TACKLING , TRANSFORMING LIVES Accelerating Human Development in Asia and the Pacific

Published for the United Nations Development Programme Copyright ©2008 by the United Nations Development Programme Regional Centre in Colombo, Human Development Report Unit 23 Independence Avenue, Colombo 7,

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First published, 2008

Published for UNDP by Macmillan Ltd.

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Printed at Sanat Printers 312 EPIP, Kundli 131 028 TEAM FOR THE PREPARATION OF THE Asia-Pacific Human Development Report TACKLING CORRUPTION, TRANSFORMING LIVES

Team Leader Anuradha Rajivan

Core Team: Gry Ballestad, Elena Borsatti, The Asia-Pacific Human Development Ramesh Gampat, Renata Rubian, Niranjan Report Unit (HDRU), Regional Centre Sarangi, Ruwanthi Senarathne, Omar in Colombo (RCC) Siddique, Manoja Wickramarathne The HDRU team members, both past and Statistics team: Ramesh Gampat, present, who worked on this collaborative Niranjan Sarangi, Ruwanthi Senarathne, effort are Gry Ballestad, Bineswaree Manoja Wickramarathne (Aruna) Bolaky, Elena Borsatti, Hasna Cheema, Kay Kirby Dorji, Ramesh Editor: Peter Stalker Gampat, Sonia Gomez, Anuradha Rajivan, Renata Rubian, Niranjan Sarangi, Designer: Rustam Vania Ruwanthi Senarathne, Omar Siddique, Bronwyn Walker and Manoja Publishers: Macmillan India Ltd. Wickramarathne.

About the Asia-Pacific Human Development Report

The Asia-Pacific Regional Human Development Report (APHDR) is an important resource and instrument to explore critical development concerns. The Report thus informs policies from a human development perspective, putting people at the centre of development debates. As a regional public good, the APHDR focuses on issues that are of common concern to several countries in the region, have sensitivities that are better addressed at a regional level, or have clear cross-border dimensions. The APHDR is an independent intellectual exercise developed through a regional participatory process that draws from the contributions of many. The theme for each Report is also selected through consultations that include participants within and outside UNDP. The more nuanced focus of the Report is guided by substantive and diverse inputs that bring together Asia-Pacific stakeholders from governments, civil society, academia, research institutions, the media, the private sector and others. Technical background papers are prepared by eminent experts drawn largely from the Region. An established peer review process contributes to quality and impartiality. The work is enriched by a moderated discussion on the Asia-Pacific Human Development Network, which comprises members from the Region and beyond. Drawing from this rich material, the Report is prepared by the Human Development Report Unit team. The APHDR is disseminated widely, helping to promote dialogue and bring together the people of Asia Pacific to accelerate human development. Foreword

This Report comes on the heels of the misleadingly termed ‘petty corruption’, which landmark Second Session of the Conference takes its toll on vast numbers of people, is of State Parties to the United Nations just as weighty as ‘grand corruption’, which Convention against Corruption in Bali, gets the lion’s share of publicity. Cross-border , which is aiding countries in the issues, increasingly important for this rapidly implementation of their anti-corruption globalizing region, are also explored. efforts. The United Nations Convention Corruption undermines democratic Against Corruption (UNCAC) is the first institutions, retards legally binding, international anti-corruption and contributes to government instability. It instrument that provides a unique opportu- attacks the foundation of democratic nity to mount a global response to a global institutions by distorting electoral processes, problem. This Regional Human Development perverting the rule of law and creating Report examines the problem of corruption bureaucratic quagmires whose only reason for from the perspective of the countries of Asia existence is the soliciting of bribes. Economic and the Pacific. In doing so, it builds on the development is stunted because outside direct momentum around the UNCAC mobilization, investment is discouraged and small busi- and hopes to contribute to the agenda for nesses within the country often find it change. This publication is also timely – this impossible to overcome the ‘start-up costs’ is the halfway mark in the timetable for required, because of corruption. As Kofi achieving the Millennium Development Annan, the former UN Secretary-General Goals, and it addresses corruption surround- remarked, ‘Corruption hurts the poor dis- ing the exploitation of natural resources, at a proportionately by diverting funds intended for time when concerns about climate change are development, undermining a government’s reaching a peak in this most dynamic region ability to provide basic services, feeding inequa- of the world. The Report documents the lity and injustice, and discouraging foreign challenge corruption poses for human deve- investment and aid.’ lopment and the solutions that are being In a diverse region like the Asia-Pacific, attempted to address this multi-dimensional which is attempting the twin task of problem. development and democratic consolidation, The focus on corruption from a human the problem of corruption goes to its very core. development perspective makes this Report It diminishes not only the outcomes we seek unique. It hones in on the price corruption to achieve, but also corrodes the instruments extracts from the poor and disadvantaged, and mechanisms we have at our disposal to especially in their daily lives. It spotlights do so. Many democratic regimes have been hidden forms of corruption that get less overthrown because elected governments media attention. These include the passing of failed not only to deliver results; they abused laws and regulations which allow corruption their offices for securing private gains. But to be conducted within legal bounds. The non-democratic regimes that replaced them,

v also have not been able to resolve the problem Solutions form the heart of this Report. of corruption. While non-democratic regimes Options are presented of relevance not just to may initially appear to curb visible corruption nations, but also to the region and the globe. through strong action, they are neither Tackling corruption in Asia-Pacific is an accountable nor responsive to the people they international responsibility that goes beyond govern, in the way democratic institutions can governments, after all. It needs to be shared be. The solutions lie, therefore, in more and by transnational companies, international better quality of democracy; in terms of banks, multilateral agencies, aid agencies, reinvigorated democratic institutions and civil society organizations, media and indivi- vibrant democratic practice. duals alike. Today, combating corruption Governments, civil society and companies makes more political sense than ever before. around the world are showing that it is This is especially so in sectors like water and possible to stymie high levels of corruption. electricity, and health and education, which Those in the Asia-Pacific region have won can greatly promote citizen satisfaction. some battles against it. Home-grown success The Report is action-oriented, and stories brought to the fore in this Report could proposes a seven-point agenda for change, help dissipate defeatist attitudes, which building upon ongoing anti-corruption efforts. consider corruption as an incurable ailment. These parallel and reinforce efforts for The solutions in these pages seek to deepen achieving the MDGs by improving develop- the burgeoning momentum for change and mental results and building the tools to help countries identify and strengthen their deliver. The Report therefore provides a own strategies. coherent, comprehensive vision for tackling This Regional Human Development the problem of corruption in the Asia-Pacific Report is, ultimately, by and for the people of region, and proposes interventions that add the region. Stakeholders from Asia-Pacific to a concerted, robust response. This vision is countries not only identified corruption as not fantasy; it is about the reality within one of the most pressing concerns for the reach. region, they also contributed to lively and often intensive discussions with views, suggestions for focus areas and solutions. Those actors included government officials, media, private sector, academia and civil society organizations. Contributions from experts drawn largely from the region then 31.12.2007 Hafiz A. Pasha helped shape arguments and messages. The Director, Regional Bureau for Asia entire process has been truly collaborative. and the Pacific, UNDP

The analysis and policy recommendations of this Report do not necessarily reflect the views of the United Nations Development Programme, its Executive Board or its Member States. Mention of firm names and commercial products does not imply endorsement of the United Nations. The Report is an independent publication commissioned by UNDP. It is the fruit of a collaborative effort by a team of eminent experts, stakeholders, and the HDRU team of the RCC led by Anuradha Rajivan.

vi Preface

The real price of corruption is not paid in consumers. As corruption is not confined to currency, after all. The true costs are eroded country borders, it is necessary for solutions opportunities, increased marginalisation of to be a global responsibility to be shared by the disadvantaged and feelings of injustice. multi-national companies, international The myth that nothing can be done to curb banks and aid agencies alike. This Asia Pacific corruption seems to be nearly as pervasive as HDR proposes combining political will from corruption itself. This Asia Pacific Human the top with people’s voices from below, each Development Report, Tackling Corruption, strengthening the other. Transforming Lives, shows that widespread How best can social policy be shielded corruption does not have to be an inevitable from the power of narrow special interests? part of going about one’s everyday life and How can the poorest segments of society have doing business. The Report prioritises a stronger voice? Particular solutions will tackling corruption in areas that can improve depend on every country’s specific circum- daily lives, particularly of the poor. Improving stances. Reducing corruption is ultimately in justice systems, preventing misuse of the the -term interest of all layers of society, region’s abundant natural resources and promoting justice and legitimacy of institu- ensuring the effective delivery of public tions, with the disadvantaged benefiting the services, such as clean water, energy, health most. We hope that this Report will contri- and education, touch people everyday. These bute to constructive debate. The Asia Pacific improvements are also critical for region, well known for its dynamism, can seize towards the Millennium Development Goals. the momentum for change to mobilise support The Report aims to demystify certain within and across borders to build more just misconceptions surrounding a complex societies. There is much to be gained. phenomenon – aspects of corruption that are The publication of this Report is espe- less well known and hence tend to be ignored. cially opportune. The year 2008 started with Sometimes behind closed doors, sometimes the Second Session of the Conference of State openly on the floors of parliaments, laws are Parties to the United Nations Convention passed, which allow corruption to be legal. against Corruption (UNCAC) held in Nusa Meanwhile, misleadingly termed ‘petty Dua, Indonesia, in January. The UNCAC is corruption’ can be just as, if not more, the first legally binding international anti- crushing as grand corruption, hitting hard corruption instrument, providing a unique especially at the poor. opportunity for a global response to a global Tackling corruption in the Asia-Pacific is problem that pervades institutions within a responsibility to be shared by governments, countries and crosses national borders. the private sector, international organizations, The Report benefited enormously from civil society and the media. Individuals must the ongoing guidance and support of Hafiz also assert themselves as citizens and Pasha. He worked with the Team more like a

vii member than a Bureau Director and saw the this work. On behalf of the Regional Centre Human Development Report Unit through in Colombo, we would like say a very special the many twists and turns in the course of thank you to him.

Omar Noman Anuradha K. Rajivan Chief of Policies & Programmes Regional Programme Coordinator UNDP Regional Center in Colombo Human Development Report Unit UNDP Regional Center in Colombo

viii Acknowledgements

The Asia Pacific Human Development Report Technical Consultations is the result of an intensively collaborative process with contributions from many people, The Report also draws on the feedback, views too many to individually name. A range of and opinions expressed in regional technical stakeholders, largely from the region, meetings as part of the report preparation contributed to the content: experts, academia, process. Participants were: Shahid Akhtar, the media, private sector, governments, CSOs Anne-Isabelle Degryse-Blateau, Sara Ferrer and UNDP country offices from the Asia Olivella, Elisabeth Fong, Ramesh Gampat, Pacific. Hafiz Pasha inspired and guided the Douglas Gardner, Sonia Gomez, Cherie Hart, work, and provided numerous substantive Jak Jabes, Roshni Karwal, Iori Kato, Patrick inputs. Colleagues from the Regional Centre Keuleers, Kay Kirby Dorji, Amornsak in Colombo provided excellent support Kitthananan, Marcia V.J. Kran, Tanni throughout the process of the Report’s Mukhopadhyay, Gerardo Munck, B. Murali, preparation. Omar Noman, Koh Miyaoi, Hafiz Pasha, Minh Pham, Anuradha Rajivan, Bharat Contributors Ramaswami, Ramachandran Ramaswamy, Renata Rubian, Niranjan Sarangi, Ruwanthi Numerous background papers, papers, Senarathne, Omar Siddique, Narin Sok, Peter drafts, special contributions and notes Stalker, Surekha Subarwal, R. Sudarshan, covering a wide range of issues have informed Nils Taxell and Garry Wiseman. the Report. The main contributors were: Jens Christopher Andvig, Omar Azfar, Sara Stakeholder Consultations Azfar, Gry Ballestad, Bineswaree (Aruna) Bolaky, Elena Borsatti, Neera Burra, Hiram The Report benefited from the rich and E. Chodosh, Sheila S. Coronel, Sergio Feld, fruitful interaction with a wide cross-section Ramesh Gampat, Sonia Gomez, Kevin Evans, of stakeholders in a series of focused, sub- Manzoor Hasan, Angela Hawken, Michael regional (East Asia, , and the Johnston, Patrick Keuleers, C. Raj Kumar, Pacific) consultations. Stakeholders came Molly Lipscomb, Tenen Masduki, Toby from academia, governments, the media, Mendel, Ajit Mishra, Satish C. Mishra, private sector, CSOs, think tanks and UN Ahmed Musfiq Mobarak, Gerardo L. Munck, entities. Participants were: Mirwais Omar Noman, Jon S.T. Quah, R.K. Ahmadzai, Shahid Akhtar, Jolene Akolo- Raghavan, Anuradha Rajivan, Renata Tautakitaki, Roby Alampay, Ranjan Krishna Rubian, Niranjan Sarangi, Basheerhamad Aryal, Amir Ayaz, Gry Ballestad, Abdul Bari, Shadrach, Nazhat Shameem, Amit Kevin Barr, Suki Beavers, Sharon Bhagwan- Shrivastava, Omar Siddique, M. Sohail, Rolls, Hakan Bjorkman, Georgina Bonin, Andre Standing, Paul Steele, and Ngoc Anh Blandine Boulekome, Tungane Broadbent, Tran, Manoja Wickramarathne and Zengke Radnaa Burmaa, Jinsong Chen, Chea Chet, He. Bounthavy Chittilath, Eun-Chim (Jennifer)

ix Choi, Nicasio Conti, Manuel Coutinho Carmo Treera, Chung Tsung Ping, Nguyen Tuan Bucar Corte Real, Nikhil Dey, Richard Dictus, Anh, Joseph Turia, Chander Vasudev, Heav Kunda Dixit, Kevins Evans, Elizabeth Fong, Veasna, Juree Vichit Vadakarn, Cecilia Ramesh Gampat, Sonia Gomez, Majid Valdivieso, Ugyen Wangdi, Nurina Widagdo, Hamedani, Maumoon Hameed, Anthony Garry Wiseman, Akuila Yabaki, Nemo Yalo, Harold, Cherie Hart, Manzoor Hasan, Om Yentieng, Mohamed Zahid and Graham Hassal, Angie Heffernan, Naomi Zengke He. Hossain, Henry Ivarature, Jak Jabes, Vaasili Jackson, Mohammad Jasin, Anita Jowitt, Statistical Work Sung-Goo Kang, Sapna Karim, Iori Kato, McAnthony Keah, Patrick Keuleers, Isaako The Statistical Team comprised Ramesh Kine, Kay Kirby Dorji, Marcia Kran, Walter Gampat, Niranjan Sarangi, Ruwanthi Ladhuwahetty, Vincent Lazatin, Jing Li, Jonas Senarathne and Manoja Wickramarathne. Lovkrona, Rigo Lua, Marito Magno, Matthias The team benefited from comments provided Meier, Manju Menon, Joana Merlin-Scholtes, by Amitabh Kundu, Omar Noman, T. Tanni Mukhopadhyay, Gerardo Munck, Palanivel, Hafiz Pasha and Anuradha Tsend Munkhorgil, B. Murali, U. Myint, Rajivan. Apenisa Naigulevu, Hannaline Nalau Ilo, Jennifer Navarro, Sharad C. Neupane, Hoang Reviewers Ngoc Giao, Yoko Nishimoto, Omar Noman, Beatrice Olsson, Tonet Ortega, T. Palanivel, The technical background papers as well as Hafiz Pasha, Minh Pham, Oseah Philemon the draft Report were peer reviewed inter- Obe, Thone Phonephachanh, Hla Phyu Chit, nally and externally at various stages by: Gry Eugenia Piza-Lopez, Shoma Prasad, Jon S.T. Ballestad, Nina Berg, Elena Borsatti, Asit K. Quah, Coco Quisumbing, Bishal Rai, Biswas, Edgardo Buscaglia, Jim Chalmers, Anuradha Rajivan, Bharat Ramaswami, C.P. Chandrasekhar, Yvonne Chua, Pedro Ramchandra Ramasamy, Piyasena Conceicao, Alison Drayton, Noha El-Mikawy, Ranansinghe, Ashraf Rasheed, R. Bjoern Foerde, Ramesh Gampat, Aarti Gupta, Rathakirushnam, Steven Ratuva, Nicholas Selim Jahan, Michael Johnston, Mustafq Rosellini, Renata Rubian, Ahmad Salari, Khan, Nalin Kinshor, Amitabh Kundu, Chris- Abdul Razique Samadi, Abdul Samat, tian Lemaire, Linda Lim, Sarah Lister, Yiyi Alyeksandr Sarangerel, Niranjan Sarangi, Lu, Chune Loong Lum, Phil Matsheza, Toby Sadhana Sen, Ruwanthi Senarathne, Nazhat Mendel, Gerardo Munck, Donald O’Leary, Shameem, Deepali Sharma, Beda Prasad William Orme, T. Palanivel, R.K. Raghavan, Shiwakoti, Shreekrishna Shrestha, Atapana Anuradha Rajivan, Renata Rubian, Niranjan Siakimotu, Omar Siddique, Manish Sisodia, Sarangi, Elissar Sarrouh, Muttukrishna Narin Sok, Nguonphna Sophea, Soukhampet, Sarvananthan, Ruwanthi Senarathne, Omar Shennia Spillane, Peter Stalker, Paul Steele, Siddique, Thierry Soret, R. Sudarshan, Surekha Subarwal, R. Sudarshan, Jae-Sik Pauline Tamesis, Gopakumar K. Thampi, Suh, George Sulliman, John Taimalelagi, Chanuka Wattegama, Emma Webb, Ronald Talasasa, Nils Taxell, Nandakumar Cheng Wenhao, Manoja Wickramarathne, Thamotheran, Ted Thomas, Claire Thoms, Alessandra Wilde, Rui Yang and Jon-Sung Kurbabeb T. Toily, Ngoc Anh Tran, Nualnoi You.

x UNDP Country Offices and Matsheza, Jon S.T. Quah, Anuradha Rajivan, Regional Centres Usaia Ratuvili, Charmaine Rodrigues, Renata Rubian, Farhan Sabih, Rachada Sae-lee, UNDP Country Offices in Asia-Pacific have Nabeel Salie, Niranjan Sarangi, Nashida provided useful feedback. In this regard, we Sattar, Herman Semes, Gurpreet Singh, would like to particularly thank the Country Andre Standing, R. Sudarshan, Sumitra Offices in Afghanistan, Bangladesh, Bhutan, Sundram, Bill Tod, Cecilia Tortajada, Ngoc Cambodia, China, Fiji, India, Indonesia, Anh Tran, Taryn Vian, Frank Vogl, Chanuka Islamic Republic of Iran, Lao PDR, Malaysia, Wattegama, Andrew Wedeman, Rui Yang and Maldives, Mongolia, Nepal, Pakistan, Papua Dieter Zinnbauer. New Guinea, Philippines, Republic of Korea, Samoa, Sri Lanka, Thailand, Timor-Leste Production and Viet Nam. We would also like to express our thanks UNDP RCC Business Services Unit provided to the UNDP Regional Centre in Bangkok and critical administrative support and manage- the UNDP Pacific Centre in Suva for their ment services. We express our thanks to feedback. Anusuiya Ainkaran, Lakmini De Silva, Anula Harasgama, Harini Perera and Tzvetan AP-HDNet Contributors Zafirov. Gayan Peiris from the UNDP RCC Knowledge Services Team configured the IT Stimulating and focused discussions on the platform that enabled us to rapidly store and AP-HD Network were held from June to track material relating to the Report. August 2007, which enriched the Report. The network discussions were moderated by Advocacy and Dissemination Jim Chalmers to whom we are very grateful. The contributors were: Ramachandran Hasna Cheema, Ruwanthi Senarathne and Ramasamy, Jens Christopher Andvig, Guitelle Bronwyn Walker with advice from the Baghdadi-Sabeti, Fayyaz Baqir, Gernot regional communications and advocacy team Brodnig, Hasna Cheema, Kevin Evans, Sergio of Cherie Hart and Surekha Subarwal Feld, Basil Fernando, Neil Fernando, Ramesh handled advocacy and dissemination for this Gampat, Sandy Gauntlett, Sonia Gomez, Li Report. Jing, Chitra Khati, Rokeya Khatun, Basant Kumar Rath, Raj Kumar, Roy Laifungbam, Christian Lemaire, Peng Long Yun, Juan Mayo, Ajit Mishra, Gerardo Munck, Steve Omar Noman Onwuasoanya, Pact Cambodia, Biswajit Chief of Policies & Programmes Padhi, Mark Philp, Thusitha Pilapitiya, Phil UNDP Regional Centre in Colombo

xi Contents

Foreword v Preface vii Acknowledgements ix Abbreviations xix

OVERVIEW 1

CHAPTER 1: The Scourge of Corruption 15 What is Corruption? 18 A Scourge through the Ages 22 A Challenge for International Organizations 24 Measuring the Problem 24 Forms of Government 25 Impact on People’s Lives 28 Hampering Economic Performance 29 Corroding Tax Administration 33 Corruption and Human Development 35 Contours of the Report 37

CHAPTER 2: Justice for Sale 39 Police Corruption 41 Impact on the Poor 44 Judicial Corruption 47 Not for Sale 53

CHAPTER 3: Keeping Public Services Honest 55 Health Services 57 Education Services 62 Public Utilities 66 The Right to Services 75

CHAPTER 4: Stopping Leakages in Financial and Material Aid 77 Emergency Responses 80 Longer-Term Special Development Situations 81 Social Safety Net Programmes 84 Minimizing the Leaks 87

xiii CHAPTER 5: Cleaning up Natural Resources 89 The Extent of Corruption 93 The Cross-Border Dimension 96 The Impact on the Poorest 97 Uprooting Corruption in Natural Resources 98 Supporting the Environment 104

CHAPTER 6: Crushing Corruption from the Top 105 National Legislation and Anti-Corruption Agencies 107 Reform 113 Curbing Corruption in Taxation 115 Privatization 117 The Right to Information 118 e-Governance 123 Cross-Border Cooperation 124 Governments Taking the Lead 128

CHAPTER 7: Citizens on Watch 129 The Power of the Media 131 Civil Society Organizations 137 Keeping Up the Pressure 146

CHAPTER 8: Driving Out Corruption 147 The Turning Tide 150 Seizing the Moment: Combining Pressure from Above with Voice from Below 150 Setting the Priorities 151 An Agenda for Action 152 Taking the Higher Path 155

Notes 156

Bibliography 161

BOXES 1.1 Characteristics of Corruption 18 1.2 The Most Common Forms of Corruption 19 1.3 Virtuous Women, Corrupt Men? 20 1.4 Just Not Cricket 22 1.5 Country Vulnerability to Corruption 26 3.1 Counterfeit Drugs in Asia 58 3.2 Drug Experimentation 60

xiv 3.3 Corruption in Private Schools in Bangladesh 64 3.4 Education as a Solution 65 3.5 Opportunities for Corruption Throughout the Project Cycle 67 3.6 Privatization: Mixed Results in Indonesia and the Philippines 70 3.7 Direct Action in Delhi 70 3.8 The Tortuous Process for Getting an Electricity Connection 71 3.9 Uprooting Corruption in Sanitation 74 4.1 Confronting the Double Whammy in Aceh 82 4.2 Sex for Food Scandals 83 4.3 Aid Watch in Sri Lanka 84 4.4 Corruption in Microfinance 85 5.1 What Makes Natural Resources Particularly Prone to Corruption? 91 5.2 Revenue Watch 99 6.1 ADB/OECD Anti-Corruption Initiative for Asia-Pacific 125 6.2 The Pacific Plan’s Strategy to Fight Corruption 126 7.1 An Envelope Headache in Indonesia and ATM Journalism in the Philippines 136 7.2 What Civil Society Organizations Cannot Do – And Can Do 140

TABLES 2.1 Perceptions of Corruption in Justice System, by Global Region 41 3.1 Corruption in the Health Sector 57 3.2 Corruption in the Education Sector 63 4.1 Asia-Pacific Countries, by CCI Ranking and Experience of Crisis Situations 80 5.1 Some Forms of Corruption in Natural Resources 92 5.2 South-East Asia, Indicative Estimates of Illegal Logging 95 6.1 Main Anti-Corruption Agencies in Asia-Pacific Countries 109 6.2 Appointment of Chief Executive of Some ACAs in the Asia-Pacific Region 111 6.3 Staff and Budgets of Anti-Corruption Agencies, 2005 111 6.4 Anti-Corruption Agencies: Some Examples of Focus 112 6.5 Countries in Asia and the Pacific with Right-to-Information Legislation 118 6.6 A Regional Snapshot of the UNCAC 125 7.1 Media Ownership, Percentage of Countries 133 7.2 Worldwide Press Freedom Index, Asia-Pacific Countries, 2007 134 7.3 Incentives by Type and Target Constituency 142

FIGURES 1.1 Declining Trend in Corruption and Fraud, 1815–1975 23 1.2 Political Systems and Perceptions of Corruption 27 1.3 Political Systems in the Asia-Pacific Region 27 1.4 Systems of Government and Control of Corruption Index 28 1.5 Decentralization and Perceptions of Corruption 28 1.6 Political Systems, Perceptions of Corruption Across Different Sectors 29 1.7 Control of Corruption Index and GDP Growth 32

xv 1.8 Control of Corruption and Tax Revenue 34 1.9 Human Development Index and Perceived Level of Corruption 35 1.10 Change in Human Development Index and the Control of Corruption Index Among the Low- and Medium-HDI Countries 36 1.11 The Two-Way Relationship Between Corruption and Human Development 36 1.12 Perceived Level of Corruption and Secondary Enrolment 37 2.1 Respondents Who Have Paid a Bribe to the Police, by Global Region 43 3.1 Proportion of Users of Health Services Who Make Informal Payments, Selected Countries 59 7.1 Voice and Accountability Plotted Against Corruption Control 143 7.2 Institutional and Social Capacity Compared with Control of Corruption 143

SPECIAL CONTRIBUTIONS Combating Corruption in Criminal Justice Agencies: The Indian Scene 45 Prosecuting Corruption: A Pacific Perspective 50 Strengthening Public Oversight Institutions in Bangladesh 116 Solutions for Preventing and Curbing 121 Fighting : From Where? 138

INDICATORS 181 Reader’s Guide and Notes to Tables 183 Popular Measures of Corruption 1 Popular Measures of Corruption 189 2 Corruption (Perceptions) in Public Institutions, Media and NGOs 191 3 Bribe Paying and Impact of Corruption (Perceptions) 193 Political Economy 4 Political Economy – Political Climate 194 5 Political Economy – Governance Climate 196 6 Political Economy – Voice and Choice, Legal Climate 198 7 Political Economy – Economic Climate 199 Socio Economic Indicators 8 Human Development Index – Trends 201 9 Demography 202 10 Macro Indicators: GDP, Trade and Tax 204 11 Macro Indicators: Structure of the Economy 206 12 Macro Indicators: Sectoral Distribution of Workforce and Unemployment Rate 208 13 Access to Improved Water Source and Sanitation Facilities 210 14 Maternal and Child Health 211 15 Incidence of Major Diseases 212 16 School Enrolment 214

xvi 17 Gender and Development 215 18 Environmental Sustainability: Forest Area and Carbon Dioxide Emission 217 19 Poverty, Inequality and Undernourishment 219 20 Access to Information 221

Technical Notes Technical note 1 Measuring Corruption 222 Technical note 2 Mapping Vulnerability to Corruption 224

Definitions of Technical Terms 228

Statistical References 232

xvii Abbreviations

ACA Anti-Corruption Agency ACC Anti Corruption Commission ADB Asian Development Bank ASEAN Association of South-East Asian Nations BEEPS Business Environment and Enterprise Performance Survey BRAC Bangladesh Rural Advancement Committee CAC Commission Against Corruption (Macau) CBI Central Bureau of Investigation (India) CBO Community Based Organization CCAGG Concerned Citizens of Abra Good Government (NGO-Philippines) CCI Control of Corruption Index (World Bank) CGAP Consultative Group to Assist the Poor (Consortium of Aid Agencies) CIAA Commission for the Investigation of Abuse of Authority (Nepal) CIDSS Comprehensive & Integrated Delivery of Social Services (Philippines) CITES Convention on International Trade in Endangered Species CPI Corruption Perception Index (Transparency International) CPIB Corrupt Practices Investigation Bureau (Singapore) CPLC Citizen Police Liaison Committee (Pakistan) CSO Civil Society Organization CSR Corporate Social Responsibilities CVC Central Vigilance Commission (India) DFID UK Department for International Development EBRD European Bank for Reconstruction and Development EU European Union EIU Economist Intelligence Unit ESI Environmental Sustainability Index ESIA Environmental and Social Impact Assessment EITI Extractive Industries Transparency Initiative (Regional Initiative) FAO Food and Agriculture Organization of the United Nations FATF Financial Action Task Force on Money Laundering (Founded by G7) FDI Foreign Direct Investment FIIA Foreign Investment Implementation Authority (India) FLEG Forest Law Enforcement and Governance (East Asia Ministerial Conference, 2001)

xix FSC Forest Stewardship Council GCR Global Competitiveness Report GDP Gross Domestic Product GONGOS Government Sponsored NGOs HDI Human Development Index HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome ICAC Independent Commission Against Corruption () ICC International Cricket Council ICRG International Country Risk Guide ICT Information and Communication Technology ICW Indonesia Corruption Watch IFI International Financial Institution ILO International Labour Organization IT Information Technology IUU Illegal Unreported and Unregulated KDNG Kachin Development Network Group (Myanmar) KICAC Korea Independent Commission Against Corruption KPK Komisi Pembarantasan Korupsi (Indonesian Corruption Eradication Commission) LGRDD Local Government and Rural Development Department (Pakistan) LRA Load Regularization Agreement MDG Millennium Development Goal MDI Micro Finance Institutions MKSS Mazdoor Kisaan Shakti Sangathan (Indian NGO) MSC Marine Stewardship Council NBI National Bureau of Investigation (Malaysia) NCCC National Counter Corruption Commission (Thailand) NGO Non-Governmental Organization NIS National Integrity Strategy (Bangladesh) NJPMC National Judicial Policy Making Committee (Pakistan) NLCGG Northern Luzon Coalition for Good Governance (Philippines) NRB National Reconstruction Bureau (Pakistan) NREGA National Rural Employment Guarantee Act (India) OC Ombudsman Commission (PNG) ODA Official Development Assistance OECD Organization for Economic Development and Cooperation ONA Office of National The Assembly (Vietnam) OPEN Online Procedure Enhancement for Civil Applications (Republic of Korea) PAP People’s Action Party (Singapore) xx PBS Pally Bidyut Samities (Bangladesh-Rural Electrification Board) PCIJ Philippine Centre for Investigative Journalism PES Payment for Environmental Services PMT Pole Mounted Transformer PPP Public Private Partnership PSC Public Service Commission (Bangladesh) PWYP Publish What You Pay (Campaign launched in 2002 by Civil Societies) RAS Rapid Alert System (WHO) RRC Regulatory Reform Committee (Republic of Korea) RFD Regional Forestry Division (Thailand) RTI Right To Information (India) RWI Revenue Watch International SAARC South Asian Association for Regional Cooperation SEUF Socio Economic Units Foundation (India-NGO) SFDA State Food and Drug Administration (China) StAR Stolen Asset Recovery (Initiative launched by World Bank and UNDOC) SWC Single Window Cell (India) TAF The Asia Foundation TAG Transparent Accountable Governance (NGO-Philippines) TI Transparency International TAN Transparency and Accountability Network (Philippines) UNCAC United Nations Convention Against Corruption UNDP United Nations Development Programme UNESCAP United Nations Economic and Social Commission for Asia and Pacific UNODC United Nations Office on Drugs and Crime UNEP United Nations Environment Programme UNESCO United Nations Educational Scientific and Cultural Organization UNFCC United Nations Framework Convention on Climate Change USAID United States Agency for International Development VA Village Accountants VAT Value Added Tax WHO World Health Organization

xxi Tackling Corruption, Transforming Lives

Overview

People across the Asia-Pacific region are becoming increasingly concerned about corruption, and governments are starting to react. Hauling the rich and powerful before the courts may grab the headlines, but the poor will benefit more from efforts to eliminate the corruption that plagues their everyday lives. Corruption has to be tackled from the top down and from the bottom up, with vigorous support from the media and organizations of civil society. An international response is needed to counter cross-border corruption in this increasingly globalized world as well.

Corruption has many damaging effects: requires acceding and ratifying countries to weakened national institutions, inequitable implement far-reaching reforms. social services, and blatant injustice in the Corruption is an important development courts – along with widespread economic issue – developing countries do not want to inefficiency and unchecked environmental follow the slow historical path of the now exploitation. And it hits hardest at the poor developed countries, for corruption to be – who often depend heavily on public services better controlled. Just as they are putting in and the natural environment and are least place conscious policies for poverty reduction, able to pay bribes for essential services that so too they would like to speed-up the process should be theirs by right. of tackling corruption. Politicians in the region are starting to respond. Nowadays most want to be asso- A Historical Problem ciated with fighting corruption. Indeed the need to combat corruption has been used as a Corruption has plagued the world ever since justification for overthrowing elected govern- the emergence of organized forms of govern- ments, sometimes even with an element of ment as people organized themselves for public support. Civil society groups too are group living. Until the nineteenth and early making greater efforts to hold public- and twentieth centuries, many of the now deve- private-sector organizations to account, and loped countries were riddled with corruption the media are also focusing on this issue and and it took many decades to bring the levels finding new ways to expose and publicize it. down. Governments across the Asia-Pacific There is also greater commitment at the region have also been preoccupied with this international level. By the end of 2007, 140 issue. Some countries, Singapore and Hong state parties had signed the first global anti- Kong (SAR), China, for example, have managed corruption instrument, the 2005 United to reduce corruption much more swiftly but Nations Convention Against Corruption. It most other countries in the Asia-Pacific have

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 1 generally made slow progress – they are larger regimes, and lower within parliamentary territories and their leadership has proved than presidential systems. Although in less resolute. democracies there is always the danger that Across the region, corruption comes in elected politicians will become beholden to many forms, but the commonest overall wealthy donors, citizens can always ‘vote the distinction is between ‘grand’ and ‘petty’. rascals out’. Grand corruption typically involves relatively Within all forms of government, some large bribes from contractors or other institutions are generally worse than others. corporations, generally associated with high- In the Asia-Pacific region the least trusted are level politicians or officials. Petty corruption the police, followed by the judiciary and tax involves smaller amounts but more frequent offices. Education and medical services come transactions – lower-level public officials next, while the least corrupt sectors are demanding ‘speed money’ to issue licenses, for utilities and registry or permit services – example, or to allow full access to schools, although even in these, levels of corruption hospitals or public utilities. It tends to affect are still very high. the daily lives of a very large number of Corruption inevitably has an impact on people, and more so the poor, and hence the economy and the society. It is sometimes calling it ‘petty’ is really a misnomer. argued that by ‘greasing the wheels’ corrup- Though corruption is widespread it is tion speeds things up. But there is little evi- largely clandestine, and thus difficult to dence for this from the aggregate standpoint; measure. Most attempts have been indirect – indeed it seems more likely if businesses gauging people’s perceptions rather than readily pay bribes they will simply encourage actual transactions of corruption. One of the bureaucrats to unreel yet more red tape. most widely cited is the ‘Corruption Percep- On the other hand, there are many ways tions Index’ (CPI) produced by the NGO in which corruption is likely to hamper Transparency International. Another is the growth especially over the long term – for ‘Control of Corruption Index’ (CCI) produced example, if talented people are tempted to by the World Bank. They do offer some make an easy living as corrupt bureaucrats relevant information and have spurred rather than as entrepreneurs. Even those who countries into responding. They can also be do run businesses, may prefer to remain in useful for cross-regional comparisons – for the informal sector rather than expand and which this Report uses the CCI. However, be faced with greater demands from corrupt since these measures are opinion-based they officialdom. Corruption is also likely to are necessarily imprecise. The measurements weaken infrastructure; not only does it drain are generally oriented towards businesses and away funds, it also reduces the quality of make less of an attempt to express the impact investment, producing inadequate transport, on the poor. power, or communications systems. Corruption distorts both the national Political and Economic Impact economy and public investment through the tax system. When governments apply high All forms of government are vulnerable to tax rates, with complex rules that are inter- corruption, but some are more vulnerable preted by underpaid officials they can expect than others. On the whole, corruption seems to lose a lot of tax income – particularly if lower in democracies than authoritarian there is little risk of being caught or punished.

