
collaboratively, we created a multinational task force of participating companies
from Europe, Asia, the Middle East and North America, and developed and
adopted benchmark “Business Principles” that address ethical conduct regarding
bribes, facilitation payments, political and charitable contributions as well as gifts
and sponsorships.
Global Agenda Council on Corruption
Since its formation in 2003, more than 140 companies from the global energy,
engineering and construction, mining and metals, professional services, food and
beverage, chemicals, consumer goods, logistics and transport, insurance and
healthcare industries have signed on to the PACI. In so doing, they have agreed to
maintain a zero-tolerance policy towards bribery and corruption and to implement
a broad-based anti-corruption programme to guide the behaviour of their
employees. The PACI provides them with a useful array of services such as
training and assessment materials. It also collaborates with organizations such as
Transparency International, the World Bank and regional development banks to
19
forge effective anti-corruption measures.
References
http://www.weforum.org/en/initiatives/paci/index.htm
http://www.fluor.com/sustainability/ethics_compliance/Pages/the_code.aspx
http://www.transparency.org/
Global Agenda Council on Corruption
Abstract
20
The most lethal threats to any organization are misconduct within its own walls,
how it engages with the public and corruption. Creating strong anti-corruption
initiatives with the firm, chief ethics and compliance officers (CECOs) need to
embed a system of values and philosophy of life into the culture of the
organization. The absence of it, especially in these frightening times, can only lead
to anomie, cynicism, despair and continued corruption. It is the CECO that must
make moral awareness happen. When the values and behaviours are at stake, the
CECO is the principal architect of the corporate conscience and the one most
responsible for the moral agenda.
First, the chief ethics and compliance officer (CECO) must be a “chief”, an
executive level officer reporting to the board of directors and involved in the
strategic and policy decisions of the firm. It is not likely that a lower level employee
would have the clout to intervene at the executive level, let alone be privy to
decisions being made in the C suite. The CECO must be part of the company’s
power structure to be effective.
Third, CECOs should have a direct line and unfiltered reporting relationship to the
board.
Fourth, Directors must allow time on the board agenda for periodic progress
reports from the CECO. Directors should also ask the CECO during every closed
executive session – or even over coffee or at lunch – “What are you personally
worried about or think we should know?”
Fifth, CECOs must have adequate resources to act as an agent of the governing
authority in addressing issues of corruption.
Eighth, management and CECOs must regularly assess corruption risks for
likelihood (probability); materiality (significance); mitigation factors.
Global Agenda Council on Corruption
Ninth, CECOs must work closely with auditing to monitor high and medium risk
areas.
Clearly, the most lethal threats to any organization are misconduct within its own
walls, how it engages with the public and corruption. Reputation risk today is
clearly as great as financial risk; it can destroy brands and threaten the very
21
existence of the franchise. In addition to creating strong anti-corruption initiatives
with the firm, CECOs need to embed a system of values and philosophy of life
into the culture of the organization. The absence of it, especially in these
frightening times, can only lead to anomie, cynicism, despair and continued
corruption. It is the CECO that must make moral awareness happen. When the
values and behaviours are at stake, the CECO is the principal architect of the
corporate conscience and the one most responsible for the moral agenda. This
cannot happen without the strong support and involvement of the board of
directors.
Global Agenda Council on Corruption
Abstract
behaviour throughout the organization. Employees and third parties must be made
aware of acceptable behaviour and taught what to do if they encounter it.
At Fluor, the foundation includes a set of underlying core values and a culture of
ethical behaviour. Integrity has been one of Fluor’s four enduring values (the others
being safety, teamwork and excellence) throughout our nearly 100-year history.
Today, we have a comprehensive Fluor Code of Business Conduct and Ethics. It
includes topics from financial controls and conflicts of interest to doing business
globally and to health, safety and the environment. Messages are simple and
direct: “If you know it’s wrong, don’t do it”; “If in doubt, ask”; and “Looking the
other way is not acceptable”.
Four, all salaried employees must certify each year that they understand and
accept your code of business conduct and ethics. Strongly encourage employees
to report potential violations, first to their manager or supervisor, and then if
necessary to experts in such areas as Corporate Security, Human Resources,
Legal Services, Internal Audit, HSE or Corporate Compliance. For those not
comfortable with these avenues, establish a hotline operated by an independent
third party.
