Laurence Cockcroft was a founding board member of Transparency International ( TI ), serving for nine years. He was chair - man of the British chapter of TI from 2000 –08 and continues as a member of its board of directors. He is the author of Africa’s Way: A Journey from the Past, ( I. B. Tauris, 1990) .

Global Corruption: An Untamed Hydra Laurence Cockcroft

The last 15 years have seen a remarkable with organized crime. The tales of large- change in the perception of corruption at scale looting by the elite of many nations both national and international levels, driv - are sadly numerous—an accumulation of en in large part by civil society organiza - huge fortunes by a rogues’ gallery of heads tions and watchdog groups. In the many of state, including Abacha of Nigeria ($4 countries where corruption is endemic, but billion), Suharto of Indonesia ($15 billion where public discussion had been most lim - channeled to his family over 30 years) to ited, it has become the focal point of in - Mobutu of Zaire ($4 billion, made and creasingly open campaigns by civil society probably lost) and Nazarbayev of Kaza - and political parties. In the international khstan (up to $1 billion pilfered from arena , a series of conventions at both the national oil revenues for special accounts). global and regional levels have influenced But at the other end of the spectrum, corporate codes of conduct and the agendas even minor acts of corruption—like small of development finance agencies. This in - personal bribes to police or bureaucrats— creased awareness has achieved a notable can eat away at the fabric of society . toughening of anti -corruption legislation in While the different forms of corruption many countries and spurred changes in cor - may converge in a toxic stew at the national porate behavior. But these achievements re - level in scores of countries, the goals of each main quite modest in relation to the overall form are distinct—and each needs to be ap - scale of the problem. There remains woe- proached with a different set of solutions. fully inadequate recognition of the ways cor - Corruption in political finance has only one ruption is intertwined with the larger neces - objective : the retention of power . The arrival sities of eliminating poverty, halting climate of multi -party states in the post –Cold War change , and rebuilding failed states . What world has raised acute problems in political anti-corruption measures are now in place funding, since in only very few cases do need to be vastly extended . such parties have extensive membership Corruption manifests itself in many dif - structures and , in even fewer cases , are these ferent ways—from the looting of major as - members able to contribute sufficient fund - sets to small-scale bribery , to political and ing to finance electoral activities. But the party finance, to corruption both by and cost of getting elected in a multi-party within multinationals, and to the interface democracy is often quite high. In contempo -

© 2010 World Policy Institute 21 rary India , the cost of winning a parliamen - ment itself, some 40 percent of supplies tary election has been estimated at $50,000 ; were reported to have been diverted through in Tanzania , the cost of running in a pri - corruption. In these and a host of other cases mary election has been put at $30,000. in the developing world, the acute inequali - These sums effectively require candidates ty in access to resources gives rise to a mas - to seek investments that ultimately need to sive industry of small scale corruption. And be repaid with interest—frequently in the when one’s very survival is predicated on a form of allocating contracts to financial pay-off, it highlights just how difficult it is backers once a party has achieved or retained to eliminate. power. The drivers of petty corruption— In Western democracies , the member - survival, greed, compulsion from above, or ship-based funding of major parties has be - guanxi (Chinese for “connections”)—are sub - come increasingly problematic and has led stantially different from that of larger insti - to a continuous revision of the legislation tutionalized graft . Taking “commissions” which governs political financing. This has by semi-skilled and skilled workers on ex - seldom been successful . In 2003 , the World tremely low incomes may be justified by Economic Forum published an assessment those soliciting the bribe as a means of sur - (based on 101 countries) of the extent to vival. But once the pattern is established, which legal party donations influenced this can easily be regarded as a permanent subsequent government policy when the source of additional income, with a high up - beneficiary party took power. This was per limit. In many cases , this form of cor - found to be a medium -scale problem in ruption is institutionalized as police offi - 70 countries —including Canada, France, cials, or say, port managers , take a small the United States, and Britain —and a high - daily allotment from revenues and pass a level problem in 21 countries. share upstream to their superiors . In the Well below the level of the elites in guanxi payments typical in China (but also both kleptocratic regimes and democracies prevalent in clan and tribal relations across are the daily experiences of two to three bil - Africa ), the senior members of a family se - lion of the world’s poor, who often have to cure a position for a junior relative in the bribe their way to get services that govern - expectation of being rewarded by under- ments should provide for free. In 2001, in the-table extra income earned by the new Pakistan, a Transparency International sur - appointee. In many cases, such networks vey found that 90 percent of homes with become a means of simple survival in des - access to public education paid an average perately challenged economies, rather than bribe of $90 to teachers to ensure their chil - a means of retaining or cementing political dren made it to higher grades—the equiva - power. lent of 20 percent of per capita gross domes - But the problem for those who would tic product. In the same year, surveys across seek to destroy these networks and create Ecuador, Paraguay, and Bolivia found that more transparent governance is often that, the delivery of virtually any public service regardless of the origins of these illicit deals, required a bribe. In Uganda, a 2009 survey the pattern of corruption calcifies, adding found that citizens were obliged to pay layer upon layer that can persist for genera - bribes of between $20 and $60 for basic tions and across regimes. Indeed, the me - health services, even AIDS relief. In a 2009 chanics of Kenya’s Anglo Leasing scandal (in assessment of India’s food distribution pro - which the government grossly overpaid for gram, commissioned by the central govern - passport and forensic equipment, siphoning