2 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT This, in turn, could reduce the capacity of efforts at poverty reduction – by diverting government to provide quality public services. goods and services targeted for the poor to A number of studies have indeed well-off and well-connected households who suggested that extensive corruption is can afford to bribe officials. The poor also lose associated with lower levels of growth – out when they have to pay bribes, since they though the correlation is weaker in Asia than can only afford small amounts, which elsewhere. Generally it does less damage in represent a high proportion of their income. larger countries, perhaps because investors In turn, better human development condi- may be willing to tolerate a more difficult tions – wider-spread education, an informed working environment if they can recoup their citizenry with voice to influence decision losses in large consumer markets. Another makers in government and businesses – can factor is the way in which corruption is help combat corruption. organized: usually it is less harmful if it is predictable, when, for example, a strong but Justice for Sale corrupt ruler demands for himself and his entourage a standard percentage on all major In the Asia-Pacific region, corruption is often activities and works with a long time horizon, at its worst in law enforcement, seriously delivering at least some benefits to bribe undermining justice. Many police officers are payers. honest and conscientious, but others have a different agenda; rather than serving as Corruption and Human Development guarantors of rights and protection they are sources of harassment and fear. In the rural Corruption undermines human development. areas, they may, for example, be in the This can happen through various channels. It pockets of rich landowners who use them to is likely, for example, to corrode ideals of control their workforces or their tenants. In public service, so that corrupt administra- the cities, the police can be in the pay of tions will tend to be less interested in corrupt politicians and business interests, and investing in health and education. Even if they may be used, for example, to force poor wish to, they will find that their activities people off their land to make way for new have hampered and developments. Or police officers may simply weakened tax collection, leaving them less to be working for themselves, extracting as spend on public service programmes. much income as they can from their position Corruption also affects the quality and of power. Poor salaries and working condi- composition of public investment. Corrupt tions among the lower constabulary are officials are less attracted to small-scale contributory factors. projects that involve a large number of actors, Police corruption is especially pernicious preferring large infrastructure projects that since it is often accompanied by violence. offer greater opportunities for collecting Police may, after apprehending suspects, rents. This distorts the pattern of public choose not to arrest them but instead beat expenditure – away from key public goods them up or rape them, and force them to pay such as public health, education and for their freedom. Police can also seize environmental protection, and towards new people they know to be innocent, threatening roads or airports or military hardware. them with arrest and demanding payment Corruption is also likely to undermine for release. A survey in the Asia-Pacific

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 3 region found that over the previous year, make it tempting for weak judges to buckle to 18 per cent of respondents had paid a other pressures too. Some may, for example, police bribe. consider it more important to support a The poor are the most exposed because relative or associate than to uphold the rule they lack the funds or influence needed to of law. They may also fear retribution. defend themselves. In cities, among those Much of the responsibility for reducing likely to be harassed are street vendors, who judicial corruption lies with the judges and have to pay up or see their goods confiscated lawyers – acting individually and through or destroyed. On the other hand, poor people associations or professional bodies. But are less likely to receive any attention if they governments can also minimize judicial want to register a complaint. corruption. They can, for example, ensure For tackling police corruption, one of the that judges are appointed by independent most important steps is to ensure that com- bodies, serve fixed terms, have salaries that plaints against the police are dealt with, by a match their experience and qualifications, truly independent body. Other solutions and are offered all necessary protection. The involve changing police structures and opera- judicial system should also require judges to tions to make them more efficient and give written reasons for their judgements – responsive – applying rigid recruitment making greater use of information technology criteria, reallocating individuals across tasks, to offer easier access to court documents. modifying transfer patterns, and carrying out ethical evaluations of those who are up for Keeping Public Services Honest promotion. The overall intention should be to create more professional forces that enable Corruption is also widespread in social individual officers to take greater pride in services such as health and education, as well their work. as in public utilities that provide electricity People tend to have fewer interactions and water. As a result, poor people find with the court system. But here too they may themselves excluded from schools or hospitals find that justice has its price. A number of that they cannot afford, or asked to pay extra studies across Asia have found that two- simply to gain access to services to which they thirds or more of the population consider the already have a right. routine court system to be corrupt, and admit that they themselves, guilty or innocent, will Health Services consider it wise to pay bribes. The poor will suffer from a corrupt legal system that offers Corruption can occur within health services them little protection – exposing them to at all levels – from grand corruption, as funds arbitrary judgements that may cause them to are siphoned off during the construction of lose their land, homes, or livelihoods. new hospitals or health centres, to petty Judicial corruption is another aspect of a corruption as health workers or administra- weakly functioning state. In many countries, tors demand bribes just to perform their judges are appointed or promoted by routine duties. Corruption can also take politically motivated bodies and even judges various forms within health service staffing. who want to uphold ethical principles may This may involve, for example, buying find themselves subject to heavy political positions at the time of hiring, or excessive pressure in high-profile cases. Low salaries absenteeism: across the region reported

4 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT absenteeism rates cluster around 35 per cent in the most extreme form, results in the to 40 per cent. Corruption also creeps in via recruitment of ‘ghost teachers’ or even in the the pharmaceuticals business – at all stages creation of entire ‘ghost institutions’ – with of drug development and supply. For the drug the allocated salaries and other expenses companies, one of the main priorities is to channelled into the pockets of officials. Just ensure that their products are prescribed, so as families may need to pay bribes to get into they are profligate with generous ‘perks’ for hospitals, they may also have to pay extra to doctors. get their children into schools. One might expect corruption to result in If governments do not address these poorer standards of health. Some cross- problems, schools will continue to transmit a national studies have indeed suggested that culture of corruption to succeeding genera- in countries where levels of corruption are tions. The main priority should be closer higher immunization rates are lower and supervision, especially by allowing commu- levels of child mortality are higher. nities more control over schools through Reducing corruption in health and other parent-teacher associations and other local government services will require action from organizations. In the Philippines, for example, below and above. From below, users can work a range of civil society groups, from NGOs to together to resist demands for bribes. In churches to Girl and Boy Scout groups, have India, teams of semi-literate rural people come together to monitor the delivery of working as amateur reporters have exposed school books. In India, one NGO uses doctors illegally charging for delivering babies cameras to register the attendance of teachers at a community health centre. From above, by taking digital photos that record the date governments will need to ensure more trans- and time. parent and better managed services. In the Mekong sub-region, for example, the regula- Public Utilities tory authorities have been improving commu- nications and cooperation across borders, so For electricity and water supplies, across the they have been able to notify each other of the region the standard kickback for infrastruc- circulation of fake drugs and remove them ture projects is often quoted as 10 per cent of more quickly. the value of the contract. Corrupt officials regularly demand bribes to accept bids or to Education approve the completion of the work. But construction companies themselves often take Corruption is also widespread in education the initiative – colluding with officials or systems. This can start in the procurement of other bidders. material and labour for school construction, Once the systems are in place, corruption as corrupt officials siphon off funds for continues in day-to-day operations. Since school buildings – which can increase costs water supplies and sanitation and electricity between two and eight times. There can also supplies are generally delivered by monopoly be corruption in the purchase of textbooks, providers, officials can take advantage of the desks, blackboards, and other supplies, as fact that consumers have nowhere else to well as in contracts for cleaning services and turn. Staff might, for example, supplement meals. In many countries, there are their salaries by colluding with clients to irregularities in the hiring of teachers, which provide services ‘informally’ – by carrying out

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 5 repairs for side-payments, falsifying meter Stopping Leakages in Financial readings, or making illegal connections. The and Material Aid ensuing losses can be huge: it has been estimated that, if corruption in water Emergencies such as conflict, natural dis- supplies were eliminated, 20 per cent to asters, or sudden changes in political configu- 70 per cent of resources could be saved. ration – ‘special development situations’ – But the most damaging effect is on the often show human beings at their best. lives of poor people through high prices. As Nevertheless, there are also people who take one consumer said to a researcher for this advantage of opportunities to enrich them- Report: ‘It is really tough for a day labourer selves at a time when large amounts of cash to pay a high price for electricity and water. and goods have to be transferred rapidly with You know it is not possible to get electricity few administrative controls. and water connections without bribes or extra To some extent, corruption can even lead money. So our budget is strained and we to emergencies. Corruption tends to break the cannot afford to meet our needs. We cannot trust between the governing and the governed, save anything for our future either.’ Others as well as sow dissension among communities said that they had been deprived of basic that can degenerate into destructive or violent foodstuffs and medical facilities, incurred conflict. Corruption can even exacerbate the business losses, and interrupted their impact of natural disasters, such as earth- children’s education because they had to quakes, if it leads to uncontrolled develop- spend money on bribes. ment and compromises building inspection Many of the strategies for uprooting practices. The links between corruption and corruption involve greater investment in disasters are even clearer with landslides that services, to minimize the shortages that result from illegal logging. encourage people to pay bribes. Public corpo- When responding to emergencies, aid rations will also need to improve standards agencies are under pressure to spend fast, and of management and operate in a more trans- move quickly with flagship projects in an parent fashion. But consumers too can take unfamiliar environment and have to relax or direct action to get better services. In set aside normal procedures – which may Bangladesh, for example, the board of rural cause damage in terms of community practice electric cooperatives is selected by consumers and expectation. who then negotiate an agreement that Many of the same issues arise with longer- includes targets for system losses, collection term processes in the aftermath of conflict. efficiency, and the cost of supply per kilo- In this case, there is a temptation to buy a metre of line. They also hire meter readers on temporary peace by allowing antagonistic fixed contracts – after that they have to seek groups to share out the spoils. This is dange- different careers. Another example comes rous since it allows corrupt elites to entrench from the Local Government and Rural Deve- themselves in politics and set up predatory lopment Department in Azad Jammu and schemes that later will be very difficult to Kashmir which has largely eliminated the use eliminate. of private contractors. Instead, its technical As elsewhere, corruption in special staff work with community members who development situations needs to be addressed themselves provide labour and organize the through greater transparency in governance purchase of supplies – limiting the opportu- and closer monitoring. But there are also more nities for ‘cream skimming’ and collusion. specific measures. One is for agencies to

6 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT reduce the pressure to spend ‘fast and ensuring greater community control and furious’ by operating with more rational social audits. To be sustainable, however, deadlines; and rather than aiming at unrea- community-driven approaches have to be listic fiduciary standards, they should try to backed by a strong legal framework and ensure that their activities and the prices they bureaucratic support. pay are ‘reasonable’ under the circumstances. When responding to natural disasters they Cleaning Up Natural Resources can also establish long-term contracts with prime international contractors – who should Many developing countries in the Asia-Pacific be required to engage and build the capacity region are rich in natural resources, but, of local businesses. In addition, governments thanks to corruption, much of this national and aid agencies also need to work closely wealth is being drained away. Companies with local NGOs and establish effective may bribe public officials to get permits for systems for dealing with complaints. cutting timber, for example, or they may pay to get away with logging in protected areas. Social Safety Net Programmes Public officials themselves can also join in by running their own ‘off-the- book’ businesses. Social safety net programmes are an impor- Similar problems arise with mineral extrac- tant part of anti-poverty programmes but tion or unregulated fishing, and with systems they are also vulnerable to corruption. Those of land registration and administration, or organizing the schemes may, for example, the capturing of protected species. demand payments to register the names of Given the size of potential profits, recipients, or they can also enrol non-existent corruption can be on a grand scale, indeed workers or falsify the number of hours frequently amounting to ‘state capture’, as worked or underpay workers or give them private companies pay public officials to less food or materials than they are entitled shape laws, policies, and regulations to their to. Contractors who are supposed to be selling advantage. State capture can, however, also subsidized grains for the poor, sometimes sell be achieved through legal routes – by intense much of this on the open market at inflated political lobbying, for example, or by making prices. donations to political parties. Government have tried to reduce these Corruption in the management of natural leakages with more targeted programmes, but resources is particularly damaging for the even these are susceptible to corruption poorest communities. Many farmers have during the selection of beneficiaries. An been driven into poverty as a result of illegal alternative form of targeting is to encourage land expropriations or have been denied ‘self-selection’; for example, by offering work access to irrigation water. Whole communi- or wages that only the very poor will accept. ties, particularly indigenous people, suffer Similarly, for food distribution, rather than from the exhaustion of many natural re- distributing expensive grains, such as highly sources, notably primary forests and inshore processed rice and wheat, safety net fishing grounds. programmes can distribute cheaper but Experience across the region suggests a nutritious staples such as sorghum. number of ways of addressing these A number of countries have also problems. One is to ensure that new projects improved the efficiency of such schemes by are subjected to environmental and social

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 7 impact assessments, followed by open public therefore need to be matched by international hearings. Another is to decentralize natural campaigns that reject goods produced by resource management – to allow local people corrupt and exploitative individuals and to use resources sustainably, giving them also companies. a greater incentive to control and protect these resources. At the same time, since exploita- Crushing Corruption from the Top tion of natural resources often takes place in remote regions, governments and interna- If countries are to tackle corruption they will tional organizations can support them with need to address the issue at all levels of govern- satellite monitoring technologies. ment as well as in the private sector – reform- Given the highly cross-border nature of ing institutions and processes so as to reduce the problem, it is vital to achieve international the opportunities for corruption while creat- cooperation. Extraction processes are capital ing effective systems for detecting malpractice intensive and often involve large multina- and punishing offenders. tional companies that can be susceptible to One of the most basic anti-corruption international pressure – especially if govern- measures is to ensure that corrupt activities ments insist that their financial transactions are outlawed – either as part of general legisla- are open to public scrutiny. Unfortunately, tion or laws against specific forms of corrup- many of the errant multinationals are based tion. Legislation can also cover such issues as in Asian countries that have shown little money-laundering; a public procurement code interest in policing their companies abroad. of ethics should also be in place. It is also Since natural resource corruption is important to provide legal protection for driven largely by governance failings, it will ‘whistle-blowers’. be important to strengthen state capacity generally. But there are also some specific Anti-Corruption Agencies options for agencies concerned with natural resources, such as separating functions for Governments may divide anti-corruption res- managing production from those for monitor- ponsibilities between various prevention and ing and conservation. law enforcement institutions. Most countries The most extreme solution for limiting in the region have established formal anti- the effect of public corruption is privatiza- corruption agencies (ACAs) of one form or tion. However, this may only shift the power another. Unfortunately, these agencies are from one corruptor to another. The aim often quite weak. Almost all these ACAs instead should be to establish a clear and depend on government funding and several transparent regulatory framework for rights face severe budget constraints. Another to natural resources, whether held publicly important factor is where the ACA is located or privately. in government: if it reports to the office of the This has to be a combination of national prime minister, for example, it can be used as and international action. Most of the corrupt a weapon against political opponents. In the activity would be much less profitable Asia-Pacific region, the experience has been without ready markets in richer countries for mixed. Some administrations, such as those oil or metals or agricultural products. More in Singapore and Hong Kong (SAR), China effective monitoring and control by have resisted the temptation to meddle; government and local communities will others have not. Another important issue is

8 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT independence from the police; otherwise a Another issue is red tape, which slows corrupt police force may be free to investigate procedures and forces users to join queues its own members. that can only be jumped by paying bribes. Whether a country has one or many Most tax-related corruption, for example, agencies, success in the fight against corrup- flourishes within excessive red tape which tion depends to a great extent on cooperation requires frequent interactions between from other parts of government. Unfortu- taxpayers and tax officials. This can be nately, this is rarely forthcoming and agencies tackled by keeping rates moderate so as not are regularly frustrated by their inability to to discourage potential taxpayers while secure information and prosecutions. In the creating an integrated, simple and rational hands of a clean government, an ACA can be system. This would allow tax departments to an asset. But since it can also be deployed as a make the best use of information technology political weapon, such an agency should not which limits the discretionary powers of tax be created until there is a sufficient political officials while also cutting transaction costs, consensus on an anti-corruption strategy. helping to increase transparency and build trust. Civil Service Reform Finally, the acid test of an anti-corruption strategy is the determination to catch the ‘big Attempts to reduce corruption within fish’. Prosecuting and punishing the rich and government will require civil service reform – famous, enhance the credibility of the strategy reducing the incentives and opportunities for and has the added advantage of deterring corrupt behaviour among public servants, others, especially junior civil servants. while increasing their anxieties about being caught and punished. For this purpose, one of Privatization the first priorities should be to base personnel policies entirely on merit. Some countries in In addition to reforming public services, Asia had merit-based policies in the past but governments can also consider privatizing or have not maintained this tradition and make outsourcing some of them. This does not many appointments on the basis of favouri- necessarily solve the problem since corruption tism. Another option is to raise salaries, is also rife in the private sector, so govern- reducing the gap between those in the public ments need to be concerned not just with and private sectors. Although this is unlikely whether services should be privatized but to reduce grand corruption, which is caused how. If policy is weak before privatization, it less by need than by greed, it can reduce need- will also be weak after privatization. An based and more retail corruption. alternative is to create public-private partner- Governments will, however, need to ships. So far these have had mixed results; supplement salary increases and merit-based they seem to have worked better on a smaller promotions with tighter systems of monitor- scale. ing and control that can detect corruption swiftly and punish it severely. This should The Right to Information alter the mindsets of civil servants so that and e-Governance they see and corruption not as ‘low- risk, high-reward’ activities but as ‘high-risk, People now believe they have a right to see low reward’ ones. how government works and what it is doing.

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 9 In response, eight Asia-Pacific countries, national agencies and international corpora- including China and India, now have right to tions. The most important step in this has information (RTI) legislation. This defines been the United Nations Convention Against key categories of information that all public Corruption (UNCAC). Thus far, while 19 bodies are required to publish, and establishes Asia-Pacific countries have signed the treaty, citizens’ rights to receive specific information only 10 have ratified or acceded to it. on request. Legislation is, however, only the One of the aims of cross-border coopera- first step. The highest levels of government tion is to control transnational corporations also have to sustain their support of RTI and (TNCs) – which generally operate more public officials have to engage positively and responsibly in developed countries where they meet their obligations fulsomely, so it is are under closer scrutiny. While many TNCs important that officials are engaged from the have developed their own codes of conduct, a outset, and understand not only their number of international agencies and civil obligations, but also the benefits they can society organizations have also established derive. guidelines. One development that should permit For developing countries, one of the main transparency and the right to information is problems is that the proceeds of corruption the introduction of information and are laundered through offshore banks and tax communications technology (ICT) and the havens, outside of Asia Pacific and within. extension of e-governance. Governments and As a response to this, and to help developing service providers can use new technology to nations recover assets stolen by corrupt become more accountable and responsive. In leaders, UNDOC and the World Bank in India, for example, the Central Vigilance 2007 launched the Stolen Asset Recovery Commission uses its website to publish the (StAR) initiative. names of officers against whom corruption investigations have been ordered or on whom Citizens on Watch penalties have been imposed. But there are dangers. Governments may Tackling corruption is not a job for govern- also use new technology to exercise greater ments alone. Civil society too must play its control over their citizens. Corrupt officials part – by monitoring and reporting on stan- too may also be able to exploit such systems dards of government and also by refusing to to their own advantage. Many governments pay bribes or collude with corrupt officials. have placed the development of national Individuals, civil society organizations and e-governance plans in the hands of IT staff. the media need to stay alert, demanding the Since they may not be very familiar with highest ethical standards and resolving to corruption issues, they need therefore to reject corruption wherever it appears. work with legal and anti-corruption experts. The Power of the Media Cross-Border Cooperation One of the principal watchdogs monitoring In an increasingly integrated global economy, and exposing corruption should be the media corruption has become a cross-border issue. – press, radio and TV. When the conventional Countering corruption will need,therefore, media are too timid, those with vital informa- cooperation between governments, inter- tion on corruption can now use the internet.

10 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT The media can serve many important func- other civil society organizations to encourage tions, not just exposing corruption but also anti-corruption activities. In Papua New sustaining an open and transparent flow of Guinea, Transparency International, the information and fostering a climate of opinion Ombudsman Commission and the Media that is increasingly intolerant of corruption. Council run a hotline, through which Publicity can be particularly effective members of the public can report suspected against , which victims may be cases directly to the media. willing to report to the press. Another type of Even when the media are not launching corruption that the press can expose is investigations, they can still play a vital role collusion; neither bureaucrats nor their through their normal functions. By reporting clients have any inceptive to expose the regularly on the activities of public anti- malfeasance, but journalists do – motivated corruption bodies, the media reinforce their either by their professional ethos or the position. By persistently snapping at the prospect of a good story. As well as exposing heels of public officials, a lively press helps individual cases, investigative journalism can sustain a democratic system and discourages lead to more profound reforms – uncovering people tempted to engage in corrupt practices. serious systemic flaws and catalysing public discussion and debate. Civil Society Organizations The press and other media will, however, only be able to report on corruption if they While the media can prepare the ground, are free to do so. They face two main types of accountable government has to be sustained constraint: the first comes from government by citizens themselves, partly through the censorship; the second comes from ballot box but also through civil society proprietors since the private media often organizations (CSOs). What sort of relation- serve the interests of wealthy individuals or ship should CSOs have with local regimes: corporations who also may be corrupt. In contentious or cooperative? To some extent, addition, there can be constraints of capacity the answer depends upon the available since journalists often lack the skills for political options, and upon the state of civil textured and in-depth reporting. liberties and rule of law. CSOs must be forth- The media can promote good governance right about opposing corruption, but where if news organizations enjoy editorial indepen- possible they should seek cooperative relation- dence, abide by high ethical and professional ships with the regime, giving government standards and know that their rights will be officials incentives to oppose corruption, and guaranteed. Clearly, however, a free press is helping them develop the means to do so. not enough. Corruption is rife even in coun- However, they should avoid becoming investi- tries with long traditions of press freedom. gative bodies, whistle-blowers, or forces of These countries also need clean and efficient anti-corruption vigilantes – which is unlikely systems of justice that will follow up on to be welcomed by political leaders. Nor widely-reported allegations. should they offer ethical ‘seals of approval’ to There have been many examples across leaders, parties, agencies or private interests. the region, of action by national and The Asia-Pacific region has a variety of community-based media. In Nepal, for organizations, which are active in the anti- example, the Civil Society Anti-corruption corruption field. Some have a global focus, Project uses local radio listener clubs and others a regional base. Their greatest

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 11 successes, as in the Philippines and India, for example, politicians who can claim credit for example, have often been in monitoring public rooting out corruption from sectors like water works. In a number of countries, such as or electricity, health or education, will derive Cambodia, NGOs have mobilized public fresh sources of legitimacy from a grateful support for anti-corruption efforts. electorate. Businesses that align themselves Both media and civil society organizations with higher standards of corporate gover- can thus keep up the pressure on politicians nance can devote their energies to boosting and public services and hold them to account. their own growth and profits legitimately, If they have the benefit of a supportive rather than seeing their investment funds political environment, they can amplify and leech away unproductively into the pockets reinforce a government’s own commitment. of corrupt officials.

Seizing the Moment Setting the Priorities

Governments and civil society are thus Addressing corruption can be a daunting finding new ways to drive out corruption, proposition. It may be better therefore to working both from the bottom up and the top focus initially on a few specific areas. down. National political imperatives are being The Report has identified three areas to reinforced by international economic pres- consider – the police, social services, and sures. Asia’s largest corporations are now natural resources. Naturally specific priori- global players and thus have to meet global ties will depend very much on national standards, not just in the quality of their circumstances. From a human development goods and services but in the way they perspective, however one priority is clear: produce them. That includes the influence of governments should be seeking ways of corruption, particularly in the extraction of reducing the forms of corruption that hit the natural resources. Consumers want environ- poor the hardest – in health and education mentally ‘clean’ products – not those pro- services, for example. Another priority duced by logging or mineral extraction should be to root out corruption within police companies working hand in hand with forces and the justice system since this can corrupt administrations. pave the way for dealing with corruption This combination of national and inter- elsewhere. With the growing international national pressures is creating fresh opportu- recognition on degradation of the environ- nities across Asia and the Pacific. How can ment and climate change, there is little time the countries of the region best seize the to lose in preserving our natural resources. moment? There is no one route or single These need prioritized attention before it is answer. Action has to come from many too late, especially where this is the backbone directions – from governments, civil society of livelihood for the poor. organizations, the media and private business working together. An Agenda for Action Much of this involves the pursuit of justice and retribution. However, anti- Although the appropriate measures for corruption campaigns can also be viewed in a tackling corruption will depend on national more positive light. There are also huge circumstances, there are a number of political and economic dividends on offer. For common options:

12 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT 1. Join with international efforts – All opportunities to break the information countries in the region should join the monopoly of corrupt officials. United Nations Convention Against 7. Support citizen action – Local governments Corruption, and the Stolen Assets should publish the basic information on Recovery Initiative. contracts to facilitate citizen auditing; 2. Establish benchmarks of quality – To judge individuals can do much as citizens and their success, governments can use consumers, including keeping themselves international benchmarks – for anti- informed and networked. corruption agencies, for example, and for the national media. Taking the Higher Path 3. Strengthen the civil service – Some govern- ments could raise salaries, but all should The developing countries of Asia and the be able to ensure merit-based recruitment Pacific are likely to shed many corrupt prac- and promotion – along with more tices as a natural by-product of moderniza- rigorous systems of control. Governments tion. But they need not simply wait for and donors will clearly need to invest development to take its course. Nor should much more in local government. they. Just as most countries are designing 4. Encourage codes of conduct in the private targeted policies and programmes to eliminate sector – Among the professions, the most poverty and meet the other Millennium critical codes are those of lawyers and Development Goals, so they can devise accountants. programmes specifically to tackle corruption. 5. Establish the right to information – All Uprooting corruption will not just improve countries in the region could enact laws governance and economic efficiency; it will on the right to information – and also help reduce poverty and promote human encourage public officials, the media and development. In this light, anti-corruption civil society organizations to take measures are not just about prevention or advantage of this right. punishment. They are also about establishing 6. Exploit new technology – Information fairer societies. The history of corruption technology and e-governance offer fresh does not have to be the region’s destiny.

TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 13

One cannot conceal problems forever.

SAMOAN PROVERB

Just as it is impossible not to taste honey or poison that one may find at the tip of one’s tongue, so it is impossible for one dealing with government funds not to taste, at least a little bit, of the King’s wealth . . . it is difficult, though not impossible, to stop government officials from hiding their corrupt take.

THE ARTHASHASTRA The Scourge of Corruption 11 Chapter

Corruption is by no means a new phenomenon in the Asia-Pacific region but nowadays it is coming under much closer scrutiny. While corruption may be difficult to pin down and measure, there is little doubt that it is pervasive, ranging from petty corruption to grand corruption to ‘state capture’ – all of which errode trust in government and business and discriminate harshly against the poor.

People across the Asia-Pacific region, as else- ratified or acceded it. Recognizing the com- People across the where, are becoming increasingly concerned plexity of the issue, the Convention stresses a Asia-Pacific region, about the scourge of corruption. They can see cross-border approach based on cooperation as elsewhere, are the damaging effects of it in the form of weak- involving governments, civil society and the becoming increas- ened national institutions, inequitable social private sector to fight corruption. It promotes ingly concerned services, and blatant injustice in the courts, a five-pronged anti-corruption strategy – about the scourge of corruption along with widespread economic inefficiency prevention, criminalization, international and unchecked environmental exploitation. It cooperation, asset recovery and mechanisms is also evident that corruption hits the poor for implementation. hardest, who often depend heavily upon Till now attention on corruption has con- public services and the natural environment centrated more on its effects on economic and are least able to pay bribes for services growth and the business climate and less on that should be theirs by right. the impact on human development – on the There are signs of growing support for ways in which bribery and graft siphon off anti-corruption action today. Responding to scarce national resources and weaken govern- public concern, governments want to be seen ments’ abilities to deliver public services and to fight corruption, not enable it. Civil society protect the interests of the poor. There has too is working to make the public and private also been less attention to the ways in which sectors more accountable. Media are more corruption affects the livelihoods of poor aggressively exposing corruption. Popular households and frustrates many of their own anger against corruption, real or perceived, efforts to improve their lives. The result, as has also been utilized to destabilize elected Amartya Sen repeatedly points out, is a governments, with unfortunate consequences reduction in the capabilities of large segments for democratic governance. of the population.1 There is also greater international com- One might think that corruption is a mitment. This is evident in the 2005 United problem that will eventually go away – per- Nations Convention Against Corruption, haps owing to rapid development and im- which is the first global legally binding anti- provements in living standards along with corruption instrument and requires members more efficient and effective government. In- to implement its far-reaching reforms. ternational experience suggests otherwise. Towards the end of 2007, 140 governments Even the most mature democracies and ad- had signed the Convention and 104 had vanced economies have to remain alert to the

CHAPTER 1: THE SCOURGE OF CORRUPTION 17 dangers of corruption. The countries of the Some acts of corruption involve coercion Asia-Pacific region need therefore, not just to – a demand for a bribe, for example, or extor- uproot corruption now, but also build institu- tion. This tends to happen in secret but may tions and processes that could help keep a lid also become public if the victim protests. Oth- on it on a continual basis for the future as ers involve collusion between the corrupt offi- well. cial and the corruptors – a premeditated meeting of minds that is harder to detect as What is Corruption? both parties have an interest in concealment. Corruption can take on many forms ranging Corruption can take Corruption is commonly defined as the ‘mis- from the gross to the subtle, some of which on many forms use of entrusted power for private gain’ (Box are not widely understood. The phenomenon ranging from the 1.1). Note that this does not restrict the is thus difficult to capture in a single defini- gross to the subtle, potential for corruption to only the govern- tion or measure. some of which are ment. Individuals in private companies in not widely privileged positions may take bribes to pro- understood An Agency Framework vide goods or services that are in short supply. The definition is, however, limited One way of considering corruption is within since it portrays corruption as a one-way the framework of ‘principals’, ‘agents’ and process driven by the greed of corrupt offi- ‘clients’. The principals want to ensure that a cials. In fact, almost all corrupt transactions particular service or activity is delivered to have two players – the person who is receiv- clients, but since they are not in a position to ing the bribe and the corporation or individual do everything themselves, they will employ who is offering it. Moreover, the balance of agents to work on their behalf. In govern- power is not necessarily on the side of the ment, the principals can be elected officials corrupt person with ‘entrusted power’, since who represent the state and its citizens and outside influences can serve to overwhelm employ a wide range of public servants – from weak and ineffective administrations.2 tax officials, to labour inspectors, to teachers

BOX 1.1 CHARACTERISTICS OF CORRUPTION

Corruption is such a complex phenomenon that attempting a power; it should be available, whether in public or private universal definition of it is fraught with difficulties. To un- hands or both derstand the phenomenon better, we may nevertheless iden- • Misuse of the power that often drives a wedge between tify some core characteristics or prerequisites for a corrupt intended and stated positions, for unintended benefits act. Here are six: The last prerequisite is complicated by the fact that what constitutes ‘misuse’ or unacceptable behaviour could differ by • Gap between group and individual interest or between context, shaped by local norms and priorities. Social norms are short- and long-term benefits difficult to ignore in identifying corruption. And norms tend • Two or more parties since one can hardly be corrupt with to have local variants, their plurality leaving space open for one’s own self interpretation. The differences are not limited to cross-coun- • Consenting adults that have a common understanding, try variations; there are, equally, differences within a country with reciprocity, explicit or understood, whether by collu- as well.4 A further complication arises when norms are not sion, coercion, through perceived lack of choice, passive or universally held even in local contexts.5 Under such circum- facilitative3 stances, whose norms should receive primacy remains an open • Benefit furtherance, be it private, sectional, or political question. Corruption often constitutes a divergence between a party interest stated position and actual intent. • Existence of power that could be grabbed, usurped, en- trusted or otherwise available; corruptors (givers) can have Sources: Gampat 2007a; Rajivan 2007b.

18 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT – to deliver public services to citizens. Princi- work and provide services and goods to pals could also, ultimately, be the voters. customers. Similarly, in the private sector the owners of The problem arises when the agents take companies are principals who employ advantage of the power entrusted to them to managers to do most of the day-to-day work on their own behalf or on behalf of their

BOX 1.2 THE MOST COMMON FORMS OF CORRUPTION

The following are the most common forms of corruption, as solicit a bribe for seeing a patient quickly but if an appoint- described in the United Nations Anti-corruption Toolkit. ment is a matter of medical necessity, the ‘bribe’ can be more properly characterized as ‘extortion’. Bribery. The bestowing of a benefit in order to unduly influ- ence an action or decision. This is the most common form of Abuse of discretion. For example, an official responsible for corruption. It can be initiated by a person who seeks or solic- government contracting may exercise the discretion to pur- its bribes or by a person who offers and then pays bribes. The chase goods or services from a company in which he or she ‘benefit’ in bribery can be virtually any inducement: money holds a personal interest or propose real estate developments and valuables, company shares, inside information, sexual or that will increase the value of personal property. Such abuse other favours, entertainment, employment or, indeed, the mere is often associated with bureaucracies where there is broad promise of incentives. The conduct for which the bribe is individual discretion and few oversight or accountability struc- paid can be active – the exertion of administrative or political tures, or where decision-making rules are so complex that influence – or it can be passive – the overlooking of some they neutralize the effectiveness of any accountability struc- offence or obligation. Bribes can be paid individually on a tures that do exist. case-by-case basis or as part of a continuing basis. Favouritism, and clientelism. This generally involves Embezzlement, theft and fraud. In the context of corruption, abuse of discretion. Such abuses, however, are governed not these all involve the taking or conversion of money, property by the self-interest of an official but the interests of someone or valuables by an individual who is not entitled to them but, linked to him or her through membership of a family, political by virtue of his or her position or employment, has access to party, tribe, religious or other group. If an individual bribes them. In the case of embezzlement and theft, the property is an official to hire him or her, the official acts in self-interest. taken by someone to whom it was entrusted. Fraud, however, If a corrupt official hires a relative, he or she acts in ex- consists of the use of false or misleading information to change for the less tangible benefit of advancing the interests induce the owner of the property to relinquish it voluntarily. of family or the specific relative involved (nepotism). For example, an official who takes and sells part of a relief donation or a shipment of food or medical supplies would be Conduct creating or exploiting conflicting interests. Most forms committing theft or embezzlement; an official who induces of corruption involve the creation or exploitation of some con- an aid agency to oversupply aid by misrepresenting the flict between the professional responsibilities of a corrupt in- number of people in need of it, is committing fraud. An dividual and his or her private interests. The acceptance of a ordinary bystander, on the other hand, who steals aid bribe creates such a conflict of interest. Most cases of em- packages from a truck is committing theft but not bezzlement, theft or fraud involve an individual yielding to corruption. That is why the term ‘embezzlement’ essentially temptation and taking undue advantage of a conflict of inter- means the theft of property by someone to whom it was est that already exists. entrusted. Improper political contributions. It can be difficult to make a Extortion. This relies on coercion, such as the use or threat of distinction between legitimate contributions to political orga- violence or the exposure of damaging information, to induce nizations and payments made in an attempt to unduly influ- cooperation. Officials in a position to initiate or conduct crimi- ence present or future activities by a party or its members nal prosecution or punishment often use the threat of pros- once they are in power. A donation made because the donor ecution or punishment as a basis for extortion. While extor- supports the party and wishes to increase its chances of being tion can be committed by government officials or insiders, elected is not corrupt. A donation made with the intention or such officials can also be victims of it. For example, an official expectation that the party will, once in office, favour the in- can extort corrupt payments in exchange for a favour or a terests of the donor over the interests of the public is tanta- person seeking a favour can extort it from the official by mount to the payment of a bribe. making threats. In some cases, extortion may differ from brib- ery only in the degree of coercion involved. A doctor may Source: UNODC 2004.

CHAPTER 1: THE SCOURGE OF CORRUPTION 19 Citizens who need clients. Typically, they know far more about normal circumstances many areas of govern- services may have the administration or the business than either ment activity such as arms supplies are no option but to the principal or the client – a situation of ‘asym- shrouded in secrecy and are vulnerable to pay – what is metric information’ – and can exploit their grand corruption. referred to as position as go-betweens to act more in their Petty corruption, on the other hand, also ‘needs-based’ own interest, commonly through bribery, referred to as ‘street’ or ‘retail’ corruption, corruption or extortion, fraud, nepotism or embezzlement. involves transactions that are smaller but ‘survival’ corruption usually more frequent. It generally involves Grand and Petty Corruption agents or sub-agents demanding or accepting ‘speed money’ to issue licenses, for example, Within government, corruption can take or to provide access to schools, hospitals or many forms, at many levels (Box 1.2). The water supplies. Unlike grand corruption, commonest distinction is between ‘grand petty corruption often thrives during periods corruption’ and ‘petty corruption’. In grand of weak economic growth at times when goods corruption sums are large and agents are typi- and services are in short supply – though the cally high-level politicians or officials who agents can also deliberately create shortages collude with corporations by, for example, by raising additional bureaucratic hurdles. accepting bribes from contractors. This is Petty corruption also has a more direct im- especially prevalent in periods of rapid eco- pact on the poor. nomic growth when there are many new Citizens who need services may have no opportunities for investment in infrastruc- option but to pay – what is referred to as ture, for example, or in the extraction of ‘needs-based’ corruption or ‘survival’ corrup- natural resources. In these circumstances, tion. Some may take the initiative in offering decisions are often taken secretly and quickly bribes in order to gain privileged access or to and with little effective oversight. But even in jump queues. The poor, however, with the

BOX 1.3 VIRTUOUS WOMEN, CORRUPT MEN?

It is popularly thought that women are more honest and less corrupt exchanges occur, unless they are represented by male corrupt than men. This claim has been supported by a num- relatives. ber of studies which argue that women are less tolerant of Without holding posts with potential bribery income, how corruption than men, and that having more women in public can women become ‘receivers’? In Bangladesh, for example, life would reduce corruption. only 20 per cent of Civil Service cadre officers are female. Statistics show that in the Asia-Pacific region, if a country Similarly, without access to substantial assets and to incomes, has more women with secondary education, and a higher pro- how can women equally be ‘givers’? portion of those working in the service sector are women, As workplaces become more feminized and women take then the country’s score on the control of corruption index leadership jobs it cannot be assumed that women will be less tends to be higher. On the other hand, the control of corrup- corrupt. On the other hand, gender may influence the impact tion index does not show any significant correlation with the of corruption. Women are, for example, at risk of extortion for proportion of seats held by women in national parliament. sexual favours instead of cash much more frequently than Similarly, many of the countries in the region have been run men. And when positions, grades, and diplomas can be by female presidents or prime ministers with no discernable bought, girls are less likely to benefit. Women, with less cash improvement in corruption. at their disposal are more likely to lose out. Finally, the funds In fact, many women would find it difficult to get involved allocated for women’s development may be more easily stolen in corrupt dealings – even if they wanted to. Arenas where if women are less aware of their rights and less willing to corrupt dealings take place are typically all-male networks and demand accountability. forums from which women are excluded. In India and Sources: Alolo 2006; Dollar et al. 1999; Goetz 2007; Goetz and Bangladesh, for example, women cannot normally participate Jenkins 2005; Nyamu-Musembi 2006; Swamy et al. 2000; in the male-dominated patronage networks through which Transparency International Bangladesh 2007.

20 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT same needs, do not have the same freedom to from one function to another but from one pay for their needs to be met. person to another. These lines are further blurred when public officials have ties with Areas of Ambiguity certain groups of citizens based on ethnicity, religion, or language and may tend to favour Although many acts of corruption, whether them, even if they do not have any direct fi- grand or petty, are clear enough, there can nancial gain. also be areas of uncertainty between accept- able and unacceptable behaviour. These Gift giving. When is a gift a bribe? In many include: societies across Asia and the Pacific, daily transactions and social networking commonly Legality and illegality. Acts that many people involve gifts, typically consumable items such would regard as corrupt need not necessarily as food. Indeed in many Pacific countries not be illegal. Until a few years ago it was quite giving a gift can be seen as corruption. In re- Traditional systems legal for companies based in OECD countries cent times, however, traditional systems of of governance have to bribe officials in other countries. Only governance have been combined with ‘intro- been combined with recently has this become a crime in the duced’ systems and as the two interplay, gift- ‘introduced’ systems company’s home country. On the other hand, giving has been extended to non-consumable there are many illegal acts which do not items such as land. This manipulation of the involve corruption. A government official who practice of gift giving has often led to the jus- steals a car in the street is guilty of theft, but tification of corrupt acts. However it can be if he or she acquires it by abusing their privi- argued that in most cases both the ‘givers’ and leged position in the administration, then this the ‘takers’ know when the lines are being constitutes corruption. crossed and a supposed gift is actually a bribe for a specific favour. Ethics of survival. In many Asia-Pacific coun- tries people engage in what might be called Lobbying. Many developed countries, frown ‘survival corruption’ in order to meet basic upon bribery yet allow high-powered lobby- needs. Faced with poverty and shortages they ists to bombard public officials with one-sided will do whatever is needed to support them- information and arguments. The lobbyists do selves and their families. Members of poor or not provide cash but offer free ‘services’ such marginalized groups might, for example, steal as research and information with the inten- water or electricity in collusion with a local tion of biasing lawmaking or awarding of lines-man, or bribe a petty official to falsify an contracts in their favour. Lavishly funded lob- address to make them eligible for a ration card. bying can be considered as a form of corrup- tion. Private and public. In many countries across Asia and in smaller states in the Pacific, where State capture. This refers to a situation where there are strong notions of hierarchy, it is con- private interest has effectively taken over cer- sidered right to make payments to those in tain state functions, a type of corruption gen- authority as a way of showing respect. In erally less understood by the public or by the these cases the public-private interface is ill- media. One example is when an international defined. Power is seen to reside not in offices mining company is largely determining the or institutions but in the persons of high offi- contours of a country’s mining policy. Cor- cials, and lines of authority are drawn not ruptors who have achieved state capture do

CHAPTER 1: THE SCOURGE OF CORRUPTION 21 not simply take the institutions as given but Cultural relativism, on the other hand, also seek to shape them: they are thus would say that it is impossible to apply ‘makers’ rather than ‘takers’. Companies values across traditional practice systems; often achieve this through corrupt and illegal each country has to work out its own prin- practices – for example, by bribing law- ciples of right and wrong – including those on makers to adjust legislation in their favour, corruption. A related issue is cultural deter- so that their subsequent activity may now be minism which asserts that certain traditional legal but is actually corrupt. This can be practices are innately more prone to corrup- termed ‘legal corruption’.6 tion. Some studies have indeed found Corruption is Corruption is thus intrinsically bound up evidence for the fact that traditional practices intrinsically bound with social norms and practices.7 Indeed, do matter but they do not show that some are up with social norms and practices some people argue that it is not something to destined for corruption or are likely to be which countries in the region should respond more tolerant of it.8 – that efforts to combat corruption involve imposing Western or developed country biases A Scourge through the Ages on very different societies. In this context, however, it is important to distinguish Corruption is certainly not a new phenom- between cultural pluralism and cultural rela- enon. Governments across the Asia-Pacific tivism. Cultural pluralism acknowledges that region have been preoccupied with this issue traditional practices are different and that ever since they started to build states on the these differences will affect the forms of basis of funds collected from peasant agricul- corruption, but it is nevertheless consistent ture. Rulers who wanted to raise funds for with an underlying set of universal principles wars of conquest or to reward court follow- that would condemn corruption. ers and the local nobility had to employ tax

BOX 1.4 JUST NOT CRICKET

Participation in sports helps young people learn honesty, disci- nance of certain sports has given sports official’s diplomatic pline and teamwork. But at the professional level, many sports statuses and other absolute privileges making them less such as cricket, rugby and football are extremely lucrative accountable and more susceptible to corruption. multi-billion dollar enterprises and sports bodies such as the Sport can itself also be used as a way to corrupt other Fédération Internationale de Football Association (FIFA) and processes. In Sri Lanka, for example, making it onto a high the International Cricket Council (ICC) are accorded statuses school sports team comes with a certain level of prestige that similar to those of governments. However, this boom has is helpful in securing better employment. Thus it would be come at a price and Transparency International argues that beneficial at an interview if one belonged to the same alumni commercialization of sport has promoted opportunism for as the interviewer and even better if one was a member of ‘dirty business’ to thrive. FIFA and the ICC have taken some its cricket or swimming team. action to monitor irregularities, although there is a lot more Many of the exposures of corruption in sport have been to do. the result of tireless work by investigative journalists and In the Asia-Pacific region one of the most popular sports is organizations dedicated to ensuring fairness in sport. Interna- cricket, which in the last decade has been marred by match- tional sports organizations have also been making determined fixing and bribery scandals that have caused major players to efforts. FIFA, for example, has recently introduced an ethics leave the game in shame. At the administrative level senior commissions and created a commercial firm called ‘Early officials have been sacked for using their authority for per- Warning System’ and the ICC now has an Anti-Corruption sonal gain and entire boards have been dissolved. and Security Unit – approaches that could be emulated by The potential gains from corruption are also large when it other sporting bodies. comes to choosing venues for huge events like the Olympics and the Football World Cup, when politicians may be tempted Sources: BBC, 2007; FIFA.com 2007; ICC n.d.; Poroznuk and to bribe the officials of governing bodies. In addition, the domi- Pfeifer 2006; Transparency International 2006b.

