Corruption cripples the ability of emerging economies to grow. While bribes are very much a fact of life in most developing countries, this needs to change if diplomacy and international business are to function properly, argues Parag Khanna, author of “How to Run the World.” He writes that organisations like Transparency International are paving the way for such a change.
In a memorable scene from the Hollywood thriller Syriana, an American oil executive is outraged at being indicted for paying for the private school tuition for the son of a Kazakh Government official in exchange for a lucrative energy contract. Flailing his arms and stomping his feet, he whines incredulously, “Corruption is what keeps us warm at night! Corruption is how we win!” It’s easy to point to several high-profile cases of mega-corporations handing over briefcases of cash to Government officials and declare all companies corrupt, but corruption is a two-way street. Corruption is as much a fact of life as birth and death, and almost requires no definition. You know it when you see it.
In countries from Nigeria to India, the more ministers there are, the more corruption there is. The U.S. Foreign Corrupt Practices Act of 1977 (FCPA) has diminished American firms ability to bribe foreign leaders, but it hardly stops anyone else. In a world desperately driven by profit at all costs, can shame curb this most universal social disease?
Enter Peter Eigen, a German lawyer with the audacity to take money from the world’s Governments and multinational corporations and then shame them for their misdeeds. After 25 years running World Bank programmes in Latin America and Africa, it comes as no surprise that in 1993 Eigen founded Transparency International (TI).
TI is a Berlin-based NGO perpetually collecting data from media outlets, businesses, Governments and civic groups that are compiled into its highly visible Corruption Perceptions Index report. The report is the gold-standard in the naming and shaming of countries.
TI today remains so unimpeachable in its own credibility that it also bestows an annual Integrity Award, which in 2008 went to Guardian journalist David Leigh for uncovering British Aerospace Systems murky weapons deal with Saudi Arabia an issue Tony Blair would have preferred to sweep under the rug. Eigen’s formative experiences with the World Bank taught him that discussing corruption as an external official has little impact. Rather, TI needed to work from the bottom-up to support local anti-corruption groups and accredit them as its national chapters. From Nigeria to Cambodia, TI has also established websites for whistle-blowers to confidentially feed information.
Such high-quality and real-time data becomes an important signal to investors as well meaning when a country’s ranking falls, it needs to explain itself to those who hold the purse-strings. It was the head of TI’sKenya chapter, John Githongo, who upon becoming the country’s ethics and governance investigator uncovered one of Africa’s greatest looting schemes by Kenyan ministers. He then fled into exile in London to expose the charade all while Kenya earned top marks from bilateral donors and the United Nations.
Make no mistake: Corruption was not a big diplomatic issue between Governments and companies before Transparency International and AccountAbility came along. It was TI that lobbied actively for the OECD Anti-Bribery Convention and the UN Convention Against Corruption — and to close loopholes in both. Now transparency has become a buzzword at both the Internationl Monetary Fund and the World Bank.
Nothing holds a country back like audacious and endemic corruption, which eviscerates any efforts to provide public welfare. Anti-corruption efforts like those of TI are therefore a vital public service. But TI no longer works alone. Under its umbrella, companies such as mobile phone supplier Alcatel have preached reduced corruption from South Africa to Russia as a way to save money and gain a more predictable business environment.
After being exposed for paying over more than $1 billion in bribes in ten countries to gain preferential contracts, the engineering conglomerate Siemens agreed to spend $100 million on such anti-corruption training and education programmes in emerging markets. The opportunities for corruption only grow not recede as many countries climb the development ladder and democratise. In Indonesia, local and provincial authorities have gained more and more autonomy from the central Government and everyone wants a piece of the action on oil and gas or mining deals.
Indonesia’s Government can’t force Sumatran politicians to abide by global standards of transparency and fair play not that it would anyway. Instead, one has to go inside the companies making investments to coach them in how to not cut corners.
This is what AccountAbility does. A British non-profit founded in 1996, AccountAbility digs deep into its clients’ strategies culture to embed sustainable practices in a manner invulnerable to market whims and local conditions. Its experts go on-site with leaders and staff, mentoring from top to bottom, pushing tangible change from within. By working with the leadership of some of the largest companies, including Nike and Nissan, it kicks off a process of strategic sustainability that ripples through massive supply chains.
But AccountAbility is more than a corporate watch-dog. Its Global Accountability Report evaluates UN agencies, development banks and NGOs as well all of whom have plenty of room to improve on measures such as whether their members control their budgets, and how consultative they are with other stakeholders. Democracy cannot solve these problems, but collaborative governance can.
This means leveraging private investment to build transport infrastructure and make water management more efficient, but in the context of partnerships where businesses and Governments recognise mutual obligations and monitor each other. Make no mistake: Corruption was not a big diplomatic issue between Governments and companies before Transparency International and Accountability came along. It was TI that lobbied actively for the OECD Anti-Bribery Convention and the UN Convention Against Corruption and to close loopholes in both.
Now transparency has become a buzzword at both the IMF and the World Bank. The U.S. Millennium Challenge Account uses TI criteria in determining which countries will receive American aid. Corruption is now on the diplomatic agenda, and diplomacy will be more effective as a result.
TRANSPARENCY INTERNATIONAL CORRUPTION INDEX
India dropped to 95th position last year
In a reaffirmation of the general perception, India has dropped 11 places to be ranked 95th in the Transparency International Corruption Index.
The global anti-graft watchdog, which compiles an annual list of countries based on their ranking on a scale of 1 to 10, places India below China in the index, but above its neighbour, Pakistan. India is perceived to be more corrupt than China which is ranked 75th on the list, but is better off than Pakistan, that is placed at the 134th position.
Transparency International’s Corruption Perceptions Index scores 183 countries and territories from zero (highly corrupt) to 10 (very clean) based on data from 17 surveys that look at factors such as enforcement of anti-corruption laws, access to information and conflicts of interest.
That India sank in the global corruption index did not come as any surprise to the political observers and social activists, given the environment that has been created across the country because of the surfacing of high-profile cases of financial irregularities in recent times.
The 2011 list included the 2G spectrum allocation scam, Commonwealth Games scandal, the Adarsh Housing Society case, aircraft purchase and illegal mining. Investigations in these cases have seen several politicians, bureaucrats and corporates landing behind bars.
New Zealand was ranked number one in the index. In other words, it was rated as the least corrupt country, while Somalia and North Korea were the worst performers.
Transparency International, the global body spearheading the fight against corruption, said its annual league tables showed that New Zealand stood at top of the global list overall as the least corrupt in the world, according to anAAP report. Australia was among the least corrupt country in the Group of 20 industrialised nations, according to the survey.
Last year, Australia’s trans-Tasman neighbour was ranked joint first, alongwith Denmark and Singapore, which stood at second and fifth respectively. Australia shared the eighth position with Switzerland. Two-thirds of ranked countries scored less than five. New Zealand scored 9.5 compared while Australia achieved 8.8 in 2011. North Korea and Somalia both scored just one point and ranked at the end of