The Partnership for Transparency Fund

THE PARTNERSHIP FOR TRANSPARENCY FUND: “WHAT’S NEXT FOR THE ANTI-CORRUPTION AGENDA?”

On February 17, 2016, I attended an event celebrating 15 years of operation of the Washington-based Partnership for Transparency Fund. The PTF, founded by former staff members of the World Bank, promotes “transparent, accountable and effective government through citizen-led action.” Since its inception, the PTF has supported some 250 projects in 53 countries, aimed at increasing public awareness of and access to information concerning government operations and expenditure. The fundamental idea is to increase the capacity of citizens in low- and middle-income countries to know what their governments are doing, and to improve their capacity to hold those governments accountable for their actions. The PTF operates on the slimmest of shoestrings, with two paid employees and the pro bono contributions of its managers and advisors, all of whom are persons experienced in international development matters.

The focus of the anniversary event was a panel discussion of the question, “What’s Next for the Anti-Corruption Agenda?” The speakers included Nancy Birdsall, founding President of the Center for Global Development (where the event was held); Robert S. Mueller, Director of the US FBI from 2001-2013 and now a partner at the law firm WilmerHale, and Ngozi Okonjo-Iweala, twice Minister of Finance in Nigeria, and a former Managing Director of the World Bank. She is presently Senior Advisor to Lazard, and Distinguished Visiting Fellow at the Center for Global Development. Daniel Ritchie, formerly of the World Bank and past-President of the PTF, summarized PTF’s past operations and lessons learned. Richard Stern, current President of the PTF (and, again, formerly of the World Bank) moderated the event.

Highlights

Ms. Birsdall led off the discussion with three observations/suggestions on what she – and the personnel of her Center - had concluded after years of observation and reflection on the issue: 1. Governments should “publish what they buy;” i.e., all government contracts should be published or made available on-line so that the public could see where government monies are being spent and on what terms. This is already being done in the U.K., Slovakia, and perhaps Colombia, with promising results in increasing the number of bidders (in and of itself a significant corruption-reducing action). 2. Bi- and multi-lateral donors’ anti-corruption efforts focus more on policing their expenditures against (usually minor) fraud than they do on reducing the (usually more massive) corruption prevalent in the receiving countries. The size and impact of the trade-offs involved should be more openly addressed. 3. More attention could and should be paid to developing and disseminating the technology required for a “cash free economy.” 2

This would reduce the interface between the bribe-taking bureaucrat and the hapless citizen.1 Ms. Birdsall also noted that in a recent op-ed Larry Summers (now Chair of the CGD board) argued for the elimination of the US $100 note and the EU 500 Euro note on the simple grounds that these denominations are the favored currencies of the corrupt and illegal. A $1 million US packet in 500 Euro notes weighs 2.2 pounds; the same amount in US $20 notes weighs more than 50 pounds. Neither large note is needed or widely used by the average citizen or business; indeed, Summers says the 500 Euro note is known in law-enforcement agencies as “the Bin Laden.” Why not add to the transaction costs of the illicit?

Mr. Mueller held the audience spellbound while he told of becoming Director of the FBI just one week before September 11, 2001. A day or two after the attack, in his very first meeting with the US President (also in the meeting were the Vice President, the Director of the CIA and the National Security Advisor) he was asked what steps his agency was taking. Mr. Mueller is a lawyer and his previous experience was as a prosecutor. He started to detail the measures taken to identify the perpetrators, find their living accomplices and prepare to subject them to criminal proceedings. No, he was told, the main question is what is the FBI doing to ensure that another attack of this nature will not occur? Mr. Mueller described his feeling at that moment as that “of the 18 year old who suddenly realizes he has prepared for the wrong exam.”

The link between Mr. Mueller’s post 9/11 meeting and the FTP event is this: In shifting the FBI to deal with counter-terrorism Mr. Mueller concluded that the Bureau needed to give special and concerted emphasis to anti-corruption mechanisms, along with human rights protection, and closer interaction not simply with other US intelligence and law enforcement agencies, but as well with these bodies in many foreign countries. Ingrained and widespread corruption, and human rights abuses, he argued, are key generators of the hatred motivating terrorist attacks. The Bureau has thus expanded greatly its efforts both to train intelligence/law enforcement agencies in friendly countries – and to include anti- corruption efforts and human rights protection in these trainings - and to more rigorously enforce the US Foreign Corrupt Practices Act of 1977, which made illegal

1 Between 2005 and 2011 the Republic of Georgia undertook a massive anti-corruption program (alas, later at least partially reversed) in which each and every one of the much hated traffic police were fired, overnight; a large number of permits and licenses were simply abolished and on line mechanisms were established for many of those remaining; and a host of other measure were introduced aimed at eliminating or minimizing opportunities for corrupt officials to extract bribes. Georgia moved from position 124 of 133 on the 2003 Transparency International ranking, to position 51 of 174 on TI’s 2012 scorecard – the most rapid and substantial improvement yet recorded. For details see, World Bank, Fighting Corruption in Public Services: Chronicling Georgia’s Reforms; Washington, DC: 2012 3

any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.2 Mr. Mueller noted that prior to 9/11 enforcement of the Act had not been a top priority; it has since become so.