22 WORLD POLICY JOURNAL • SPRING 2010 ©Rob Rogoyski

millions of dollars into politicians’ pockets) strengthened over the past decade and has were put in place in the latter years of the spawned a number of important initiatives. rule of the nation’s second president, Daniel These have included the Organisation for Arap Moi, but the graft was perpetuated by Economic Co -operation and Development his successor, Mwai Kibaki. Many cases such (OECD ) Convention Against Illicit Payments as this—and there are far too many to list in 1997, and the 2005 UN Convention here—have as much to do with the reten - Against Corruption. While the UN conven - tion of political power through corrupt tion is more far reaching in scope (providing means as with the simple enrichment of for the repatriation of corruptly gained as - crony networks . sets) the OECD convention is the subject While the origins of each type of cor - of a fairly effective review process by its ruption may be diverse, the phenomenon signatory states, which the UN has so far they create is always dynamic, like a cancer been unable to achieve. capable of morphing and attracting newly This new emphasis on drafting interna - malignant players —to the point where it tional law against corrupt practices has infects entire societies . As such, the reme - triggered a significant response by multina - dies must be idiosyncratic to the country, tional companies . For example, all of the society, and nature of the corruption. And, 2,200 companies in the UN’s Global Com - much like fighting cancer, the first and pact have committed themselves to abide by often most crucial step towards a cure is either TI ’s Business Principles for Counter - recognition. ing Bribery, or the comparable principles defined by the World Economic Forum’s Current Initiatives Partnering Against Corruption Initiative . International recognition of the problem, Although reality all too often has fallen largely initiated by civil society, has short of the ideal , when cases of large-scale