Global Agenda Council on Corruption
Five, seek the leverage that results from making anti-corruption everyone’s
responsibility. Be on constant lookout for “red flags”, such as the statement:
“That’s just how it’s done here.” “No,” we reply. “That is not how it’s done. If we’re
going to do business, we’ve got to do it ethically.”
23
constructed. While much has been done by governments and NGOs to fight
corruption, global business must step up and get involved. I believe we have a
real opportunity to make a meaningful and positive impact.
References
http://www.weforum.org/en/initiatives/paci/index.htm
http://www.fluor.com/sustainability/ethics_compliance/Pages/the_code.aspx
http://www.transparency.org/
Global Agenda Council on Corruption
Abstract
1. Introduction
In more than 30 years of anti-corruption in a global business organization,
successes and setbacks have been experienced. One can learn from both. What
can reasonably be expected in the future? What can be recommended on such a
basis?
2. Achievements
Launching of anti-corruption recommendations for business in 1977
• Rules and recommendations, without requiring signing in or individual adhesion
• Recommendation to adopt a corporate code of conduct, based on the concept
of self-regulation
• Creation of an expert panel, to which extortion (attempts) may/should be
reported
1977-1994
• Back to “business as usual”
• (Almost) no files are reviewed by the expert panel
• Some large companies (also outside the US) start with codes, but scholars
express scepticism about the implementation of the rules and the codes
1994-2003
• Rules revamped in 1995: condemnation of all corruptive practices, based on
business case for anti-corruption; companies also to have integrity programmes;
still no requirement to sign in or to show individual adhesion
• Expert panel, which had become an embarrassment, disappears
• Two first editions of anti-corruption handbook
• Building contacts with international public organizations and full endorsement of
OECD instruments
2003-now
• Third review of rules and handbook; handbook recognized as useful tool but
sold in small quantities
• UN Convention against Corruption welcomed by business and seen as a
promise of a level playing field
• Proposal for reporting extortion (attempts) to ICC Commercial Crime Services
fails because of lack of interest of business
• Proposed cooperation with one or more audit firms to “monitor” progress by
companies not accepted
• Guidelines on whistle-blowing issued; guidelines on intermediaries in the
making; guidelines well accepted
Global Agenda Council on Corruption
• Advocacy with international public organizations on certain issues (i.e. private-
to-private corruption)
• Cooperation on selected issues with UN Global Compact, World Economic
Forum Partnering Against Corruption Initiative and Transparency International
(i.e. RESIST, Resisting Extortions and Solicitations in International Transactions)
3. Lessons learned
It is impossible to go back to “business as usual”, even if there is huge pressure
because of the present crisis*. Anti-corruption awareness is such that anti-
25
corruption has become part and parcel of the level playing field policy of
business organizations.
SMEs continue to be a headache. Certain believe that, due to their size, they
don’t have to comply to the same extent as big companies. Business
organizations do not have convincing SME policies.
Companies express desire to receive explicit advice (and not general expressions
of intent) on difficult and sensitive issues such as:
• whistle-blowing***
• hiring, renewing and remunerating intermediaries (what kind of due diligence is
required for hiring an intermediary and at what level should their fees be?)
• facilitation payments or zero tolerance****
Companies also want to have readily usable material for training their personnel.
This will probably be the main use for RESIST.
* ICC has launched in May an enquiry (ICC-IFO) containing i.e. a question asking if business is going to
increase or decrease anti-corruption efforts during the crisis
** See Deloitte, “Fortifying Anti-Corruption in Today’s Corporation, Survey Conducted by the Economist
Intelligence on behalf of Deloitte”, on the question ‘From which of the following sources would most
likely lead to changes in your organisation’s anti-corruption programme?”, 18 % of the respondents
answered ‘Advice from outside organisations TI, WEF/PACI, UNGC and ICC’
*** The idea of having Guidelines on Whistle-blowing did not come from the central organisation but
from ICC France.