22 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT collection agents – who then spied an oppor- Similar problems were evident in most The Emperor tunity for self-enrichment. The statesman other countries in Asia and beyond. Until the Yongzheng . . . and philosopher Kautilya, for example, wrote nineteenth and early twentieth century, many concluded that the in the fourth century BC about the King’s of the now developed countries were riddled tax system was full servants who were skimming off a part of his with corruption. In some, for example, much of abuses and . . . revenue. ‘Just as it is impossible not to taste of the public funding for basic services such responded with a series of reforms, honey or poison that one may find at the tip as street cleaning and construction was including improving of one’s tongue, so it is impossible for one deal- diverted through kickbacks. Since then, financial records of ing with government funds not to taste, at matters have improved considerably; never- provincial authori- 9 least a little bit, of the King’s wealth.’ theless it took some of these countries almost ties . . . and Kautilya went on to suggest that it is difficult, a century to reform. One way of following increasing the though not impossible, to stop government this slow process, for example, is to track the salaries of local officials from hiding their corrupt take. There steady decline in mentions of ‘corruption’ or officials through a are different versions of the same saying all ‘fraud’ in dailies (Figure 1.1). The figure bonus called over the ancient empires of the world. And shows that corruption declined over a period yang-lien ‘money to many of the solutions advocated today, (long) as captured by reporting, controlling nourish honesty’ such as raising the salary of officials or for space given for political reporting. improving records of property rights and tax National reporting (The New York Times) is liabilities have also been advocated since time corroborated by small town and city report- immemorial. ing (Ancestry.com).10 Among all the ancient empires, China came closest to organizing a centralized and effectively managed bureaucracy – with all the requirements for bringing corruption to heel: political commitment from the Emperor; a system of pay and benefits for the scholar gentry; a moral-ethical code provided by Confucian doctrine that emphasized order and hierarchy; a system of audits and inspec- tion; and, by no means least, harsh punish- ments for disobedience. Nevertheless, corruption remained a per- sistent problem. The Emperor Yongzheng (1723–35), for example, concluded that the tax system was full of abuses and that local financial clerks had been accepting payoffs to Figure 1.1: Declining Trend in Corruption and Fraud, 1815–1975 exempt wealthy families from nearly all their Note: ‘NY Times (Corr + Fraud)/Political’ and ‘Ancestry (Corr + Fraud)/Political’ are tax obligations. He responded with a series of series based on the count of articles containing the words ‘corruption’ and ‘fraud’ (and reforms, including improving financial their variants). For the Y-axis, this count is standardized, providing an ‘index of records of provincial authorities, carrying out corruption and fraud’ dividing by the number of articles containing the word ‘political’ special inspections and increasing the salaries (and its variants), taking into account the overall amount of attention given to politically- relevant stories on corruption and fraud. of local officials through a bonus called Source: Based on Glaeser and Goldin 2006. yang-lien ‘money to nourish honesty’.

CHAPTER 1: THE SCOURGE OF CORRUPTION 23 Asia, on the other hand, provides several transparency and accountability, confronting cases of countries that have managed to malfeasance head-on and improving manage- reduce corruption much more swiftly. Before ment. This is vital if they are to fulfil the goals 1960, Singapore, for example, was as corrupt of partners, staff and donors, and above all as in many other places in Asia. Then in June the beneficiaries. 1960 the People’s Action Party introduced the This has involved, for example, tighten- Prevention of Corruption Act, which ing up many policies and practices, strength- enhanced the powers of the Corrupt Practices ening ombudsman offices, requiring senior Investigation Bureau. As a result, by 1965, staff to disclose their assets and liabilities, when the country attained its independence, increasing legal protection for whistleblowers, the situation had been turned around and and introducing independent audit offices. today Singapore is of the cleanest and most Agencies are also publishing more informa- effective bureaucracies in the world.11 tion through websites and other media. They Around the same time, Hong Kong too have added to this impetus for reform started to take firm action against corruption. through the formation of staff associations Singapore and Hong The early 1970s was a time when ‘bad cops and institutions such as ‘town hall meetings’ Kong had the and bribes ruled the streets’.12 The police in which they can air their grievances to the advantages of being were largely in charge of running crime, while management.13 city territories but regularly staging ‘fake busts’ to give an im- probably the most pression of honest action. Widespread public Measuring the Problem important reason dissatisfaction, however, eventually resulted for their success in strong action. In 1974 the government Just as it is difficult to define corruption was strong political established the Independent Commission across different cultures and political envi- will against Corruption and by 1977 this had ronments, it is also very difficult to measure helped break all major corruption syndicates, its extent. One might consider, for example, including those within the police force. the amount of money being lost, but this Singapore and Hong Kong had the advan- misses out the number of people involved. tages of being city territories over which it And both the money value and the number of proved easier to exert control, but probably people miss out on the social loss in under- the most important reason for their success mining institutions. And in either case, since was strong political will. In most other coun- corruption is generally illegal and clandestine, tries in Asia, anti-corruption efforts have gen- it is hard to track it directly. erally been slower because they cover much Instead, the most common measures larger territories and because the leadership work indirectly, based not on registering has proved less resolute. specific corrupt acts but people’s perceptions of the extent of corruption. One of the most A Challenge for International Organizations widely cited examples is the ‘Corruption Perception Index’ (CPI) produced by Trans- The past 60 years or so have seen a consider- parency International (TI).14 Since 1995 TI able increase in the number and scope of has been collecting the ratings of business international organizations. Nor surprisingly, people and country analysts and averaging these too have proved vulnerable to corrup- them into a single index. By 2007 the CPI tion and have had to re-examine their covered 180 countries and appeared as a methods of operation so as to achieve greater widely publicized league table which regularly

24 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT listed several Asian countries as among the compare each country’s vulnerability to cor- world’s most corrupt. Since 2003, TI has ruption by considering factors such as the size supplemented the CPI with the Global of the public sector, or marginal tax rates Corruption Barometer which is based on a (Box 1.5). But ultimately, no single metric Gallup International Poll that explores the is- would work in uniquely measuring the phe- sues in greater detail, considering not just per- nomenon. ception, but also direct experience, and by 2006 covered 62 countries. Forms of Government Another widely used source, produced History has since 1996 by the World Bank, is the Control History has demonstrated that all forms of demonstrated that of Corruption Index (CCI). Although its title government are vulnerable to corruption but all forms of suggests that it is measuring the effectiveness some may be more vulnerable than others. It government are vulnerable to of measures to control corruption it is, in fact, might be argued, for example, that, authori- corruption; another perception index. It does however tarian leaders, such as Chinese emperors, democracies are differ in a number of respects from the CPI. It would have found it easier to deal with corrup- better designed to gathers data from a wider range of sources tion because they can act against corrupt offi- control corruption than the CPI and also covers petty and grand cials quickly and ruthlessly without the need since citizens can corruption as well as situations of state cap- for prolonged and uncertain judicial processes. take advantage of ture. In addition, the CCI uses different statis- On the other hand, authoritarian leaders may regular elections to tical techniques that make it better suited for also deliberately foster a more corrupt envi- vote out corrupt comparisons across countries and over time. ronment as a result of what has been called politicians While interpreting the CCI, it should be noted the ‘dictator’s dilemma’: the more power a that it combines perceptions and observed data. dictator has the more insecure he feels, so he Other sources of corruption rankings distributes opportunities for ‘rent gathering’ include those from private consultancies and other favours as ways of building sup- designed to offer businesses and investors an port and trust. indication of the investment climate in each Similar considerations can apply in demo- country. The International Country Risk cratic systems. Democracies are better Guide, for example, includes subjective assess- designed to control corruption since citizens ments conducted by staff on the ‘likeliness to can take advantage of regular elections to vote demand illegal payments in high and low out corrupt politicians, but the quality of levels of government’. democracy determines if this mechanism is These indices do indeed provide some in- actually exercised. Democracies can also be formation of relevance and spur countries susceptible to corruption if politicians become into responding. But they may not give a very beholden to wealthy donors on whom they accurate reflection of the actual situation and rely for electoral funds and who will expect make little attempt to gauge the pressures and favours in return. This popular disillusion- the effects on the poor. Mostly they are ori- ment has recently led to the overthrow of ented towards businesses though they may many democratically elected regimes on the also be used by donors to make decisions on explicit grounds of corruption, such as in the distribution of foreign aid. They can also Bangladesh, Fiji and Thailand. be useful at the regional level for comparative One way of checking which system is purposes – for which this report will use the cleaner in practice is to compare the indices CCI index. Another approach would be to of corruption with those of democracy. This

CHAPTER 1: THE SCOURGE OF CORRUPTION 25 BOX 1.5 COUNTRY VULNERABILITY TO CORRUPTION

Most popular measures of corruption are based, at least in est start in this direction by trying to identify likely factors part, on perception. Another approach might be to chart the and seeking out appropriate, observable indicators on which ‘climate’ for corruption by identifying factors that may make data are available. Below 21 indicators are grouped into 12 a country vulnerable to corruption. This Report makes a mod- categories.

Factors Capturing the Vulnerability of Countries to Corruption

Categories Indicators

Taxation system Highest marginal tax rate, individual rate (%) Highest marginal tax rate, corporate rate (%) Trade policy Trade restrictiveness index (Tariff and NTF manufacturing) Regulatory policy and transaction costs Start-up procedures to register a business (number) Procedures to enforce a contract (number) Procedures to register property (number) Level and nature of public expenditure Military expenditure (% of GDP) Public investment (% of GDP) Inequality Ratio of the top 20% to bottom 20% Access to services No access to improved water source (% of population) Physicians per 1,000 people (reciprocal – to make it unidirectional) Gross non-enrolment rate (Combined primary, secondary and tertiary) (%) Dependence on natural resources Mining (% of GDP) Access to knowledge and information Illiteracy rate, adult total (% of people ages 15 and above) Internet non-users (% people) No subscription to fixed line and mobile phone (% people) Relative wages in public sector Military personnel exp per capita/per capita income (Proxy indicator, reciprocal to make it unidirectional) Importance of FDI/ODA FDI (% of GDP) ODA (% of GDP) Informal Sector Informal sector (trade + construction + other) as % of GDP (Proxy indicator) Extent of cash transaction Currency in circulation (% of money supply)

Source: Gampat, Sarangi, Wickramarathne and Senarathne 2007.

The 21 indicators are unidirectional in the sense that all depending upon the country context. A more detailed discus- indicators contribute positively to vulnerability to corruption. sion of these indicators is given in Technical note 2. Of course, the relative importance of the indicators will vary

is illustrated in Figure 1.2 which plots the are some outliers, such as Bhutan, Hong Kong Control of Corruption Index against an index (SAR), China and Singapore, which appear produced by the Economist Intelligence Unit to have done exceptionally well in controlling which rates countries along a scale from 0 corruption. The pattern is similar within the (authoritarian regimes) to 10 (full democ- sample of developing countries and also racy). On this basis, countries at the highest within developed countries. ranking on the democracy scale tend also to This is, of course, only a correlation. It be high on control of corruption, though there does not indicate whether democracy itself

26 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT helps reduce corruption. However there have been efforts to explore causality. Treisman (2000), for example, using data from 64 countries, suggest that there is a connection, but he ascribes this not just to the current degree of democracy but to the length of time a democratic system has been in place: the more experience a country has with democ- racy, the better it can address corruption. This implies that in the short term compared with more authoritarian states, young democ- racies such as Cambodia, Indonesia, or the Philippines may have little advantage. But in the long term, when these countries have ac- Figure 1.2: Political Systems and Perceptions of Corruption cumulated more experience with democratic Sources: EIU 2007; World Bank 2007b. institutions and improve the quality of their democratic practice, they would be able to address corruption more effectively.

Parliamentary and Presidential Systems

There are, of course, many different shades and types of democracy. One of the clearest distinctions is between parliamentary and presidential systems. The Asia-Pacific region is distinct from the rest of the world in that it has a lower proportion of presidential or semi- presidential systems. In the rest of the world 55 per cent of states have these systems. In Figure 1.3: Political Systems in the Asia-Pacific Region the Asia-Pacific region, on the other hand, only Figure 1.3: Political Systems in the Asia-Pacific Region 27 per cent of countries do so; 58 per cent Colour codes: Green – parliamentary republics; Brown – presidential republics; Blue – semi-presidential republics; Violet – parliamentary constitutional monarchies in have parliamentary systems, the rest being which the monarch does not personally exercise power; Yellow – republics where the monarchies or one-party states (Figure 1.3). dominant role of a single party is enshrined in the constitution; Red – absolute How do the different systems rate on the monarchies CCI? This is illustrated in Figure 1.4, which Source: Tran 2007. shows that the region’s democracies tend to do better, achieving a simple average score of ure also shows, even the region’s parliamen- The more 0.1 compared with presidential and semi- tary democracies have lower scores than those experience a presidential systems which get scores of –0.7 in the rest of the world. On the other hand, country has with and –0.4 respectively. Somewhat surpris- the region appears to enjoy some of the democracy, the ingly, the presidential and semi-presidential world’s least corrupt monarchies. better it can systems in Asia and the Pacific do not per- This perspective is confirmed by many address corruption form significantly better than one-party sys- cross-country and multivariate analyses tems, which have a score of –1.1. As this fig- which show that that corruption is

CHAPTER 1: THE SCOURGE OF CORRUPTION 27 Country Size and Decentralization

Corruption can also vary according to the size of the country. Some studies have found that larger countries tend to be more susceptible to corruption than smaller ones, perhaps because in smaller countries people are more likely to know their rulers and are in a better position to keep an eye on them.17 Large coun- tries might, however, be able to achieve a similar effect by decentralizing administration to lower levels of government, which local people would be better able to monitor and Figure 1.4: Systems of Government and Control of Corruption Index control. This assumes however that local Note: Produced by the World Bank, the scores for the control of corruption index communities have the necessary capacity. In (CCI) range from –2.5 to 2.5; higher values indicate higher control of corruption; conversely, lower values indicate lower control over corruption. practice this is seldom the case – legal and monitoring institutions are generally weaker Source: Tran 2007. and fewer at the local level, so decentraliza- Corruption is significantly lower in parliamentary states tion can instead open the door to greater significantly lower than in presidential ones.15 Others go further corruption. in parliamentary to show that corruption tends to increase as One way to assess this would be to states than in the president gets more powerful and that it compare control of corruption with the presidential ones usually worse towards the end of the presi- extent of decentralization as indicated by the dential term, maybe because by this stage the share of national expenditure administered incumbent has little to lose.16 at sub-national levels. As Figure 1.5 shows, this does not indicate any correlation. Indeed a number of studies that have attempted to assess the effects of decentralization on corruption have come up with mixed results.18 So although many governments are keen on decentralization as a means of achiev- ing more effective governance, the benefits for the control of corruption remain unproven.

Impact on People’s Lives

While it is interesting to consider in principle the relationship between systems of govern- ment and perceptions of corruption, ultimately the most important issue is which system offers greater protection to its citizens and is better able to promote human develop- Figure 1.5: Decentralization and Perceptions of Corruption ment. One indication of this is the Trans- Sources: Tran 2007; World Bank 2007b. parency International Global Corruption

28 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Barometer. This is compiled from opinion surveys that ask people to rate the level of corruption in seven important aspects of their everyday lives, on a scale from 1 (not at all corrupt) to 5 (extremely corrupt). The results for the Asia-Pacific region are shown in Figure 1.6. Overall, people clearly have least confi- dence in the honesty of the police, followed by the judiciary and tax offices – though higher or supreme courts are considered relatively clean. Education and medical services rank in the middle of the scale, while the least corrupt sectors are utilities and registry or permit services – although even here levels of corruption are still very high. Figure 1.6: Political Systems, Perceptions of Corruption Across Different Sectors But as Figure 1.6 also shows, in each of Source: Transparency International 2006a. the seven sectors it seems that ordinary people are best served by parliamentary sys- Can Corruption Boost Growth? People clearly have tems. Of the other systems, the presidential least confidence in ones perform better than semi-presidential One way in which corruption might be the honesty of the ones, though in both cases the perceived rates thought to help economic performance is by police, followed by of corruption are not only higher but vary ‘greasing the wheels’, i.e. allowing businesses the judiciary and considerably across sectors. to get quicker decisions, cutting through red tax offices tape and thus operate more efficiently. In Hampering Economic Performance countries where laws are rigid and inappro- priate, circumventing these through bribery Another matter of great concern is whether might increase efficiency. In fact, there is not corruption affects economic performance. much evidence that corruption has any such This will be difficult to prove one way or the beneficial effect. One study found, for other since economic growth is clearly the example, that the firms that were required to outcome of many different factors – up to 40 pay extensive bribes were still subject to high factors have in different studies been identi- levels of official harassment. It seems that in fied as having an effect on economic growth.19 a highly corrupt environment, officials take Generally they appear to be detrimental to advantage of this to develop more sophisti- economic growth, but there can be exceptions. cated approaches, ‘customizing’ the nature For instance, it may not appear to harm and scale of their harassment to each firm growth in countries which are in the process and its ability to pay bribes.21 of modernization.20 Furthermore, the effects Another suggestion is that corruption may only surface in the long term. For could compensate for weak government. example, corruption may discourage innova- Bureaucrats charged with choosing between tion, or divert funds from productivity- companies that are to be awarded contracts enhancing investments towards those that may, for example, have neither the informa- offer more opportunities for rent-seeking. tion nor the competence to make the decisions

CHAPTER 1: THE SCOURGE OF CORRUPTION 29 on objective criteria. They could therefore How Corruption could Hamper Growth? simply award the contract to whoever offers the biggest bribe – effectively holding an On the other hand, it is also possible to iden- auction in which the contract goes to the tify many more mechanisms through which company that places the highest valuation. corruption could hamper growth: This might be one way of achieving ‘allocative efficiency’, but this assumes that the person Allocation of talent. Economic activity will cer- offering the biggest bribe also is the most tainly be hampered if people can earn more talented entrepreneur with the best project, by working as corrupt bureaucrats than as which is often not the case. entrepreneurs. Corruption thus distorts the Bribery might also be seen as a way to allocation of talent by steering people to less increase efficiency by allowing queuing and productive or unproductive sectors. In the rationing systems to work more effectively, end, this leads to a downward spiral that on the assumption that the person or even affects the income of corrupt officials. If company prepared to pay most is also the one the productive sector shrinks and returns are that can make the best use of the services. low, payoffs too will tend to fall, leading to Indeed overall queuing times could be reduced high corruption with no growth.23 Talent is if payments induce bureaucrats to work more also allocated to maximize family benefit rapidly.22 Even if this were the case, however, through diversification, such as when one capacity to pay seldom coincides with real family member joins politics, another the need, so there will be a strong element of bureaucracy and a third the private sector. injustice. This is often done to ‘hedge’ any risk involved A more fundamental objection to the in changing political circumstances, for ‘grease’ hypothesis is that it assumes a static example, when an opposing political party environment in which businesses are faced comes to power. with a bad and unchanging bureaucratic environment. It is more probable, however Size of the formal sector. A corrupt system may that businesses are sustaining this situation also prevent entrepreneurs from moving from by their willingness and capacity to offer the informal to the formal sector. Entrepre- bribes – encouraging bureaucrats to increase neurs who want to register their business may their rigidity and unreel yet more red tape. have to pay a high level of bribes to get the Indeed in circumstances of rampant corrup- necessary documentation. If the informal sec- tion, even honest officials will tend to become tor is less productive or the cost of doing busi- more bureaucratic – not because they want to ness in the informal sector is very high, then extract bribes but because they do not want long-run growth will be lower. However, if the to be held individually responsible for any cost of operation in the informal sector is low, decision where they could be accused of bureaucratic corruption may not have any ef- taking bribes. fect on growth.24 Moreover, for every case where corrup- tion is suggested as a way of increasing effi- Availability of public goods. Economic growth ciency there are always cleaner courses of rates also depend on the level of government- action that perform at least as well or better. provided public goods.25 Corruption can af- The fear that eliminating corruption will lead fect these in several ways. Fiscal corruption, to a loss in efficiency is clearly unfounded. for example, could reduce government rev-

30 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT enues leading to lower investment in infra- levels of economic growth. This may be structure. But even in the absence of fiscal linked to market size since investors may be corruption, bureaucratic corruption generally willing to accept the risks posed by corrup- causes public goods to be under-supplied and tion if they are offset by the potential of a overpriced. large consumer market. Growth rates seem to have been slower in smaller countries – Innovation. Corruption is likely to hamper with the exception of city states where anti- innovation.26 This is because innovators corruption efforts have been successful. when starting from scratch tend to have Another factor is the way in which greater need for government-produced goods corruption is organized.32 Many people have and services and also have riskier projects argued that corruption is less harmful to that are vulnerable to bureaucratic delays. So growth when it is predictable – when, for even if corruption does not slow down invest- example, a strong but corrupt ruler demands ment or production in the short term, by for himself and his entourage a standard Even if corruption deterring innovation it can have serious percentage on all major activities. This might does not slow implications for long-term growth. explain why many Asian countries have sus- down investment or tained rapid growth despite high levels of production in the short term, by Empirical Results corruption – compared with other regions like Empirical Results deterring innovation Africa, where corruption is thought to be it can have serious In principle therefore corruption is likely to more disorganized. One study using a World implications for slow economic growth, and a number of Bank dataset confirmed that investment long-term growth; empirical studies have indeed suggested that boosts productivity even at high levels of corruption will higher levels of corruption are associated corruption. However, it also found that as the have less effect on with lower levels of growth – though the level of corruption rose it also becomes less growth in countries correlation is weaker in Asia than else- predictable, so it would be wrong to believe with strong where.27 One, for example, concludes that a that corruption can always be safely governments 10 per cent increase in corruption perception, managed.33 would lead to a 2.8 per cent reduction in Corruption will also have a less corrosive growth rate in Africa, and 2.6 per cent in effect on the economy if corrupt politicians Latin America but only 1.7 per cent in Asia.28 and officials work with a long-time horizon This reduction in growth results to some and deliver genuine benefits to the payers of extent from reducing investment29 but bribes. During the 1980s and 1990s in a mainly from undermining political stability number of East Asian states, politicians which in one study accounted for around two- established long-term relationships with thirds of the effect of corruption on growth.30 capitalists; in exchange for bribes and kick- This suggests that corruption will have less backs they provided valuable promotional effect on growth in countries with strong privileges. In other countries where officials governments. extracted bribes in a less predictable fashion The link between corruption and growth and offered fewer real benefits growth tended can also depend on the size of the country.31 to be slower.34 Corruption may seem less damaging to In addition to comparing the experience growth in larger countries. In East Asia a of different countries it might also be possible number of large countries with high perceived to look at groups of countries in Asia Pacific levels of corruption have also sustained high region and see if changes over time in the

CHAPTER 1: THE SCOURGE OF CORRUPTION 31 perceived levels of corruption correlate with equality in education. The vibrant NGO changes in economic output. However, the sector in the country, along with government, opportunities for doing so are limited. The has been instrumental in these positive CCI, for example, has been produced only human development outcomes even though since 1996 and annually only since 2000. For corruption is shown by the CCI to be some of the most dynamic economies of the extremely pervasive in Bangladesh. region this provides only eight observations, Even India, which has a middle ranking some of which were during the Asian finan- in the CCI, has seen significant fluctuations cial crisis, when the economic and political in economic growth at a time when percep- environment was in rapid flux. tions of corruption have been relatively stable. Certainly there does not seem to be any Similarly, for Malaysia, which is consistently As the crisis correlation for individual countries. Take the ranked among the cleaner Asia-Pacific coun- continued, example of Bangladesh which according to the tries, the growth and corruption outcomes corruption also CCI ranking is one of the world’s worst seem unrelated: growth fluctuated between weakened countries in terms of corruption control. Yet 1997 and 2002, though the perception of governments’ it has achieved steady growth which does not corruption scarcely changed. capacity to respond correlate with the level of the CCI; indeed, One can also put the growth-corruption and to protect corruption has become worse according to link into some perspective by considering the the poor this index (Figure 1.7). This experience may, rise first of China and now of India as star however, be temporary in a country making global economic performers. Could they have the transition to a more free market grown any faster in the absence of corruption? economy.35 Yet, despite what high level of Indian economic growth was over 9 per cent corruption might suggest, Bangladesh has in 2006 and that of China has been over 10 made remarkable progress in certain social per cent over a prolonged period. Corruption indicators such as in health (immunization may have hampered growth, but probably not rates and infant mortality) and gender much. It seems more likely that growth is constrained by other factors – such as world market demand, the rate of technological adaptation and the actions of global competi- tors. It can, however, be argued that even in these countries growth will eventually lead to systemic shocks – economic or political – which are less easy to manage in countries hampered by high levels of corruption.

The Asian Financial Crisis

The most dramatic case of corruption contributing to an economic implosion was Figure 1.7: Control of Corruption Index and GDP Growth the 1997 Asian financial crisis. By now the Note: GDP growth in the figure is the annual per cent change of GDP at constant proximate causes of the crisis are well known 2000 prices. GDP growth is graphed on the left axis and control of corruption index – related to the premature liberalization of is graphed on the right axis. banks and capital markets in the absence of Sources: World Bank 2007b; World Bank 2007c. an adequate regulatory framework. The need

32 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT for greater caution was also hidden to some This created an unstable situation since extent by many years of record growth, stable political connections can suddenly snap. In exchange rates and relative political stability Malaysia, for example, in the initial stages of – which generated a degree of euphoria. the financial crisis, the politically connected For long-term foreign investors this was firms were among the hardest hit – though too good an opportunity to miss. Faced with when capital controls were instituted follow- rising labour costs at home they were happy ing the crisis, the position of these firms to take advantage of new technological possi- recovered, corresponding to an increase in the bilities by relocating and outsourcing to Asia. expected value of their political capital.36 They were also reassured by the fact that Across the region, as the crisis continued, their governments had anti-communist and corruption also weakened governments’ defence alliances that reduced the likelihood capacity to respond and to protect the poor. of sudden changes of regime and nationaliza- This was partly because money for social tion of foreign assets, even in countries where benefit programmes was stolen from public the state remained a key player in economic funds but also because social safety net decision-making. programmes provided opportunities for The resulting flood of foreign capital, corruption among local governments and much of it short term, combined with the officials and also allowed them to curry ability of local firms to borrow cheaply off- favour with local interest groups who were shore in international capital markets created given priority over more deserving house- a dangerous but predictable bubble. As holds. Local politicians were also able to sell Corruption can bubbles are prone to do, this one duly burst – relief goods at rates above the subsidized therefore not only and in spectacular style, starting with the prices, and keep the remaining funds. make countries nosedive of the Thai baht on 2 July 1997, and Corruption can therefore not only make coun- more vulnerable to going on to rock the world capital markets, tries more vulnerable to crises but also reduce crises but also with tremors being felt as far away as Russia their capacity to handle such crises. reduce their and Brazil. capacity to handle This was a crisis exacerbated by ‘crony Corroding Tax Administration such crises capitalism’ which distorted the worth of companies. The value of many companies had One of the most important ways in which less to do with economic fundamentals and corruption distorts both the national economy more to do with their political connections. and public investment is through the tax sys- Those that had managed to build strong tem. Some of the factors likely to influence the relationships with political leaders were able extent of corruption in the tax system are:37 to procure special privileges and licences and protection against competitors. They also Complexity. If the rules are complex and the found it easier to get credit. Valuable laws unclear, with multiple regulations and resources thus went to those companies that procedures, then the taxpayers are likely to enjoyed special relations with government have to interact with the system – and officials rather than to those most willing to officials will have more opportunities to pay for the license or who could achieve the extort bribes. highest returns for a loan. With prosperity based on firms that were well connected but Rates. As tax rates increase, the motivation inefficient, productivity inevitably declined. for tax evasion also increases.

CHAPTER 1: THE SCOURGE OF CORRUPTION 33 Discretionary power of officials. The greater the Overall governance environment. The extent of discretionary and monopoly power of tax corruption in a given tax administration officials, the greater their scope for interpret- generally parallels that in the administrative ing rules and regulations to their advantage. environment as a whole – if that is corrupt, Without inadequate monitoring and report- the tax system will be corrupt too. ing, the result is likely to be more corruption. Most forms of taxation are susceptible to corruption, including value-added tax (VAT), Appeals system. If it is costly and time- which in many countries is now replacing consuming to file an appeal, taxpayers may other trade taxes. In Sri Lanka in 2006 the be motivated to ‘beat the system’. Indeed, amount of VAT fraud has been estimated to some people may do so simply to signal how be 3.57 billion rupees.38 In VAT many of the smart they are, though the empirical evidence opportunities arise in the credit and refund for this is weak. mechanisms which allow tax officials and businessmen to collude. There is also scope in There exists a Enforcement. If taxpayers and officials believe the system of VAT for false invoicing of trans- simultaneous occurrence of low that there is little risk of being caught or actions. In addition, studies suggest that control over punished they are more likely to engage in causes of corruption in VAT may arise due to corruption and low corrupt behaviour. credit claimed on purchases that are not tax revenues for creditable, bogus traders and under reported several Asia-Pacific Level of remuneration. If the wage levels of tax sales.39 countries officials are low, they will be more tempted to The association between corruption and supplement them through corruption. tax revenue is shown in Figure 1.8. If outliers are disregarded, the central message from this chart is that there is an association between the capacity to control corruption and tax revenue: lower values of the CCI – suggesting poor control of corruption – are associated with lower tax revenues as a share of GDP and vice versa.40 The figure indicates that there exists a simultaneous occurrence of low control over corruption and low tax revenues for several Asia-Pacific countries. Empirical evidence shows that countries in the Asia-Pacific region perceived to have high levels of corruption also tend to have high marginal tax rates, both individual and corporate. And the situation is worse if they also have multiple, burdensome procedures. One effect of this is that raising tax rates can Figure 1.8: Control of Corruption and Tax Revenue lead to a fall in net revenue, partly because of Note: Produced by the World Bank, the scores for the control of corruption index corruption or because high rates drive busi- (CCI) range from –2.5 to 2.5; higher values indicate higher control of corruption; nesses into the underground economy.41 The conversely, lower values indicate lower control over corruption. result is that enforcement costs also go up and Source: Gampat, Sarangi and Wickramarathne 2007. net tax revenue goes down.

34 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Corruption and Human Development corruption perception index and the human development index, concluded that corrup- While there has been fairly intensive study of tion does indeed lower human develop- the impact of corruption on economic growth, ment.44 Others have looked at components of there has been less systematic research on its human development such as health care and impact on human development. There are education and demonstrated that corruption various channels through which corruption both raises the costs and reduces the quality could cause damage. It is likely, for example, of service and thus raises infant mortality and to corrode ideals of public service, so admin- school drop-out rates.45 Further studies have istrations mired in corruption will also be similarly concluded that corruption reduces those less interested in investing in health and life expectancy and literacy.46 education. But even if corrupt governments The overall picture is illustrated in want to increase investment in social services, Figure 1.9 which shows, as might be expected, they will find that corruption has lowered that the countries in the region with higher Countries in the economic growth and weakened tax collection, levels of human development also demon- region with higher leaving them with less to spend on welfare strate low perceived levels of corruption, levels of human programmes. as measured by the control of corruption development also Corruption is also likely to determine the index. demonstrate low character of public investment. Corrupt offi- A closer look also shows that both scores perceived levels of cials are generally less attracted to small-scale tend to move in the same direction over time, corruption projects which involve a large number of as illustrated in Figure 1.10 which plots the actors, and instead prefer to invest in large changes in human development over the infrastructure projects that offer greater period 1980 and 2004 against the changes in opportunities for collecting rents. This leads the CCI over the period 1996 to 2006, show- to imbalances in the pattern of public expen- ing that an improvement in human develop- diture – away from key public goods such as ment is associated with a significant boost in health, education and environmental protec- the control of corruption. tion, and towards new roads or airports or military hardware.42 For example, they will prefer large infrastructure projects that are difficult to monitor and the purchase of mili- tary and high technology goods rather than ongoing expenditure on health and education. To get a better insight into the impact of corruption on the allocation of public expen- diture, one study conducted a cross-country regression for around 100 developing coun- tries for the period 1996–2001.43 This con- firmed that corruption reduced expenditure especially on education, health and social protection and affected the quality of services. Other studies attempted to demonstrate a more direct link with human development. Figure 1.9: Human Development Index and Perceived Level of Corruption One, using the transparency international Sources: UNDP 2006; World Bank 2007b.

CHAPTER 1: THE SCOURGE OF CORRUPTION 35 Again, however, this does not indicate causality. It could just as well be that higher levels of human development help combat corruption. The potential feedback links are illustrated in Figure 1.11. The most obvious channel through which higher levels of human development would reduce corruption is through better standards of education. Education empowers people to demand their rights and access to the services to which they are entitled, and also strength- ens their capacity to detect corrupt practices and speak out against them. The correlation between perceived corruption and secondary education is illustrated in Figure 1.12. Figure 1.10: Change in Human Development Index and the Control of Corruption Index Among the Low- and Medium-HDI Countries Sources: UNDP 2006; World Bank 2007b.

sectors of the economy, corruption also has cross- border dimensions, which has become an issue with accelerating globalization. However, various international and regional conventions and agreements could mitigate the impact of cross-border factors that drive corruption. All three forms of corruption can be found in the public sector – petty, grand, and state capture. Petty corruption is widespread in poor countries where a large fraction of public services is delivered by the government – shortages, real or contrived, numerous gatekeepers and complex procedures create an incentive for corruption. The private sector, on the other hand, provides the space for grand and petty corruption. Depending upon the circumstance, cross-border dimensions of corruption can be linked to both sectors but the effect is the same: corruption becomes more entrenched. The most telling and direct effect is on growth via investment. While there might be some short-term benefit from grease-the-wheel corruption, the long-term effect on growth is negative. Growth, in turn, affects employment, inequality and government revenue. Constrained government revenue presents serious problems for the delivery of public services (health, education, water, electricity). Employment, inequality and Figure 1.11: The Two-Way Relationship Between Corruption delivery of public services are then linked to human and Human Development development, which can also have an independent and direct effect on corruption. Notes: Corruption is embedded in the very fabric of society, a direct consequence of human living in groups, communities and societies. Present in both public and private Source: Gampat 2007a.

36 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT The Effects on Poverty

Corruption in its various forms is also likely to affect poverty. This has been confirmed, for example, in a global study which shows that corruption tends to slow the income growth for the bottom 20 per cent of the population.47 As with human development, corruption slows down poverty reduction by lowering growth rates and reducing the effec- tiveness of social programmes. There is not much systematic evidence but it is well known that many of the goods and services targeted for the poor do not actually reach them – instead finishing up in the hands of Figure 1.12: Perceived Level of Corruption and Secondary Enrolment well-off and connected households who can Sources: UNDP 2006; World Bank 2007b. afford to bribe the officials. The poor also lose out since they have less corruption is seen to be highest in the police The poor also lose bargaining power when there is a general and judiciary. This chapter considers how out since they have shortage of services, public or private. The this can undermine the position of the poor, less bargaining rich and the powerful can get the best deals both by harassing them and by denying them power when there out of the existing stock either through any means of redress. It also indicates ways is a general short- age of services, bribery, good connections or access to the in which the judicial system can be made more public or private open-market. Thus while the poor are already responsive and accountable. excluded from various opportunities such as credit and insurance because of market Chapter Three. Poor people encounter corrup- imperfections, corruption erects a further tion in a wide range of services. This chapter barrier. In addition the poor also lose out looks at health, education, water supply and when they pay bribes. Even if they do so less electricity, showing how both grand and petty frequently than the better off, the amounts corruption reduce the funds available for they pay generally represent a higher propor- investment in human development. tion of their income.48 Chapter Four. When money, food, or other Contours of the Report materials change hands there is always the danger of ‘leakage’. This chapter looks at the The aim of this Report is primarily to potential for tighter control during ‘special consider ways of countering corruption. The development situations’ and when providing following chapters therefore give a brief social safety nets for the poor. summary of the nature and extent of corrup- tion in some of the most important sectors, Chapter Five. Some of the largest bribes along with examples of anti-corruption concern the exploitation of precious natural measures. resources – from oil to minerals to forestry. In this case the influence of the corruptors Chapter Two. In the Asia-Pacific region can even amount to ‘state capture’.

CHAPTER 1: THE SCOURGE OF CORRUPTION 37 Chapter Six. Tackling corruption means Chapter Seven. This chapter looks from the working simultaneously from the top down bottom up at what citizens can do to counter and from the bottom up. This chapter starts corruption when supported by the media and at the top looking at what governments need civil society organizations. to achieve in terms of legislation, creating anticorruption agencies, fulfilling the right to Chapter Eight. This chapter distils from the information and reforming their civil analysis of the Report, a 7-point agenda for services, as well as in cooperating with other change. countries.

38 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT

There are no transcripts in Indonesian courts. And without a full transcript . . . how do you investigate court decisions properly?

AMIEN SUNARYADI, VICE-CHAIRMAN OF THE CORRUPTION ERADICATION COMMISSION (KPK), INDONESIA Justice for Sale 22 Chapter

In the Asia-Pacific region corruption is often at its worst in justice systems. Police, public prosecutors, court officials, lawyers, judges – all can demand payments, sometimes not just for doing their job but also for diverting justice from its true course.

Many people see the police and the judiciary TABLE 2.1 not as guarantors of their rights but as PERCEPTIONS OF CORRUPTION IN JUSTICE SYSTEM, sources of harassment and bribery, distrust BY GLOBAL REGION and fear. The officials who should be protect- Political Police Legal Educa- ing people from abuse are themselves often parties system tional the worst offenders. Small wonder that the judiciary system police and the courts are often held in low Asia-Pacific 4.0 3.8 3.3 3.1 esteem. This is evident in Table 2.1, showing Africa 4.2 4.6 4.0 3.8 comparative ratings in the Transparency In- South-East Europe 4.0 3.9 4.1 3.8 EU and other Western Europe 3.7 2.7 2.9 2.3 ternational Global Corruption Barometer – Latin America 4.2 4.2 4.1 3.0 which asks people for their assessment of the North America 4.2 3.1 3.5 2.9 extent of corruption in various sectors of Former socialist states 3.9 4.1 3.9 3.8 government, on a rating of 1 (not corrupt) to Note: Transparency International’s Global Corruption Barometer measures people’s 5 (highly corrupt). The answers were disturb- perceptions of corruption in different sectors/public institutions on a scale of 1 to 5. ing. In Asia-Pacific as a whole the most 1 = Not at all corrupt; 5 = Extremely corrupt. corrupt group were the politicians, but the Source: Transparency International 2006a. police came in a close second and the judi- ciary not far behind. The situation appears, themselves may also have paramilitary however to be worse in Asia than in the divisions, so the lines can be blurred. Never- Pacific where the judiciary is not considered theless the police in all countries have the that corrupt and is effectively independent of same core task: to protect citizens and government. Compared with other regions provide them with security of life and per- sonal property against potential threats from the police are perceived as somewhat more Officials who corrupt than those in Western Europe and in others. The police also serve as guarantors of should be North America, though less than those in state power, defending the state against protecting people Africa and Latin America. potential, large-scale violent action or from abuse are challenges – as is evident in their presence at themselves often the Police Corruption political demonstrations. worst offenders Many of the officers carrying out these The most common daily interaction with the and other tasks are honest and conscientious justice system is through the police. Each – trying to enforce the law fairly and to country organizes its forces in different ways. protect citizens. But there are also others, who In some cases, in more remote and lawless for at least part of the time, have a different areas, for example, police-like tasks may be agenda. In the rural areas, they may, for carried out by the army, though the police example, be in the pockets of rich landowners

CHAPTER 2: JUSTICE FOR SALE 41 who can use the police to control their Mixed fraud and extortion. If the courts have workforce or their tenants. In the cities, the to be involved, as they normally are in larger police can be in the pay of large corporations, cases, police extortion is often combined with colluding with politicians and business inter- fraud – as in the classic case when the police ests, and may be used, for example, to force plant drugs in the pocket of the suspect. As poor people off their land to make way for the case proceeds through the judicial process new developments. And the poorly paid lower the price of freedom to be paid to the police or constabulary, often living in slum-like condi- the judicial system steadily rises. tions, with inadequate resources to carry out main responsibilities or satisfy demands of Corrupt transactions. The police may illegally supervisions, may feel pressured to seek sell decisions such as not to report a traffic ‘extra curricular’ income. violation, or not to register a crime. Or they In some instances police officers may may offer to falsify reports by, for example, simply be working for themselves, extracting reducing the amount of drugs a dealer is as much income as they can from their posi- recorded to have been carrying when arrested, While corruption in tion of power. While corruption in the police in order to reduce his punishment. Generally, the police forces forces in many respects is similar to that in the simplest and most lucrative option for a in many respects is other public services, in this case it is often corrupt officer is not to arrest people who are similar to that in accompanied by violence. The police can known to be guilty. For example, when prosti- other public legitimately use physical force in the pursuit tution is illegal, the police can charge sex services, in this of their normal duties and even direct the workers a regular fee for not arresting them, case it is often same force against the innocent. Members of or perhaps in exchange for submitting to accompanied by the public on the other hand have no such sexual exploitation. In some cases, however, violence rights; they are not permitted to resist even it may well be the guilty party who initiates an unjustified arrest using physical force. the process by offering a bribe. Another type The most common forms of police of corrupt police transaction is to sell infor- corruption are: mation, such as a warning to illegal establish- ments about impending inspections. Extortion. Police may, for example, apprehend Whenever police corruption is extensive, suspects whom they believe to be guilty of a however, it tends to be linked with other crime, but rather than executing a formal corruption networks. Some of these are arrest they may instead beat them up and within the police service itself which may force them to pay for their freedom. Police have developed a hierarchical system for can also seize people they know to be inno- distributing the proceeds of extortion up- cent, and threaten them with arrest and wards through higher ranks of the force. On demand payment for release – which for the other hand, much of the corruption actu- women can often mean submitting to sexual ally starts at the top when senior officers de- exploitation. This type of extortion is most mand bribes for appointments or promotions common when the police have great freedom or for the most profitable postings. Senior of- to arrest suspects and temporarily jail them, ficers also tend to be part of wider networks independently of the courts. The police may of corruption within the justice system, with also act as local gangsters, threatening to in- connections with politicians, judges, lawyers, flict harm against establishments or individu- and prison guards, as well as with criminal als who are unwilling to pay for ‘protection’. gangs.