He cautioned that anti-corruption efforts are “intricate undertakings.” First, there are normally “only two witnesses to the crime, and both have strong incentives to remain silent. Second, the high level political support necessary to fight corruption is usually “episodic” in nature; as the anti-corruption champion departs or tires, the steam often goes out of the struggle. Finally, the FBI has found that many countries lack the tool of plea bargaining (in which the accused agrees to plead guilty to a charge in return for some concession from the prosecution). Plea bargaining has helped prosecutors persuade persons accused of corruption to testify against others involved in the action. Where this device is not available, the accused are more likely to tough it out.

Ms. Okonjo-Iweala, known to all as Ngozi, stole the show. She vividly recounted the anti-corruption measures undertaken during her two terms as Nigerian Minister of Finance. While these efforts were resisted from the outset by the numerous, powerful beneficiaries of corruption in Nigeria, Ngozi classified her first period as more successful than the second, in good part because of more sustained high-level political support and also because it took a bit of time for the corrupt to realize that the announced reforms were more than the usual rhetoric. By her second term they knew what was at stake and they threw everything they had -- which was plenty – against the program, and her personally.

Agreeing with Ms. Birdsall, Ngozi stressed the acute importance of giving the public the facts. For example, during her tenure, the Nigerian Federal government for the first time published detailed data on the precise amounts of all Federal transfers allotted to sub-national entities. These thick books of tables and numbers became “the most boring best-sellers ever.” State and local leaders who for years had blamed the lack of infrastructure, health and education services on the failure of the Federal government to finance these sectors suddenly had to account for the vast sums handed over and unaccounted for. Ngozi also attempted to clean up a much- troubled, absurdly expensive and wasteful fuel subsidy program, and to convince the government to reduce expenditures against the day (now here) of lower oil prices. Both of these programs produced ferocious resistance. When she argued that Nigeria had “to save for a rainy day” she was told, “it’s pouring right now.”

2 The quotation, not given by Mr. Mueller, is from the Act. 4

Several other information gathering mechanisms altered and alarmed the public. Checking civil service payrolls produced 60,000 “ghost workers;” i.e., non-existent persons drawing salaries. A number of these had been on the books so long they had become ”ghost pensioners.” The essence of sustained anti-corruption, said Ngozi, is the “not so interesting plumbing” of data collection, assessment and dissemination. But getting these efforts going takes time, money and usually technical assistance. To be effective the processes must be repeated and become institutionalized; to be effective they must be long-term. Political leaders (and donors too) want immediate and sensational results; the corrupt are more patient.

Ngozi made a special plea, based on her bitter personal experience, to those who wish to tame corruption to understand just how ruthless and unconstrained, either by morality or legality, are the corrupt. Her efforts in Nigeria were attacked first by the many who wish to remain obscure in the shadows. The data collection and publication programs introduced were and are constantly attacked as misleading, wasteful, not needed, etc. Second, a concerted effort has been made to paint her as corrupt; “to portray me as one of them.” Constant allegations of her supposed corruption are made in the Nigerian press, allegations that she strenuously denied, stating that she has opened her bank accounts to public and legal scrutiny and has nothing to hide. As she put it, if she possessed the enormous yacht she is accused of receiving as a bribe, “would I be here talking to you?” Third, in December of 2012, Ngozi’s 82-year-old Mother was kidnapped and held for five days. Ngozi said the only demand made by the kidnappers was that she stop her anti-corruption efforts. Fortunately, Mrs. Okonjo was released unharmed.

Ngozi’s point is that the aid community has to realize the risks run by those nationals who tackle corruption from within the countries in question. In these countries anti-corruption is not a matter of debate or legal maneuvering. There are few if any limits on the defensive efforts the corrupt will employ to maintain the system.

PTF, the Center for Global Development, and the speakers are to be congratulated for this stimulating and informative session.

John Nellis 02.19.2016 5