Global Corruption: An Untamed Hydra 23 commercial corruption have come to light, must conform to international rules ... must tough judicial responses have at least trig - be open and transparent, should go through gered a new aversion to bribery by leading a bidding process for the big projects ... and international companies. Here are just a reject corruption and kickbacks. ” These handful of recent examples: the German en - moves give hope that Russia and China gineering giant, Siemens, was fined $1.34 will eventually become significant support - billion in 2008 for the widespread use of ers of the international conventions that bribes to win overseas contracts; Loïk Le have helped shape global corporate behavior, Floch Prigent , a former chairman of Elf, although Beijing still opposes the adoption was charged in 2001 for corruption in the of the UN’s “peer group ” monitoring sale of frigates to Taiwan (all but implied system. was the collusion of the French govern - Meanwhile , multilateral agencies are ment) ; in January 2010, Britain’s BAE Sys - awakening to the scope of the crisis and the tems struck a plea bargain for $450 million potential role they might play in stamping in fines with the U.S. Department of Justice out corruption. Many had previously ig - and the U.K. Serious Fraud Office in con - nored the issue of corruption , even as their nection with the Al Yamamah arms deal activities provided substantial lubricants to with Saudi Arabia where it was alleged that encourage graft . The World Bank, for exam - bribes of $1.5 billion were paid to Prince ple, had by 1996 lent a cumulative $23.7 Bandar bin Sultan, a former Saudi ambassa - billion to Indonesia and $1.4 billion to dor to Washington ; and, in January 2009, a Zaire, much of which went directly into the subsidiary of Halliburton was fined $579 personal accounts of Suharto and Mobutu, million for bribes paid to win a contract for respectively. In principle, World Bank Presi - a $4 billion natural gas plant in Nigeria’s dents Jim Wolfensohn (1995 –2005) and southern delta region. But if these prosecu - Paul Wolfowitz (2005 –07) began to reverse tions are a glimmer of hope, they also high - this trend, requiring stricter monitoring of light the massive and widespread practice loans and allocating additional funding for of Western companies in perpetuating civil society projects. Between 2004 and corruption. 2009 , funds committed to promoting “jus - An even more troubling threat to the tice, law , and administration ” accounted for emergence of a set of higher corporate prin - roughly 20 percent of the bank’s overall ciples is that all four of the BRIC countries— lending. Brazil, Russia, India , and China—lie at the Yet the imperative to continue lending bottom of TI ’s ”Bribe Payers Index ,” with and support development has prevented the Chinese and Russian companies ranked as bank from suspending its operations in the worst offenders. In spite of this un - countries where major, institutional corrup - promising record , both countries are con - tion is rampant . Within a year of the public scious of a shift in global attitudes and exposure in Kenya of the Anglo Leasing more active climate of prosecution . In scandal , the World Bank and other donors 2008 , Russia’s Basic Law against Corruption had resumed lending as usual, although it was introduced , partly to enable the country was clear that elements of the scam (and its to support the UN’s and OECD ’s anti-corrup - perpetrators) remained in place. And, in tion initiatives . Even in China , the issue is 2009, the expansion of lending as a response coming to the fore. In 2006 , Premier Wen to the global economic crisis has made it Jiabao told a meeting of Chinese traders even less likely that the World Bank and its and investors in Africa: “Our enterprises sister agency, the International Monetary

24 WORLD POLICY JOURNAL • SPRING 2010 Fund , can be truly effective in combating included Vicente Fox in Mexico (2000–06), corruption among their borrowers. Luiz Ignacio “Lula ” da Silva in Brazil (2002–present ), Olusegun Obasanjo in More Promising Ethics Nigeria (1999–2007), and Alejandro Toledo A much more promising avenue for interna - in Peru (2001–0 6). None has had any last - tional and government collaboration are the ing success in curbing the problem. Fox’s ethical initiatives launched recently in cer - legacy to his successor, Felipe Calderón, was tain key global industry sectors. The Extrac - an environment so conducive to the growth tive Industries Transparency Initiative ( EITI ) of organized crime that it has thrust the has focused on corruption in the oil and gas army into a domestic drug war and threat - sectors. Now formalized as an international ened to overwhelm the state itself . Brazil’s voluntary agreement, it is managed by a Lula fatally compromised his anti-corrup - secretariat in Norway and has 31 member nations in various stages of commit - An even more troubling threat is ment, with Azerbaijan that all four of the BRIC countries and Nigeria most dedicat - “ ed to making their energy rank as the worst offenders . sectors transparent—less so Kazakhstan , Kyrgyzstan, and Turk - tion strategy by buying parliament”ary votes menistan . Still, it’s a good start. In October in 2005 in the Mensalao scandal. Obasanjo 2009 , the top 14 defense companies from took a positive step in establishing an effec - the United States and the European Union tive Ecomomic and Financial Crimes Com - launched the Global Principles on Business mission , but neutralized the progressive Ethics program , which includes “zero toler - moves he had made by engaging later in the ance of corruption .” The principles will be widespread bribing of Congress to secure a promoted through an international forum constitutional amendment enabling him to on ethical conduct for the aerospace and de - stand for a third term. fense industry. For a sector that has rivaled In China, beginnin g wit h the 1949 revo - construction at the top of the list in terms lution , the Communist Party has struggled of corruption, this is a welcome develop - with little success to curb corruption from ment . Initiatives such as these —where the leadership to the party base—waging governments, civil society , and corporations four consecutive campaigns . The first , in actively collaborate in adhering to ethical 1951 , found no fewer than 1.3 million party practices—hold considerable promise, but members (one third of the total) to have they alone cannot roll back corruption been guilty of graft. The most recent cam - where it is deeply embedded at the paign was launched by Premier Hu Jintao national level. five years ago and struck at the top . In No - Over the last decade, the reform of vember 2006 , the chairman of the China national corruption has proved elusive. In Construction Bank, Zheng Enzhao, was im - recognition of the new international push prisoned for 15 years for accepting bribes of for clean government (and the success of the $500,000. In the same year , Chen Liangyu, populist campaign strategy of using govern - party secretary for Shanghai and senior ment corruption to impugn incumbents), Politburo member, was dismissed for being several regimes have come to power with a part of a network which misappropriated mandate to address the issue . These have one -third ($700 million) of the Shanghai