42 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT The Extent of the Problem

Some indication of the extent of corruption in the Asia-Pacific region can be gathered from surveys of public perception, as shown in Table 2.1. But it is also possible to get more direct indications from surveys of people’s actual experience. The Global Corruption Barometer also asks respondents about their interactions with the police. In the Asia- Pacific region this survey found that 18 per

cent of the respondents claimed to have paid Figure 2.1: Respondents Who have Paid a Bribe to the Police, by Global Region a bribe to the police over the previous year, Source: Transparency International 2006a. though this was a smaller proportion than found in Latin America or Africa (Figure 2.1). Similarly, in Sri Lanka, a survey Another more indirect indication comes conducted in 2007 by the Centre for Policy from crime reporting and from crime victim Alternatives, found that 45 per cent of people surveys. In most countries, victims tend to who had interacted with the police due to report only a fraction of crimes. In Oceania, traffic violations had to rely on ‘alternative the proportion is relatively high, at 52 per processes’ (paying more than what was cent, close to that in North America, but in prescribed, paying someone for assistance, or Asia it drops to 26 per cent.1 The victim’s using influence). Of those who gave more decision on whether or not to report a crime money, three-quarters did so in response will depend on a number of factors – an to a demand, while the remainder did so assessment of the likelihood of catching the voluntarily.4 One typical case occurred in perpetrator, for example, or the options 2004. The police stopped a citizen for driving offered by local systems of justice, or the a vehicle with tinted windows, revoked his requirements of insurance companies. But licence and ordered him to go to the police one key factor will be the victim’s views on station to pay a fine. Here a grama-rakshaka the efficiency and honesty of the police. When ( of the village security personnel) When victims in victims in various countries in the Asia- told him his driver’s licence would be various countries in Pacific region were asked why they did not returned if he paid a bribe of around $10. the Asia-Pacific report a crime, between one-third and three- When the driver reported this to the region were asked quarters cited lack of trust in the police.2 Traffic Section, instead of disciplining the why they did not Among different branches of the police grama-rakshaka, the sergeant said that his report a crime, some of the most frequent corrupt interac- licence would be returned only if he paid his between one-third tions are with the traffic police. In Cambodia, grocery bill of $54.5 and three-quarters cited lack of trust for example, one survey found that 89 per Police also often demand bribes from in the police cent of encounters with the traffic police long-distance truck drivers. One study, in resulted in a bribe. Typically the payments Indonesia, involved accompanying truckers in tended to be smaller amounts than those to long inter-provincial journeys that encoun- other branches of the police. The average bribe tered multiple police checkpoints. Bribe from a household was around $9. Bribes expenses at these checkpoints constituted from businesses were about fifteen times around 13 per cent of the transportation cost greater.3 which, though less than the fuel cost, is a

CHAPTER 2: JUSTICE FOR SALE 43 little more than the wage cost.6 Similarly a occurred in 1996 in Delhi, India. A fruit report in Bangladesh found that a cattle vendor belonging to a minority community trader had to pay extortion money at eight was beaten to death by two policemen mainly different places along the way to the market, because he had failed to pay the hafta – a both to the police personnel and organized weekly collection made by the police to criminals – which added 15 per cent to 20 permit petty vendors to carry on their activi- per cent to the selling price.7 ties. The incident attracted a lot of attention and action was taken by the department to Impact on the Poor prosecute the guilty police officers after pressure from the public. The National The poor are the most vulnerable to police Human Rights Commission asked the govern- corruption because they lack the influence ment to pay a compensation of INR Rs 2.5 needed to defend themselves when they get lakh10 to the next of kin and to take mea- into difficulties. Although the sums extorted sures to curb the menace so that ‘this by the police are relatively small they vulnerable section of society can live in peace’. constitute a significant proportion of the The Commission subsequently received a income of poor people – as well as creating an report from the Government of the atmosphere of fear and apprehension. Most National Capital Territory of Delhi indicat- analyses of corruption do not, however, ing compliance with the directions of the include the impact on the poor. This may be Commission.11 because it involves relatively small amounts, Police can also harass whole neighbour- and is difficult to measure, and also because hoods. In a riverside slum settlement in the victims have little power to complain. Northern India poor families described to One example in Cambodia, for example, reporters how police were fleecing them: involved a rural family who owned a small ‘They have made our lives miserable. We do boat but not the land where their house was not know when we will be thrown out of our located. The wife reported that sometimes the homes. They land up any time and demand police came when her husband was out fish- money. They threaten us that if we do not ing and although they did explain why they pay, they would throw us out of our homes. were visiting her, she at times felt forced to . . . Last week my clothes were torn apart give them money, out of fear of losing the after my husband could not pay the money boat.8 The police will generally monitor the demanded. We were allowed to go free only rural space for which they are responsible and after we sold our rickshaw and paid the use this information to identifying the most money’.12 vulnerable families they can extort. On the other hand, poor people are less Among those greatly exposed to harass- likely to receive any attention if they want to ment by the police are street vendors. Many register a complaint. For poor and disadvan- people working on the streets do so without taged people in many countries in the Asia- official recognition and even when they have Pacific region, non-registration of their protection from appropriate legislation this complaints is one of the most common and is not always implemented. As a result, widespread grievances. While this may across the region street vendors are frequently simply be due to indifference to the needs of harassed by the police. If they do not pay up, the complainants it can also be the outcome they are likely to see their goods confiscated of corruption if those accused can pay the or destroyed.9 One well publicized case police to ignore their crimes.

44 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT SPECIAL CONTRIBUTION – COMBATING CORRUPTION IN CRIMINAL JUSTICE AGENCIES: THE INDIAN SCENE By R.K. Raghavan

India has won global praise for its statistical approach in assessing police a growing feeling that the canker is robust economy and its wider media performance. But this calls for political spreading upward to the higher courts coverage of the ways in which public will and no political party likes to admit of the states. The major factor that servants function. ‘Sting’ operations to a rise in crime when it is in office. promotes judicial corruption is the expose corruption are the order of the A major factor behind police corrup- mind-boggling volume of work, which day. But amid these very positive deve- tion in the falling level of results in the pending of cases for years, lopments, not only are visible signs of integrity, especially at the level of elite sometimes for more than a decade. Judi- increased ethical standards few, but an officers drawn from bright university cial discretion to prolong trials is wide, attitude of resignation to entrenched graduates. While a module in ethics is through adjournments sought by defen- graft also prevails. now part of the curriculum at the dants for the flimsiest of reasons, which Nowhere is this more evident than National Police Academy in Hyderabad, is conducive to corruption. The appoint- in the Indian criminal justice system, this seems not to have yet brought about ment of unqualified judicial officials, where the police and judiciary are the desired improvement in values. purely on political and non-legal consid- crucial points of public contact. The Deterrence in the form of criminal erations, to prosecute cases on behalf of police, as the first point, constitute the action under the Prevention of Corrup- the State marks another negative cutting edge in offering needed relief to tion Act 1988 is one response that has feature of the scene. a person in distress. Yet it is here that been tried, with modest success. In a A provision in the Constitution seeks there have been the most vociferous recent case, a former Commissioner of to ensure judicial integrity, but enforce- complaints of corruption for decades. Police was arrested and prosecuted on ment has been at times futile, reinforc- Without the offer of a bribe, few charges of involvement in a nationwide ing a sense of public resignation. In one victims of crime get their cases regis- fraud scheme. This officer has since case, a Chief Justice was tried for tered as a ‘First Information Report’, the been acquitted but the fact he was impeachment in the national Parliament starting point of investigation under the suspected of malfeasance at all is one on charges of grave impropriety. The law. Misdeeds may even be suppressed index of the perception of declining motion failed because the issue became by corrupt officials, often with a view of levels of integrity in the Indian police. mired in controversy, with the judge in circulating the false impression that The frequent transfer of criminal question being supported by one politi- crime is under control, when it is not. cases from the state police to the cal group on partisan grounds. Creation There are, however, successful ways Central Bureau of Investigation (CBI), of a National Judicial Council to look to deal with this. Increasing manpower India’s highest investigating organiza- into complaints against judges, in addi- at police stations, the fundamental unit tion, on complaints of lack of police tion to other matters like appointments, of policing, will help, but it is not integrity offers another index of the is another non-starter because of diffe- enough. Simultaneously, police staff challenges facing police credibility in the rences of opinion between the central should also be relieved of responsibility states. CBI has limited resources and Government and the judiciary. for public order maintenance, specifically cannot handle too many cases, but this To counter all this, in some instances for the protection of dignitaries, popu- method of judicial intervention can High Court Chief Justices and judges larly known as ‘VIP security’. Several ensure straightforward criminal investi- have been transferred from one state to reform bodies, including the National gation in sensitive cases. Likewise, the another in a device tried by the Supreme Police Commission itself, have long re- Supreme Court has ordered the creation Court to neutralize partisan judges commended that such work be assigned of a Police Complaints Authority. against whom complaints of corruption to specialized units, an arrangement Although this is intended primarily to have been levelled. Still, this remains a under which a police station will then oversee cases involving alleged police stopgap measure. Ultimately, it is only become purely a service centre for the brutality, this body also could look into the appointment of people of unimpeach- average citizen. The separation of law charges of corruption and must be imple- able integrity that will at least partially and order police and crime investigation mented in more states. ensure judicial and police uprightness. units was ordered by a Supreme Court At the same time, it is widely judgement in September 2006, however, believed by the public – and has been R.K. Raghavan is a former Director of this has been only partially implemented admitted by a few Chief Justices them- Central Bureau of Investigation, New in many Indian states and must be selves – that the judiciary is not free Delhi. He is currently a leading consult- further strengthened. from corruption. Fortunately, this ant in the area of cyber-security and Suppression of crime through the malaise is almost wholly confined to the writes two fortnightly columns for ‘The manipulation of figures also decrease if lower judiciary, which hears the less Hindu’, a well- known English-language a qualitative evaluation replaces a grave cases of crime. There is, however, newspaper group.

CHAPTER 2: JUSTICE FOR SALE 45 Police corruption can also have significant contrary to their interests. With overwhelm- gender implications. According to a 2007 ing support, constant media attention and survey in Sri Lanka 78 per cent of the female intense pressure from all quarters, reforms respondents said that if they had to go to the ultimately proved a success; today Hong Kong police station for any reason they would like (SAR), China has one of the most efficient someone to accompany them, while only 32 and law-abiding police forces in Asia. per cent male respondents said that they Similar efforts have been made in other would ask a friend to accompany them.13 countries. In Malaysia, for instance, the Royal Typical cases in South Asia involve victims Commission to Enhance the Operation and of rape. Such cases do not often get reported. Management of the Royal Malaysia Police One case that made it to the press in submitted its report to the Prime Minister in Pakistan, for example, involved a rape victim April 2004. One of its key recommendations whose father tried to file a case at the nearby was to establish an Independent Police police station, to no avail. Almost ten weeks Complaints and Misconduct Commission, had passed, but no action had been taken. She though by the first half of 2007 this had yet alleged: ‘Some influential people are threat- to be established.15 With overwhelming ening us with severe consequences’.14 Other solutions involve changing the support, constant structure of police forces to make them more media attention and Tackling Police Corruption efficient and responsive – applying rigid intense pressure recruitment criteria, reallocating individuals from all quarters, Police corruption is difficult to address since across tasks, modifying transfer patterns, reforms ultimately the police can easily discover that they are under carrying out an ethical evaluation of those proved a success investigation and may be in a position to in- who are up for promotion, and attempting timidate witnesses and destroy documents. changes in policing styles. The overall inten- They can also usually rely on the support of tion should be to create more professional and powerful political patrons. One of the most effective police forces that allow individual important steps therefore is to ensure that officers to take greater pride in their work – complaints against the police are dealt with so that they think primarily about fulfilling by a truly independent and accountable body. their responsibilities. Independence is a necessary condition but Corruption may also be reduced by invest- it is not sufficient. In fact, in Hong Kong ing more in the police forces. In Karachi, (SAR), China the Commission’s headquar- Pakistan, for example, the Citizen-Police ters was in its early days surrounded and Liaison Committee (CPLC) has served as a stormed by outraged police, forcing the Com- bridge between the community and the police mission to reach a compromise on prosecu- and has helped increase awareness of the tions of many officers, and in 1977 its financial constraints and to raise resources to investigations provoked a mass police walk- improve working conditions in police stations. out. In different circumstances, such incidents The CPLC has contributed to improved might have killed off the fledgling agency. performance, including providing access to However, the critical element was public justice for the poor, offering poor people an determination: the people of Hong Kong alternative mechanism for registering crimi- (SAR), China were not prepared to go back nal complaints, as well as acting as a forum to the old days. They would no longer for dispute resolution for those who cannot accept that policing had to be corrupt and afford costly judicial processes.16

46 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Another option, depending on the coun- sive. Ideally, courts should be the place where try context, is to decriminalize and requlate all kinds of disputes can be settled fairly and activities that commonly serve as sources of dispassionately, where judges operate free income for the police – in some countries it from any political or commercial pressures, may be possible to look again at legislation settling cases only on the basis of evidence. that prohibits widely practiced social activi- Indeed there are many examples where, ties, such as the consumption of alcohol. against considerable odds, courageous and It should also be possible to reduce the principled judges particularly the higher judi- impact of police corruption by strengthening ciary do uphold the laws and constitutions of the rights of suspects. This would include the their countries, delivering judgements that right to call relatives about arrests or police correspond with national legislation and the confinement, which is becoming more practi- provisions of the constitution. cal with the increasing number of mobile This is not always so. Even judges who Even judges who phones. want to uphold ethical principles may find want to uphold People should also be better informed themselves subject to heavy pressure. Often ethical principles generally of their rights and responsibilities. this comes from the top, as judicial proceed- may find themselves In 2005, Pact Cambodia, an international ings are distorted by political intervention. subject to heavy NGO in cooperation with local NGOs, tried Judges can be leaned on by powerful politi- pressure to raise awareness among citizens on how to cians to rule in their favour, requiring the reduce corruption in the traffic system. They courts to provide legal cover for various types emphasized that fighting corruption was the of illegal activity – from land grabbing, to responsibility of every citizen and explained nepotism to a range of other dubious commer- what citizens could do to reduce corruption. cial transactions such as privatization They listed, for example, the documents that programmes designed to benefit political or people had to carry while driving – which business cronies. differ for family cars, trucks and buses and Judges typically come under the heaviest motorcycles – and detailed the fines that pressure when handling cases that are politi- people driving each type of vehicles were offi- cally sensitive: for example, the prosecution cially required to pay for any traffic violation. of former political leaders for corruption or In addition to responding more appro- other crimes, or of other high-profile figures priately to gender-related crimes, it is impor- who have a wide popular following, when tant that women should be able to count on they will be expected to make a politically special protection. In the Philippines, for acceptable ruling. example, police stations now have a ‘women Most people, however, encounter corrup- and children concerns desks’ which have tion in the judicial system at lower levels. A helped provide services and protection to the number of studies across Asia have found victims of abuse and violence while also help- that two-thirds or more of the population ing to improve police-community relations.17 consider the routine court system to be corrupt, and admit that they themselves will Judicial Corruption pay bribes, regardless of whether they are guilty or innocent. A household survey Most people have fewer contacts with the conducted by Transparency International courts than with the police, but these can Bangladesh in 2005 found that two-thirds of prove just as difficult and even more expen- the respondents who had used the lower tiers

CHAPTER 2: JUSTICE FOR SALE 47 of courts in the preceding year paid average Trial dates and timing. Court officials may be bribes of around $108 per case. This amounts bribed to get favourable dates for the hearing. to about a quarter of the average annual Judges may be bribed to ensure that cases are income in one of the world’s poorest coun- heard promptly rather than subjected to tries.18 Once people feel that the law is endless adjournments. suspect, and that the outcome will turn on who pays the most, even innocent parties Evidence. The police may tamper with the believe they will have to bribe to achieve a evidence, court officials can be bribed to ‘lose’ Recognizing this ‘fair’ result. Recognizing this issue, in files, and judges may admit or exclude issue, in Pakistan in 2007, the National Judicial Policy evidence according to which party has paid Pakistan in 2007, Making Committee (NJPMC) called for zero the most. the National tolerance towards corruption in the lower Judicial Policy courts. The committee, which has been estab- Verdicts. Once a judge has been ‘bought’ there Making Committee lished to coordinate and harmonize judicial is little hope of a fair trial. A bribed judge will (NJPMC) called for policy within the court system and to ensure often simply distort the testimony of zero tolerance its implementation, in September 2007 asked witnesses in their summaries and give the towards corruption the high court authorities to make frequent corresponding judgement. Even if the verdict in the lower courts surprise checks on lower courts.19 is inevitable the subsequent sentencing may bear little relation to the severity of the crime. Forms of Judicial Corruption What Makes a System Corrupt Corruption can emerge at all stages of the judicial process from the initial arrest to the Judicial corruption in many respects is just final sentencing to the assessment of the another aspect of a weakly functioning state. period of imprisonment. Indeed, running In many countries politically motivated parallel with the more formal judicial process bodies appoint or promote judges according there can be an ongoing negotiation between to their own requirements, so that the judi- lawyers, judges and others on the size of the cial system becomes just another arm of the required payment – which tends to increase executive. Such judges are more inclined to steadily as the case proceeds. bend to the wishes of their political masters than to guarantee justice or protect the rights Police discretion. Initially the decision to arrest of citizens. will depend largely on the police who in many Weak judges may also yield to other pres- cases are open to bribery. The police may also sures. Some may, for example, consider it decide on whether complaints that are more important to support a relative or asso- brought to them should be investigated, ciate than to uphold the rule of law. They may often requiring payment just to register also fear retribution – sometimes in the form cases. of violence. In addition to lack of economic security, judges may in countries such as Prosecution decisions. In some countries the Afghanistan, suffer from a lack of physical decision whether or not to bring a case will security.20 But they may also be concerned rely on a public prosecutor. This post does about reactions from other branches of gov- not usually carry a very high salary, but is ernment, which can bring bogus charges or very powerful and much sought after. force ‘awkward’ judges into early retirement.

48 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT A further issue is low salaries. Explain- rural justice in Pakistan, for example, found ing why Singapore’s judges are paid high sala- that people in poor villages were reluctant to ries, the former President, Lee Kuan Yu said: engage with the formal legal system because ‘you pay peanuts, you get monkeys’.21 they viewed the police and courts as luxuries Although there are many courageous and for the rich. Rather than getting involved with honest judges on low salaries, low pay may the formal legal system they would prefer to contribute to corrupt behaviour. In many use more informal systems of dispute resolu- countries salaries of judges, particularly those tion. Though quicker and cheaper such who work in rural areas, are so low that they systems may not necessarily be fairer.23 frequently earn much less than the people Second, the poor suffer because without they are giving judgment on, and often less being able to afford to defend themselves they than practicing lawyers. While on duty, are subject to arbitrary judgements that can judges may get housing and transport giving cause them to lose their land, homes, or them a higher standard of living than that livelihoods. affordable on retirement – tempting them to A study in Bangladesh of 3,000 house- acquire some funds for the future. holds shows that 97 per cent of households Unquestioned power of the judiciary can that bought land had to pay bribes for land also be a source of potential corruption, even registration, 88 per cent of the households as it protects its independence. In most coun- who mutated their land ownership had to pay Although there are tries where judicial independence is institu- bribes for it, 85 per cent households who many courageous tionalized contempt of court laws not only collected land related documents had to pay and honest judges insulate the judiciary from the legislature and bribes, 83 per cent households had to pay on low salaries, the executive, they also keep it from media bribes for land survey, and 40 per cent house- low pay may scrutiny.22 Such laws prevent anyone – holds who received land had to pay bribes.24 contribute to elected representatives, officials, media, Corruption tends to compound the other corrupt behaviour citizens – from doing or saying anything that factors that prevent the poor from getting is seen to lower court authority. As a result, access to justice. Often the poorest people live even when a judgment is suspected of being in rural areas far from the courts and have based on extraneous considerations, it cannot little knowledge of how they work. In addi- be adversely commented upon openly. Few tion they are unlikely to have the funds to would risk undergoing a criminal trial, includ- pay for an experienced lawyer. In Bangladesh, ing the possibility of a prison sentence, for one woman narrated to Transparency Inter- commenting on a judicial decision. This ends national her experience about a murder up gagging the media. In India, for example, conviction of her seven-year old boy. While where contempt of court is taken seriously, playing he threw a ball which hit the chest of until last year even truth was not considered another boy who subsequently died. The court a valid defense. A few instances of alleged high sentenced him to several years in prison. His level judicial corruption have resulted in a mother lacked the funds to bribe court offi- debate on the matter. cials or to engage good lawyers, and relations of the dead boy evicted her from her home. Impact on the Poor Although poor families should be able to rely on the support of bar councils and govern- The poor will suffer from a corrupt legal ment funds, she was unable to enlist any such system primarily because they cannot rely on help. Fortunately at a later date she received it for protection. A 2003 UNDP study of the backing of a human rights group.25

CHAPTER 2: JUSTICE FOR SALE 49 Uprooting Judicial Corruption The general principles that judges should follow have been codified in the ‘Bangalore Much of the responsibility for reducing judi- Principles’. In 2000 a group of senior judges cial corruption lies with the judges them- from Africa and Asia met in Bangalore and selves. Judges in many countries have found a listed six core principles: independence, powerful voice by joining an association of impartiality, integrity, equality, propriety and judges to represent the interests of all judges competence and diligence.26 These have since – particularly lower court and district judges, been endorsed by a number of international whose opinions are rarely heard. This can bodies – the UN Commission on Human provide a potential for setting norms and Rights in 2003, the UN Commission on standards and abiding by them. Crime Prevention and Criminal Justice in

SPECIAL CONTRIBUTION – PROSECUTING CORRUPTION: A PACIFIC PERSPECTIVE By Hon. Madam Justice Shameem

The abuse of entrusted power for regulations and legal rules broke down in countries where no political will private gain is a habit. It is found in all or were compromised. The National exists to fight corruption. There will be countries, rich and poor, developed and Bank was asked to process ‘soft’ loans no political will where charges are likely underdeveloped. It is found in all socie- to indigenous Fijians as a form of affir- made against people who are powerful ties and ethnic groups. All that differs is mative action. For six years, millions of and part of, or supporters of, the the degree and type of corruption. In a dollars were advanced with no or Government. democratic society it is easier to spot, inadequate security. Law firms created Third, is cultural practices. Fiji has but corruption exists in democracies and shelf companies to siphon off funds and societies that are traditional, authorita- dictatorships alike. Wherever there is channel them abroad to unseen, rian and patriarchal. Some of the power, there exists the potential for unknown recipients. accused were traditional leaders as well power to be abused. The National Bank’s board said it did as Government officeholders. Charges For 16 years before I became a judge, not know what was happening. The challenged the traditional practice of gift I was a prosecutor, and for five of those Reserve Bank did not know. The giving, and of traditional favours years I was Fiji’s Director of Public Cabinet did not know. The Minister of expected and received. This was seen as Prosecutions. My experiences taught me Finance did not know. Eventually, the challenging a whole community’s that to deal with corruption effectively, media informed the public that the cultural identity. Prosecutors were you need good laws, a strong and inde- National Bank was owed $200 million, accused of cultural insensitivity, but this pendent judiciary, an independent and which it would probably never recover. obscured the real issue: whether the well-resourced prosecutors’ office, as Police investigations revealed that accused had acted corruptly. well as a determined police force. recipients were neither all indigenous Fourth, is delay. Delay is destructive But that is not all. The prosecutor nor financially disadvantaged, uncover- to prosecution. Witnesses, in any event, himself or herself needs to develop ing , dishonesty, fraud and reluctant to testify against those in immense resolve, a thick skin, excellent corruption. Cabinet Ministers, lawyers, power, renege or disappear. Often, they research and advocacy skills, along with accountants, civil servants and business forget evidence. Delay leads to applica- the ability to look dishonesty and interests all benefited. tions made by the accused to travel corruption in the face and say, ‘This is We started to issue charges. The abroad, to appeals from interim rulings dishonesty and corruption’. Corruption accused were all prominent members of and to applications for a permanent stay cases need prosecutors who will carry the establishment. The effects were of the prosecution. This happened in a on even when they lose and lose again, immediate: first, the hostility of the number of fraud and corruption trials in and who will recognize that victory is judiciary. When lawyers are challenged, Fiji, including several of the National in trying. members of the bench are not always Bank cases. The result was a failure to A story I have often told is of the able to consider their cases impartially. air the substance of the charge of collapse of the National Bank of Fiji. The principle of equality before the law, corruption. Fiji had its first military coup in 1987, so intrinsic to the rule of law, is most Fifth, is personal attacks. Members of said to be conducted to protect indi- severely tested when we try one of our the bench threatened several prosecutors genous Fijian interests. In the after- own. with contempt proceedings. Two were math, Government procedures, bank Second, the inadequacy of our laws cited, and one was detained in the cell Contd...

50 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Contd...

after feelings had run particularly high corruption case. A country determined must be prosecuted by strong, well- in court. Those were the direct attacks. to fight corruption must have the politi- resourced and independent law enforce- The indirect attacks were those within cal will to change laws, to change the ment bodies. These institutions are too the civil service machinery, the lack of structure of government institutions, to easy to manipulate and subvert, often in cooperation, the abusive memoranda, not tolerate corrupt conduct and to allo- the name of freedom and democracy. the ostracism. Only those who live in a cate resources to investigate and Lastly, anti-corruption agencies must small community will understand the prosecute corruption. have an educative role. Cases must be effectiveness of the social cold shoulder. How do we persuade governments to fought in an open court, under the glare When prosecutors take on the rich and develop political will? First is through of public scrutiny. One glimpse of a influential, their children will be abused increasing media consciousness about cultural or government leader in the at school, threatening letters will be what is corrupt conduct and how the dock teaches society more about the rule thrown over their gates, old friends will criminal justice system should be of law than a series of law lectures at cross the street to avoid talking to them. strengthened. Second is through the the university. In such cases, the media I suffered all of these, as did other involvement of civil society, which uses must inform, monitor and report with- prosecutors. We developed the art of the democratic means to pressure govern- out losing objectivity. sphinx-like stare. ments to pass anti-corruption laws and Prosecuting corruption is difficult but Lastly, is the opposition of the execu- code-of-conduct legislation. The other the solutions are apparent to those who tive. An independent prosecutor is a advantage of a greater civil society voice have been at the front lines and potential challenge to a government that is that it creates public consensus about survived. A failure to achieve those does not believe in accountability. the need to resist corruption, which in solutions, or to work towards them, will Attempts will be made to subdue that turn persuades witnesses that testifying result in the failure of the rule of law. independence, ensuring some executive against corruption is an act of courage control. The Government of Fiji tried to and a social responsibility. In a democ- The Hon. Madam Justice Shameem is a force me to agree to report to the racy – indeed, in any country – there judge of the High Court of Fiji, a position Permanent Secretary for Justice. I can be no greater voice than that of the she has held since 1999. She was Fiji’s refused, but the pressure was immense. people. Director of Public Prosecutions from 1994 Together with the personal attacks, the Furthermore, all state institutions in to 1999, after prosecuting for 10 years. She judicial battles, the legal challenges and a democratic government must be holds law degrees from Sussex University, the political apathy, these pressures strengthened. These institutions, when and Cambridge University, and is a defeated the prosecutions. weak and corrupt in themselves, under- barrister of the Inner Temple, London. I see the solutions very clearly, mine democracy. They undermine the Her special interest lies in the law of having failed to obtain a single convic- rule of law. They perpetuate the false fraud and corruption and in children’s tion in relation to the National Bank belief that all is acceptable. Corruption rights.

April 2006, and by the Economic and Social In Malaysia, for example, in September Council of the UN in July 2006.27 The impor- 2007 the Malaysian Bar Association orga- tance of the Bangalore Principles has also been nized a peace march to express concern about recognized at the national level. In 2004 the the state of the judiciary and to demand Philippines introduced a new code of judicial investigation into the authenticity of a video conduct for the Philippine Judiciary patterned clip featuring what appears to be a well- after the Bangalore Principles. connected senior lawyer purportedly discuss- Lawyers too can contribute, especially ing promotions and factionalism among through bar associations. One important role senior judges over the phone with the number of a national bar association is to defend the three judge in the country at the time. The independence of judges and to lobby govern- clip was recorded on a mobile phone in 2002. ments to provide the support necessary to The marchers also to handed over a memo- ensure their effectiveness. Bar associations randum to the Prime Minister’s office calling can also impose sanctions on members who for the setting up of a Royal Commission of engage in corruption and bring the profession inquiry into the controversial video clip, as into disrepute. well as a Judicial Appointment Commission.

CHAPTER 2: JUSTICE FOR SALE 51 The Government was responsive to their Appointments. Judicial appointments should request and announced the setting up of an be made by independent bodies with repre- independent panel to investigate the video sentatives from the legal system as well as clip. While welcoming this first step, the Bar from civil society. In the Philippines, for Council continued to ask for a broader inter- example, under the Action Programme for vention, namely for a Royal Commission to Judicial Reform launched in 2000, several look into the state of the judiciary and the citizen watch groups were formed to monitor need for a Judicial Appointment Commission.28 the selection of the chief justice, ombudsman Journalists also have a role to play as they and election commissioners. can report cases of public interest. Allowing public access to courtroom proceedings can Salary and working conditions. Judges should improve journalists’ often shaky grasp on the have salaries that match their experience and legal ramifications of a case, improving public qualifications and they should be offered all perceptions of the judiciary. In many juris- necessary protection for their security. To dictions the problem is not sensationalist deal with case overload and provide better reporting by journalists, but rather the access at the lower level, the number of obstacles that make it difficult for the media benches could be increased. to report allegations of corruption. Some recent efforts undertaken by the media, such Security of tenure. Judges should serve fixed as a hit and run case and a media analysis terms, for ten or more years, and should not comparing the lifestyle of judges to the size of be removed for reasons other than profes- their salaries (thereby exposing the account- sional misconduct. ability gap) have attempted to improve the 29 Systems of administration of the judiciary. Promotion. Systems of promotion should be promotion should Judicial reform programmes involve a merit-based, rewarding those who have be merit-based, wide range of measures that can help reduce upheld the integrity of the law. rewarding those corruption. These include: who have upheld Education and training. This should allow the integrity of the Budgeting. To protect judicial independence, judges to gain an understanding not just of law for instance, budgets for the courts could be a the law but also of ethical standards and of charged item to minimize political inter- ways to resist external influences. This would ference. Independent judicial councils could help reform the organizational culture within also present budget proposals directly to the judiciary. parliament. Specifics would depend upon the local context. Random case assignment. Cases should be assigned on objective criteria and judges Contempt of court laws. In most jurisdictions should not work in courts where they have disobedience of a court order constitutes ties with local politicians. contempt of court. But who will judge the judges or check their power? A possible way Transparent procedures. Cases should gene- could be to codify laws on contempt or drop rally be heard in public and judges should be them altogether. Alternatively, a body could be set required to give written reasons for their up for self-regulation by judges guided by bar judgements. Courts can also be subject to associations, senior lawyers and former judges.30 independent monitoring. In Cambodia, for

52 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT example, since 2003 the Center for Social being available on the internet. In addition, Development has been monitoring court the ONA has developed ‘Lawdata’, a compre- proceedings through its the Court Watch hensive database collecting legal documents in Project. Similarly, in the Philippines, under Vietnamese and containing more than 11,000 the Action Programme for Judicial Reform, documents which are updated frequently. the NGO Bantay Katarungan has been moni- But ultimately, governments need to toring court proceedings and the screening of demonstrate the political will to root out applicants for positions in the regional trial corrupt judges. In China in 2006, for courts and courts of appeals. As a result, example, one case involved three top judges between 1998 and 2001, the Supreme Court from Fuyang Intermediate People’s Court in took disciplinary action against judges for East China’s Anhui Province, who were graft and corruption.31 arrested for taking bribes. Two were sentenced to 9 and 10 years imprisonment Use of information technology. Transparency respectively, with the other one still on trial. can also be enhanced by making much greater Another case involved five senior judges from use of information technology. The Malaysian Shenzhen’s Intermediate People’s Court in Government, for example, has decided to South China, three of whom were sentenced expand a pilot e-judiciary project that to jail terms ranging from 3 to 11 years.33 provides the judiciary and government agencies such as the police with easier access Not for Sale to court documents. In addition to enhancing transparency and accountability, compu- Across the region, corruption is clearly terization of the courts should help in provid- widespread in justice systems, with serious ing speedy, high quality and cost-effective implications for the poorest people who are justice, while also reducing corruption and least able to pay bribes or engage effective In India the intro- harassment. In India the introduction in lawyers. duction in 1998 of 1998 of ICT in court management has Cleaning up the justice section is thus an ICT in court reduced the huge backlog in the Supreme urgent priority. Unless countries are deter- management has Court. Encouraged by this the Government mined to ensure that their systems of justice reduced the huge now has a five-year plan to computerize the are clean and fair, they are unlikely to be able backlog in the national justice delivery system. This will to uproot corruption from other sectors – Supreme Court include computer rooms in all 2,500 court since there will be much less prospect of complexes, and official laptops and training successfully prosecuting offenders. for 15,000 judicial functionaries.32 Viet Nam Much of this will require intensive insti- too has been making greater use of ICT. In tutional reform – to ensure that police forces 2001 the Office of the National Assembly and the judiciary operate efficiently, with (ONA) compiled a database covering 12 legal adequate salaries, and systems of checks and areas, more than 250 legal documents and balances, both official and unofficial, to more than 1,300 questions into a CD-ROM ensure that justice is delivered in an open called ‘Your Lawyer’. This has been distri- and transparent fashion. This is likely to buted to delegates to the National Assembly require significant investment. Justice does in all 61 provinces, offices of people’s not come cheap. But on the other hand it councils, and media organizations, as well as should not be for sale.

CHAPTER 2: JUSTICE FOR SALE 53

But if you do not have the Tao yourself, what business have you spending your time in vain efforts to bring corrupt politicians onto the right path?

CONFUCIUS Keeping Public Services Honest 33 Chapter

Corruption is widespread in social services such as health and education, as well as in public utilities that provide electricity and water. As a result poor people find themselves excluded from schools or hospitals that they cannot afford, or asked to pay extra simply to gain access to services to which they already have a right. Communities are however now keeping a closer check on services and finding ways to monitor and control them.

In rich and poor countries alike, governments able extra costs or are driven towards the Developing assume the major responsibility for ensuring private sector. countries in the the availability of key services. In some cases, Corruption can occur within health ser- Asia-Pacific region they will do so by regulating provision by the vices at all levels, from grand corruption as have been private sector, but in many developing coun- funds are siphoned off during the construc- expanding health tries governments take responsibility for tion of new hospitals or health centres, to services, though the region as a whole delivering the services themselves through petty corruption as health workers or admin- still spends less as government departments or public corpora- istrators demand bribes just to perform their a percentage of tions. As a result they employ large numbers routine duties. Some of the most common GDP than other of people as teachers or doctors or nurses, for forms of corruption within health services are parts of the world example, directly as civil servants or indi- summarized in Table 3.1. rectly as workers in public corporations that supply electricity, water or sanitation ser- TABLE 3.1 CORRUPTION IN THE HEALTH SECTOR vices. Most of these employees do their jobs conscientiously, often in very difficult circum- Patient–Doctor Payer–Hospital Hospital–Supplier Within stances, but others exploit their position to hospital/ Ministry their own advantage – to extract ‘rent’ from their privileged positions. Bribes for Fraudulent billing Kickbacks for Sale of jobs and treatment for fictional treat- purchase orders promotions and ment for drugs, equip- transfers Health Services ment, supplies, meals and clean- Developing countries in the Asia-Pacific re- ing services gion have been expanding health services, Induced demand Patients with Bribes for appro- Theft of funds for unnecessary coverage get pro- val of drugs though the region as a whole still spends less procedures (e.g. cedure and pres- as a percentage of GDP than other parts of caesarean cription the world. Worse still, much of this expendi- deliveries) ture is being dissipated by corruption. As a Diluted vaccines Doctors bribed by Theft of drug companies supplies result even basic preventive measures such as for prescribing vaccination programmes can be undermined, their drugs while families already in distress as a result Source: Azfar and Azfar 2007. of illness face the added anxiety of unpredict-

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 57 Grand Corruption and Procurement for pharmaceutical products and many mul- tinational drug companies are planning to Health funds can disappear at the highest expand their investments and operations in level of government. In some countries 10 per the region. Corruption can occur at all stages cent of the health budget can disappear en of drug development and supply from route from the Ministry of Finance to the approval and registration, to selection and Another outcome of Ministry of Health, and more subsequently distribution. For the drug companies one of corruption in drugs leaks out through various side channels, as the main priorities is to ensure that their supply is the the funds flow from national governments to products are prescribed, so they are profli- provision of low- provinces and to local hospitals and clinics.1 gate with their ‘perks’ for doctors that could quality drugs Much of this corruption is linked with be seen as forms of corruption. They might, procurement as companies pay bribes for for example, sponsor doctors at conferences, public contracts for major construction underwrite symposia, or pay expenses for projects. There can also be kickbacks from doctors and their spouses to attend drug suppliers of equipment or of ongoing services, launches abroad. They may also give free drug such as meals or cleaning. Health ministry samples and offer expensive gifts such as officials and hospital administrators can watches, air-conditioners, laptops or even inflate the cost many times, colluding with down-payments for new cars. private suppliers to share the difference. Another outcome of corruption in drugs In any health service the largest expendi- supply is the provision of low-quality drugs. ture after personnel costs is for drugs. Asia is In some countries around one-third of drugs one of the world’s fastest-growing markets are expired or counterfeit (Box 3.1). These

BOX 3.1 COUNTERFEIT DRUGS IN ASIA

According to the World Health Organization, a counterfeit that counterfeit drugs have grown from 10 per cent to 20 per drug is ‘a medicine, which has been deliberately and fraudu- cent of the total market. In the Philippines, 30 per cent of lently mislabelled with respect to identity and/or source. Coun- drug outlets carry fake drugs. A 2004 survey in Southeast terfeiting can apply to both branded and generic products and Asia showed that among 188 tablets presented as the anti- counterfeit products may include products with the correct malarial drug artesunate, more than 50 per cent were found ingredients or with the wrong ingredients, without active to be counterfeit. International health officials are also ingredients, with insufficient active ingredients or with fake concerned that fake antibiotics and anti-retrovirals will soon packaging.’ be leaking into the market. The counterfeit drug trade is of particular concern in Asia In the case of anti-malarials insufficient quantities of and the Pacific because of the volume of drugs produced in active ingredients, besides failing to heal unsuspecting pa- the region and high levels of corruption at many stages along tients, can also lead to drug resistance. Concern about the the pharmaceuticals supply chain. Corruption can occur, for rising counterfeit drug trade is such that the World Health example, when regulatory bodies are bribed to approve new Organization last year established the International Medical drugs without meeting standards. It can also happen at the Products Anti-counterfeiting Taskforce. One of its key objec- point of manufacture, when corrupt employees siphon off tives is to encourage countries to recognize counterfeiting active pharmaceutical ingredients and substitute substances drugs as a crime against human security and to introduce that may have insufficient amounts of active ingredients or legislation that deals specifically with the issue. The Agency actually be toxic. It can also happen at the point of sale, where has also set up the ‘Rapid Alert System’ (RAS) – the world’s drugs can be repackaged or adulterated. first web-based system for tracking the activities of drug The extent of the problem in Asia is troubling. In Indone- cheats, which transmits reports on the distribution of coun- sia, the International Pharmaceutical Manufacturers Group terfeit medicine to National Health Authorities in the region. estimates that counterfeit drugs make up 25 per cent of the $25-billion pharmaceutical market. In India, estimates show Sources: WHO. n.d. (a).; Centres for Disease Control and Pre- that about one in five strips of medicine sold are fake and vention. n.d. WHO. n.d. (b).

