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Collective Action to Fight Corruption

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Collective Action to Fight Corruption Development Co-operation Report 2010 © OECD 2010 Chapter 7 Collective Action to Fight Corruption The prevailing world economic crisis will only increase the level of scrutiny over the use of public funds. This chapter explores how the development community is making increased efforts to tackle corruption, whilst maintaining its commitment to the aid effectiveness agenda. The chapter draws on knowledge and lessons from the field, and research by the Development Assistance Committee’s Network on Governance to show how donors are increasingly working together in partner countries to understand and deal with corruption. Donor spending on a variety of initiatives aimed at strengthening governance is steadily increasing. In addition, international agreements like the UN Convention against Corruption (UNCAC) are helping to support coherent donor approaches. The chapter concludes by listing some further actions needed in today’s crisis environment to respond better to public concerns about corruption in the overall delivery of international aid. 87 7. COLLECTIVE ACTION TO FIGHT CORRUPTION Corruption: a threat to development “The greatest threat to effective aid is the prevalence of corruption in environments where aid operates” (Carlsson, 2009). There is a growing public perception that aid money is squandered by corrupt governments. Combined with the global economic crisis increasing the level of scrutiny over the use of public funds, domestic economic hardship appears to be resulting in a greater focus on aid budgets. This increases the likelihood that incidents of corruption will lead to calls to cut aid. As an example, 52% of respondents to a UK survey believe that corruption in poor countries makes it pointless donating money to reduce poverty (DFID, 2009). OECD governments have a responsibility to help prevent and address corruption. Today there is a growing understanding of what makes donor countries part of the problem – and of how they can be part of the solution. Donors have developed approaches to the delivery of aid that aim to balance corruption concerns with broader aid effectiveness priorities and poverty reduction goals. The Paris Declaration on Aid Effectiveness (Annex ) sets out a clear, practical plan to help improve the quality and positive impact of development assistance through efforts to combat corruption. It commits donors to increasing their support to developing countries’ anti-corruption efforts, aligning with country-led initiatives and promoting local ownership of anti-corruption reforms. Calls for greater policy coherence are also gaining ground; for example, policies to recover misappropriated development funds are supported by complementary policies which address banking secrecy. The specific focus of donor anti-corruption efforts has been on programmes to strengthen mechanisms associated with those areas where corruption is most likely to occur, for example in procurement and financial management systems. Donor spending on strengthening governance (including public sector financial management) has been increasing since 2002 (Figure 7.1). Additionally, international agreements like the UN Convention against Corruption (UNCAC) and the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention) will help support coherent donor approaches. Until 2003, donors were making poor headway in their fight against corruption (OECD, 2003). The main constraints were limited capacity, competing priorities and piecemeal approaches to fighting corruption. The DAC took action by publishing the Policy Paper and Principles for Donor Action in Anti-Corruption (OECD, 2006). This paper proposed actions for a more effective and co-ordinated fight against corruption, such as working jointly with other donors to establish a clear and common understanding of country-level corruption trends and the governance context in which corruption occurs; developing principles for common OECD DAC responses to corruption; integrating national action on corruption with international/“supply side” action on issues such as bribery, money laundering and asset recovery; and applying lessons learned in supporting the implementation of the UNCAC. 88 DEVELOPMENT CO-OPERATION REPORT 2010 © OECD 2010 7. COLLECTIVE ACTION TO FIGHT CORRUPTION Figure 7.1. DAC donor spending on strengthening governance, 2002-2007 Current prices, disbursements, in USD millions Economic and development policy/planning Public sector financial management Legal and judicial development Strengthening civil society Elections Human rights Free flow of information Women’s equality organisations and institutions 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 2002 2003 2004 2005 2006 2007 Source: OECD DAC, International Development Statistics. 1 2 http://dx.doi.org/10.1787/787556542258 The DAC’s Network on Governance (GOVNET)1 has followed up on these proposals by producing specific recommendations on how donors can improve processes for assessing governance and how they can better tackle corruption through greater co-ordination, based on knowledge and lessons learned from the field (OECD, 2009a and b). In this chapter we highlight some of the main findings and recommendations.2 A shared understanding of governance “We must take a serious view of the fact that for decades we have paid aid worth billions to countries where corruption has increased rather than decreased” (Carlsson, 2009). Corruption is the result, at least in part, of poor governance. To tackle corruption we need to understand how public sector governance works in a country – both the formal and informal uses of power. Good governance is not just about government; it is also about political parties, parliament, the judiciary, the media, civil society and the more informal agents of accountability often relied upon in developing countries. It is about how citizens, leaders and public institutions relate to each other in order to make things happen (DFID, 2006). DEVELOPMENT CO-OPERATION REPORT 2010 © OECD 2010 89 7. COLLECTIVE ACTION TO FIGHT CORRUPTION Donors need to conduct joint analysis of governance in a partner country to ensure that their responses are informed by a common understanding of the governance challenges impacting on corruption (OECD, 2006). The analysis is most effective when partner governments show leadership and ownership of measures to improve governance and reduce corruption (Box 7.1); this can also provide an opportunity for donors to enhance joint responses. The analysis should, as a necessary first step, explore the political drivers and policy priorities of partner country governments that impact on their level of commitment to tackle corruption. Why should this be a joint donor exercise? GOVNET found that there is frequent duplication and overlap among assessment tools used by donors and other stakeholders in the field: “There are multiple definitions of governance and a multiplicity of assessment tools… [revealing] the existence of 45 general methodologies, many of which overlap” (OECD, 2009a).3 This inevitably increases transaction costs for both donors and partner countries. There are very few instances of genuinely coherent and co-ordinated governance assessments at the national level (Box 7.1). While it may not be possible to agree a commonly accepted definition of governance, there is scope for further agreement on identified principles around what good governance represents. GOVNET research has found that there is little interest in developing one single common assessment tool for all to use. However, co-ordination can be improved by matching different tools to specific purposes, mixing long- and short-term interventions and feeding lessons from individual processes into new initiatives. Similarly, donors should identify and draw lessons from existing best practices from their own experiences to inform further Box 7.1. A shared understanding of governance: examples from Africa One of the few examples of an effectively co-ordinated governance assessment comes from Rwanda. Significantly, the driving force behind this more co-ordinated effort came directly from the head of state. The president of Rwanda initiated a successful joint governance assessment (JGA) in 2006 to foster a collaborative and inclusive process among stakeholders from government, civil society, the media and opposition parties, with donors and the multilateral agencies working effectively together in a supporting role. The Government of Rwanda notes that the JGA: […] intends to establish a common understanding of governance progress, problems and priorities, and a framework for assessing progress over the coming years on the basis of agreed indicators and benchmarks. The guiding principle has been to provide a basis for joint ownership and constructive discussion in order to improve the quality and usefulness of dialogue around issues of good governance (Ministry of Local Government, 2008). In Cameroon, the Change Habits-Oppose Corruption (CHOC) Project – a partnership involving numerous donors* – was set up to explore country-level partnerships for good governance. This promising platform provides a coherent assessment framework through which significant progress can be made. Under GOVNET’s leadership and following an invitation from the Government of Cameroon, a multi-donor mission conducted a rapid assessment of corruption in Cameroon and proposed the next steps to support the country in its fight against corruption. * Jointly managed by
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