Global Corruption: An Untamed Hydra 25 Social Security Fund for personal investment dent that the most devout societies are not in property . In 2007 , Zheng Xiayou, direc - immune to widespread corruption. Indeed, tor of China’s Food and Drug Administra - Hindu and Buddhist scriptures have very tion was executed for sanctioning the pro - little to say about the topic, while the duction of counterfeit drugs in return for Catholic Church has long tolerated the prac - bribes totalling $800,000. Despite these ex - tice and even encouraged it in the form of amples , the Chinese press continues to pub - indulgences. Only Islam and Confucianism, lish reports of large - and small -scale corrup - religions concerned with the governance of tion cases on a virtually daily basis . Beijing society and moral philosophy, have clear still has a long way to go. In December anti-corruption messages. But, on the 2009, a national audit found that Chinese ground, pervasive corruption in China and officials had misused or embezzled some across much of the Muslim world illustrates $35 billion of government money. that even the best intentions are no match for the temptations of profit and power, Social Values especially when governments and elites are In light of this persistent, pervasive corrup - engaged in these practices. Ideals are all tion, some reformers have asked whether well and good, but the vacuums that remain nations’ unique social and cultural values within and between the world’s major faiths are responsible for undermining efforts at have left space open to a highly pragmatic reform . One school of thought holds that interpretation of corruption as an inevitable corruption is simply the norm in many part of the real world. societies—particularly where poverty is However, this apparent tolerance has its pervasive. The Swedish sociologist Gunnar limits. The mother of a baby whose life is Myrdal, for example, explored the origins of in danger certainly would not find it “cul - corruption in India in the 1960s and con - turally acceptable ” to be asked to pay a cluded that it represented a heightened form bribe of $10 for treatment at a local hospital of reciprocal systems present in rural society in Uganda . Nor would a street vendor in that had been distorted as rapid urbaniza - Mumbai find it acceptable that an arbitrary tion and a new form of politics emerged tax is suddenly levied by city authorities, after independence. requiring him to bribe officials or risk los - But theories such as these discount ing his only means of income. These highly countries that have moved from being rela - individual injustices provide the fuel for tively corruption -free to ones plagued by those politicians who run on anti -corruption graft. Indeed, experience has shown that tickets (even in societies where the problem ethical values change—particularly when an is endemic ), and provide a modicum of example is set at the highest echelons —and hope for governments and non-governmen - that the unacceptable can become accept - tal organizations committed to fighting able. Other scholars have wondered whether corruption. secularism and lax moral values are to blame in creating this slippery slope. But religion Taking it to the Streets has not been shown to stem corruption. If The problem for reformers, however, is one were to overlay a map of TI ’s most cor - that one can’t stem the tide simply by put - rupt countries with that of the most reli - ting a finger in the dyke. Take the example gious nations, it would illustrate alarming of the street vendor in Mumbai: what’s to parallelism . Without falling into the trap of stop even the most upstanding policeman confusing correlation with causality, it’s evi - from shaking him down for a bribe today,