58 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT may be sold fraudulently through the private sector, or through public health services as a result of corruption on the part of those pro- curing drugs.

Bribery

Users of health services are more likely to encounter corruption as a demand for a bribe. Health workers frequently ask for ‘extra pay- ments’ to speed up admission to hospital or to provide a particular drug or treatment. Bribery is common throughout the region, but particularly high in South Asia, as is evident from Figure 3.1. One survey of Bangladesh, India, Nepal, Pakistan and Sri Lanka found that health workers often demanded bribes for admission to hospital, to provide a bed, or to give subsi- dized medications.2 In one Indian city, a social audit in the form of citizen report cards revealed that more than half of the respon- dents had paid bribes in government hospi- tals. Among people using hospitals in small cities the proportion paying bribes rose to almost 90 per cent. In maternity hospitals Figure 3.1: Proportion of Users of Health Services Who Make Informal Payments, Selected Countries mothers even had to bribe the nurses in order to see their babies.3 Within some countries in Source: Lewis 2006. South-East Asia, the proportion of people paying bribes tends to be lower perhaps they might welcome the opportunity to influ- because more people get their treatment in the ence the outcome. private sector.4 These extra payments have now become Staffing and Absenteeism so institutionalized that many people have come to accept them and even regard them as Corruption can also take various forms useful. In countries where the quality of pub- within health service staffing. This may Health workers lic sector care is weak, they can see these involve, for example, buying positions at the frequently ask for informal fees as a form, albeit unreliable, of time of hiring, along with nepotism or politi- ‘extra payments’ to quality assurance. They regard health as so cal or military influence for postings. In one speed up admission important that it is worth almost any price to South-East Asian country it has been to hospital or to get the best outcome. This is particularly the reported that a post of director at the provin- provide a particular drug or treatment case for in-patient treatment, for which they cial or national offices of the health ministry have fewer choices: concerned about greater can be obtained at a going rate of up to risk from invasive or intensive procedures $100,000, while a job as a low-level public

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 59 servant in the health sector will cost $3,000. supervision but also because staff find it more In countries where government salaries are difficult to get to work or are discouraged by generally only around $40 per month these the prospect of using clinics that lack equip- are huge sums which are paid on the assump- ment or drugs or are in a poor state of repair. The most extreme tion that they can be more than recouped The most extreme absenteeism takes the 5 absenteeism takes through corruption. form of ‘ghost workers’. These are fictitious the form of ‘ghost Corruption in staffing can also take the staff whose salaries are paid into the accounts workers’ form of absenteeism. At a low level this is of public officials. common in most working environments and Grand corruption and many forms of is usually more an issue of management petty corruption, as in other parts of public failure. But at higher levels, and in more sys- service, are often a reflection less of need than tematic forms, this can be considered corrup- of greed. But there are other contributing tion, since health workers are abusing their factors. One is that health services are position by taking salaries while not showing generally underfunded, so hospitals and up for work. Across the region reported health centres may feel the need to make absenteeism rates cluster around 35 per cent charges just to cover the costs that are not to 40 per cent and tend to be higher for being met by central government (Box 3.2). doctors and nurses than for other health Since these payments are unofficial, however, workers. In one survey from in they are unlikely to be accounted for fully and India nurses were to be found in their posts in institutions where management is in villages only 12 per cent of the time.6 Rates weak will sustain an atmosphere where of absenteeism are also typically higher in unofficial payments and corruption seem rural areas, not only because of the lack of normal.

BOX 3.2 DRUG EXPERIMENTATION

Transnational pharmaceutical companies are providing much What can be done to curb this activity? First, steps will wanted capital investments but also challenging the region to have to be taken to reduce the vulnerability of the drug-con- improve its systems of regulation. In most countries the trolling agencies. Checks and balances should be enforced to pharmaceutical regulatory bodies are understaffed and unable ensure their integrity and neutrality, as well as making sure to cope with the new industry of drug testing. This has that these offices are adequately staffed. Additionally, ethical created much room for corruption. In India, for example, committees in hospitals should be streamlined and mecha- clinical tests have to be authorized by the ethical committee nisms should be in place to ensure that they implement the of the hospital that will carry out the trial and by the Drugs rules on conflict of interest. Controller General, which is a part of the Indian health Secondly, the only training many doctors have on conduct- ministry. This is, however, mainly a paperwork check. ing trials comes from the company in question or a contracted Random inquiries have found that some patients are not even research organization, which may include trips abroad and aware that they are being experimented on. other benefits. Some misconduct could be reduced by neutral Hospitals are often in dire need of funds and for the sums training, including lessons on how to identify and act on offered by the pharmaceutical companies are willing to cut ethical issues. Overall there needs to be more thorough moni- corners. In most cases the companies refer to written consent toring of the entire process of drug testing, right from from patients or relatives, however interviews have shown approval by the national drugs controller to the actual tests on that many people just accept what the doctor recommends, patients. without understanding the implications. Additionally, even when these test drugs prove to be efficient most of the patients they are being tested on have to revert to their old drugs after the test period is over, because they cannot afford Sources: BBC News 2006; CancerPage.com 2001; De Ron 2006; the new ones. Radakrishnan n.d.

60 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Impact on the Poor controlling for many other factors that would also reduce the death rate, such as per capita One might expect corruption to result in income, the level of female education, public poorer standards of health. Some cross- health spending, the dependency ratio and national studies have indeed suggested that the extent of urbanization, corruption still in countries where levels of corruption are had a significant impact on child mortality. higher some health inputs such as immuniza- Of course not all of this corruption will be in tion are lower. This could be because vaccines health services. Child mortality, for example, or other supplies are being stolen or because will be affected by the availability of clean the health workers are absent from their water and good sanitation, so corruption in posts. Immunization rates may also be lower these services too is likely to damage because corrupt officials have an interest in children’s health. directing investment towards expensive Hospitals often run short of supplies as a curative care which offers greater opportuni- result of mismanagement, lack of funds and ties for rent-seeking – diverting funds from negligence, but this is exacerbated by corrup- immunization programmes or other forms of tion. Some users may provide their own linen primary health care. or food as a cultural preference, but they can These cross-national comparisons have also find themselves buying bandages, 7 been supported by national studies. One syringes and medicines – a significant burden study from a country in South-East Asia for the poor. estimated that a 10 per cent increase in Bribery and the need to make up for miss- Bribery and the corruption, as measured by the perceptions ing supplies inevitably discriminate against need to make up of public officials as well as of service users, the poor. This is not because they have to pay for missing reduced the immunization rate by 10 per cent more. Indeed in absolute terms it seems that supplies inevitably to 20 per cent and also the odds of complet- compared with ‘richer customers’ they pay discriminate against ing vaccination by four times. The same around 40 per cent less.10 However, these the poor increase in corruption increased the waiting lower payments still represent a far higher time in public health clinics by as much as 30 share of household income, and if the poor per cent and decreased user satisfaction by pay less they may also get a lower quality 30 per cent. This study also highlighted an service; those who can pay more will be able interesting difference between urban and to jump queues and get preferential treatment rural areas. In the urban areas, as corruption in public hospitals. And when public health increased, households were more likely to be services are undermined by corruption the deflected to private providers. But in the richer households have the option of paying rural areas where they had fewer alternatives for private care. to public health clinics, they simply had to 8 wait longer. Uprooting Corruption in Health Services Some studies have also looked at the relationship between corruption and health Reducing corruption in health and other outcomes. A global study of 89 countries government services will require action from found that a two-point change in the corrup- above and below. From above, governments tion rating, as measured by the World Bank will need to ensure more transparent and control of corruption index, was associated better managed services; from below, users with a halving of child mortality.9 Indeed even can work together to resist demands for

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 61 bribes. Examples from action around the tory authorities in all these countries have region include: been improving communications and coopera- tion across borders, so they have been able to Reducing Informal Payments in Cambodia. In notify each other of the circulation of fake Takeo Provincial Hospital in Cambodia in drugs and remove them more quickly from 1996, the monthly revenue from informal all outlets.13 payments was estimated at $13,750 – about five times the monthly hospital payroll and New prescriptions in China. In June 2006, about 45 per cent of the total budget. Since China’s legislature adopted the sixth Amend- then the hospital has reformed the way it ment to the Criminal Law, stipulating that works. It has, for example, replaced informal staff members of schools and hospitals will payments with formal user fees and directs face criminal penalties if they seek bribes or the revenue from these to pay bonuses for receive kickbacks or commissions. The former staff. Even so, patients are now paying less in Commissioner of China’s State Food and official fees than they did in informal charges, Drug Administration (SFDA) was subse- and know too that the fees will be consistent quently convicted for accepting more than and predictable. This has transformed the $850,000 in bribes. The government has operation of the hospital, which treats many launched a large-scale investigation among the more people at a lower cost.11 SFDA staff who are possibly involved in this case. All drug licences will be re-issued. The Unlike other social Radio power in India. The radio programme Ministry of Public Health now requires services, corruption ‘To be Alive’ is broadcast on state radio in the hospitals to separate the procurement of in education can poor rural region of Kutch in drugs from the writing of prescriptions so also affect province. This is made by semi-literate rural that neither hospitals nor doctors benefit behaviour and people trained by a human rights organiza- from prescribing particular drugs.14 perceptions of tion to be amateur radio reporters. Often a future generations whole team of reporters will carry out ‘radio Education Services raids’. They directed one, for example, at a doctor who was charging women for deliver- Throughout the Asia-Pacific region, education ing babies at a community health centre – a typically forms a large part of the public service which was supposed to be free for the sector, consuming about 20–30 per cent of the poor. This sparked a government inquiry into national budget and employing a substantial illegal charging at primary health centres proportion of each country’s civil servants.15 across the country.12 Since most of these have direct contact with the general public, it is not surprising that Removing fake drugs in Mekong countries. In education services are vulnerable to corrup- 2003 in the Mekong subregion – Cambodia, tion. Moreover, with so many people involved Lao PDR, Thailand, Viet Nam, and Yunan there are often strong vested interests that Province of China – it was found that all coun- will resist attempts at reform. tries were using substandard or fake Unlike other social services, corruption in antimalarials. With the combined support of education can also affect behaviour and per- the US Pharmacopeia Drug Quality and ceptions of future generations. Children who Information Programme, USAID, WHO, and see their parents pay bribes for school admis- national and local governments, the regula- sions and to get books and better grades, learn

62 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT from a young age that things can be achieved TABLE 3.2 by violating rules. Some of the types of CORRUPTION IN THE EDUCATION SECTOR corruption prevalent in education systems Student–Teacher Payer–School School–Supplier Within school in Asia and the Pacific are summarized in or Ministry Table 3.2. Bribes for admis- Ghost schools and Kickbacks for Sale of jobs sion and grades ghost teachers construction and promotions Procurement and transfers Sale of exam Inflating number Kickbacks for Fraudulent Corruption in the procurement of material papers of students to get construction or billing for and labour for school construction can in- reimbursements for purchase expenses orders for equip- crease costs between two and eight times, as ment, meals and funds for school buildings are siphoned off by cleaning services corrupt officials.16 It also reduces the quality Absenteeism Loan officers Bribes for appro- Prioritising of construction since contractors who pay and induced bribed to give val of textbooks expenditures demand for loans to rich where the rent bribes to get contracts try to offset some of private tuition students or non- seeking poten- the costs by using sub-standard materials. students tial is high. This can have tragic outcomes. Many coun- Source: Azfar and Azfar 2007. tries in the region are vulnerable to earth- quakes which have often laid waste to ‘ghost teachers’ or even in creation of entire hundreds of schools, burying children within ‘ghost institutions’ – with the allocated them. Although schools are not usually salaries and other expenses going into the designed to be earthquake-proof they should pockets of corrupt officials. provide at least some level of security, rather A related problem is teacher absenteeism. than instantly crumbling at the onset of an Surveys across the region show this to range earthquake. from 16 per cent to 25 per cent in primary Corruption can exist in the purchase of schools.19 Even so, teachers are almost never textbooks, desks, blackboards, and other fired. Indeed since they are rarely disciplined In many countries supplies, as well as in contracts for cleaning even for repeated absence, it is impressive that corruption results services and meals. Supplies and funds are there are so many dedicated teachers who in the recruitment frequently misappropriated. In one province work conscientiously. of ‘ghost teachers’ in Pakistan a social audit estimated that only or even in creation of entire ‘ghost 16 per cent of textbooks procured by the Bribes and Unauthorized Fees government reached the intended children.17 institutions’ In Bangladesh in 2001, 25 million secondary Just as families may need to pay bribes to get level children started the school year without into hospitals, they may also have to pay textbooks and when the books were finally bribes to get their children admitted to delivered they were found to be full of schools. In China, in 2003 audits of nearly errors.18 3,000 primary and 1,500 secondary schools in Jiangxi found 125 cases of illegally collected Ghosts and Absentees fees worth $2 million. Nationwide the government uncovered over $20 million in In many countries corruption is widespread illegally collected school fees. In 2004 the in the hiring of teachers, which in the most authorities disciplined 2,488 people in the extreme form, results in the recruitment of education service and dismissed 359 school

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 63 principals. At the higher education level the Impact on the Poor national government audited 18 institutions in 2003 and found that 15 per cent of all Corruption reduces the funds available for 21 charges were illegal.20 While similar examples education and lowers the quality. Siphon- Many see education can be provided from other countries, it ing off funds robs schools and pupils of equip- as one of the few seemed that the main causes of corruption ment and facilities. The quality of teaching possible ways out were the lack of accountability, low salaries also suffers if there is corruption in recruit- of poverty and go and the monopoly of power, compounded by ment or promotion or if teachers are fre- out of their way to the shortage of specific guidelines or auditing quently absent or make less effort in schools secure the systems. because they want to work as private tutors necessary funds to This problem is also common in South teaching some of the same pupils (Box 3.3). put their children Asia where students are often required to Studies have shown that higher levels of through school make unofficial payments for admission to corruption are correlated with lower school schools, for books, sporting or religious enrolment and higher rates of repetition and 22 events, examinations, or promotion to higher dropout and illiteracy. classes. Poor families also suffer if they have to Bribes for tuition or a better grade may pay bribes. Many see education as one of the also be extorted in the form of sexual exploi- few possible ways out of poverty and go out tation. Educators abusing their positions in of their way to secure the necessary funds to this way betray the trust of the community, put their children through school, often exposing children to illegal and unethical working at several jobs. If they cannot raise practices. This can affect boys, particularly the funds their children are less likely to at an early age, but girls may be more vulner- enrol or may subsequently drop-out. able since they are less able to challenge such There are also long-term social costs. If abuse. richer people can buy admission to higher education, better exam results, or degrees, BOX 3.3 this blocks key routes of social mobility. At CORRUPTION IN PRIVATE SCHOOLS IN BANGLADESH the same time, entire generations of youth are Bangladesh has a large number of private schools which receive Govern- being mis-educated – to believe that personal ment support. Their interactions with the Government have provided numerous opportunities for corruption. First, in order to receive finan- success comes not through merit and hard cial assistance to pay the salary of school teachers, a private school has to work, but through favouritism, bribery and renew its registration each year which means bribing the concerned fraud. officials. They might pay for this by requesting a contribution from teach- ers or by paying them less or by registering a non-existent teacher and passing the corresponding sum back to the official. A school that fails to Uprooting Corruption in make the payment is likely to find that their application will be lost Education Services or misplaced. Throughout the school year, the schools are also made to pay bribes to inspection officers and to get students registered Governments urgently need to address cor- for exams. The teachers themselves will also have to pay to get a job in a private ruption in education. Otherwise schools will school. First they need to ‘manage’ the school’s managing committee and continue to transmit a culture of corruption make a contribution to the district education officer. They will also need to succeeding generations, undermining all to pay to get enrolled in the monthly pay roll or if they want a promotion. The students are also drawn into the corruption cycle. Since other anti-corruption initiatives. Thus far, teachers have to cover the costs of these payments they will often enrol however, few countries in the region have been their pupils for compulsory extra coaching. able to approach the issue in a comprehensive Sources: Ahmad et al. n.d., Ahmed 2006. and effective manner. A number of initiatives

64 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT have been implemented, some of them more BOX 3.4 successful than others. Practice shows that EDUCATION AS A SOLUTION governments can tackle corruption in educa- Education is frequently a site of corruption but can also offer solutions. tion through much closer supervision and by A number of countries in the region, from Mongolia to Papua New allowing communities more control over Guinea, have introduced some form of anti-corruption education provid- ing children with the information and knowledge to take a stand on schools, through parent–teacher associations corruption for the future; this also partly contains the seeds of how and other local organizations (Box 3.4). Some corruption can be countered. successful initiatives include: Public education is an important part of Hong Kong’s Independent Commission Against Corruption (ICAC). The Community Relations Department aims to change public attitudes towards corruption. The main Counting books in the Philippines. Textbook targets, however, are young people who are reached through schools. procurement and delivery in the Philippines From an early age children are being exposed to anti-corruption and has long been plagued by theft, patronage and morality lessons. ICAC also organizes a number of social events such as concerts and sports targeting youth. Effective moral education pro- favouritism. To tackle this, one of the grammes can help young people internalize the conviction that country’s best-known anti-corruption advo- corruption is wrong and unacceptable. Ultimately fighting corruption cacy groups, Transparent Accountable should rely less on external controls and deterrents and more on self- Governance (TAG), in 2004 organized Book motivation and self-discipline. Count 2, bringing together a range of civil Source: http://www.icac.org.hk/eng/main/index.html society groups, from NGOs to churches to Girl and Boy Scout groups, to monitor the day they were absent. In the control schools, delivery of books all over the Philippines. teachers simply received a monthly salary of TAG is a joint project of the Makati Business $22 but were reminded that they could be Club, the Philippines Center for Investigative fired for poor attendance and warned that Journalism, the Philippines Center for Policy each month there would be unannounced Studies, and Social Weather Stations, with school visits. The results were striking. funding provided by USAID, through a part- The schools with cameras made dramatic nership with the Asia Foundation.23 improvements and increased the number of child-days taught per month by one-third. Digital attendance in India. Most rural The experiment was also cost-effective: schools in Rajasthan have only one teacher, so average salaries in both groups were similar when the teacher is absent, children miss an though this did not include the costs of Practice shows that entire day of school. Because the villages are cameras and programme administration – governments can often remote it is difficult to monitor atten- annually around $6 per child.24 tackle corruption in dance and the absentee rate has been over 40 education through per cent. The NGO Seva Mandir came up Community management in Indonesia. In some much closer super- with a novel solution – requiring teachers to schools in Indonesia corruption in the man- vision and by allowing communi- take a photo of themselves with the students agement of funds has been minimized by the ties more control at the beginning and end of each school day involvement of parent’s associations which over schools using cameras with tamper-proof date and decide on the use of these funds and monitor time functions. They randomly selected 60 to them to ensure that they reach their intended serve as treatment schools and another 60 as destination. At the beginning of the school a control group. Teachers received a salary of year, school officials meet with representa- about $22 if they were present for at least 21 tives of the parent’s association to agree on days in a month and a bonus of $1 for each an annual plan, then during the years additional day but were penalized $1 for each provide them with a detailed accounting of

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 65 expenditures. The system works because the population now have access to improved use of these funds is highly structured, water supplies. Progress in sanitation has expenditures are transparent and the commu- been slower: indeed South Asia’s sanitation nity attaches considerable importance to the coverage, at only 37 per cent, is among the system and takes pride in its success.25 lowest in the world. As this implies, even for water many millions of people are still un- Mobilizing support in Pakistan. Following the served. In 2004, more than 650 million devastating earthquake in 2005, most pri- people lacked access to safe water supplies, mary schools in the Manshera district of and almost two billion to safe sanitation.28 Pakistan were totally destroyed. Some of the The situation is worse in the rural areas, and teachers were displaced, but others also used for the poorest families. Electricity supplies the earthquake as an excuse for absenteeism. too can be erratic: many parts of the region A local NGO managed, however, to get a num- suffer from low voltage operations or fre- ber of schools functioning again by mobilizing quent power outages. local opinion. The NGO contacted leaders Even these data overestimate access to Each year millions of children die as a such as imams and elected representatives services since the quality is often low. Water result of diarrhoea and encouraged them to put pressure on supplies, for example, can be intermittent and and other diseases teachers. The NGO also organized workshops polluted by faeces from leaking septic tanks. caused by unclean with teachers, local counsellors and clerics This has serious implications. Each year water and poor where they emphasized social and religious millions of children die as a result of diar- sanitation, com- responsibilities for education and children’s rhoea and other diseases caused by unclean pounded by erratic rights. Almost all the teachers participated in water and poor sanitation, compounded by power supplies to the workshops, and within two months of erratic power supplies to health facilities. For health facilities the earthquake most primary schools in the businesses and households that rely on public district were functioning again.26 grids, inadequate power supplies severely Such examples should however only be limit the technology they can use and their considered as an indication of what is range and duration of economic activities. possible. What works in one context may not work in another. Some countries have, for Grand Corruption in Infrastructure example, had good experiences with decen- tralization but in others this has merely One of the main causes of low coverage and shifted corruption from one level of adminis- poor quality services is underinvestment. tration to another. No single intervention will Extending water, sanitation and electricity be sufficient in itself, rather the more success- coverage is expensive, requiring large-scale ful approaches have combined a comprehen- upfront investment for basic infrastructure. sive understanding of the problem with Much of this is being dissipated through incentives, supervision, sanctions and partici- corruption.29 Across the region the standard pation.27 kickback for infrastructure projects is often quoted as 10 per cent of the value of the con- Public Utilities tract though in some countries it is thought to be 20 per cent to 40 per cent. Corruption can Many countries in the Asia-Pacific region have emerge through the whole cycle from made progress in delivering essential services, project selection to subsequent repairs particularly water; around 80 per cent of the (Box 3.5).

66 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT BOX 3.5 OPPORTUNITIES FOR CORRUPTION THROUGHOUT THE PROJECT CYCLE Project selection quality (typical examples include less cement or steel rein- Corruption can negatively affect the selection of projects. forcements) For example, corruption can divert resources away from Corrupt contract amendments to a contract’s scope of work social sectors toward defence and major infrastructure and costs projects Outright theft of materials, equipment or services with Corruption may also encourage the selection of uneconomi- collusion cal projects because of opportunities for financial kickbacks Corrupt diversion of allocated project funding and political patronage Duplication of payments, alteration of invoices, lack of Planning stages supporting records, ineligible payments, over billing, mis- Projects can be used as vote winners or opportunities for use of funds, unauthorised payments, etc. personal gain rather than on the basis of priority or avail- Concealing substandard work ability of financial resources Bribing the relevant official to certify that the work was Planning in favour of high value infrastructure (white done according to specification elephant projects) and against the interest of the poor Service delivery Project requirements may be overstated or tailored to fit one specific bidder Superiors in the public service charge ‘rents’ from their subordinates When firms bidding for contracts offer ‘training’ or ‘enter- tainment’ to officials Siphoning off supplies to market Inspection stages Ghost/absent workers – accepting a salary and not being at the job Weak oversight and supervision mechanisms that prevent the detection of fraud and corruption Use of contacts or money to get better or faster service or to prevent delays Kickbacks can be given to persuade inspectors to turn a blind eye to slow implementation of projects, unfulfilled Maintenance and management stages contract requirements, and other instances of malpractice Corruption in procurement of equipment and spare parts Mutually corrupt relations among construction companies, Withholding needed approval or signatures for gifts/favours inspection teams and government authorities continued, with inspectors overlooking the improper construction Bribes to win O&M contracts or personnel appointments Design Lower standard of construction to create the need for expensive repair and maintenance Project design or timing of the project might be manipu- lated to benefit particular suppliers, consultants, contrac- Subscription process tors and other private parties Extra-legal payments for new connections Bribes for favourable environmental impact assessment/ Consumers paying money in order to speed up the process planning proposal/approval Officials being paid to turn a blind eye to unauthorized Over designed and overpriced projects can increase poten- connections tial corrupt earnings during implementation Billing system Kickbacks to government officials for rapid privatizations of utilities Opaque system of billing Bid and contract signing stage Irregularities in the ledger of paid bills Political parties levy large rents on international businesses Disconnection in return for government contracts Disconnecting customers in good standing Kickbacks for construction and supply contracts Extorting money to reconnect customers Officials receive excessive ‘hospitality’ from contractors Extorting money to prevent disconnection and benefits in kind Inadequate advertising of tender Fault redress Excessively short bidding time Extorting money for repairs that are meant to be free Construction Gift giving in return for favours in fault redress Provision of equipment or goods of lower than specified Source: Sohail and Cavill 2007.

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 67 One contractor in South Asia described be paid by the pre-agreed winner, and a the process. Contractors, he said, have to pay certain percentage goes to the agency’s at every stage. This starts with basic informa- personnel. Not all the payments need be in tion. Public authorities have been known to cash. Private companies can also offer lavish publish advertisements for new tenders in hospitality inviting municipal staff to visit obscure newspapers, particularly during their headquarters with tickets and all festival times, so that potential bidders are expenses paid in the expectation of being unlikely to see them. Instead officials expect awarded the contract. contractors to pay to be informed. Having dis- Once the project is underway there are covered the project and made a bid, the con- many other opportunities for fraud in billing, tractor will then have to bribe the executive for example, in the acquisition of rights of engineer to ensure that the bid is successful. way, and in degrading construction quality. When work has been completed the contrac- Companies can make ‘ghost’ or substandard tor will need to pay the inspecting engineer deliveries, or submit supplemental billings for for a good report. After completing the work cost over-runs, or they can pad delivery some companies put khushi kora money into receipts or payrolls – all with the knowledge the budget as incidental costs (bribes are of project engineers, auditors, examiners, and known as khushi kora or ‘making happy’. The supervisors. Then when all this corruption term comes from the promise ‘do the work results in substandard work, new opportuni- we will make you happy later’). The need to ties arise to prepare inflated bills for repairs pay bribes to the authorities and mastans and maintenance. means that the contractors are obliged to 30 engage in dui numbari kaj (illegal activities). Grand Corruption in Public Networks Nevertheless, much of the blame lies with Once the systems construction companies themselves which Once the systems are in place corruption con- are in place participate actively in all these activities, tinues in day-to-day operations. The ensuing corruption continues indeed frequently taking the initiative. They losses can be huge. It has been estimated that in day-to-day are well versed in the ways of colluding with if the water sector operated in a transparent operations other bidders or with officials in executing fashion, and corruption were eliminated, 20 agencies, governments and financing agencies. per cent to 70 per cent of resources could be Even before there is a proposal a contractor saved. The World Bank suggests that 20 per with insider connections can influence a cent to 40 per cent of water sector finances contract’s identification and creation as well are lost to dishonest and corrupt practices.31 as its specification, tender conditions, prepa- For example, research in India into a Water ration and design. and Sewerage Board found corruption in the Contractors also collude in tendering and following aspects of service delivery: bidding. A group of contractors will often put in coordinated bids in such a manner that Bulk water supply. The quantity of water to be their preferred candidate will win – on the supplied to residential, commercial or indus- understanding that the others will be desig- trial units is under the control of a ‘key-man’ nated as sub-contractors or as winners for or ‘line-man’ who regulates the valves. For a future projects. In many cases, officials are suitable payment he can open these for longer aware of the bid rigging. When this happens, than scheduled or favour some areas over the project costs include the ‘grease money’ to others. A handsome bribe can ensure an

68 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT additional connection to a particular housing, in 1990 in the state of in India. industrial or commercial unit. Local officials A TNC attempted to supply power to the can also collude with owners of water lorries state through a subsidiary. This was achieved to supply water through lorries rather than through secret negotiations that violated through municipal pipes, enriching both ve- India’s Electricity Supply Act. The project hicle owners and themselves in the process. faced corruption allegations from its early Another technique is to bribe the water and stages. During subsequent litigation, the High sewerage board to tap directly into the main Court of the state of Maharashtra observed line and then supply water by donkey cart to that the state committee involved in the rene- villages and settlements. gotiation ‘forgot all about competitive bidding and transparency’. The multi-billion dollar Accounts and recoveries. Officials may inten- plant was mothballed in 2001 because its elec- tionally issue incorrect high bills to consum- tricity was turning out to be prohibitively ers in order to receive a bribe to correct the expensive, putting a lid on potential corrup- bill – blatant blackmail that can only be tion32 with the Maharashtra State Electricity bypassed by influential people. Officials may Board deciding not to buy any more power also do the reverse – under-bill in return for a from it. Although the plant continued to bribe or favour. remain idle for some years it is currently be- ing set up for reactivation.33 Purchases. Staff commonly accept commission In the Philippines in 2005 an ADB study payments or kickbacks for purchases of found that ‘deeply-rooted’ corruption was everything – from heavy machinery to minor increasing costs of power projects, delaying fixtures. Officials can, for example, raise a their implementation and providing Filipino fake request for a purchase, then forge an households and businesses with electricity entry in the stock register to say that the services that were both unreliable and expen- components have been supplied by colluding sive; two to three times the prices in other with a contractor who then issues a corre- countries.34 It said corruption was involved Whether provision sponding invoice, the proceeds of which he in almost all phases of a project, from tender- is public or private, shares with the officials. This activity is also ing and bidding to operation and maintenance utilities tend to be common in the maintenance of municipal as well as in privatization and the awarding local monopolies vehicles, with officials paying fake bills for of independent power-producing contracts maintenance and fuel. (Box 3.6).

New connections. Getting a connection is often Petty Corruption designed intentionally as a very complicated process, so consumers may find it quicker to Water supply, sanitation services, and elec- apply through a middle man, who may be an tricity supply offer economies of scale that approved contractor or someone from the de- make it technically more efficient to have a partment. As well as taking his own commis- single provider acting as a ‘natural monopoly’. sion, this person knows who to pay and how And, particularly when the investment is much, they may also provide a higher-volume beyond the reach of private investors, the sole connection at the price of a lower-volume one. provider is likely to be a public corporation. One of the most high-profile cases of Whether provision is public or private, utili- dubious provision of power supplies occurred ties tend to be local monopolies. This puts

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 69 BOX 3.6 PRIVATIZATION: MIXED RESULTS IN INDONESIA AND THE PHILIPPINES In most cities in the Asia-Pacific region, utilities and services of currencies greatly expanded the foreign debts of the con- are considered the domain of government, but in some cases cessionaires. In Indonesia, the ousting of the regime the utilities have been privatized. Faced with the deteriora- forced the withdrawal of one of the partners, including one of tion of public services, some metropolitan authorities have Suharto’s sons, from the venture. In the Philippines, one of argued that services should be priced and paid for according the domestic concessionaires declared bankruptcy and the to their value. International financial institutions and aid government had to sustain the operations of the water agencies have supported this view and have advocated the system. use of privatization schemes. Public officials, in collusion with private companies, may Metropolitan infrastructure and services often require also see ‘prospects’ in the privatization of infrastructure. For massive capital investments. These lumpy capital requirements instance, an advisor for public sector management and can be met by public-private partnerships that may also reform at the Asian Development Bank cites one Asian increase managerial efficiency and allow the application of country that lost around $50 billion in ten years. This was a cutting-edge technological approaches. result of corruption through undervaluing assets that In 1997, the ownership and management of the Jakarta were sold to local and foreign investors in return for com- Raya and Metro Manila waterworks and sewerage system missions. were transferred to joint consortia made up of international On the other hand, officials at the lower levels may resist and domestic concessionaires. In both cities, the privatization privatization if they fear a loss of illicit income. In July 2001 initially resulted in considerable improvements. In Metro the then Prime Minister of Papua New Guinea, publicly Manila, the concessionaires installed 238,000 new water con- described both his own party and his government as system- nections, 128,000 of which were in urban poor communities. atically corrupt for attempting to block the privatization of New service connections that averaged only 17,040 per year state assets on the grounds that this would reduce their between 1991 and 1995 tripled to 53,921 between 1997 and opportunities for exploiting public resources. 2001. However, the 1997 Asian economic crisis hit those privatized schemes that were heavily dependent on interna- Sources: Agro and Laquian 2007; Evans 1997; Forbes 2001; tional financing. In both countries, sudden drops in the value Inocencio et al. 2001.

staff working for operators in a powerful ‘informally’ by selling them water supplies, position which, combined with shortfalls in carrying out repairs for side-payments, falsi- supply, creates fertile ground for corruption. fying meter readings, or making illegal con- Officials can take advantage of the fact that nections. This can often lead to ‘needs-based’ consumers have nowhere else to turn. Staff corruption; if poor people need supplies of might, for example, supplement their salaries water or electricity they have no choice but to by colluding with clients to provide services collude. A survey in Bangladesh found that 60 per cent of urban households either paid BOX 3.7 DIRECT ACTION IN DELHI money or exerted some form of influence to get water connections, and that nearly one- Parivartan is an NGO that has helped people use satyagraha, a form of non-violent resistance, as a mechanism to fight corruption. When a cus- third of urban households had their water tomer of Delhi Vidyut Board got an inflated electricity bill, a Parivartan bills reduced through an arrangement with volunteer accompanied him to the offices, but each time the officer would the meter readers.35 Consumers are often politely apologise for the delay and seek more time. On his final visit, the willing to pay bribes just for convenience; even volunteer replied, ‘Sir, I am not in a hurry. I have told my people at home that I will not be back for a week.’ The officer replied, ‘But I have to go honest consumers will be discouraged by long now for a meeting with my Chief Engineer that will last till late in the queues to pay bills and be tempted to turn to evening.’ The volunteer said, ‘Sir, please don’t worry. I will keep sitting ‘middle men’. For the simplest routine – legal here. When you come to the office tomorrow, you will find me sitting here. You may go ahead with your meeting without worrying about me.’ or necessary functions such as obtaining a Unsurprisingly, he immediately got the revised bill issued and then went connection – they may have no choice but to for the meeting. make ‘grease payments’ or pay ‘tea money’ or Source: http://www.parivartan.com/satyagraha.asp ‘speed money’ (Box 3.7).

70 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT The transition from corrupt to clean from the main line. Since this can be detected institutions can often be difficult. Bangladesh quite easily, a middleman is needed to encour- offers a recent example. The current Interim age the electricity department inspector to Government says that one of the primary turn a blind eye. In some areas almost all objectives of its administration is to tackle these inspectors are corrupt. They may take corruption. It has implemented far reaching small payments but these can soon add up. In and effective measures to prevent, identify some countries around half the power dis- and punish corrupt acts. However this has appears in the form of ‘system losses’. One Although citizens inadvertently worsened the situation of the survey of power supplies in India found that have welcomed the poor since businesses are finally paying taxes in the previous year 12 per cent of households tough stance on on their products and passing these price had paid bribes to obtain services; of these, corruption this increases to consumers. As a result there have more than one-third had paid money to a line- support could be been dramatic increases in the price of fish men, while one-quarter had paid money to an eroded by rising and rice, which are staples of the Bangladeshi agent or middleman37 (Box 3.8). prices diet. Many business leaders report that pro- Problems of corruption can also occur cedures that used to require merely a bribe or when the utilities are privately run though the a quick call to the right contact, now demand contract may be obtained with a certain paperwork in triplicate with multiple rounds amount of ‘generosity’. The utilities company of approvals. Thus although citizens have may, for example, invite municipal staff to welcomed the tough stance on corruption this visit its headquarters, paying for both the support could be eroded by rising prices.36 ticket and stay. Nevertheless overall corrup- For electricity supplies, much of the tion tends to be lower. The cities of Kolkata corruption is linked to illegal connections and Mumbai in India, for example, have had

BOX 3.8 THE TORTUOUS PROCESS FOR GETTING AN ELECTRICITY CONNECTION

In South Asia, the process of obtaining a permanent elec- 8. The customer submits the payment receipt to the plan- tricity connection for a new building or complex can involve a ning department which, after payment of a bribe, long and expensive series of steps: transfers the application along with other documents to the underground department. 1. The customer submits an application to the electric 9. The underground department prepares a list of the supply corporation through an approved contractor. She or material needed. This requires the largest bribe of all. he must also submit to the planning department copies of 10. The contractor approved by the electric supply corpora- the site plan of the plot, the approved plan of the build- tion charges an official fee for installation of material at ing, the National Identity Card of the plot owner, the the site. lease of the plot and sale deed for the plot along with an 11. The underground department prepares a final estimate. agreement to pay for the connection. 12. The customer pays a security deposit through an approved 2. The planning department issues a load regularization bank, which is the official fee. agreement (LRA) in favour of the land owner. 13. The government electric inspector issues a test form, for 3. The customer sends an LRA to the chief engineer of the which there is a charge. electric supply corporation for approval. This requires a 14. When the contractor has completed the work and all bribe. meters have been installed the operations department 4. The approved LRA is then sent back to the planning energizes the line after payment of a bribe. department. 5. The planning department prepares a supplementary In total, getting a permanent electricity connection for a estimate requirement, which requires another bribe. medium-sized complex requires over $4,000 – a significant 6. The estimate is given to the approved contractor to pay proportion of which is bribes. official charges. 7. The payment is sent through an approved bank. Source: Sohail (ed.) 2007.

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 71 private utilities for decades and their com- operators paid to utility officials.42 The mercial procedures tend to be better than operators of water tankers are often those of state-owned corporations. They also controlled by powerful mafias that capitalize have stronger accounting systems that dis- on inept water distribution systems and have courage theft. As a result their ‘commercial effectively privatized the supply: after paying losses’, including those from theft, are corrupt officials to turn a blind eye, they sell usually around only 15 per cent – half of the water to hotels and other businesses.43 those incurred by the state-owned utilities, which are typically in the range of 30 per cent Warped distribution. Corruption skews deci- to 35 per cent.38 Also in India, the state of sions on who is likely to get services. Residen- Orissa privatized the distribution of electric- tial suburbs, for example, can be left without ity several decades ago and has benefited from water because the supply has been siphoned significant improvements in billing and off to service the farm of a prominent collection. Even so, a review of the perfor- politician. mance of the utilities conducted by the Orissa Electricity Regulatory Commission in 2005 Capital-intensive investment. Corruption also showed that the company was still losing biases investment towards large new infra- some $240 million per year as a result of structure projects and away from smaller corruption, mainly from stolen electricity and scale but less lucrative investment in the re- also from inadequate metering, billing and habilitation of systems or in improving op- collection.39 eration and maintenance.