3. Recommendations to Governments
Global Agenda Council on Corruption
Abstract
The improper use of public office for private gain still motivates most corrupt
practices by national and regional politicians. In the 20th century world, however,
28
corruption also facilitates major illicit people, weapons and drug trafficking
activities. It also, worryingly, makes possible the potential spread of terrorism and
the proliferation of nuclear fuels and devices. This new transnational character of
modern corruption, and its ability to undermine global security, needs to be
recognized. The only antidote is strengthened governance, based on committed
national leadership, throughout the developed and developing worlds.
Until avarice and ambition cease to be human traits, corruption will continue to
flourish. Self-interest dictates the using and granting of favours. Merit will
determine outcomes and advancement only in a minority of nations, and the
riptide of corruption – even in the most abstemious nations and societies – always
exists as an undertow to be resisted. Indeed, in many nations, obtaining even
rightful entitlements in a timely fashion, or at all, is characteristically subject to
inducement. Almost everywhere, and from time immemorial, there is a
presumption that the most desirable outcomes are secured through illicitly
pressed influence or hard-bought gains.
Corruption is common everywhere in the early 21st century and almost no nations
and no collections of leadership are immune to the temptations of corruption. We
know more than ever before about the mechanisms and impacts of corruption.
We also know that corrupt practices are more egregious and more obscenely
excessive in the world’s newer nations. But what is truly novel in this century is
that corruption is much more a threat to world order than ever in the past.
Old-fashioned forms of corruption persist alongside and facilitate the spread of the
newer, more potentially destructive modes of corruption. Indeed, as great as are
the wages of sin within national borders and national governments – and almost
nothing has diminished those rewards – they are just as large if not much greater
across borders. There has been a quantum leap in all forms of trafficking,
particularly that of humans (mostly women and children, and some male slaves)
29
and in drugs, with new beachheads for South American-derived cocaine and
marijuana in Africa and Afghan, heroin in Asia and the ex-Soviet hinterland. Light
weapons and small arms are smuggled along some of the same routes, and
nuclear and other WMD smugglers often coexist with human and drug traffickers
– all varieties encouraged by open or corrupt borders and officials at all levels.
Some of the criminalized states specialize in such activities. Other nation states,
such as North Korea, depend on the open sores of corruption to accrue foreign
exchange.
For all these reasons, the battle against corruption is more urgent than ever
before. Global security depends first on being aware of the new threats to world
peace and the transnational combination of corruption and organized crime, and,
second, on reducing and containing corrupt practice everywhere. The usual
nostrums are still important: improved surveillance; enhanced accountability and
publicity; better policing; stepped-up forms of punishment; and new multinational
agreements. But strengthened leadership and reformed governance are also
critical in the battle against the old as well as the new forms of this ancient and
continuing human disease. Indeed, closer attention to better national governance
is the best antidote to the spread of transnational corruption.
Reference
Robert I. Rotberg (ed.), Corruption, Global Security, and World Order (Brookings,
2009).
Global Agenda Council on Corruption
Abstract
The idea of granting a private right of action aimed at establishing liability for acts,
which are also the subject to public jurisdiction, is not new. As early as the 14th
century, English courts allowed so called qui tam* actions under which a private
party could be heard on matters which were of alleged interest to the Crown.
Where the court ruled in favour of the party who initiated the action (the “relater”),
the relater was entitled to a share of the penalties imposed on the defendant.
Qui tam actions have found their way into a number of US statutes, including the
US False Claims Act (“FCA”), one of the most important US federal anti-fraud and
anti-corruption statutes. The FCA criminalizes the presentation of fraudulent
invoices by suppliers to the government. Aaron R. Petty writes in his note, “How
Qui Tam Actions Could Fight Public Corruption”** that in total, “over US$ 15 billion
was recovered under the FCA between the 1986 amendments and the end of
fiscal year 2005, including US$ 9.6 billion recovered under the qui tam
provisions…the total recovery by relaters in that period was over US$ 1.6 billion.”
Of the two private action options, the inclusion of qui tam provisions in relevant
anti-corruption legislation and regulations will require a greater amount of effort.
Enacting legislation that challenges powerful interests and the status quo is never
easy, so a concerted outreach and education effort is necessary to convince
Global Agenda Council on Corruption
affected parties, including the general public, to apply pressure on legislators.
NGOs can play a significant role in raising the visibility of this issue and initiating
debate, but a focus on civil action, my second proposal, will also play an
important role in improving the impetus for reform.