26 WORLD POLICY JOURNAL • SPRING 2010 when the policeman knows that even if difficult task. But the clearly daunting scale he refrains, a colleague certainly will try of this undertaking should not divert inter - tomorrow—and that his job security is con - national efforts to address corruption, espe - tingent upon stuffing the pockets of those cially as concerted actions can promote higher up the chain of command. As such, the achievement of more specific goals at the main weakness in reform programs is the national level. that they have been largely piecemeal in their approach and have not recognized the A Forward Agenda relationships between the various forms of We now find ourselves at a unique position, corruption and the interwoven nature of in - a crossroads of sorts for reformers, where it stitutionalized graft . is possible to move either backwards or for - An effective anti-corruption campaign wards. The general good that can be done must be holistic and should include , at a by chipping away at corruption is now a minimum : stricter laws on campaign finance and political fundraising ; a strict clamp - This agenda is a tall order and down on all forms of petty might only be implemented corruption generated by the “ delivery of public services (po - by a quasi-authoritarian lice protection , health care, tax authorities); a focused cam - regime, such as Singapore. paign against organized crime; a root -and -branch reform of the procure - given, but the difficulty in creating g”raft- ment system that ensures transparency and a free societies and the hypercompetitive role for civil society; a reform of land alloca - global environment makes the practice of tion and tenure systems ; the establishment doing so much more problematic. While of effective judicial dispute resolution; the Western leaders insist on the necessity of full disclosure of the value of natural re - leveling the playing field, making the world sources and the terms of extraction contracts a more transparent place, and removing the granted by the state ; tougher audits of pri - impediments to development and prosperity vatized companies, clarifying the role of in - for so many of the world’s poverty-stricken, vestors; the careful monitoring of banks to it would be worthwhile to recognize that ensure that the flight of ill-won capital is corruption also negatively affects the resolu - minimized; and active participation in the tion of the major global problems that are repatriation of assets stolen from a country likely to dominate the near future: climate and held overseas. change, a continuing energy crisis, the need This agenda is a tall order and, even in to prevent the collapse of failing or failed the best case scenario, would constitute an states , and the challenges of post -war enormous political hurdle—perhaps one reconstruction . that might only be implemented under a Each of these pressing concerns is made quasi-authoritarian regime such as that of worse by corruption. Climate change has Singapore, which has achieved remarkable been intensified by the deforestation of Cen - success in fighting corruption and now tral African and Latin American rainforests, ranks as the third -least corrupt nation in and by unregulated industrial pollution— the world . Achieving even a measure of both frequently sanctioned by officials these gains in a democracy is a far more prepared to turn their heads in return for

Global Corruption: An Untamed Hydra 27 bribes . Likewise, the increasing global fected by the policies (or lack thereof) of consumption of fossil fuels has created an emerging nations that struggle with graft . intense competition for resources in politi - One condition for success will be the sincere cally fragile nations where governments adoption of anti-corruption agendas by the and individuals expect large pay-offs, par- BRIC countries, as their share of world trade ticularly in Central Asia and Africa. It’s no and investment expands. Meanwhile, West - surprise then, that these oil- and resource- ern democracies in Europe and North Amer - rich states appear (like Angola, Turk - ica can no longer pretend that their prac - menistan, and Congo, to name just a few) tices and their corporations are immune to at the bottom of TI ’s most-corrupt states list, the temptations of illegitimate and easy and find themselves consumed by restive profits. populations, disease, and violence. And in The cancer of corruption, once thought these and a host of other cases , corruption to be in remission, is growing again. But has often led to one dominant ethnic or the global recognition of the severity of the social group emerging to seize control of disease is still lacking , as is an understand - lucrative resources, leaving millions of dis - ing of the price of failure. This must come enfranchised as victims, their hopes and first, as the cure will not come easily and aspirations for the rebuilding of their requires a commitment from all parties. nations, societies , and the lives of their But the cost of doing nothing is far greater: families sabotaged. corruption will go unchallenged, the gains If any global anti -corruption agenda is made will be lost, billions will remain to be sustained , the international communi - trapped in a cycle of poverty, and our ability ty must recognize that the momentum to address the pressing needs of this new needs to be maintained and that the collec - century will be fatally undermined .• tive challenges of tomorrow are deeply af -

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