Corruption The Costs for Water and Weak finances. Corruption undermines the undermines the Electricity Supplies long-term financial stability of utilities and long-term financial thus their ability to offer reliable services to a stability of utilities Corruption thus costs the water and electric- wider population, while also diverting govern- ity sectors millions of dollars every year, ment revenues that could be used to improve diminishing a country’s prospects for provid- water supply and other services.44 ing services for all. Globally it is estimated that corruption in the water sector absorbs Environmental damage. Corruption con- 20 per cent to 40 per cent of all funds,40 strains overall water-resource management by while corruption and theft in the electricity encouraging inefficient use of freshwater or sector each year costs another $40 billion.41 over-extraction of ground and surface water. Losses on this scale cause significant damage: Public health. Reducing supplies of drinking Inefficiency. Corruption seriously undermines water directly undermines public health, and the performance and effectiveness of both more so for the poor. Corruption in utility public and private sectors, discouraging the services can also undermine standards of investment urgently needed to improve health. In the Republic of Korea, for example, supplies. In one major city in the region it has in order to avoid paying the costs of recon- been alleged that the public utility held back struction of underground water sites, water on improving water supplies in the areas quality testers were bribed to provide fake test supplied through kiosks or hydrants, for fear results. Subsequently 1,753 water sites were of losing the side payments that the hydrant found to have contaminated water, with high

72 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT levels of nitrates, which can cause a condition For the poorest people, even low-quality known as methemoglobinemia or ‘blue baby’ services tainted by corruption are, of course, disease.45 Erratic electricity supplies to health better than nothing. So any sudden enthu- centres and public hospitals also undermine siasm for clamping down on corruption at the basic and emergency care. consumer end – by cutting off illegal connec- tions in slum areas, for example – would leave Lower income potential. Opportunities for them with no services at all. small and micro-enterprises are restricted when electricity is expensive, erratic or Uprooting Corruption in Utilities unavailable, particularly for the poor in semi- urban and rural areas and in urban slums. Many of the strategies for uprooting corrup- tion involve greater investment in services to Hardship for households. Erratic and expen- minimize the shortages that encourage people sive electricity make it difficult to get suffi- to pay bribes. Public corporations need to im- cient heating and lighting. Children will thus prove standards of management and operate find it difficult to study in the evenings. in a more transparent fashion. But consum- ers too can take direct action to get better Effects on Poor People services. Some examples from around the region including in sanitation (Box 3.9): The most damaging effect is on the lives of poor people through high prices. As one A single window cell in India. At the end of the consumer said to a researcher for this report: 1990s the Hyderabad Metropolitan Water ‘It is really tough for a day labourer to pay a Supply and Sewerage Board introduced a Women-headed and high price for electricity and water. You know number of customer-focused service delivery other poorer house- it is not possible to get electricity and water reforms. This included a process of consoli- holds are likely to connections without bribes or extra money. dated applications for new connections – pre- be less aware of So our budget is strained and we cannot viously a major source of corruption. Rather where to file a afford to meet our needs. We cannot save any- than filing an application in their local complaint thing for our future either.’ Others said that district office, customers now go to the they had been deprived of basic foodstuffs, Board’s headquarters to a ‘Single Window medical facilities, incurred business losses and Cell’ (SWC) which manages all the related interrupted children’s education because they activities, such as obtaining a road-cutting had to spend money on bribes. In these permit or land surveying. The Board pub- circumstances many poor people feel power- lishes the fee schedule for various plot and less and helpless.46 connection sizes in its office and in the press, Although corruption affects both sexes, thus reducing the opportunities for staff to it can present particular difficulties for levy excess charges. The process has been women-headed households. Service providers designed as a one-visit operation so the may, for example, be more inclined to demand customer rarely leaves the SWC without an a bribe from women whom they consider to ‘application token number’, the equivalent of be more susceptible to coercion, violence or a receipt for acceptance of the application. threats. Women are also at risk of sexual harassment, women-headed and other poorer Grass root monitoring – in Pakistan. For many households are likely to be less aware of where decades, institutional decay and corruption to file a complaint. in Pakistan resulted in poor public water,

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 73 BOX 3.9 UPROOTING CORRUPTION IN SANITATION

Corruption in the sanitation sector is generally less well Foundation (SEUF), a non-profit organization, worked documented and understood than in water supplies. This is together with local governments to carry out a subsidized partly because most sanitation systems, in rural areas in sanitation programme, serving poor families. This ensured particular, are likely to be based on individual septic tanks that local people understood the system which could then be or pit latrines that are installed or purchased by each monitored by different groups such as water and sanitation household. committees, women’s groups and youth groups as well as Corruption is most likely to occur, however, in the installa- households and local government. The programme used tion of capital-intensive sewerage networks in cities different ways to control spending such as public and open generally to serve high-income neighbourhoods. Even in selection and multiple tenders, independent audits which household sanitation projects, there are opportunities for required double signatures on receipts and surprise spot- corruption when the government offers subsidies for latrine checks of suppliers. Monitoring and mapping exercises were construction. Corrupt officials can direct these subsidies to carried out with cross-checking to ensure validity and stop relatively less poor families. Contractors brought in to do the the flow of subsidies to ineligible households. This experience work can over charge for construction, or use cement that showed that triangulation is essential in ensuring the honest contains too much sand. It is estimated that 20 per cent to 30 allocation of subsidies. Overall, up to 20 per cent could be per cent of funds and materials are diverted from sanitation saved on construction costs while improving the quality of programmes due to corruption and dishonesty. sanitation facilities. One example of efforts to reduce this type of corruption comes from in India. In 2003, the Socio-Economic Units Source: Water Integrity Network 2006.

sanitation and electricity services. This for the poorest people in the city has risen process in turn fuelled citizens’ mistrust of from 100 to over 13,000.48 This has been Government and politics. In response, the achieved by creating an autonomous and Government in 1999 embarked on a massive transparently-run authority in which the national reconstruction process which in- staff are given greater responsibility and are cluded devolving powers to the grass roots, paid according to financial performance. Al- restructuring federal and provincial adminis- though the tariffs were increased, these were trations and reforming the civil service. As used to subsidize connections and bills for the part of this the Government also introduced, poorest people. Automated billing and collec- along with direct involvement of the benefi- tion systems have replaced the often corrupt ciaries, a system of social audits to evaluate bill collectors. Inspection teams penalize those the outcomes. The government hoped that with illegal connections, which encourages these audits would increase transparency and people to report them. Customer service has help reduce some of the mistrust while also also been improved with a free phone number monitoring the delivery of services. Donors and a 24-hour repair team for water leakages. too were attracted by these audits which Any staff associated with illegal connections would help measure the impact of their are removed or punished immediately. More 47 Staff are not seen support programmes. importantly, staff are not seen as a source of as a source of the the problem but as a major part of the problem but as a Cleaner water supplies in Cambodia. The solution. major part of the Phnom Penh Water Supply Authority has solution improved hugely over the last decade with the Clean energy in Bangladesh. The Rural Elec- coverage in the city increasing from trification Board and its rural electric 25 per cent to 90 per cent. Between 1999 and cooperatives (Pally Bidyut Samities, or PBS) 2006, the number of household connections are expanding electricity services in rural

74 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT areas. They have protected themselves from community work. ‘I thought I was hired as corrupt practices through a number of inno- an engineer,’ one employee recalled. ‘Then I vative arrangements. First the Board of each found out I was going to be an engineer, a PBS is selected by consumers. Then the meter community organizer, a policeman, and a readers are hired on one-year contracts that labourer.’ Over time, technical staff have can be extended to three years with good per- formed close bonds with the communities to formance, after which the meter reader has which they are assigned.49 to seek a different career, which is not diffi- cult if they have a good record. Every year the The Right to Services management of each PBS negotiates an agree- ment that includes targets for system loss, Corruption is undermining a whole range of collection efficiency, revenue and cost of public services, siphoning off much needed supply per kilometre of line and debt repay- funds that could be used to invest in better ment. The PBSs use independent consulting standards of health and education and more firms to survey rural areas, identify potential efficient and cheaper public utilities. Much of consumers and design the electricity distribu- this corruption is tied up with procurement, tion network. They also display on a notice as companies pay bribes for public contracts board the list of lines to be installed, to for major construction projects. People across reduce the risk of corruption and nepotism in the region often have to pay bribes just to investment decisions and help to avoid obtain services which should be theirs constructing uneconomical lines. by right. Many of the problems are linked to low Reducing collusion in Pakistan. The Local investment which creates shortages that Government and Rural Development public workers can exploit – allocating scarce Department (LGRDD) in Azad and Jammu resources to those who are prepared to pay. Kashmir, Pakistan works in remote areas of Reducing corruption in health, education and the state, but keeps a tight rein on activities other government services will require action through field visits and biannual meetings. It from above and below. From above, govern- has eliminated private contractors for all but ments will need to ensure more transparent the most technically complex of the 1,260 and better managed services; from below, Technical staff work schemes; instead, its technical staff work users can work together to resist demands for with community with community members who provide the bribes. members who required labour and organize the purchase of So far few countries in the region have provide the required supplies. In sum, it has limited the opportu- been able to approach the issue in a compre- labour and organize the purchase of nities for ‘cream skimming’ and collusion. hensive and consistent fashion. There are, supplies Moreover, the staff take great pride in their however, many cases in which governments work and in reducing corruption. Most tech- have been able to introduce more efficient and nical staff were not told at the time of their transparent systems and citizens have united hiring that they would have to do so much to demand their rights.

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST 75

A tilted load won’t reach its destination.

AFGHAN PROVERB Stopping Leakages in Financial 44 and Material Aid Chapter

Governments and international agencies frequently have to respond with large-scale programmes, disbursing funds or materials to help people in difficulties. This may be the result of emergencies, arising from conflict or natural disaster, for example, and referred to as ‘special development situations’. Or they may be giving longer-term assistance in the form of ‘social safety nets’. In either case, resources destined for the poor risk being diverted by corruption.

Financial and material aid in emergency with the lowest rankings in the World Bank’s responses, longer term development control of corruption index (CCI). It seems situations, and social safety net programmes likely therefore that many of these conflicts are of particular relevance for the most are linked to poverty and to the capacity and disadvantaged. Emergencies such as conflict, integrity of governance. Countries with low natural disasters or sudden changes in levels of corruption tend to have more political configuration – sometimes referred coherent states with stronger social fabrics. to as ‘special development situations’– often Struggles between competing interests, there- Much of the bring out the best and the worst of human fore, are less likely to degenerate into destruc- momentum for beings. Unarmed resistors in conflicts bravely tive or violent conflict. political transitions confront their tormentors. Many people in Corruption, on the other hand, tends to often derives from natural disasters risk their lives to save break the trust between the governing and the public outrage at others. Public servants will frequently remain governed as well as sow dissension among perceived corruption at their posts, serving their communities communities. Indeed much of the momentum while foregoing easy opportunities to reap for political transitions often derives from material rewards for themselves. Neverthe- public outrage at perceived corruption or less, there are also people who take advantage abuse of authority. This has been evident in of opportunities to enrich themselves when the mass protests that lead to some of the large amounts of cash and goods have to be region’s major political transitions, as in the transferred, sometimes very rapidly and with Philippines (1986 and 2001), in Indonesia few administrative controls. Corruption can (1998) and in Thailand (2006). aggravate the impact of crises and undermine It can also be argued that corruption social safety net schemes. In turn, the availa- contributes not just to political instability but bility of no-cost or low-cost aid can create also to the impact of natural disasters. While conditions for corruption. the forces of nature such as earthquakes and Over the past decade, most special devel- volcanic eruptions are largely unpredictable opment situations in the Asia-Pacific region their likely effects are well understood and have been linked to conflict – and have can be anticipated. Stronger states can there- generally occurred in countries with the low- fore mitigate the damage by enforcing con- est levels of human development. As Table trols, closing certain areas to development 4.1 shows, these also tend to be territories and enforcing building controls. Corruption

CHAPTER 4: STOPPING LEAKAGES IN FINANCIAL AND MATERIAL AID 79 TABLE 4.1 undermines these efforts by allowing uncon- ASIA-PACIFIC COUNTRIES, BY CCI RANKING AND trolled development and compromising EXPERIENCE OF CRISIS SITUATIONS building inspection practices. Perceived levels of corruption were found related to the earth- CCI rank HDI rank Special development (2006) (2005) situation quake death toll in a review of the impact of High CCI ranking 344 large-scale earthquakes in 42 countries over a 28-year period, worldwide.1 The links New Zealand 4 19 None between corruption and disasters are even Singapore 5 25 None clearer with localized disasters, such as land- Australia 11 3 None slides that result from illegal logging or the Hong Kong 16 21 Stable political tran- destruction of fishing resources as a result of (SAR), China sition through return to China pollution from industrial zones upstream. Japan 21 8 None Emergency Responses Macao (SAR), 64 – Stable political China transition through Despite their significant differences, most return to China special development situations have a Taiwan, Province 62 – None number of similarities. The most obvious is of China an extraordinary event, which leads to a Republic of Korea 74 26 None breakdown of regular social, economic and or Malaysia 67 63 None political interactions and the assumptions Low CCI ranking that underpin them. Timor-Leste 166 150 Conflict followed by In the case of short-term emergencies this transition to sover- breakdown is further complicated by the eign independence arrival of international agencies typically Viet Nam 147 105 None under pressure to spend fast. The multi- Nepal 155 142 Political transition plicity of newly arrived international agencies linked with political (UN, donors, IFIs, NGOs, contractors, etc.) insurrection can also be highly aggressive in seeking to Philippines 151 90 Separatist/sectarian establish their programmes and disburse their conflict resources. They can also be eager to position Indonesia 159 107 Political transition, separatist/sectarian themselves against the ‘competition’ and move conflict, major natural quickly with flagship projects or face the risk disaster of losing funds. This reduces the time avail- Papua New 188 145 Separatist conflict able for substantive programme planning and Guinea risk analysis – problems compounded by high Pakistan 170 136 Political transition, rates of staff turnover. The diversity of adminis- regional conflict and large scale disaster trative systems among agencies makes it difficult to keep track of funds and supplies. Cambodia 192 131 Post-conflict consoli- dation This is most evident in procurement. Bangladesh 197 140 Political transition Usually organizations operate with standard commencing market principles of predictability of price, Myanmar 205 132 Sectarian conflict quality and availability. They are expected to make purchases at the lowest price with high- Sources: Evans 2007; UNDP 2007a; World Bank 2007b. est quality and anticipate subsequently being

80 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT audited. These regulations may be relaxed or den changes of political configuration, raise even set aside during an emergency as many many of the same issues. For instance, there more resources arrived from many different is a usually multiplicity of agencies who try to directions and often travelling through apply normal controls in an abnormal unfamiliar channels. Combined with the environment. imperative to spend fast, this produces an en- Governments and international agencies vironment which is susceptible to corruption. have to consider how the misuse of resources International agencies may also have the relates to efforts to achieve reconciliation and disadvantage when they are unfamiliar with build peaceful societies. In this case there is a existing networks of patronage and de facto temptation to be more tolerant of corruption, local business models. They may end up allowing antagonistic groups to share the selecting staff and partners who have ques- spoils as part of buying a kind of temporary tionable local reputations. At the same time peace. The pragmatic argument in favour of the agencies may try to curry favour with this practice is that it demonstrates that ‘all local administrators by offering salary top- have a stake in the system’ and leads to some ups, special training or international travel. sense of immediate commitment to the initial Local people, on the other hand, are more peace process which, is hoped to deepen in familiar with the terrain but they can have time. the disadvantage of not knowing how recov- But this is counterproductive: such ‘peace In post-conflict ery programmes operate. This asymmetry of agreements’, in fact, usually contain the seeds environments, there knowledge can easily degenerate into mutual of future corruption. Practices such as divid- can also be a mistrust, including mutual perceptions of ing up ministries among differing conflict major shift in corrupt behaviour. protagonists can often lead to a kind of patterns of econo- Does this matter? Many people argue that ‘balkanisation’ of the civil service, subverting mic ownership which opens up anti-corruption efforts regarding emergencies any commitment to a merit-based administra- opportunities for are second-order priority compared with tive system by institutionalizing patron-client corruption building up functioning institutions. Interna- relationships. Ultimately, it is likely to repli- tional actors typically overwhelm local cate the fault lines of the earlier conflict. absorptive capacity by trying to do too many At times, war veterans and returning exiles things at once. Shouldn’t they try to create may see reconstruction as a ‘payback’ scheme, the basic institutions first and clean them up using wartime sacrifices to ‘justify’ misuse of later, dispensing international funds quickly public offices and positions.3 rather than carefully?2 Others see this per- Evidence from a number of countries spective as naïve, if not downright irrespon- shows that neglecting the corruption problem sible, arguing that international agencies and from the outset is a dangerous strategy, allow- NGOs should never immerse themselves in ing corrupt elites to entrench themselves in quick and dirty deals that disregard the politics and set up predatory schemes that are longer-term damage in terms of community extremely difficult to eliminate later on. As practice and expectation (Box 4.1). in post-conflict environments, there can also be a major shift in patterns of economic Longer-Term Special Development Situations ownership which opens up opportunities for corruption. For example, Indonesia in Longer-term processes, linked either to ongo- the wake of the Asian financial crisis, ing conflicts, post-conflict situations or sud- nationalized most of the large private banks

CHAPTER 4: STOPPING LEAKAGES IN FINANCIAL AND MATERIAL AID 81 When corruption is along with some of the businesses that had the new government may on the other hand seen as common, taken loans from them. The subsequent choose to privatize state assets – public utili- even ‘normal’, it processes of asset consolidation, restructur- ties such as water, electricity, telephony and becomes difficult ing and (re)-privatization challenges were transportation – only to see these captured and complex to fraught with problems related to integrity and by local, corrupt elites.5 reduce corruption. Whatever the type of government, in some Along with the regime change, there is ways when it comes to corruption the percep- also the danger of shifting from one form of tion is arguably even more important than corruption to another. Corruption occurs in actual prevalence, since it can become a self- many centralized authoritarian regimes, fulfilling prophecy. When corruption is seen because they lack the safeguards to curb as common, even ‘normal’, it becomes diffi- abuses and exploitation of state assets by cult and complex to reduce. Another common military officers or politicians and their feature of a corrupted environment is a cronies.4 In a more democratic environment, growth of cynicism in response to the gulf

BOX 4.1 CONFRONTING THE DOUBLE WHAMMY IN ACEH

The earthquake and tsunami which struck Aceh and the is- Elsewhere at the institutional level, the Supreme Audit lands of Nias on 26 December 2004 claimed the lives of 30 per Agency has now established a permanent office in Aceh. To cent of the provincial capital and similar losses in at least two demonstrate further seriousness on countering corruption, the other districts. Overall 170,000 of the region’s 4.7 million Corruption Eradication Commission has also established a people were lost. In Aceh, this natural disaster also took presence in Aceh. place against a backdrop of long-term violent and separatist Within the BRR Executing Agency, we radically adjusted conflict with all the usual breakdowns in social trust and sys- the remuneration system for staff, scrapping numerous dis- tems that such conflicts cause. Collectively this represented a cretionary stipends and top-ups to provide a single income. real double dose of human misery for the people of Aceh. This reform has allowed us to both retain staff and also to Each of these disasters, namely natural calamity or conflict, establish integrity controls and initiate staff productivity con- can normally be expected to give rise to special concerns about tracting. the potential for reconstruction activities to be subverted by To assist in the maintenance of systems of integrity, we corruption. Together these dynamics amplify the threats of established an Anti Corruption Unit first. It operates on the corruption. basis of preventing potential deviations including offering sug- Indeed evidence of a pre-existing corruption problem prior gestions on correcting system weaknesses. The Unit also to the tsunami was seen through the prosecution of the then provides education on corruption-related issues to staff as well Governor of Aceh. This clearly demonstrated that corruption as to the wider public and passes information on possible represented a real and serious threat to the post-tsunami re- cases of corruption directly to the Corruption Eradication construction programme. Commission. To pre-empt this potential threat, the Government designed We in BRR see the fight against corruption in Aceh and the dedicated post-tsunami reconstruction executing agency, Nias as advancing Indonesia’s wider struggle against corrup- known by the Indonesian acronym of BRR, with an eye for tion. We recognize that this task is very difficult, particularly ways to avoid some of the usual traps. Among these, was the in a post-conflict situation where there is a need to build not establishment of a special and dedicated Treasury Office of just physical infrastructure but also the social fabric of the the Ministry of Finance to manage all BRR payments. This community and their government. We believe firmly that has significantly reduced the costs and time delays that en- corruption both robs disaster victims of the support they need courage people to cut corners to manage funding issues. and also undermines ongoing and future support from gener- Substantive oversight is a key ingredient to any effective ous external supporters. In this regard, corruption is both integrity system. To this end, the establishment of a dedicated morally wrong and also undermines programme success. Cor- BRR Oversight Council as well as a BRR Steering Council ruption does not grease the wheels; it is a spanner in the provides institutional mechanisms to ensure financial and works. policy compliance from the BRR Executing Agency. The Na- Kuntoro Mangkusubroto tional Parliament has also established an active committee to Director, Executing Agency, BRR monitor BRR activities. Source: Evans 2007.

82 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT between how the system should operate and BOX 4.2 how it actually does. SEX FOR FOOD SCANDALS Corruption does not involve money alone. During and after conflicts, The Culture of Silence peacekeeping forces and aid workers who find themselves in a position of authority and control have exploited vulnerable women and children Corruption during a special development by demanding sex in exchange for food or other resources. Refugees and other displaced people who commonly lack the documentation needed to situation is often sustained by a culture of prove their entitlement to food, health services or shelter may be obliged silence (Box 4.2). Many local people or aid to exchange sex for survival. This is partly a reflection of the breakdown workers may be reluctant to report cases of of social norms and prohibitions that would normally be a constraining force in a society. corruption. They may, for example, fear The organizations need to replace these missing managerial and retribution from political forces or be nervous personal controls and build effective processes for complaints, including that donors or parliaments back home will protection for whistle-blowers. consider their programmes to be failing.6 Or they may simply not see the point of protest- spend ‘fast and furious’ is by extending dead- ing if the legal system is weak and lacks an lines. This would need some kind of interna- easily identifiable mechanism for lodging tional agreement – between bilateral and complaints. multilateral agencies and NGOs as well as On the other hand, international agencies representatives of the governments likely to can also be vulnerable to false accusations be recipients of international emergency against the non-corrupt in order to intimidate assistance. UNDP or the Development Assis- them or extort favours in the form of jobs tance Committee of the OECD might take the or programme resources. Sorting genuine initiative. complaints from the fake ones is particularly Corruption during a difficult when an ill-informed, gullible or Paying for controls. All programmes have special development unethical media are quick to broadcast legitimate management costs so donors situation is often slanders. should be made aware of the need to pay for sustained by a fiduciary controls. Cutting costs to claim that culture of silence Recommendations for Special every cent goes to hungry children is self- Development Situations defeating if resources end up being stolen or misdirected. Indeed recent studies suggest How can corruption be minimized during that auditing ensures that more money goes special development situations? As with to those in need.7 corruption in other sectors, greater transpar- ency in governance and closer monitoring Active communications. Communicating with would apply some needed discipline. But beneficiaries and other stakeholders, includ- there are also steps that can be taken to mini- ing local and national authorities is impor- mize the opportunities for corruption. A tant. Apart from computer based systems, programme that does not deliver a certain publication through print media, use of broad- percentage of allocated resources need not be cast media, local information boards, public considered a failure when compared to a meetings with local communities providing programme that is expended fully, but badly. information, etc. are means to limit corrup- tion. Setting realistic expectations is an Extending deadlines. One of the most impor- important factor in building trust. This tant steps towards reducing the pressure to argues strongly for public education to

CHAPTER 4: STOPPING LEAKAGES IN FINANCIAL AND MATERIAL AID 83 BOX 4.3 Work with established local NGOs. During AID WATCH IN SRI LANKA conflicts NGOs have often continued to One of the challenges of delivering recovery in crisis situations is that deliver public services as substitutes for the needs and interests of the affected themselves are not reflected in collapsed government. Their established the planning and implementation of projects, resulting in a severe dis- networks, internal systems and procedures connect between their delivery and the corresponding needs on the ground. This not only contributes to delays, wastage and higher inci- offer some hope of integrity control. Local dences of corruption but also feeds into existing feelings of isolation and authorities or agencies such as universities disillusionment among the affected. could be mobilized to identify reasonableness Recognizing the need for including the voices of those affected in the of input prices. tsunami recovery process and for empowering the communities to be agents of their own recovery, UNDP Sri Lanka launched the AIDWATCH initiative in 2005. The objective of this initiative was to strengthen Supreme audit agencies. At the formal level, capacities of beneficiaries to monitor the implementation of projects un- there may be great value in bringing together dertaken on their behalf and to ensure their accountability and transpar- ency. Under this initiative, a representative sample of beneficiaries was the supreme audit agencies of official donor selected and provided with basic awareness on their claims vis-à-vis de- nations to work with those of the affected velopment activities alongside basic advocacy and negotiations skills. society. These groups were also brought into contact with relevant project staff in the field and in Colombo, as well as with local government authorities and local Human Rights Commission representatives. Equipped with new Complaints management. Key agencies, work- awareness, skills and networks, these beneficiary collectives were em- ing with existing local or national entities powered to play an active role in monitoring the progress of the project. should establish a joint and credible com- They had greater access to local authorities in securing their public ser- vice needs and had strengthened access to grievance-redress mechanisms, plaints system. People need to know how to for example, through the Human Rights Commission, in the event that lodge a complaint, what to expect and what their needs were not been met. Initially five pilot AIDWATCH initiatives future obligations may emerge. They also were set-up in Galle, Moratuwa, Trincomalee, Jaffna and Batticaloa, al- though many of them had to be scaled-down due to the worsening con- need to know the legal limits of investigative flict situation. authorities.

represent one core component of the Social Safety Net Programmes complaints management approach (Box 4.3). A number of countries in the region have Engage in long-term procurement. Responding social safety net programmes. Some are to natural disasters involving large-scale temporary, having been created in response international business can be based on long- to emergencies, while others are ongoing to term contracts with prime contractors, who provide the poorest citizens with some very should be required to engage and build the basic security. These interventions vary from capacity of local businesses. supplementary feeding for undernourished children to pensions for the old and disabled. People need to Establish principles of ‘reasonableness’. Rather They can also range from support to farmers know how to lodge than aiming at fiduciary standards, agencies through subsidies for seeds, fertilizers and a complaint, what should instead aim to ensure that their activi- water to providing income through unskilled to expect and what ties and the prices they pay are ‘reasonable’ employment in public works programmes. In future obligations under the circumstances. The term is neces- the last years, microfinance has also become may emerge sarily vague but does at least correspond to a widespread approach to reach out to the the normal situation. This can be based on poor (Box 4.4). real-time evaluations that provide simulta- Although such programmes generally neous recommendations to staff. make a valuable contribution, they are also

84 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT BOX 4.4 CORRUPTION IN MICROFINANCE

One of the most popular tools for addressing poverty nowa- respondents who had taken a microfinance loan may have days is microfinance – small loans to individuals and groups bribed the provider. who would not normally qualify for direct, commercial bank Another form of corruption is inflating the prices of assets loans. By 2006, across the Asia-Pacific region, such schemes within in-kind loans. Instead of directly giving cash the bank were reaching 98 million people – who received 85 per cent provides an asset such as a buffalo – but at a much higher of such loans globally. Evaluations of the social and economic price than the market rate, with the lender or agent pocket- impact of these schemes have shown them to be very success- ing the difference. Not surprisingly, many of the borrowers ful – achieving better nutrition and improved health out- struggle to repay such loans. comes, helping the poor to send their children to schools Addressing corruption in microfinance will require much and improving gender equity through the empowerment better monitoring – which can now be helped with appropri- of women. ate software. PRADAN, for example, an NGO microfinance There have been fewer assessments of their vulnerability institution in India, is significantly improving its group re- to corruption. This is partly because many do not work in a payment performance in this way. largely transparent fashion. However, two case studies, one The strongest guarantee is to ensure that microfinance from India and the other from Indonesia, have demonstrated institutions operate in a transparent fashion. Recently a con- the risks. In India, corruption prevails in some government- sortium of aid agencies and microfinance institutions of the backed lending schemes. In some cases, collusion between Consultative Group to Assist the Poor (CGAP) and the mem- government agents and bank officials results in leakages, for bers of the Small Enterprise Education and Promotion Net- instance, demands of 10 percent of loans amount as bribes. work, have developed disclosure guidelines specifying the fi- The borrowers do not usually complain because they consider nancial information that microfinance schemes should report. it standard practice. Since the government guarantees the The CGAP recommends donor members make their support loans, the bank is assured of the return of its principal at conditional on full compliance with these guidelines. least. A survey of 10 groups that had taken loans from banks found that all of them had reported bribery as a precondition. Sources: Azfar and Azfar 2007; Littlefield et al., 2003; Sarangi Similarly, a study from Indonesia found that 15 per cent of 2007. vulnerable to corruption. This is primarily cards and photographs, which are supposed because they involve better off, better- to be free. Those organizing the schemes may connected and better-educated people organiz- also enrol non-existent workers or falsify the ing the distribution of public resources to number of hours worked, or underpay people who are usually semi-literate and poor workers or give them less food than they are and therefore powerless and often unaware entitled to. In labour-intensive work, supervi- Officials may also of their full entitlements. Moreover, as subsi- sors can cheat on the volume of work done collude with dies are involved, the beneficiaries, even when and on the number of people employed. Very contractors to issue aware of their entitlements, do not always often, workers themselves are willing to give bills for inflated protest even when some diversion takes place a percentage of their wages to project officials quantities of – better to get something for free rather than and local elites, because what they get from materials or food nothing at all.8 Not surprisingly, some of the projects by way of wages is usually more than distributed resources ‘leak’ along the way or are directed what they would get paid by local landlords towards some less deserving groups. Thus, and other employers. both types of errors take place compounded Officials may also collude with contrac- by corruption through the exclusion of the tors to issue bills for inflated quantities of eligible and inclusion of the ineligible. materials or food distributed. Contractors This corruption can take many forms. It ostensibly running outlets for subsidized can, for example, appear at the outset when grains for the poor, can sell much of this on people have been asked for money to get their the open market at inflated prices. But cor- names registered or have to pay for their job ruption is not limited to public officials and

CHAPTER 4: STOPPING LEAKAGES IN FINANCIAL AND MATERIAL AID 85 the private sector. In some Pacific Islands, for for school-going children. They not only example, it is found even among civil society purchase fresh supplies grown by local organizations.9 farmers, particularly women, but also cook In the 1990s, in an effort to use resources and serve to children. This has considerably more effectively, public transfer programmes reduced leakages.11 moved from universal provisioning to highly targeted transfers. This, however, assumes an Integrated services in the Philippines. In 1994 accurate and fair basis for targeting, which the Department of Social Welfare and Devel- Often the targeting may not always be available. Often the target- opment launched the Comprehensive and is based on the ing is based on the assessments of local officials Integrated Delivery of Social Service (CIDSS). assessments of who can classify their own less deserving This aimed at a convergence of services, with local officials who friends or family as qualifying for assistance. communities being organized and mobilized can classify their In-kind targeting seems to be more corruption to take decisions, manage local funds and own less deserving prone than simple cash transfers. It involves monitor and evaluate the system. Originally, friends or family as procurement and distribution of food grains this only involved the poorest municipalities, qualifying for involving private contractors who can short- but since 1997 it has included all municipali- assistance change the poor by giving them substandard ties regardless of income class. Since then the food supplies and under-weigh the quantities programme has had some success in meeting that they are supposed to supply. An ESCAP minimum basic needs of local communities study, for example, concluded that in some thanks to increased community participa- countries in Asia resources lost through leak- tion.12 ages range between 50 to 70 per cent.10 Community development in Indonesia. The Uprooting Corruption in Social Safety Kecamatan (sub-district) Development Net Programmes Project covers 15,000 villages throughout Indonesia. Every year, each village in the With such negative experience in targeting, a sub-district makes a proposal for small-scale number of schemes are moving away from infrastructure projects and the provision of traditional methods. Instead, more are using seed capital for microcredit cooperatives. forms of ‘self-selection’, for example, by Most villages propose an infrastructure offering work or wages that only the very poor project plus a small amount for savings and will accept. Similarly, for food distribution, loans for women. An inter-village forum schemes can buy cheaper but nutritious ranks all proposals according to a number of staples such as sorghum rather than distri- criteria, such as the number of beneficiaries buting expensive grains such as highly and project cost, and projects are funded processed rice and wheat. A number of coun- according to the rank list until all funds have tries have also improved the efficiency of such been exhausted. If the project is funded, a schemes by ensuring greater community meeting is held to plan construction, after control and social audits. These include: which an elected implementation team procures materials, hires labour and carries Women’s self-help groups in India. In several out the project. The members of the imple- parts of India, particularly in Orissa, mentation team receive an honorarium women’s self-help groups are being supported limited to a maximum of 3 per cent of the to procure local produce for mid-day meals total cost of the project. No contractors are

86 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT used in construction.13 This has limited the community through the media, using popular scope of collusion between officials and culture and folk traditions to explain to private agencies to the advantage of the people their rights and entitlements as well intended beneficiaries. as their roles and responsibilities in any project. This has to be an ongoing process. To Social audits in India. India’s National Rural be sustainable, community-driven approaches Employment Guarantee Act (NREGA), have to be backed by a legal framework and provides for 100 days of guaranteed employ- strong bureaucratic support. ment to one member of every rural household, based on the principle of self-selection by Minimizing the Leaks Corrupt officials are focusing on unskilled, manual work. There returning money are strong provisions for transparency and Any government programme that involves a they have taken accountability at all levels. For instance, transfer of resources to its poorest citizen has from villagers and wages are to be paid in the presence of the to anticipate the danger that the funds, asking them not to community on pre-specified dates; all relevant materials or food may disappear en route to complain to the documents are to be made available for public their intended destination. But there are ways social audit teams or at the public scrutiny; and regular social audit of all works to minimize the leakages. In the case of special hearings has to be conducted, in tandem with India’s development situations this may often involve Right to Information Act. This seems to be setting more realistic standards, backed by having an effect: corrupt officials are return- effective auditing as well as programme ing money they have taken from villagers and design and speed. These should be driven asking them not to complain to the social more by the needs of recipients and less by audit teams or at the public hearings.14 those of donors or the glare of the inter- Community-based approaches are not, national media. Social safety nets too can be however, an answer on their own; there is better designed to avoid corruption, though always the danger of communities being co- because these run over longer periods, they opted by the local elite. Every effort should, offer many more opportunities for commu- therefore, be made to mobilize the local nity participation and monitoring.

CHAPTER 4: STOPPING LEAKAGES IN FINANCIAL AND MATERIAL AID 87

The earth provides enough to satisfy every man’s need, but not every man’s greed.

MAHATMA GANDHI Cleaning Up Natural Resources 55 Chapter

Many developing countries in the Asia-Pacific region are rich in natural resources – vast tropical forests, extensive mineral deposits and fertile agricultural land. These assets should serve as a firm basis for economic and human development, but too often their potential is drained away through corruption. Given the enormous potential profits, corruption too can be on a grand scale, reaching the highest levels of the state, indeed frequently amounting to ‘state capture’.

Millions of poor people rely on access to BOX 5.1 common-property natural resources – water WHAT MAKES NATURAL RESOURCES PARTICULARLY and land, fisheries, forests and wildlife – PRONE TO CORRUPTION? which are crucial to their income and can • Lack of property rights, particularly for poor people provide safety nets in times of crisis. In India, • Those who are most dependent on natural resources are the poor and for example, such resources are thought to powerless who are also less able to resist corruption • Limited supply when the rate of use of renewable natural resources provide about 12 per cent of household income exceeds the natural replacement rate among the poor.1 But these same resources • Remote locations make resources difficult to monitor are also of great interest – often for other • Excessive state discretion over natural resources in cases where the state has a monopoly purposes – to the rich and powerful who have • Elsewhere, excessive private discretion over natural resources – little compunction in seizing them to establish particularly in cases of state capture or in remote areas where the lucrative businesses. Natural resources are state is weak • Commodities are often traded through complex chains, including prone to corruption for a number of reasons smuggling like inadequate property rights, among the • Lack of market prices for some natural resources – primarily their poor, unequal power, remote locations, etc. ecosystem aspects services – means that corrupt behaviour is low cost (Box 5.1). Not surprisingly, the exploitation Source: Feld et al. 2007. of natural resources is also cursed with many, often overlapping, forms of corruption – commonly ignored by commercial fishing bribes, fraud and embezzlement conflicts of companies who bribe officials to turn a blind interest, favouritism, and state capture. eye to transgressions.2 On a smaller scale, poor people will often have to pay bribes for Bribery. Companies may bribe public officials permits to use resources such as land, water to facilitate legal acts, to get permits for resources or forest products. cutting and transporting timber, alternatively, they may pay to get away with illegal acts such Fraud and embezzlement. Public officials may, as logging in protected areas. Payments to for example, run their own ‘off-the-book’ Payments to ‘look ‘look the other way’ are also evident in businesses using state-owned natural resource the other way’ are commercial fisheries: to sustain the fish assets. also evident in stocks on one of South-East Asia’s largest commercial fisheries lakes, for example, there is a ban on fishing Conflicts of interest and favouritism. Many from August to October, though this is politicians also have extensive investments in

CHAPTER 5: CLEANING UP NATURAL RESOURCES 91 the companies whose activities they are political lobbying or by making donations to supposed to be regulating, or they can award political parties. Given the nature of state concessions or favours to family members or capture, in some cases it can be difficult to political allies. Public officials also often blur distinguish this from pure mismanagement of the lines between their official responsibilities natural resources. and their private interests. Many can be seen These different types of corruption can as using the ‘revolving door’, moving back and create complex and seemingly impenetrable forth between public office and private webs of influence (Table 5.1). It might be companies, exploiting their period in a tempting to envisage a simple linear model of government department for the benefit of corruption with dishonest public officials at their future employers. An official in a one end and state-capture at the other. In fact, forestry department, for instance, may these options are usually interwoven with support pro-timber policies and then join the many ambiguous networks or associations board of directors of a major timber company. between state officials, political elites and private businessmen. One report on the State capture. In the extraction of natural mining industry in Mongolia found that resources, this is one of the most serious and political elites not only demanded kickbacks pervasive forms of corruption, as private from mining companies but also entered into companies pay public officials to shape laws, numerous deals and joint ventures with policies and regulations to their advantage. them: ‘the line between public and private This has been an issue in the Pacific Islands spheres is almost non-existent.’4 where international logging companies have Similarly, complex relationships can been accused of trying to influence policy occur at lower levels, indeed they may be decisions by bribing members of govern- deeply embedded in social structures. One ments.3 State capture can, however, also be report on a small community living next to a achieved through legal routes – by intense wildlife sanctuary in India found that local

TABLE 5.1 SOME FORMS OF CORRUPTION IN NATURAL RESOURCES

Land Fisheries Water resources Wildlife Forestry Minerals Grand Bribes for major Bribes for access Deliberate non- Bribes for large Bribes for Bribes and kick- corruption land transfers to major fisheries investment in scale illegal trade forestry backs for mining Nepotism-based Nepotism-based water structure Nepotism-based concessions concessions concessions concessions maintenance and concessions Nepotism-based Nepotism-based kickbacks for concessions concessions larger-scale water systems Nepotism-based concessions Petty Bribes for land Bribes for small- Bribes for water Bribes for small- Bribes for forest Bribes for corruption transactions scale fishery access scale trade permits artisinal mining access State capture Interference in Interference in Interference in Interference in Interference in Interference in land regulations fishery regula- public water wildlife regula- forestry regula- mining regula- tions investments tions tions tions

Source: Steel et al. 2007.