Most legal systems would already allow the victims of corruption or other crimes
to seek civil remedies for damages they suffer at the hands of criminals. Every
poor mother who is forced to pay a hospital administrator a bribe to secure
medical treatment of her sick child has a right to seek the return of that payment.
31
Every firm that is unfairly excluded from a public procurement has the right to
damages. The fight against corruption could be substantially strengthened if the
victims of corruption were to systematically assert those rights in civil cases where
the burden of proof is lower than in criminal actions.
The right of private parties to maintain private actions for damages arising out of
corruption in national courts has been reinforced at the international level. The
Council of Europe’s Civil Law Convention on Corruption and the UN Convention
against Corruption are two examples. These are generally aimed at cases
involving businesses where damages can be in the millions. However, to deal with
corruption at the national or local level, and even for petty corruption, the use of
existing national law will normally suffice. The challenge here is to overcome the
victims’ fear of retribution.
As a first step, national anti-corruption bodies, citizens groups, NGOs, legal aid
providers and chambers of commerce must undertake a joint review of the local
laws to determine the best way for the victims of corruption to take civil legal
action against perpetrators. This must include relief from penalties imposed on the
payer of a bribe and transferral of those damages to the corrupt official.
As the victims of corruption achieve increasing success with their private actions,
prosecutors would have fewer opportunities to refrain from pursuing wrongdoers
and legislators might be more willing to consider qui tam approaches. Hopefully,
as the tsunami begins to surge, we will witness a virtuous perfect storm, where
the general public, the victims of corruption and the public authorities act together
to overwhelm the fear and helplessness upon which corruption thrives.
* The phrase qui tam comes from the Latin, “qui tam pro domino rege quam pro
se ipso in hac parte sequitur,” which translates as “who pursues this action on our
Lord the King’s behalf as well as his own.”
** 39 U. Mich. L. J. Reform 851
Global Agenda Council on Corruption
Abstract
The governing party or coalition with the majority of members in parliament has a
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vested interest in ensuring its own future and continued dominance of the political
landscape. Therefore it will use that majority to protect its position. Yet, it is
parliament that has the constitutional authority to pass legislation governing
political parties and their financing, so how does one solve the conundrum?
Openness, transparency, an informed electorate, vigorous debate, an independent
parliament, all parts of a functioning democracy, are by far the best ways to
ensure balance in political party finance.
It is trite to say that parliaments, as the representatives of the people, are the best
places to ensure that political party financing is fair to all. The governing party or
coalition with the majority of members in parliament has a vested interest in
ensuring its own future and continued dominance of the political landscape.
Therefore, it will use that majority to protect its position. Yet, it is parliament that
has the constitutional authority to pass legislation governing political parties and
their financing. How can this conundrum be solved?
Like most other political problems, this situation cannot be solved overnight, but
prevention is much better than cure. Parliament is not the only institution that has
the capacity to exercise accountability in a country. Civil society and an
independent media can also exert significant accountability in a democratic nation.
These two pillars of accountability in a democracy share the stage with political
parties as the communication links between government/parliament and society at
large.
The general concept of fairness sits well with society at large. Society wants
political choice at elections and equal opportunity for the party and candidates of
their choice. In addition to fair and honest elections, this means a generally level
playing field for the parties and candidates.
In addition to the normal rules regarding funds raised and spent during an
election, “off balance sheet” items can also seriously affect the fairness of
elections. In countries where democracy is weak, the most common is dominance
of the media by the governing party and a biased presentation of party and
election coverage. There is no dollar cost attached to this kind of political finance.
When this problem exists, it is exacerbated by the lack of fair debate of the issues
presented to the public at the election. Candidates and the policies of the ruling
party are feted and lauded while other candidates and their issues are sidelined or
ignored. On a more subtle basis is a preferential bias in the media for parties and
candidates of their choice. The media have tremendous influence over public
opinion and need to be cognizant of their responsibilities and be accountable for
them.
The other off balance sheet item is third-party financing of issues that are topical
in an election but not central to it. There is the argument that free speech should
not be restricted such that multimillion dollar campaigns to affect the outcome of
Global Agenda Council on Corruption
an election by supporting or condemning a candidate’s stance on a particular
issue are allowed. But free speech does not need a megaphone, and it is not free
and certainly not fair if influential lobby groups use it to affect the outcome of an
election.