92 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT people who wanted access to forest resources law recognizes access to land based on were bribing lower-level forest officers who kinship. This may respect the rights of duly passed a share upwards through the traditional groups but can also create Forest Department bureaucracy. Forest opportunities for nepotism, favouritism, and officers loyal to ‘the system’ could expect clientelism. A 2002 Transparency Interna- promotion; others would usually be tional survey conducted in five countries in transferred. For both the bribers and the South Asia – Bangladesh, India, Nepal, bribed, the system had developed into a type Pakistan, and Sri Lanka – found land of ‘protocol’ for the use of the forest. This administration to be one of the three main system generally excluded the poorest sectors prone to corruption.6 Similarly, a households who could not afford to pay and study from the Pacific also identified land also marginalized women who had fewer administration as one of the areas most chances to establish ‘closeness’ to the forest vulnerable to corruption.7 In Bangladesh, 97 officers by eating or drinking with them.5 per cent of households were found to have paid bribes for land registration, 88 per cent The Extent of Corruption for land mutation, 85 per cent to obtain land- related documents, 83 per cent for land State and private elite groups – often in collu- surveys and 40 per cent to receive land.8 sion – are thus in a position to monopolize In addition to smaller-scale corruption access to resources and exclude the poor. As related to registration, there can also be much a result, a small elite often accrue the benefits larger scale corruption related to land grabs. from natural resources – doing little to A number of countries in South-East Asia, for promote broad-based economic development instance, have seen the land of poor and – or lift people out of poverty. This is evident indigenous communities seized for govern- across most important natural resource ment or private developments. Uncertainties sectors from land to water to minerals. in land ownership can compound the situation. Even when the ownership is clear, Land Even when the land may still be taken by force.9 A recently ownership is clear, For the majority of poor people in Asia and approved law on anti-corruption in Viet Nam, land may still be the Pacific, land is a key resource in both rural which aims to heighten the responsibility of taken by force and urban areas. In rural areas, the poorest the heads of land management bodies and do not own the land they live or farm on; they authorities at all levels in curbing corruption, usually rent or share-crop or work as hired may have a positive impact in this regard. labour on the land of others. Even if they do In Cambodia, corruption and lack of own land, it will typically be the most transparency connected with rising economic marginal. In the urban areas, they often live and military appropriation of communal in illegal settlements with little access to lands have exacerbated land disputes and water, electricity and other urban services. skewed land ownership patterns to the Corruption related to land is often disadvantage of both rural and urban poor. concerned with administration. In many The problem is difficult to address due to the countries there are few systematic records or absence of land records and maps, inadequate maps, while legislation and registration laws and land registration systems and the systems are frequently inadequate. The situa- inability of the justice system to deal with tion is further complicated when customary land disputes.10

CHAPTER 5: CLEANING UP NATURAL RESOURCES 93 Water Resources Fisheries

For the two and a half billion people living in Fishing is an important source of income to low-income countries, agriculture is the most island and coastal developing countries. Asia- important sector by employment and by far Pacific accounts for 49 per cent of global the largest user of water.11 Access to water is capture fisheries production,17 and fisheries closely linked to land values and livelihood contribute significantly to GDP in many low- potential. Both surface and groundwater are income countries. In Bangladesh, fisheries important; for example, over half the popu- provide over 5 per cent of the GDP and full lation of Bangladesh, India and Pakistan time employment for more than 2 million has a livelihood-stake in groundwater people.18 irrigation.12 Illegal, unreported and unregulated Corruption often Corruption often distorts the provision of fishing is a serious global problem, distorts the water infrastructure and influences decisions particularly to some of the poorest parts of provision of water on who should benefit from water flows. This the world. This represents not just a major infrastructure and invariably works against the poor who are loss of revenue, but is also threatening food influences decisions less able to exert political pressure or pay security; fish stocks in many coastal areas of on who should bribes. In some South Asian countries like the region are being severely threatened by benefit from water Pakistan, irrigation officials routinely require overfishing. The main causes are institutional flows bribes to ensure continuous supplies of weaknesses and lack of capacity. Many water.13 Corruption is also a major factor in countries in the region prohibit the use of shaping policy, steering investment away from dynamite or cyanide for fishing, but these efforts to improve the efficiency of existing methods persist and there are few arrests, water provision, which offers fewer opportu- with even fewer prosecutions.19 In parts of nities for kickbacks, and towards the more South-East Asia, for example in Indonesia, lucrative construction of dams and large the live fish trade could benefit many more irrigation schemes.14 fishing communities in the long term but ‘In South Asia irrigation charges are instead is organized to ensure short-term typically very low by comparison with those gains for officials and entrepreneurs at the in East Asia, both in absolute terms and as expense of fragile coral reef ecosystems and share of the value of production.’15 Low the local communities that depend on them.20 charges are justified for sustaining food security and poverty reduction but hide equity Forestry problems since poor farmers tend to pay more for irrigation water than larger landowners. Forest products contribute to an average of Unequal access and unreliability of irrigation 10 per cent of the GDP in some of the world’s schemes maximize the opportunities for poorest countries.21 While the forest area has corruption in South Asia. Although irrigation increased slightly in industrial countries since charges are higher in China and Viet Nam, 1980, it has declined by almost 10 per cent in water is more equitably and reliably developing countries.22 Deforestation is also distributed across the system, enabling poor causing massive loss of biodiversity, flooding producers to finance payments through and soil erosion while exacerbating global higher productivity.16 climate change.

94 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT The global timber trade is plagued by high TABLE 5.2 rates of illegal logging (Table 5.2) which often SOUTH-EAST ASIA, INDICATIVE ESTIMATES involves corrupt activities and can be used as OF ILLEGAL LOGGING a proxy for the incidence of corruption. With Country (various years) Proportion of illegal logging (%) some species of timber reaching $500 per Cambodia 90 cubic metre logging is a lucrative business. It Indonesia 70–80 involves extensive networks of corrupt Lao PDR 45 officials within police forces, customs Malaysia Up to 35 agencies and military forces – all colluding Myanmar 50 with powerful national and international Papua New Guinea 70 syndicates. Corruption emerges at each link Thailand 40 in the chain – from issuing permits and Viet Nam 20–40 licenses for wood harvesting to inspecting and Source: World Bank, 2006e. exporting the products. Governments in the region, such as Cambodia’s acknowledge the Administrative Staff College in Lahore scale of corruption and illegal plunder but reports, ‘it is alleged that an association of illegal activity has not been adequately powerful businessmen have formed some- addressed23 and anti-corruption activists still thing akin to a “timber mafia” with represen- face intimidation.24 Similarly, the Indonesian tation across government offices and state Government is active in fighting illegal logging institutions.’29 and has worked with a series of international The corrosive effects of illegal logging are programmes and initiatives.25 However, these not only confined to the forest sector. Forest efforts are partly being undermined by the products are bulky, making illegal lumber activities of neighbouring countries.26 visible and easy to be intercepted by officials. In Indonesia, less than one-fourth of the In order for forestry corruption to thrive, a total logging operations, estimated at $6.6 range of people including customs, police, billion, is legal. The value added of illegal log local politicians and transport authorities exports represented 3 per cent of Indonesia’s need to collude, and as a result all these GDP in 2000, or 17 per cent of the value institutions lose their integrity.30 added of the agricultural sector output. The government also loses considerable revenue, Wildlife because almost no taxes are collected on illegal logging. Informal payments and bribes in this Wildlife is a vital issue for poor people. sector are estimated to be more than $1 Around 13 per cent of people living on less billion a year.27 than a $1 a day are thought to rely on wildlife During the 1980s and 1990s, unregu- as a source of livelihood.31 South-East Asia is South-East Asia is lated logging to meet the demand in Pakistan’s responsible for one quarter of the global trade responsible for one markets is thought to have destroyed over in illegal wildlife,32 thought to be worth quarter of the half of Afghanistan’s natural forests. The around $15 billion per year, or nearly $160 global trade in United Nations Environment Programme billion with the inclusion of wild-sourced illegal wildlife reports that the situation in the past few years timber and fish products.33 The problem is has spiralled out of control, with 25 to particularly acute in Asia, which hosts nine 50 trucks containing illegal logs crossing of the ten most endangered species. Much of the border every day.28 The Pakistan the illegal trade is fuelled by the demand for

CHAPTER 5: CLEANING UP NATURAL RESOURCES 95 traditional medicines. In 2003 one raid by the of bribes when conducting business overseas local police in Chatuchak market in Bangkok – often after their own natural resources have seized protected species worth $1.25 been exhausted.38 Malaysia’s forests were million.34 In Mongolia it is thought that the depleted years ago but the country is still one illegal and often corrupt trade in fur seriously of Asia’s top exporters of timber thanks to endangers the population of protected supplies from Indonesia.39 This export species.35 consists of both legally and illegally harvested timber, but once a log has changed hands it is Minerals very difficult to identify its source. Following China’s total logging ban in 1998, timber Corruption affects the trade of many companies looked overseas to Cambodia, minerals across the region – from sand to Indonesia, Lao PDR, Myanmar, Papua New metals, and oil to gas. The mining of sand is Guinea and West Africa. One report on the an environmentally damaging but highly smuggling of illegal wood from Myanmar to lucrative operation; even in countries where China by ethnic Kachin people found that it is governed by permits. In Sri Lanka much $125 per truck was paid to Burmese soldiers, of this takes place illegally with police $83 to the forestry department and $25 to involvement or the use of permits procured the drug police. Then at the final stop before The mining of oil, through bribery.36 The mining of oil, gas and the border, the Kachin group collected a ‘tax’ gas and hard rock hard rock minerals is also susceptible to large- from Chinese truckers before issuing minerals is also scale corruption which among other things documents that declared the shipments to be susceptible to large- leads to environmental destruction; mines legitimate.40 scale corruption and exploration sites are usually in remote In Lao PDR illegal logging and related locations where governance structures often cross-border trade is possible because of the are weakest. The problems are compounded collusion between importers, customs when political elites have personal stakes in officers, the military and local party officials. mining ventures.37 This is an issue in ‘Much of the border trade is conducted countries with mineral and oil deposits such informally and illegally, largely in response to as precious metals in Mongolia, phosphate customs officials’ demands for illicit and other minerals in Nauru and the payments.’41 Quantities of goods are systema- Philippines. It also applies to oil, coal and gas tically under-reported, with the savings in industries that are established in Bangladesh, tariffs shared between the importer and local Indonesia and Pakistan, which are now being party officials. Attempts to give more developed in Cambodia and Myanmar. responsibility to the provinces for managing their revenues only aggravated the problem.42 The Cross-Border Dimension The final consumers must also take responsibility. According to a 2005 report Since many of the natural resources being exploit- commissioned by the Australian Government, ed are destined for export, corruption in the around AUS $400 million-worth of illegally natural resources sector generally seeps across logged timber products are imported into national borders. Transparency International’s Australia every year.43 It is very difficult to bribe payers index finds that companies from actually trace the origin of a log once it is being China, India, Malaysia, Russia and Taiwan, processed, and major retailers in Europe and Province of China frequently pay high levels North America are selling furniture produced

96 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT in Asia to customers with little inkling of the purposes based on the Land Acquisition Act, wood’s origin.44 Nevertheless, the impact of but corruption sometimes takes place in land informed consumers and consumer driven valuation, which can harm poor farmers. demand for fairly and sustainably managed resources should not be underestimated. Loss of water rights. The poor can also be Partly due to the ‘’ movement, there deprived of rights to water. In Pakistan, is an increasing trend among consumers in wealthier farmers often pay bribes to gain developed countries to question the origin of access to irrigation water as well as to ensure products as well as the ethical records of the investments in new irrigation systems that companies behind. benefit their land. This has been documented as far back as the 1980s.46 The Impact on the Poorest Overharvesting. Corruption is accelerating the While corruption in the management of exhaustion of many natural resources, not- natural resources creates significant obstacles ably primary forests and inshore fishing Major retailers in for many aspects of national development, it grounds on which many communities rely Europe and North is particularly damaging for the poorest upon for their livelihoods. Deforestation and America are selling communities: land use change is currently the source of furniture produced about 20 per cent of the world’s greenhouse in Asia to Loss of land. Many farmers have been driven gas emissions. The 2007/2008 Global Human customers with into poverty as a result of land expropriations Development Report identifies reducing little inkling of the wood’s origin that have been expedited through corruption. deforestation as one of the main priorities to

In countries where land is owned collectively ensure that CO2 emissions can be sufficiently officials may illegally approve the conversion mitigated. In today’s world the real climate of farmland for construction or mining.45 change vulnerabilities linked to storms and This jeopardizes local food security, and may floods are in poor rural communities such as drive a mass of small farmers and peasants in the great river deltas of the Ganges and the into poverty. The farmers who lose their land Mekong, as well as in sprawling urban slums.47 generally get little or no compensation because they have limited legal rights. Land culti- Mismanagement of resources. Corrupt officials vated, either by the state or by village who see opportunities for gain will generally cooperatives leaves individual farmers with resist or subvert reforms that might threaten little recourse in the case of expropriation. their incomes, perpetuating inefficient ways Farmers can also lose their land following the of managing resources. In India the dominant breakdown of traditional systems of regula- model of irrigation infrastructure provision tion on the use of common property. This may has aptly been described as ‘build-neglect- be due to population pressures but can also rebuild’ since maintenance is not a profitable occur when public resources are leased out to business, but rehabilitation and new irriga- commercial operators through agreements tion construction are.48 Meanwhile systems that grant exclusive access. Corruption in controlled by corrupt engineers or managers land administration is not limited to countries typically exclude the poor who cannot afford where land is collectively owned. In countries bribes and also operate at very low levels of like India, for instance, private land can be efficiency, reducing agricultural output and legally acquired by the state for public incomes.

CHAPTER 5: CLEANING UP NATURAL RESOURCES 97 Subjugation of indigenous peoples. In many ‘depending on forests for their livelihoods are countries indigenous groups have tradi- losing out to economic activities operating on tionally occupied land that is now being the basis of a false economy’.51 However, exploited by commercial interests in collusion while corruption is linked to loss of revenue with governments. As a result, they are being deriving from the exploitation of forests denied rights to self-determination which products, we do not know the magnitude of would require that they regain their land or the loss caused by corruption. resources or receive compensation. This in stark contrast to Article 26 of the Declaration Sustaining authoritarian regimes. People, on the Rights of Indigenous People adopted especially the poor often suffer when by the General Assembly in 2007, which authoritarian and highly corrupt governments recognizes indigenous peoples’ inalienable gather wealth from the exploitation of collective right to the ownership, develop- resources. The Cambodian Khmer Rouge, for ment, use and control of lands, territories example, is thought to have received between and resources. $220 and $390 million a year from the sale of timber.52 People who live in Threats to health. People who live in areas areas where mining where mining and other industrial wastes are Uprooting Corruption in and other industrial illegally dumped into rivers face serious Natural Resources wastes are illegally health threats from the effects of toxic dumped into rivers chemicals. In Myanmar, gold-mining enter- Combating corruption in natural resources face serious health prises not only pay taxes to the Government will rely on many of the same measures that threats from the but also follow a well-structured system of can deal with corruption in general – greater effects of toxic personal payments to officials who can openness, strengthening government institu- chemicals protect them from any repercussions for con- tions, improving enforcement and having taminating the environment with mercury.49 media and civil society watchdogs ensure greater accountability. Given the highly Loss of public revenue. Poor people usually have cross-border nature of the problem, in a greater need for government services whose addition to national remedies, international budget allocations are severely constrained by cooperation needs to be stressed. Overall the losses from corruption. The Government of aim should be to empower citizens to have Indonesia has estimated that lost forest greater control over decision-making, while revenue costs the nation up to $4 billion a restricting the hidden power of corporations, year or around five times the annual budget concentrating less on efforts to improve effi- for the Department of Health.50 Viewed in ciency or attract foreign investment and more narrow commercial terms, deforestation only on ensuring that policy making is not captured makes sense because markets currently attach by the wealthy for their own self-interest. no value to carbon repositories. Also, those Experience across the region suggests a profiting from overharvesting of forests often number of steps that can combat corruption: belong to powerful elites with little motiva- tion to change the existing market structures. Empower Poor People in In Indonesia, for example, the market return Natural Resource Management of commercial logging represents less than one-tenth of the value of the carbon bank its In some cases problems have been solved by forests constitute. This means that people decentralizing natural resource management.

98 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Thailand, for example, used to have a top- BOX 5.2 down system for forestry but is now taking a REVENUE WATCH more participatory approach. The Phupan Revenue Watch International (RWI) is a multi-stakeholder initiative that National Park, previously under the works with civil society, media and policy makers in resource-dependent management of the Community Forestry countries. The Institute works with key organizations such as the World Bank, Columbia University, the Democracy Center, Global Witness, Save Division of the RFD, was a site of constant the Children (UK), Transparency International and Oxfam. conflict but is now managed by Udon Thani The mission of RWI is to improve democratic accountability in natural Forestry Region Office which works more resource-rich countries by equipping citizens and the media with the closely with indigenous rights holders.53 information, training, networks and funding they need to become more effective monitors of government revenues and expenditures as well as Similarly, in India, a system of ‘joint forest by advising governments and policy makers on best practices in resource management’ which started in , revenue management. This also works with companies to encourage and has enabled villagers to reap the benefits of support an accountable and transparent presence in resource-rich countries. the forests they help manage. It also RWI helped initiate and works closely with, the international Publish encourages more transparency in the What You Pay campaign to encourage oil, gas and mining companies to management of forests, which has not been publicly report payments to governments in resource-dependent economies and to engage the IFIs in the resource revenue transparency exempt from corruption. By 2002, co- campaign. management of forests was underway in 27 states, covering 18 per cent of the total Source: www.revenuewatch.org forested area and involving more than 62,000 forest protection committees. In Andhra environmental standards. Multi stakeholder Pradesh alone these include 1.2 million, initiatives to improve accountability by mostly tribal people. Nevertheless, many equipping citizens, media and private challenges remain particularly on the companies can also be of help (Box 5.2). marketing side since many forestry products are still marketed through uncompetitive Resistance by Poor People channels that reduce the profits received by low-income household producers.54 On a number of occasions the poor themselves On a number of Joint management can be more difficult have taken direct action to resist natural occasions the poor in the case of extractive industries. This is resource corruption that denies them access themselves have due to the economics of large-scale extraction to land, fisheries and forests. Early in 2007, taken direct action plus the activities of companies that are for example, tribal fishers in 44 hamlets to resist natural resource corruption typically bound with complex laws and protested outside the office of the Satpura regulations. Even so, NGOs, CSOs and others National Park (a tiger sanctuary) against the can help local people master complexities and State Government’s conduct training sessions along with public decision not to renew their fishing lease for hearings to review laws, policies and licences the man-made Tawa reservoir which falls from a rights-based angle. There may also be within a protected area of the park, even opportunities for local communities to work though a Government task force on the issue with companies to make ‘integrity pacts’, as had endorsed their fishing rights. Some in the Philippines’ mining industry where alleged that the Government’s decision to such pacts grant companies the right to revoke the community’s fishing rights was operate subject to binding commitments to connected to their involvement in exposing uphold human rights and comply with government corruption.55

CHAPTER 5: CLEANING UP NATURAL RESOURCES 99 Improve Environmental and meet 50 per cent to 60 per cent of world Social Impact Assessments forestry demand by 2050.56 With plunging natural fish stocks, fish farms already Communities will be in a better position to provide a major portion of global output. offer free and informed consent for large-scale However, replenishing natural resources development projects in the extractive needs to be managed carefully, since planted industries if they can rely on thorough forests compete for land with natural forests. environmental and social impact assessments Similarly, fish farms could be avenues for (ESIAs), followed by open public hearings on increased pollution into rivers if not managed the findings. Although ESIAs have been properly. In other words, expanding supply carried out in some countries in the region, can bring significant gains but it can also be these have either not been implemented or controversial and has to be carefully designed have been abused by the same, powerful to protect the environment and avoid interests that are the source of many of the penalizing the poor. problems. Such assessments are usually conducted by specialized consulting firms that Increase Monitoring and Transparency rely on resource extraction companies for their income and in some cases the Increased monitoring and transparency can conclusions seem suspiciously favourable to result from pressure on stakeholders both their clients. There are however, examples from within and outside a country. Corrupt where assessments have been conducted in a exploitation of natural resources often takes meaningful and unbiased manner, with the place in remote regions, far from official full involvement of local people and civil concern and public scrutiny, and precisely in Improvements in society organizations. Even when imperfect, those areas inhabited by the poor.57 Improve- monitoring can be ESIAs may be the best way to limit state ments in monitoring can be achieved directly achieved directly by capture. by using new technologies. In Cambodia and using new Indonesia, for instance, remote sensing is technologies Increase the Supply of being used to identify forest concessions that Natural Resources were awarded illegally. Monitoring and transparency can also be promoted by the use Corruption is often driven by scarcity; this is of independent monitors, which is now clearly demonstrated in natural resources gaining ground in the forestry sector. which may be limited by their natural availability. Scarce resources such as wildlife, Alert Stockmarket Investors water, fish and minerals may generate high prices or demand that opens the way for Extraction processes are capital-intensive and bribes and kickbacks. One way of limiting the often involve large multinational companies opportunities for corruption in natural who can be susceptible to international resources is to expand the supply – by pressure. Based on the recommendations of planting forests, establishing fish farms or the Norwegian Government’s Council on harvesting rainwater for irrigation. It has Ethics, the Norwegian Pension Fund – the been estimated that plantation forests largest pension fund in the world – has managed exclusively for wood and fibre on blacklisted 19 companies and subsequently just 4 per cent of existing forest lands could sold all stocks and shares in these businesses.

100 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Negative publicity caused by corruption, Progress at an inter-governmental level is Progress at an human rights abuses and damage to the attributed to the Extractive Industries inter-governmental environment have also led private pension Transparency Initiative (EITI), also level is attributed funds to question certain companies.58 supported by the G8 summit in 2003. EITI to the Extractive Similarly, export credit agencies are took PWYP a step further by requiring Industries developing more robust guidelines to combat financial disclosure by host governments. So Transparency Initiative bribery among the companies they support.59 far, 22 developing countries have signed up to EITI, although only two are from the Asia- Put Pressure on Asian Multinationals Pacific region: Mongolia and Timor-Leste. Once a host government commits to the EITI Many of the multinationals engaged in all companies operating in its territory, corrupt activities have their home base in including those that are state-owned, have to Asia. So far, however, countries in the Asia- follow a set of principles and publish infor- Pacific region have shown little interest in mation on payments. EITI implementation is policing their companies abroad. Malaysian carried out with the active support and logging companies are prominent in the financial assistance of donor agencies, inter- timber industry throughout Asia and the national financial institutions, corporations Pacific. There is potential here for the Govern- and civil society organizations. ment to encourage these companies to commit Although transparency is important, it is to a corruption-free environment in their only one step along the way. The financial operations abroad. The same recommen- deals can be immensely complex offering dation can be levelled at other countries in companies, and governments numerous ways the region that have companies operating of concealing corruption. In many cases the outside their national jurisdictions. deals can only be fully understood in conjunction with contractual agreements Ensure Financial Transparency which are often confidential. Even if the key information is published, it can be difficult to Companies involved in the extraction of extract evidence of state capture from floods natural resources would also be under more of extraneous data. pressure to avoid corruption if all their financial transactions were exposed to public Balance Roles of the State scrutiny. Based partly on the experience of and Private Sector Norway and Alaska, there has been a growing movement among international Corruption can be driven by failings of the NGOs to put pressure on companies and state. This can be tackled both positively by governments to increase financial trans- improving state capacity and negatively by parency. The NGO, Global Witness, heads a limiting the powers of the state. The positive worldwide coalition of more than 190 civil response would take account of generic society groups, which in 2002 launched a requirements to improve the state such as campaign called Publish What You Pay improved salaries, merit-based promotion, (PWYP) calling for not only greater trans- reduced politicization, better equipment and parency but also for protection for companies operational budgets. There are also some that decide to disclose their payments specific reforms that natural resource-based (Box 5.2). agencies can undertake. This would include

CHAPTER 5: CLEANING UP NATURAL RESOURCES 101 institutional reforms that separate produc- poor depend are not privatized by elite groups tion functions from monitoring and conserva- in a defacto way. Such unwanted privati- tion functions. In many countries in the zation may occur when traditional systems of region, fishery and forestry departments are regulation on common property use that responsible both for maximizing fish and worked in the past have broken down, partly forest production, as well as monitoring and due to population pressure combined with conserving the resource base. Not surpris- other factors. It can also happen when public ingly, this creates a conflict of interest and resources such as forests are leased out to fertile ground for corruption. Other institu- commercial-scale operators under concessions tional reforms include rewards and incentives agreements which grant exclusive access, for corruption prevention. As illustrated in driving out the poor. The central issue here is Sri Lanka, a financial reward for detection of for the government to establish a clear and anything illegal has been used to motivate transparent regulatory framework for customs officers to identify illegal exports of resource access rights, whether or not they ornamental fish and other rare plants and are publicly or privately held. In this regard, animals. privatization may also have a positive impact A negative response to state weakness as it can provide initiatives for managing and potential corruption is to limit the ways resources appropriately and sustainably. that the state can gain from corrupt natural However, governments need to enforce resource management. Many natural resource laws that prevent private-sector natural rules allow significant state discretion which resource corruption, imposing sufficient creates opportunities for corruption. serious punishments to make corruption Discretionary powers of state officials more costly than non-corrupt behaviour. can be limited by simplifying the rules and Combating corruption will require judicial making greater use of new technology. In reform and the support of impartial, in India, land registry has been a consistent criminal justice systems along with major source of corruption; village revenue successful prosecution of the guilty. officials often monopolize the revenue records Fortunately, this is an area that is receiving Over 300 which have frequently been tampered with. increasing attention, though it is important companies in Now the Bhoomi programme has facilitated to recognize some of the specific obstacles to China now hold the computerization of the records and so litigation. FSC certificates limited the power of state officials to control land transactions.60 Certification The most extreme way to limit state discretion is privatization, although the very One encouraging trend among private process of privatizing state assets can generate companies in the forestry and fishery sector corruption. In theory once a company is in across Asia has been the expansion of the private sector, it will be less prone to state- schemes of certification. The Forest led corruption. In practice privatization may Stewardship Council (FSC), for example, sometimes only shift the power from one promotes a chain-of-custody and tracking corruptor to another, increasing the power of system to ensure sustainable logging and private companies and the conditions of state timber manufacture. Over 300 companies in capture. A first step is to ensure that open China now hold FSC certificates. In the access to natural resources upon which the fisheries sector, the Marine Stewardship

102 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Council (MSC) is promoting a similar Parties to the Convention on International approach to achieve sustainable fisheries. Trade in Endangered Species of Wild Fauna There are also more generic international and Flora (CITES) held in Bangkok in October codes of conduct. The United Nations has 2004. This is one of the few multilateral been promoting the Global Compact which environmental agreements to which all ten includes anti-corruption principles. While ASEAN member states are party. Amnesty International, Human Rights Watch At the meeting, ASEAN announced an and other NGOs initially welcomed the Global initiative to work together to address the Compact initiative, some now question its region’s rapidly growing illegal trade in effectiveness because the pact is voluntary, its CITES-protected species and ten ASEAN standards are unclear and there is no process countries committed towards developing a for monitoring or enforcement. Regional Action Plan for 2005–10. Subse- quently there has been little action, however, Tackling Cross-Border Natural and attempts to limit the trade in wildlife and Resource Corruption protect the environment have largely failed. In any case, the announcement of a trans- Many natural resources in the region are being boundary wildlife trade action plan between depleted by corrupt, cross-border trade. Lao PDR and Viet Nam is a positive sign.62 More wildlife, for instance, is being traded China’s support for these efforts is critical illegally because an economic boom in the for success on controlling and limiting major client, China, has driven up the this trade. The East Asia demand.61 Several South-East Asian coun- The East Asia Ministerial Conference on Ministerial tries have emerged as willing sources of Forest Law Enforcement and Governance, Conference on supply – particularly Cambodia, Indonesia, which took place in 2001, could play a role in Forest Law Enforce- Lao PDR, Myanmar and Viet Nam – facili- promoting regional cooperation in regulating ment and Gover- tated by high levels of poverty, lack of illegal logging. The conference adopted the nance, which took environmental awareness, institutionalized Bali Declaration, whereby participating place in 2001, could play a role in corruption, and the long and porous borders countries committed themselves to increase promoting regional between South-East Asian nations. But their efforts to regulate the forest sector and cooperation in protected wildlife is not just being smuggled strengthen bilateral, regional and multilateral regulating illegal by the poor. This is a very profitable activity collaboration to address illegal logging and logging and has attracted syndicates of organized violations of forest law. The conference set criminal groups operating from Malaysia, up a regional task force to advance the Singapore, South China, Thailand and Viet Declaration’s objectives, and the following Nam, who are also involved in drugs, illegal discussions have led to bilateral agreements logging and human trafficking. between the UK and Indonesia as well as One way to tackle these issues is tougher Japan and Indonesia to combat illegal logging cross-border controls and regional coopera- and the international trade in illegally logged tion. Unfortunately, the main regional group- timber.63 The 2007/2008 Global Human ings – ASEAN and SAARC – have done Development report also emphasizes the need relatively little to set regional standards for for strengthening international cooperation in improved governance of natural resources. creating incentives for conservation and The prospects appeared to improve at the sustainable management of rainforests and Thirteenth Meeting of the Conference of the backs international finance transfer plans on

CHAPTER 5: CLEANING UP NATURAL RESOURCES 103 deforestation as advocated by among others logging and extractive industries can shape Indonesia and Malaysia. their own laws, with little respect for the poor Another case of regional cooperation on communities whose land they are exploiting. natural resources is the Forum Fisheries Confronting this power, especially when it is Agency in the Pacific whose work includes based on state capture, will always be What is clear is attempts to limit corruption in one of the difficult. But it is possible. What is clear is that this has to be world’s most valuable fisheries: the tuna that this has to be a combination of national a combination of industry of the Pacific. and international action. Most of the corrupt national and activity would be much less profitable international action Supporting the Environment without ready markets in richer countries for oil, metals or agricultural products. More Countries with weak systems of adminis- effective monitoring and control by govern- tration are inevitably vulnerable to corruption ment and local communities will therefore but the scale of loss is often greatest when it need to be matched by international campa- comes to the use of natural resources. Far igns that reject goods produced by corrupt from the centres of government, many of the and exploitative individuals and companies.

104 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT

At a time when we are establishing parliamentary democracy in the country . . . it is imperative to establish the Office of the Anti-Corruption Commission.

HIS MAJESTY KING JIGME SINGYE WANGCHUK, FOURTH KING OF BHUTAN Crushing Corruption from the Top 66 Chapter

If countries are to tackle corruption, they will need to address the issue at all levels of government as well as in the private sector – reforming institutions and processes to reduce opportunities for corruption while creating effective systems for detecting malpractice and punishing offenders.

One of the most encouraging developments in A government determined to fight corrup- the Asia-Pacific region has been the emergence tion must not only enact legislation, promote of corruption as a major concern for national civic values and establish institutions and governments. On his election in 2004, the agencies. It must also demonstrate formal President of Indonesia said, ‘The eradication political commitment to implement legislation of corruption will be my priority over the next comprehensively, impartially and sustainably. five years. We have to eradicate it structu- However, corruption is not just an issue rally and culturally . . . This country will be for the public sector. Much of the responsibi- destroyed if we do not stop the growth of lities rest with domestic firms, transnational corruption. There needs to be some shock corporations, banks and external develop- therapy so that the people know that this ment partners. Up to one-third of firms are government is serious about corruption.’1 thought to pay bribes for public procurement India too has been showing increasing contracts in emerging economies.4 In addition determination. Addressing a conference about many businesses are imposing undue influ- rural roads in mid 2007, the Prime Minister ence on national laws and institutions. said that corruption on construction projects The UN Convention Against Corruption The UN Convention had ‘spread like cancer to every corner of our recognizes, that this is not simply a domestic Against Corruption vast country’ and was a major reason for poor issue. Corruption is a complex phenomenon recognizes that this quality roads. Addressing a Confederation of involving many actors – givers, takers, legal is not simply a Indian Industry, he announced, ‘The cancer facilitators, regulators – who can reside any- domestic issue of corruption is eating into the vitals of our where in the world. Effective action against body politic,’ adding that ‘corruption need not corruption will therefore require extensive be the grease that oils the wheels of progress.’2 cross-border collaboration to control The challenge posed by corruption is also transnational businesses, address money acknowledged in Bhutan. In the Preface to the laundering and prosecute corrupt leaders and 2007 Annual Report of the Anti-Corruption officials who hide illegitimate fortunes in Commission, His Majesty, the 5th Druk overseas banks. Gyalpo said, ‘The rise in corruption in Bhutan is a challenge we face. How big the National Legislation and challenge is will depend on how soon and how Anti-Corruption Agencies strongly we decide to oppose it. There is no room for corruption – it is as simple as that, One of the most basic anti-corruption not now and not in the future.’3 measures is to ensure that various corrupt

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 107 acts are outlawed – either as part of general the Hong Kong/Singapore-type single anti- legislation, or as laws against specific forms corruption agency. Despite the limited Legislation can of corruption. Legislation can also cover number of success stories, policymakers and cover issues such issues such as money laundering, public pro- development agencies continue to invest as money curement and ethical codes. Of the 28 coun- scarce resources in agencies that have doubt- laundering, public tries in the region that responded to a survey ful impacts, often operating in a political procurement and for this Report,5 22 countries report specific environment that shows little commitment to ethical codes. In legislation on corruption. In addition, over the tackle the root causes of the problem. addition, many past five years many countries in the region According to the UNCAC, State Parties to countries in the have established parliamentary committees the Convention have the option to choose region have on corruption. whether to grant responsibilities to a single established parlia- It is also important to protect ‘whistle- organization or to divide responsibilities bet- mentary committees on corruption blowers’ – individuals who disclose informa- ween various prevention and law enforcement tion about wrongdoing. The survey shows 11 institutions. The single-agency approach countries offer some protection to whistle- places a number of key capabilities, responsi- blowers though this may not be very strong. bilities, and resources under one roof, thus Of the countries in the region that were not a creating a powerful centralized agency (ICAC part of the survey, Hong Kong (SAR), China, style) to lead the anti-corruption drive. The Republic of Korea,6 Australia, Japan and New multiple-agency approach aims to combine the Zealand have enacted laws or programmes for efforts of various units or agencies with whistle-blower protection. specific anti-corruption responsibilities that may be scattered among departments. Anti-Corruption Agencies The first Asia-Pacific country to establish an independent ACA was Singapore which in The results of the survey show that all 28 coun- October 1952 set up the Corrupt Practices tries have established formal anti-corruption Investigation Bureau (CPIB).7 The most agencies (ACAs). These have taken various recent cases were in Bhutan, which in 2006 forms. In some cases, as in Singapore, the agency established the Office of the Anti-Corruption specializes in investigation. Elsewhere, the Commission and Mongolia which formed the ACAs have broader functions, as in Hong Kong Independent Authority Against Corruption (SAR), China where the agency is also tasked the same year (Table 6.1). Some countries with prevention and communications. ACAs with notable ACAs include: can also vary in legal structure. While in some countries they have been established as auto- Singapore. To curb corruption during the nomous agencies, in others with parliamentary colonial period, the British relied on the systems, they can take the form of commis- Singapore Police Force. This was a serious sions that report to parliamentary committees. mistake, not least because of the prevalence And rather than having just one organization of corruption within the police. In 1952 there- there may actually be a cluster of them. fore the Government created the Corrupt While institutional responses vary across Practices Investigation Bureau, giving it three the globe, and there is agreement that good main functions: to receive and investigate practices are context specific, there has been complaints; to investigate misconduct by an increasing tendency, over the years, to public officers; and to examine public service continue to promote the establishment of procedures so as to minimize opportunities

108 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT for corrupt practices. In addition, the agency TABLE 6.1 screens candidates for positions in the MAIN ANTI-CORRUPTION AGENCIES IN Singapore Civil Service and statutory boards.8 ASIA-PACIFIC COUNTRIES Anti-corruption agency Date established Hong Kong (SAR), China. The story was simi- Singapore Corrupt Practices Investigation October 1952 lar in Hong Kong (SAR), China where exten- Bureau sive police corruption led to the establishment India Central Bureau of Investigation April 1963 in 1974 of a specialist Independent Commis- Central Vigilance Commission February 1964 sion Against Corruption (ICAC). Unlike the Malaysia Anti-Corruption Agency October 1967 CPIB’s investigative model, Hong Kong’s Hong Kong (SAR), Independent Commission Against February 1974 (SAR), China. ICAC has been described as the China Corruption ‘universal model’ because its strategy is three- Papua New Guinea Ombudsman Commission September 1975 pronged, focusing on investigation, commu- Philippines Tanodbayan (Ombudsman) July 1979 nity relations and prevention. Overall it aims Brunei Darussalam Anti-Corruption Bureau February 1982 to create ‘a new public consciousness’.9 Australia New South Wales Independent March 1989 Commission Against Commission Nepal Commission for the Investigation 1990 India. The country has two ACAs; the of Abuse of Authority Central Bureau of Investigation (CBI) estab- Maldives Anti-Corruption Board 1991 lished in April 1963, and the Central Vigi- Sri Lanka Commission to Investigate November 1994 lance Commission (CVC) formed in February Allegations of Bribery or 1964. The former was initially set up as part Corruption of the Ministry of Home Affairs but later Pakistan National Accountability Bureau November 1999 transferred to the Department of Personnel Thailand National Counter Corruption November 1999* Commission in the Cabinet Secretariat. As a police agency Macao (SAR), China Commission Against Corruption December 1999 of the central government it cannot investi- Republic of Korea Korea Independent Commission January 2002 gate corruption offences in the states without Against Corruption the consent of the state concerned. Unlike Indonesia Corruption Eradication December 2003 Singapore’s CPIB and Hong Kong’s ICAC, the Commission CBI is not independent of the police and does Bangladesh Anti-Corruption Commission August 2004 not focus entirely on corruption. Indeed, as a Afghanistan General Independent Adminis- 2004 police agency, the CBI has three major areas tration Against Corruption of operation: anti-corruption in the public Bhutan Office of the Anti-Corruption January 2006 Commission sector; economic crimes; and special crimes includ- Mongolia Independent Authority Against December 2006 10 ing organized crime and terrorism. The CVC, Corruption (IAAC) on the other hand, is free of control from any Note: * In Thailand, the 1997 constitution mandated the Government to executive authority. It is considered the main restructure the 1972 predecessor ‘Commissions for Prevention and anti-corruption agency in India, monitoring Counter Corruption in Civil Service’ into the NCCC with a new struc- and advising central government agencies. ture and authority. However, it plays a mainly supervisory role.11 Source: Based on Quah 2007a.