With all the vested interests at play and the stakes exceedingly high, i.e. the
winner governs the country, the first rule of democracy comes into play: get
everyone engaged. Public debate informs the public. Their capacity to hold their
representatives accountable is the strongest influence on parliament and the best
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motivator for parliamentarians to ensure that campaign financing is in the best
interests of the public. Therefore, it behoves parliament, as the institution that
represents the people and ensures their well-being is served by government, to
enact legislation that provides for free and FAIR elections.
3) Requiring that all parties and candidates file audited reports with the
commission on the sources of all election financing in a standard format
4) Requiring that all parties and candidates file audited reports with the
commission on all campaign spending in a standard format
6) Through access to information, provide real opportunity for media, civil society
and citizens at large to obtain information on election financing
Global Agenda Council on Corruption
Abstract
34
In 1997, the OECD enacted both a Convention (on criminal law) and a Council
Recommendation (on non-criminal issues) to combat corruption in international
business relations. Although it is narrowly focused on the supply side of bribery, it
is probably one of the most effective anti-corruption instruments currently in place,
in particular because of its strict provision to monitor government and corporate
implementation and application efforts.
One of the key features of the OECD anti-bribery approach is its particular
combination of treaty law and soft law. Additionally, the OECD Working Group on
Bribery monitors the implementation and application of its instruments in a
rigorous peer review process. Regular discussions on ongoing cases as well as
country surveys have motivated member states to upgrade their anti-corruption
systems. In particular situations, the Working Group has requested countries to
report on case-related work (e.g. the ongoing procedures on companies like
Siemens, BAE, Halliburton or Total). Although the approach only covers part of the
problem of commercial bribery (the supply side as well as certain abuses of
financial centres), it is probably the most stringent of initiatives in force to date.
Nevertheless, there remains a lot to do; in several jurisdictions substantial legal
deficits (e.g. insufficient corporate liability) have been identified and other countries
find it difficult to process even blatant bribery cases. Finally, even where the laws
are up to standard, greater efforts are frequently required to raise public and
private awareness. The intended monitoring role of the OECD Working Group is to
remind countries in an impartial manner of their international obligations.
One of the main effects of the OECD’s work on corruption has been to motivate
corporations worldwide – be it directly or by raising legal risk – to upgrade their
compliance systems and to live up to the standards to prevent law enforcement
action. Thereby, public sector work dovetails with the anti-corruption efforts of the
private sector.
35
– Companies may want to cooperate in industry specific groups to further focus
on the particular problems of a sector.
References
– OECD Policy Brief, Fighting Bribery in International Business Deals, September
2008
– OECD Working Group on Bribery, Annual Report, Paris 2007
– Mark Pieth/Lucinda A. Low/Peter J. Cullen, The OECD Convention on Bribery,
A Commentary, Cambridge 2007
Global Agenda Council on Corruption
Abstract
Corruption poses one of the greatest threats to political, social and economic
stability in the world today. It is also one of the most vexing challenges for
governments, law enforcement and businesses in both developed and developing
countries to eliminate.
INTERPOL knows that we can win over corruption only if we deploy the
indispensable human component with the tools and knowledge required to defeat
corruption in commerce, the administration of justice and the machinery of civil
government.
That is why INTERPOL, in partnership with the government of Austria and the
United Nations Office on Drugs and Crime (UNODC), moved to create the world’s
first International Anti-Corruption Academy (IACA) to educate and inspire a new
generation of law enforcement officers, government officials and business
professionals to fight corruption in all of its forms.
We are leading this effort jointly because virtually every survey taken in high-
corruption countries identifies police corruption as one of the top three most
prevalent types of dishonesty, because law enforcement officers are the ones
called in to investigate claims of corruption, and because the UNODC is
responsible for overseeing the implementation of the United Nations Convention
against Corruption.
Set to open in Vienna in 2010, IACA will meet this overwhelming need in several
important ways:
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educators and others, the IACA approach will address all types of corruption with
every available training tool.
If we take these steps and see them through, we will reduce corruption by
teaching all how best to prevent, investigate and prosecute it. With the business
sector at the table, we can ignite a dialogue and create partnerships that will lead
to notable progress in transparency and accountability, thereby making our
citizens safer, our governments stronger and our businesses healthier.
In the end, we will overcome the most pervasive and dangerous aspect of
corruption: the belief that nothing can be done to stop it.
Global Agenda Council on Corruption
39
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption
How civil society can best recognize public and private sector
players that demonstrate leadership in fighting corruption
Peter Eigen, Chair, Extractive Industries Transparency Initiative (EITI) and Founder
and Chair of Advisory Council, Transparency International, Germany
Cobus de Swardt, Managing Director, Transparency International, Germany; Co-
Chair of the Global Agenda Council on Corruption
40
Abstract
It has long been acknowledged that to tackle corruption, effective societal and
governmental institutions need to be in place. Meanwhile, the relatively recent
emergence of the corporate social responsibility movement has seen the private
sector become a potentially powerful new partner in the global fight against
corruption. It is critical that these relationships between government, the private
sector and civil society continue to mature and that innovative new synergies are
identified.
As with all relationships, all three actors must engage constructively together. Civil
society can best fulfil its role when it recognizes:
Above all, civil society must perform its key role as a consensus builder and
watchdog. Civil society participation lends decision-making legitimacy, but with
this comes the responsibility to unflinchingly hold both government and business
to account.
41
as reduce the probability of such demands being made. RESIST was developed
with more than 20 companies and organizations, and the World Economic
Forum’s Partnering Against Corruption Initiative, the International Chamber of
Commerce and the UN Global Compact.
The same benchmarking principle can be used with governments. Civil society
research can show how well governments are performing in relation to their peers.
For instance, the worldwide recognition and significance for foreign direct
investment of TI’s Corruption Perceptions Indexiv means that many governments
attach great importance to their country’s score and are willing to make necessary
reforms. For this purpose, diagnostic studies, like TI’s National Integrity Systems
Studiesv, can provide governments with clear evidence where specific reforms are
needed most.
A leading model of how government, business and civil society can join forces is
the Extractive Industries Transparency Initiative (EITI)vi. As a global standard for
companies to publish what they pay and governments to disclose what they
receive in oil and gas revenue, the EITI seeks to turn the “resource curse” into the
blessing it should be.
Governments and companies that implement the EITI show investors and
international financial institutions serious intentions about good governance,
transparency and accountability. Companies mitigate potential political and
reputational risks, and demonstrate their contribution to a country by making all
payments to governments visible to the public eye. By providing such a facilitating
platform, civil society can more effectively safeguard the general public’s interests
and hold governments and companies to account.
Along with business and government, independent and critical civil society
organizations play an integral part in the solution necessary to confront major
global challenges and achieve sustainable outcomes. The stronger these
partnerships are the greater the successes will be.
i http://www.transparency.org/global_priorities/private_sector/business_principles
ii http://www.transparency.org/global_priorities/private_sector
iii http://www.transparency.org/policy_research/surveys_indices/promoting_revenue_transparency/in_english/companies_report_2008
iv http://www.transparency.org/policy_research/surveys_indices/cpi/2008
v http://www.transparency.org/policy_research/nis
vi http://www.eitransparency.org/
Global Agenda Council on Corruption
43
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption
5. Recommendations on Multistakeholder
Partnerships
Global Agenda Council on Corruption
Dimitri Vlassis, Chief, Corruption and Economic Crime Section, United Nations
Office on Drugs and Crime (UNODC) ) and Secretary, Conference of the States
Parties to the United Nations Convention against Corruption (UNCAC), Vienna*
* The views expressed in this contribution are those of the author and do not
necessarily reflect the position or views of the United Nations.
44
Abstract
Increased awareness, lower tolerance levels and the sense of urgency caused by
the financial crisis point to the need for the establishment and strengthening of
partnerships between the private and public sectors to effectively fight corruption.
These partnerships must be forged quickly and be based on the notion of equality
and comparative advantage. They require leadership and vision but hold great
potential for all involved and, ultimately, the achievement of success in the fight
against corruption.
We have come a long way from the word “corruption” being almost taboo two
decades ago to corruption topping the political agenda and occupying centre
stage in public discourse. This shift did not happen overnight. Credit for this
change is shared by several visionaries, who took considerable risk and worked
often against the tide, either privately, or through and within institutions. Those
individuals have displayed leadership and foresight, and helped shape public
opinion and policy-making by detecting early the pernicious effects of corruption
on every value modern societies hold dear. They had to dispel many myths,
including the one about corruption being an incurable disease afflicting some
societies or cultures.
The rise in awareness and the decrease in tolerance galvanized significant action.
A prominent example has been the United Nations Convention against Corruption
(UNCAC), with comprehensive and groundbreaking provisions, unmatched by
other legal instruments. The UNCAC is important because of the records it broke:
it was negotiated in less than two years, came into force at about the same time
and at present has acquired 136 parties – more than two-thirds of the entire
membership of the United Nations. In turn, the UNCAC has prompted national
action around the globe. It has brought about new legislation in countries big and
small, developing and developed and, most importantly, has set in motion a wave
of institution-building that has not been paralleled by any other international legal
instrument in the last couple of decades.
45
freedom of operation through progressively more extensive self-regulation. The
financial crisis has shone the spotlight on the considerable limitations of that
approach. The question is whether the pendulum will swing too far to the other
side and whether the sense of urgency brought by the crisis will leave room for
sombre and impassionate thinking to strike an optimal balance.
The numerous areas where partnerships can be forged and pursued with
concrete results in relatively short time include procurement in sensitive areas,
such as defence, or vulnerable sectors such as health, energy or construction (all
often shrouded in myth and perception). They also include the broader area of
education, where joint investment can provide the means to future generations of
citizens and public and private sector leaders to resist the temptation of
corruption.
Global Agenda Council on Corruption
Abstract
46
Corruption and bad governance are costly for developing countries. Private
investment is reduced and public resources wasted, with harmful consequences
for economic growth, poverty alleviation and human development outcomes
ranging from infant mortality to literacy [see references]. Corruption at the top is
the most costly because the bad example set by national leaders permeates the
whole country, leading to the wastage and theft of public resources, the
degradation of public institutions, especially in the key fiscal, financial and judicial
sectors, and economic stagnation.
47
Multilateral development banks should take the lead in three areas, some aspects
of which are currently under consideration and discussion within the World Bank
and its partners.
(such as EITI, CoST, MeTI) and the extension of Publish What You Pay and the
Kimberly Process to other sectors
– Launch a contest to identify and finance innovative initiatives promoted by
business sector leaders to address corruption
References
– Bardhan, P. (1997): “Corruption and Development” Journal of Economic
Literature 35 (3), pp.1320-46.
– Ernst and Young (2008): Confronting Corruption: The business case for an
effective anti-corruption programme:
http://www.pwc.com/extweb/pwcpublications.nsf/docid/974053FED579A78A
CA2573EF002CC5E9/$file/confronting_corruption_printers.pdf
– Friedman, Eric, Simon Johnson, Daniel Kaufmann, and Pablo Zoido-Lobaton
(2000): “Dodging the Grabbing Hand: The Determinants of Unofficial Activity in
69 Countries,” Journal of Public Economics, 76: 459-493.
– Gupta, S., H. Davoodi and R. Alonso-Terme (1998), “Does Corruption Affect
Income Inequality and Poverty?”, IMF Working Paper, WP/98/76, IMF.
– Mauro, Paolo (1995), “Corruption and Growth”, Quarterly Journal of
Economics, August, 1995.
– Tanzi, V. and H. Davoodi (1997), “Corruption, Public Investment and Growth”,
IMF Working Papers, WP/97/139.
Contacts
– Anders Agerskov, Senior Policy Officer, World Bank
– Bernard Becq, Chief Procurement Officer, World Bank
– Simeon Djankov, Chief Economist, World Bank
– Pascale Dubois, Sanction Evaluation and Suspension Officer, World Bank
– Djordjija Petkoski, Lead Specialist, World Bank
Internet Resources
Businesses fighting corruption: www.fightingcorruption.org
Global Compact:
http://www.enewsbuilder.net/globalcompact/index000277804.cfm?x=bd2Hd2m,b
b6LfBj8,w
TRACE International: https://secure.traceinternational.org/Default.asp?
Center for International Private Enterprise: http://www.cipe.org/index.php
http://crisistalk.worldbank.org/
World Bank Voluntary Disclosure Program: http://go.worldbank.org/0YOV31KG10
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