Malaysia. A series of anti-corruption efforts and the NBI was renamed the Anti- led in 1973 to the creation of the National Corruption Agency. The Anti-Corruption Act Bureau of Investigation (NBI). In May 1982, of 1997 amalgamated previous legislation and the Anti-Corruption Agency Act was passed provided for new offences and additional

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 109 powers for the Public Prosecutor and the impeachment by a two-thirds majority vote ACA.12 The three functions of the ACA are: in Parliament.18 The CIAA’s major function detection and investigation; communication is to investigate improper conduct or corrup- and education of the population; and tion offences by those holding public office. It monitoring and consultative services to also performs a preventive function through public agencies and the population.13 its role as an ombudsman – by recommend- ing corrective measures and educating the Papua New Guinea. When Papua New Guinea population.19 attained its independence in 1975, the Constitution provided the legal basis for the Republic of Korea. The Anti-Corruption Act Ombudsman Commission (OC) – an indepen- was passed in 2001 and the Korea Indepen- dent agency with funding from the national dent Commission Against Corruption budget. The OC’s function is to guard against (KICAC) was formed in 2002. Its functions the abuse of power by public officials, helping include policy making and coordination, them to do their jobs efficiently, while impos- monitoring corruption, protecting whistle- ing accountability.14 To deal with maladmi- blowers, encouraging civil society involve- nistration, the OC investigates many public ment, improving the legal framework and agencies, responds to complaints, makes promoting ethical values in society.20 Unlike referrals, questions decisions and considers the other ACAs, the KICAC cannot investi- defects in the law.15 gate corruption cases itself; it has to rely on the Board of Audit and Investigation and Philippines. In July 1979 a Presidential decree other agencies.21 established the Tanodbayan, or Office of the A government committed to curbing Ombudsman, though this proved ineffective corruption should demonstrate its political and in 1998 had to be ‘rejuvenated’.16 Other will by providing the ACA with adequate staff government agencies are also concerned with and funding and the ability to operate inde- anti-corruption work, but the Tanodbayan is pendently without political interference. In the main ACA. Its functions include investi- almost all countries in the region, the ACAs gation, prosecution, and disciplinary control are dependent upon government funding and over all elective and appointed officials, several face severe budgetary constraints. In except for members of the Congress, the judi- most cases the heads of the ACAs are ciary and impeachable officials. It also takes appointed by political leaders or by commit- responsibility for prevention by analysing tees that include politicians and generally anti-corruption measures and increasing report to the legislature or the parliament. public awareness and cooperation, while One of the first requiring officials and employees to give Independence. One of the first issues is where issues is where the assistance to the public.17 the ACA is located in government. If the agency ACA is located in reports to the office of the Prime Minister, for government Nepal. The Commission for the Investigation example, it can be used as a weapon against of Abuse of Authority (CIAA) was established political opponents. In the Asia-Pacific region, in 1990. It has five commissioners, appointed the experience has been mixed. Some govern- for six years by the King on the advice of the ments, such as those in Singapore and Hong Constitutional Council. To ensure their Kong (SAR), China, have resisted this temp- independence, they can only be removed by tation; others have not. Ideally the ACA

110 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT should be a completely independent body. TABLE 6.2 Where the ACA is not structurally indepen- APPOINTMENT OF CHIEF EXECUTIVE OF dent, its power is dependent on the strength SOME ACAS IN THE ASIA-PACIFIC REGION of its bureaucratic and political patrons, who Appointment head of the ACA depending on the environment, can be very Hong Kong (SAR), The Commissioner is appointed by the chief execu- powerful or very weak. In some cases, a com- China tive. The Commissioner has the power to appoint, bination of outside accountability and strong discipline and dismiss officers. political support from the press and the pub- Indonesia Indonesia’s Commission for the Eradication of Cor- lic can overcome the absence of formal guar- ruption (KPK) is appointed by Parliament from a list of candidates provided by the President. The list of antees of independence. The autonomy of the candidates is prepared by a selection committee ap- ACA can also be strengthened by ensuring pointed by the Government. that the selection and appointment of the Malaysia Director of ACA is appointed by the King on the executive(s) of the ACA is a shared responsi- advice of the Prime Minister from amongst members bility of several institutions (Table 6.2).22 of the civil service. ACAs in most countries do not require Republic of Korea In the Republic of Korea, the President appoints the chairman and the standing members of the Korea any formal complaint to investigate corrup- Independent Commission Against Corruption. The tion; some have the authority to both investi- President designates three members, while the Par- gate and prosecute; others also have the power liament and the Chief Justice of the Supreme Court to investigate corruption in the private also recommend three members each. sector. Singapore The Director of the CPIB is appointed by the Presi- dent on the recommendation of the cabinet. Another important issue is independence from the police. Some agencies do have this Source: Based on UNDP 2005. advantage, but others do not, so a corrupt police force may be free to investigate its own TABLE 6.3 members. One can also examine the records STAFF AND BUDGETS OF ANTI-CORRUPTION of these agencies in pursuing the ‘big fish’ or AGENCIES, 2005 senior officials. Again the record is mixed, Number Budget Per capita with some agencies doing very little to address of staff ($m) expenditure ($) corruption by the powerful. Staffing and Australia 110 14 2.00 budgets too can vary considerably, Macao’s Hong Kong (SAR), China 1,194 85 12.32 CAC, for instance, spends over $22 per capita India 4,711 30 0.28 of population23 compared with only $0.08 in Indonesia 305 18 0.08 Indonesia (Table 6.3).24 Macao (SAR), China 112 11 21.72 Philippines 957 12 0.15 Oversight, accountability and control. The Republic of Korea 205 18 0.37 ability of the ACA to work in an unbiased way Singapore 82 8 1.71 will depend on appropriate checks and Thailand 701 * 9 0.14 balances as well as constant scrutiny through various oversight mechanisms. Hong Kong’s Note: *2004 data as the 2005 data are not available. ICAC, for example, has its activities examined Sources: Central Bureau of Investigation 2006; Commission Against Corruption 2006; Davidsen et al. 2006; Independent Commission Against by four independent committees which Corruption (2006a; 2006b); Korean Independent Commission Against include representatives from civil society, in Corruption 2006; Office of the Ombidsman – Republic of the Philippines addition to an independent ICAC Complaints 2006; Office of the National Counter Corruption Commission 2006; Committee which receives, monitors and Republic of Singapore 2007.

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 111 Whether a country reviews all complaints against the Commis- though their agencies have neither the has chosen a single sion.25 Another way to enhance oversight is resources nor capacity to emulate Hong Kong or multi-agency to make the ACA accountable to more than (SAR), China. The most successful agencies approach, success one authority. Some countries have decided have a clear focus (Table 6.4). in the fight against to shift reporting lines from a single-person corruption depends institution such as the Prime Minister to the Coordination. Whether a country has chosen to a great extent on parliament, allowing various political parties a single or multi-agency approach, success in cooperative to scrutinize the activities of the ACA.26 the fight against corruption depends to a great relationships with other elements of extent on cooperative relationships with government Focus. The agency’s mandate needs to be prac- other elements of government. Unfortunately, tical and carefully focused. Many countries this is rarely the case, and it probably breaks propose the Hong Kong approach (prevention, down often even in cases where it has been investigation and education/awareness) achieved. As a result, agencies are regularly frustrated by their inability to secure infor- TABLE 6.4 mation, cooperation and prosecutions. In ANTI-CORRUPTION AGENCIES: SOME EXAMPLES OF FOCUS Indonesia, however, the KPK has been Focus charged with coordinating and supervising all Hong Kong The ICAC Ordinance requires the Commissioner to institutions involved in anti-corruption activi- (SAR), China investigate ‘any’ suspected corruption. The agency’s ties.27 Bhutan has established a national policy has been to take this literally, pursuing all Anti-Corruption Council to coordinate efforts corruption allegations without a priori selection cri- teria, although it is within the sole discretion of the of various stakeholders and plan and review Attorney General to decide which cases to prosecute. the effectiveness of anti-corruption policies. ICAC first focused on the public sector and only later started to focus its attention on the private sector. In 1974, 80% of the cases were from the public sector, Public Credibility today about 60% are from the private sector. ICAC has a comprehensive mandate. However, trials for Finally, how does an ACA ensure its credibi- minor cases are costly so there is a selection process lity among members of the public? The follow- that takes place at that level (if the offender admits then prosecution for minor cases, will be avoided). ing three aspects are important indicators: Indonesia Investigate, indict and prosecute corruption cases involving law enforcement officers, or government Consideration of all complaints. Does the executives that have drawn the attention of the public perceive that all complaints, no matter general public and/or involve loss to the state of at least 1 billion Rupiah. how small, will be followed up on? What proportion of complaints does it investigate? Malaysia Receive and consider any report of corrupt practices. Republic of Korea KICAC has no mandate to investigate. It refers all Does it investigate anonymous complaints? investigation to the Audit Office or the Prosecutor. If The Republic of Korea, for example, has a report regarding suspected corruption involves a penalized the disclosure of an informant’s high-ranking official then the case is directly referred identity or any information that would reveal to the Prosecutor. KICAC does not deal with the private sector. this to encourage citizens to come forward Singapore Also, Singapore’s CPIB has authority to investigate with their complaints.28 This goes hand in any crime that comes to light in its corruption inves- hand with laws to protect whistle-blowers. tigations – a power that most such agencies do not have. It investigates complaints on corruption in the public as well as the private sector. Public perceptions. Does the public believe that Note: At the time of publication $1 = IDR 9,300. the agency investigates effectively and does Source: Based on UNDP 2005. not abuse its powers? Does the public believe

112 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT that the ACA will keep their corruption re- Some of the other agencies have a lower ports confidential? Is it seen as incorruptible? reputation. This may partly be the result of under funding, however, in a number of Enforcement. Does the agency enforce the anti- cases agencies pursue political agendas, or corruption laws impartially, or does it their members themselves are not above concentrate on petty corruption and ignore corruption. grand corruption? Are the rich and powerful It should be stressed that an ACA is only protected from investigation and prosecution as effective as its incumbent govern- for corruption offences? How are complaints ment wants it to be. An ACA can only be against the agency’s own officers dealt with? independent, permanent, accountable, credi- Within ACAs of the Asia-Pacific region, ble and effective if it is supported by a the two strongest in this respect are those in government that is committed to eradicating Hong Kong (SAR), China and Singapore. In corruption. Any anti-corruption agency can Hong Kong, for instance, many complainants, be overpowered by a corrupt government or a rather than preferring to remain anonymous, crooked system. An ACA is also a double- An ACA is also a now identify themselves. Over the period edged sword and can be used by an incumbent double-edged sword from 2001 to 2006, the agency received government for good or dishonest purposes. and can be used by 24,000 complaints of which 83 per cent were ACAs are not therefore the best solution an incumbent pursuable. Meanwhile 2,751 people were for every country. What is needed first is a government for good or dishonest prosecuted of whom 83 per cent were con- clear analysis of the political and economic purposes victed and over 1,000 civil servants were situation, power-relationships and cultural disciplined.29 patterns. This may well conclude that the The CPIB in Singapore is less forthcom- right solution is an ACA. But it should not be ing with information on its operations. The designed or created until there is sufficient CPIB’s small staff complement of 82 persons political consensus on an anti-corruption compels it to focus on investigation of corrup- strategy and agreement on what the agency tion cases at the expense of the other func- will do to implement that strategy effectively. tions of prevention and education. Indeed, the If a government decides to establish an CPIB’s Achilles heel is its neglect of public ACA, it can enhance the prospects for success relations.30 It has, however, published by providing it with an adequate budget and opinion polls on corruption. In 2005, nearly sufficient staff, by not interfering in its daily 90 per cent of the respondents believed that operations and most importantly by resisting corruption was very much under control and the temptation to use it as a political weapon 86 per cent felt that in Singapore corruption against critics or opponents. In the hands of a control was better than in other countries. clean government, an ACA can be an asset According to the respondents, the low level of and a powerful weapon. could be attributed to the political will to keep corruption under Civil Service Reform control; the heavy punishment for corruption offences; and the effectiveness of the anti- Attempts to reduce corruption within govern- corruption law.31 The CPIB has convicted a ment will generally involve civil service series of high officials including, for example, reform – reducing the incentives and oppor- in 1995 the Deputy Chief Executive of the tunities for corrupt behaviour among public Public Utilities Board for accepting bribes servants while increasing the likelihood of from contractors.32 being caught and punished. For this purpose,

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 113 there can be four main strategies: merit-based most to reduce the gap between those in the personnel policies; better salaries; stronger public and private sectors. However, this is monitoring; less red tape; and a determina- likely to be expensive and governments may tion to catch the ‘big fish’. not be able to pay enough to compete with the levels of income from bribes. In any case, Merit-based Personnel Policies while this will reduce the motivation for petty corruption, it is unlikely to reduce grand The first prerequisite for a clean civil service corruption, which is caused less by need than is that candidates should be recruited and by greed. Non-cash benefits like recognition, promoted not on the basis of patronage but titles, training and exposure-visit opportuni- on that of fairness and merit. Some countries ties can also be useful incentives under in Asia had merit-based policies in the past appropriate circumstances. but have not maintained this tradition and make too many appointments on the basis of Closer Monitoring favouritism.33 Both the Philippines and Thailand, for example, have civil service Government will therefore need to supple- commissions to ensure that recruitment and ment salary increases and merit-based promo- promotion in their civil services are fair, tions with tighter systems of monitoring and though they still do not always ensure control that can detect corruption swiftly and Monitoring systems, appointments based entirely on merit.34 punish it severely. This should alter the must be carefully mindsets of civil servants so that they see corrupt designed if they are Better Civil Service Compensation activities not as ‘low-risk, high-reward’ but not to multiply as ‘high-risk, low reward’. Monitoring bureaucratic proce- Cash and non-cash benefits are both impor- systems, must however be carefully designed dures and ‘red tant part of compensation packages. The if they are not to multiply bureaucratic proce- tape’, which in Russian curse ‘May you live on your salary!’ dures and ‘red tape’, which in themselves themselves increase illustrates the universal importance of paying increase opportunities for corruption. opportunities for civil servants adequate salaries. Surveys in Governments should also publicize proven corruption many countries have identified low salaries cases of corruption among civil servants, since as an important factor responsible for corrup- the threat of ‘naming and shaming’ serves as tion among civil servants. In Indonesia, a a strong deterrent. The Chinese Government 2001 national survey – comprising 650 has been taking stern action. Gan Yisheng of public officials, 1,250 households and 400 the Party’s Central Commission for Discipline businesses – found that all three groups iden- and Inspection reported in May 2007 that it tified low salaries of civil servants as the most had sent a special team of inspectors across important cause of corruption.35 Similarly, in the country to question local party bureaus, surveys on corruption in five South Asian state-owned enterprises and banks. The team countries by Transparency International in also looked at conspicuous acts of corruption, 2001 and 2002 respondents identified the the buying and selling of government posi- low salary of employees in various sectors as tions, several dubious promotions and other a cause of corruption.36 acts of malfeasance. They uncovered around Adequate salaries are not just important $10 million in illicit payments and funds. After a for economic survival they also confer status month-long nationwide ‘discipline’ campaign, in society. So the most obvious response nearly 1,800 officials confessed to their involve- would be to raise salaries and first and fore- ment in hundreds of acts of misconduct.37

114 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Reducing Red Tape initially for graft and later for arranging the murder of the Supreme Court judge who had Corrupt civil servants love red tape. They see convicted him. Similarly, the Chinese Govern- it as a way of slowing down procedures and ment made a strong statement in 2007 by forcing users to join queues that can only be convicting Zheng Xiaoyu, former Commis- jumped by paying bribes. Governments may sioner of China’s State Food and Drug initially have devised these procedures to Administration for accepting more than build internal checks but the result is often $850,000 in bribes. counter-productive, so they could cut down India too has caught some senior officials. substantially on corruption by streamlining The Central Vigilance Board in its 2005 these procedures. This is particularly impor- Annual Report said that it had prosecuted tant regarding what in Indonesia has been various officials from the Central Board of 38 termed, the ‘wet’ departments. Compared Excise and Customs, including a commis- with the ‘dry’ departments, which do tradi- sioner and his senior staff. Other senior tional administrative work and have little officials too have been dismissed as a result contact with the public, the wet agencies deal of corruption include a commissioner of Delhi with many people outside the government and Police; a chief engineer of the Ministry of are typically concerned with money, planning, Railways; scientists from the Council of banking or public enterprises. They are also Scientific & Industrial Research; and a direc- usually generous with honoraria, allowances, tor of the Department of Health.40 service on committees and boards, and carry Such cases are few and far between. In many opportunities for foreign training. Fiji, for instance, one of the most notorious Some governments in the region have cases of corruption concerned the National made determined efforts to reduce red tape. Bank of Fiji, a case which started in 1995 but In 1998 the Republic of Korea established the has yet to produce any results. Similarly, a Regulatory Reform Committee which within more recent case in the Water & Sewerage a year had reduced administrative regulations Department of the Ministry of Works con- 39 by half. cerned payments to contractors caused losses of $9 million, resulting only in a $500 fine Catching and Punishing the ‘Big Fish’ and the transfer of a senior water engineer.41

In some countries corruption remains a Curbing Corruption in Taxation serious problem since senior officials short- circuit corruption investigations by appealing One of the most damaging forms of corrup- The acid test of to their protectors. The acid test of the politi- tion for government budgeting is in taxation. the political will of cal will of a government is therefore its deter- Much of this arises as a result of excessive a government is mination to investigate politicians and senior red tape which opens up opportunities for therefore its bureaucrats – and to punish offenders. interactions between taxpayers and tax offi- determination to Prosecuting the rich and famous enhances the cials. Nowadays one of the best ways of investigate credibility and efficacy of a government’s anti- reducing such interactions is through infor- politicians and corruption strategy and has the added advan- mation technology which cuts transaction senior bureaucrats – and to punish tage of deterring others, especially junior civil costs, increases transparency and builds offenders servants. One success in Indonesia was the trust. Technology also lowers the discretion- jailing of the son of a former president, ary powers of tax officials, thus squeezing

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 115 SPECIAL CONTRIBUTION – STRENGTHENING PUBLIC OVERSIGHT INSTITUTIONS IN BANGLADESH By Manzoor Hasan Even as Bangladesh has made impres- Although Bangladesh had shown Finally, driven by the top leadership sive achievements in economic and very little inclination to comply with of the Government, the process of social development, its success has been international standards on corruption, formulating a National Integrity Strat- marred by failures of governance. the interim Government that came to egy (NIS) is under way, with full imple- Partisan politics penetrated all aspects of power in January 2007 acceded to the mentation expected to begin at the end public life, a problem that resulted in the United Nations Convention Against of 2008. This will offer an overarching decline of public trust. For many years, Corruption (UNCAC), just one month vision for further development and the country was identified as one of the later. Crucially, 2007 also saw the long- implementation of good governance and most corrupt in the world. Ineffective overdue implementation of a 1999 legal anti-corruption reforms. Such a strategy formal controls and lack of citizen- judgment putting in place the necessary is expected to highlight the need for oriented anti-corruption accountability framework for an independent judiciary. public- and private-sector changes, mechanisms added to the crisis of inte- The process of operational separation of involve public awareness campaigns, grity. This called for a longer-term the judiciary from the executive and seek international cooperation. It change process with a strong reform commenced on 1 November 2007. This will be based on the premise that good regime that would sit at the core of the will gradually strengthen the overarch- governance is fostered by encouraging good governance agenda in Bangladesh. ing framework of checks and balances and facilitating a process of dialogue and Effective public accountability mecha- between the three branches of the State. building constituencies among key nisms and ongoing parliamentary over- Next, under new leadership, the participants, by creating demand within sight of Government activities are national Anti-Corruption Commission a wider rubric of public awareness. essential to promote democracy and (ACC) and related task forces under the Thus, the NIS will seek to strengthen economic development with a pro-poor National Coordination Committee are internal controls in State institutions focus. While formal accountability prosecuting a number of high-profile and will aim to induce a shift in culture mechanisms existed in the country, the individuals on serious charges of corrup- by encouraging the adoption of citizen- general perception, both in Bangladesh tion, abuse of power and criminal owned accountability mechanisms. and abroad, was that they were politi- activities. A number of such cases have All this is most welcome news cized, often cumbersome, ineffective and been successfully discharged, with inves- indeed. Ultimately, when reforms lacked credibility. Confrontational poli- tigations in progress for many others. have been successfully implemented, tics and a winner-take-all attitude had The reconstituted ACC is also formulat- Bangladesh will witness strengthened led to a political culture where the two ing its first strategic plan, which will institutions of accountability; stronger major political parties were constantly set out a longer-term vision for the citizens’ accountability mechanisms, at loggerheads, undermining the cred- ‘controlling, suppressing and preventing’ with effective participation of media ibility of the very institutions needed for of (Anti- and the private sector as partners; and good governance. Other institutions of Corruption Commission of Bangladesh, strengthened internal control measures integrity faced a paucity of political will 2007). In addition, the Government has across selected public sector agencies. to tackle their dysfunctionality. No pub- initiated a series of significant institu- Most importantly, it will have developed lic debate and consultations occurred on tional reform measures toward strength- an ethics- and value-based foundation the merits and demerits of proposed ening of the Election Commission, for its public service. public budgets. Dozens of national Public Service Commission (PSC), the reports on misuse of power, lack of pro- University Grants Commission and local Manzoor Hasan, a barrister by training, priety and corruption went unheeded. Government authorities. A new Chair is the Director of the Institute of Yet, beginning in 2007, there has and new members have been appointed Governance Studies, BRAC University. been cause for hope. For more than a to the PSC, in an effort to restore He was the founding Executive Director decade, I have kept a close eye on gover- that body’s image; in turn, they have of Transparency International Bangladesh nance issues and reform, and it is heart- undertaken modifications in the (1996–2003) and then the Regional ening to observe the growing political examination system to ensure that civil Director (Asia-Pacific) of TI in Berlin. disposition to move towards improving service recruitments are transparent He was also the Deputy Executive Director overall governance, including measures and fair. of BRAC. against corruption.

opportunities for corruption. Introducing in- erate enough to attract potential tax payers formation technology requires an integrated, and minimizing the list of tax exemptions.42 simple and rational system. Among other Reducing tax rates and providing other tax things, this will also mean keeping rates mod- incentives also encourages more businesses to

116 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT enter the formal economy. Evidence from 68 to expand the tax base, India adopted the countries shows that between 1982 and 1999 ‘one-in-six’: any person fulfilling one of six while the rate of taxation on profits fell from criteria must file a tax return irrespective of 46 per cent to 33 per cent, revenues from his or her level of income – a measure that taxation of profits rose from 2.1 per cent to significantly extended the tax net.46 2.4 per cent of the national income.43 Governments could furthermore make Governments wanting to reduce corrup- more use of taxes that are less susceptible to Governments tion in the tax system also need to reduce the corruption, such as value added taxes (VAT). wanting to reduce powers of individual officials. There are two However, an important issue for VAT is the corruption in the strategies for this. First, in countries where time it takes to issue refunds. While a long tax system also the same unit does assessment and adminis- delay may offer time for proper assessment, need to reduce the tration they could re-engineer tax depart- it also creates an incentive for bribing tax powers of ments to separate the two functions. Second, officials. Tax authorities must therefore individual officials they should not assign tax officials to any strike a balance between proper scrutiny and particular jurisdiction but give them tasks prompt refunds.47 randomly.44 Another way to dent the monopolistic Privatization power of tax officials is through competition. When the same task can be handled by In addition to reforming public services, multiple officials, a taxpayer who is asked for governments can also consider privatizing or a bribe can simply go to another. This kind of outsourcing some of them. This is often competition between officials can drive down suggested cure for corruption as well as their price – even to zero, as is the case in increasing transparency and efficiency. A many developed countries. Tax reforms also strengthened private sector may also serve as need to be accompanied by effective detection a check to a government’s exercise of power and enforcement, which should include when it acts independently to defend its imprisonment, large fines and confiscation of interests.48 illegally acquired assets – sanctions that must However, this assumes that the private be harsh enough to discourage corruption. sector itself will operate in an ethical fashion One more measure is to reduce the and that is likely to be less corrupt. This is number of ‘gatekeepers’ who can exert con- frequently not the case. Corruption, both trol over a particular activity. One option is ‘petty’ and ‘grand’, is also rife in the private to ensure that for each kind of economic sector. For example, in China in the first eight activity there is a ‘one-stop’ licensing and months of 2007 state prosecutors handled regulation authority. This strategy for 8,040 commercial bribery cases involving streamlining business licensing has been put more than one billion yuan ($140 million).49 into practice in many US states. India in 1999 An alternative to full privatization is a introduced a similar agency, the Foreign public-private partnership: the government Investment Implementation Authority. makes an arrangement with the private It would also be valuable to reform the sector to provide public infrastructure, taxation system. For example, in the early community facilities and related services – 1990s, as much as 81 per cent of potential with the partners sharing the investment, taxpayers in India were not captured by the risks, responsibility and rewards. When tax net.45 To rectify this situation and thus introduced for large-scale projects, however,

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 117 these have had mixed results; they seem to preferred to reveal information only when People are now have worked better on a smaller scale as part convenient or when it served their own starting to believe of local, grass roots actions. purposes. they have a right As yet, there is relatively little research In recent years, however, there has been a not just to good on the social impact of privatizing social major conceptual shift. People are now start- government but also services. Most investigations have focused on ing to believe they have a right not just to good to see how that economic efficiency rather than impact on re- government but also to see how that govern- government works distribution and the poor. It is clear that ment works and gain ready access to infor- and gain ready governments need to be concerned not just mation. For example, the process through access to with whether services should be privatized but which the Indian Right to Information Act information also how. They have to undertake focused was drafted and has come into force illus- measures to improve the chances that poor trates the power of sustained public pressure. households will benefit. If policy is weak Although the main human rights instru- before privatization, it will also be weak ments do not spell out this right explicitly, after privatization. Privatization is clearly international law supports the right to no substitute for a responsible policy of freedom of expression. That includes not only redistribution.50 the right to speak and write freely, but also to seek and receive information along with ideas. The Right to Information A number of countries have now started to enshrine this right in national legislation. In In the past, even democratically elected 1990, only 13 countries had right-to-informa- governments have operated as fairly closed tion (RTI) laws but by 2007 the number had systems, assuming paternalistically that poli- risen to 70.51 Among these are eight Asia- ticians and public officials knew best how to Pacific countries, including China and India govern and no-one else needed to know how (Table 6.5). Thus far, no Pacific Island they did it. They have therefore generally country has adopted such a law, although the matter has been debated extensively in Fiji. TABLE 6.5 However, in August 2006, Iosefa Maiava, the COUNTRIES IN ASIA AND THE PACIFIC WITH Deputy Secretary-General of the Pacific RIGHT-TO-INFORMATION LEGISLATION Islands Forum, called for appropriate 52 Countries with Official commitment to Sub-national legislation legislation. legislation adopt legislation Beyond national governments, there have Australia Cambodia China also been policies of information disclosure China Indonesia India from a number of intergovernmental organi- India Mongolia Indonesia zations. At the forefront, have been the inter- Japan Nepal Japan national financial institutions such as the Republic of Korea World Bank and regional development banks. New Zealand The World Bank, for example, adopted its Pakistan Policy on the Disclosure of Information in Thailand 1994. In 1997 UNDP also adopted a Public Notes: 1. The Philippines has an effective constitutional guarantee, as Information Disclosure Policy and UNESCO well as a requirement for public bodies to adopt openness measures. has made a commitment to do so. 2. One Malaysian state, Kelantan, has made an official commitment to adopt legislation. Most right to information laws have two main components: first, they establish key Sources: Banisar 2006; Mendel 2007. categories of information that all public

118 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT bodies are required to publish, proactively range of social programming are also and routinely; second, they establish the right published. It also requires local governments of citizens or institutions to request and to release a wide range of information on receive specific information. revenues, expenditures, special funds, land- use planning and subsidies, contracting, Proactive Publication allocations for emergencies and social relief.54 To be effective, this information must of To be effective, The more effective right to information laws course reach people. In Thailand, the 1997 information must specify information that must be disclosed on Official Information Act requires public reach people a proactive basis, including information that bodies to publish certain information in the will help expose corruption. In India, the official gazette and to make other informa- Right to Information Act requires public tion available for inspection.55 The Indian bodies to publish information on: law goes further – requiring that the informa- tion be disseminated widely and in a form • Procedures. Decision-making procedures, accessible to the public including, subject to including lines of accountability. cost limitations, in local languages.56 • Pay. The pay of all employees, along with Other countries outside the region have regulations regarding compensation. more extensive publication strategies. Mexico, • Budgets. The budget for each agency, for instance, requires the information be along with the particulars of all proposed available in electronic form, including through expenditures, and details of all disburse- a publicly accessible computer that has facili- ments. ties for printing.57 The United Kingdom, on • Subsidies. Details on subsidy programmes, the other hand, does not specify the informa- including amounts allocated and the ben- tion be published, but requires every public eficiaries. body to develop a publication scheme, setting • Concessions. The particulars of recipients out what it will publish and how much it will of concessions, grants or authorizations.53 charge – a scheme that has to be approved by the Information Commissioner.58 The In India, the Government proposed to advantage is that it allows for the amount of amend the RTI Act so as to exclude from it information to increase progressively over some administrative files and Cabinet papers. time as capacity increases. In 2006, however, following intense pressure from civil society organizations these plans Requests for Information were dropped. In China the ordinance on Openness of The second main component is the request Government Information also focuses on the procedure. This allows individuals and orga- publication of financial and development nizations investigating corruption to ask for information. It requires public bodies to precise information, which in principle disclose economic and social development should allow them access to just about every- plans, statistical information on national thing. In practice, however, they will find development and reports on fiscal budgeting their path blocked by long lists of ‘exceptions’. and final accounts. Fees charged for adminis- One of the main exceptions, rendering trative work, approvals, major building many documents off limits, is national works, policies on poverty alleviation and a security. Indeed in many countries the laws

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 119 totally exempt certain security or intelligence other pieces of legislation, allowing the public bodies supposedly on the grounds that such to find out. Some ways include disclosing the information would be beneficial to a potential salaries of senior public officials, using land enemy. Whether or not this is actually the registers to identify the owners of property case, it also denies citizens information on and inspecting the ownership structures of what is being paid and to whom. This is a publicly listed companies. major issue since in most countries’ defence In the Philippines, for instance, senior of- usually has one of the largest budgets, with a ficials are required by the Constitution to pub- considerable element of discretionary spend- licly file a declaration of their assets, liabili- ing and is thus highly susceptible to corrup- ties and net worth. This applies to the Presi- tion. There are, however, overrides around dent, Vice-President, officers of the armed this. India, for example, while generally forces with general or flag rank, and mem- excluding intelligence agencies, does allow for bers of the Cabinet, Congress, Supreme Court, the disclosure of relevant information Constitutional Commissions and other con- ‘pertaining to allegations of corruption or stitutional offices.63 In addition, national leg- human rights violations’.59 islation requires all public officials to file a Governments may also be reticent about publicly accessible statement of assets, liabili- publishing details of internal decision-mak- ties and net worth, along with a disclosure of ing. They may believe that if the minutes of business interests and financial connec- all discussions could surface subsequently in tions.64 newspapers, politicians and public officials would be less willing to express their Encouraging Access opinions frankly. Unfortunately, they usually overreact to this possibility by drafting the Legislation is, however, only the first step. exception in unduly broad terms. Under the The highest levels of government also have to Japanese law, access to information may be sustain their support and public officials have refused on the grounds that it would un- to engage positively and meet their obligations necessarily cause ‘confusion’.60 The Thai law fulsomely. This requires some fundamental similarly excludes all internal opinions and reforms. For many government bureau- advice, although this does not cover technical cracies, this will involve considerable rethink- or factual background material.61 ing since they have typically been engineered Since these exceptions could readily be for the purpose of not sharing information. used to hide corrupt activity it is important Without adequate preparation, they can that the legislation also includes the possibi- therefore find themselves inundated with One way to lity of overrides. Both the Indian and petitions to which they are unable to respond, promote positive Japanese laws allow public bodies to override leading to long delays. participation is to exceptions when this is judged to be in the One way to promote positive participa- ensure that officials overall public interest, which is often the case tion is to ensure that officials are engaged from are engaged from when the information relates to corruption.62 the outset. They need to be involved in all the outset debates on the right to information and have Other Disclosure Legislation the opportunity not just to understand the obligations but also to appreciate the benefits Outside of general right to information laws, they can derive. Initially officials can feel most countries include disclosure rules in threatened, but their nervousness usually

120 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT SPECIAL CONTRIBUTION – SOLUTIONS FOR PREVENTING AND CURBING CORRUPTION IN CHINA By Prof. Zengke He Corruption in China has undermined making processes more inclusive and enforcing laws against corruption, while Chinese citizens’ trust in the Govern- participatory for various stakeholders. corruption in the judiciary will destroy ment and their support for it. Corrup- The main function of public policies and public confidence in governments’ tion has weakened China’s international laws is to redistribute social resources efforts to combat corruption. This is competitiveness and reputation, and and justice, influencing various social because the judiciary is often said to be deprived its citizens’ of opportunities to groups. If there is no legal way to the last gatekeeper of justice. If it is enjoy a better life, especially among the influence these processes, the rich will susceptible to interference by the admin- poor. then try to influence policy processes istrative branch or other political In order to prevent and combat by bribes, and the poor will be pressure, it would not be able to act as corruption more effectively, it is my marginalized, having no say in the an independent third party to make fair view that China has to make greater decisions and laws that will affect their judgment on governments’ decisions improvements in the following areas: life. The Chinese Government should and provide legal remedies for citizens continue to broaden its engagement when their rights and interests are Firstly, there is a need for China to with citizens, civil society organizations unlawfully infringed upon by the admin- make its Government more accountable (CSOs), and the private sector through istrative branch. Given the key role of to the people by introducing open and public hearings, public consultations via the judiciary, the professional standards competitive elections into its political the media, the internet and round-table of judges are of great importance. With- system at various levels. Open and discussions, etc. Currently, there are many out high professional standards, the competitive elections can empower the pilots of public hearings about govern- quality of judicial decisions cannot be people and enable them to choose among ment decisions and consultations on leg- guaranteed. In order to improve the different political elites. As shown in islation which are organized on an ad independence and professionalism of the other countries in the world, where hoc basis. It is now time to move to sys- judiciary and prosecution services, there are alternatives for the people to tematic and standardized arrangements. reforms should be carried out on such choose, the political establishment would The fourth aspect is to make public systems as selection and appointment have stronger motivation to act in the affairs and processes more transparent. of judges and prosecutors, financing best interests of its constituencies. Access to government information by courts and prosecution services, higher Secondly, the media should be made citizens is a precondition for citizens to remuneration schemes for judges and more independent from the control and know how the government works. The secure tenure for judges, etc. interferences of certain government right to public information is also a The sixth area is to continue public officials. In developed countries, the basic right of citizens enshrined in the administration reform by making media is considered the fourth ‘public Chinese State Constitution. Trans- government regulations less and better power’ besides the legislature, executive parency in government affairs is one of and public services more efficient and and judiciary, playing a vital role of the most effective ways to prevent transparent. Complicated administrative checks and balances on the decisions corruption. Access to information laws, regulations often create a lot of red and actions of governments and public standards and mechanisms allow the tapes and thus give rise to more oppor- officials. There are numerous cases public to access government information tunities for bribery taking and giving. where journalists from the private news easily and set up remedies for citizens In the past three decades, China has media are engaged in investigative to hold governments and officials introduced several rounds of public reporting. Corruption is uncovered and accountable for failing to meet such administration reforms in response to publicized, ruining the reputation of standards. Among these, e-governance is the needs of the emerging market- corrupt officials and bribers. Some proven an efficient, low-cost way to oriented economy. As China continues corruption scandals have caused such make government information accessible its socio-economic reforms and reorients great public outrage to force the govern- and transparent. Transparency in its development policy towards balanced ments to take systematic measures to government affairs can also overcome development with greater equity, what tackle corruption. There are many good the culture of secrecy within bureaucra- China needs to do is to launch a new lessons for China from other countries, cies to expose the administrative round of administrative reform to when it is mobilizing social forces to processes to greater public scrutiny. further streamline its administrative rein in corruption. A freer and more robust The fifth area where China should regulations and improve public service media can become a powerful ally of the look into in order to fight corruption is delivery. Better regulations mean that government to cope with corruption. independence and professionalism of the the regulations should be simple, clear, Thirdly, it is necessary for China to judiciary. An independent and fair coherent, consistent and enforceable. make the law-making and policy- judicial system can play a key role in Relevant regulatory bodies should be

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CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 121 Contd...

made more independent and professional be abided by if officials and business tions on civil society organizations with so that they can perform in a transpar- leaders participate in the codification of regards to registration, donation, tax, ent and effective way and are subject to rules and make their voices heard. etc., encouraging CSOs to criticize the public scrutiny. Meanwhile, professional ethics could be wrongdoings of government officials. Seventh, there is a need to streng- effective if they are tied with the career The tenth and final area is to make then the institutions of external audi- development of civil servants. Similarly, it easier for the victims of corruption tors. External auditing on government business ethics, including corporate and whistle-blowers to report corruption bodies and public institutions is a very social responsibilities (CSRs) could be cases. Legal reform is needed to make powerful mechanism to reveal corrup- made more effective if the compliance the victims of commercial bribes seek tion and deter public officials from with standards positively influence the legal remedies and get compensation in corruption. The Chinese Government reputation and profit of the relevant a less costly and time consuming way. needs to strengthen the institutions of corporations, and vice versa. Whistle-blowers should be protected by external auditors, make external audits The ninth area is to create a more the law for their personal safety and more regular, publish the audit reports favourable policy and regulatory career development. Confidential and and take strong and prompt measures environment for civil society organiza- rigorous complaint procedure to deal against those officials who are found to tions. A strong and active civil society is with various complaints should be put be corrupt. a forceful check and balances on state in place. There is also a need to find The eighth area of anti-corruption power. The watchdog role of civil ways to protect reporters who engage measures is to breed professional and society on the potential abuse of state in objective investigative reporting. business ethics via a process of consen- power cannot be replaced by any other sus building. There are no perfect laws, government supervision bodies. Making Prof. Zengke He, Executive Director, China and law enforcement is both costly and civil society independent from the state Center for Comparative Politics & time-consuming. Therefore, it makes is the first step for the development of Economics. His main publications are sense to raise the ethical standard of civil society organizations (CSOs). The ‘Contemporary Chinese Politics’ and ‘New civil servants and businessmen through Government needs to improve the legal Path to Combating Corruption: Study on education and training. Codes of conduct and policy environment for civil society the Issue of Corruption in Transitional and ethical standards are more likely to development, reduce the current restric- China’.

subsides when they find that the feared officials. The very poor are therefore most consequences do not materialize. One way to likely to benefit via the activities of NGOs or overcome their concerns is to provide them other institutions of civil society. with training where they can learn about the Unfortunately, even NGOs do not always processes alongside the representatives of civil use their rights. Those that do so most society who are likely to be asking for infor- actively are generally those that were involved mation. in the struggle to obtain a right-to-informa- While the information is in principle tion law, since they are committed to making available to all, in practice it tends to be it deliver the desired benefits. NGOs are also accessed more by the wealthy and higher more likely to exercise their rights if they are The very poor educated. The very poor rarely exercise their pursuing a specific objective such as deliver- rarely exercise their rights fully. They may be able to take advan- ing basic entitlements to the poor. rights fully tage of information that is disclosed automati- There is also potential for abuse. Some cally, in the media for example, but they are people will use RTI to pursue personal less likely to request information themselves agendas. Civil servants, for example, some- – hindered perhaps by unfamiliarity with the times file RTI cases against colleagues who processes, illiteracy, cost, the time needed, the have been promoted over them or for other difficulty of making a request or simply personal reasons. These and other requests, because they fear, or do not trust public counter to the spirit of the right to

122 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT information, can absorb much of the time of share with citizens a large amount of infor- RTI focal points and reduce their capacity to mation related to corruption. The CVC respond to genuine cases. website has published the names of officers Overall it is probably too soon to judge from the elite administrative and revenue ser- whether RTI legislation has worked. India has vices against whom corruption investigations had some success but in the seven other Asian have been ordered or on whom penalties have countries it is too soon to say. They have only been imposed. While promoting transparency had their laws for a short time; indeed and accountability, this also serves as a China’s legislation does not even come into preventive tool. Any citizen can lodge a force until May 2008. In any case, access to complaint. Although the complaints cannot information is only one factor impacting on be anonymous the Commission has to ensure corruption; so it may be difficult to identify a that the identity of the complainant remains specific outcome of RTI processes. secret.66 The Commission scrutinizes the information and then as appropriate passes e-Governance the information on to the Central Bureau of Investigation or the Income Tax authorities. Developments that facilitate transparency Some public authorities are also using entail the development of right to informa- ICT to minimize corruption applications for tion communications technology (ICT) and licences and other permits. In 1999, the Seoul the extension of e-governance. But there are Metropolitan Government, for example, dangers in this. Governments may use new launched an Online Procedure Enhancement Governments may technology to make their activities more for Civil Applications (OPEN) covering 54 use new technology transparent but they can also misuse it to common procedures. By March 2001, close to make their exercise greater control over the lives of their to 1.5 million people had visited the website activities more citizens. Corrupt officials too may also be able and there had been 39,000 civil applications. transparent but they to exploit such systems to their own The OPEN system has made the administra- can also misuse it advantage. tion much more transparent, as those officials to exercise greater Nevertheless, governments and service responsible for corruption-prone areas, such control over the lives of their providers can use new technology to become as permit or approval procedures, now have citizens more accountable and responsive. India, for to upload reports and documents to enable example, in 1998 introduced ICT in court citizens to monitor the progress of their management and reduced the huge backlog in applications.67 the Supreme Court. This has now encouraged Another process that can benefit greatly the government to formulate a five-year plan from computerization is land registration. In to computerize all 2,500 court complexes and India, farmers who need a bank loan are provide laptops to over 15,000 judicial func- usually required to show a copy of the Record tionaries. There are also plans to create a of Rights, Tenancy and Crops. For this they database of new and pending cases and to often have to rely on the digitize the law libraries and court archives – whose records are not open to public all of which can help combat corruption in scrutiny. Their activities take anywhere the judiciary.65 between 3 and 30 days, depending upon the In an effort to propagate the idea of zero importance of the record for the farmer, along tolerance for corruption, India’s Central with a bribe, which could range from $2 to Vigilance Commission (CVC) has begun to $50, or up to $250 if the record has to

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 123 include additional dubious details.68 In the countries more vulnerable to corruption than State of Karnataka this process has been ever. There is probably an element of truth in transformed by the arrival of the Bhoomi both propositions, but it seems clear that project which has computerized the records countering corruption will need determined and opened them for public examination. action by governments, international agencies This has now been extended to other states. and international corporations working Computerizing a ICT is not in itself a solution. Compute- together. corrupt system will rizing a corrupt system will make the situa- The most important step forward in make the situation tion even worse, since those engaging in international cooperation has been the United even worse public sector corruption can take advantage Nations Convention Against Corruption of advanced technologies and porous interna- (UNCAC). Entered into force in December tional borders to move their funds around. 2005, this is the first global legal instrument If governments are to minimize these designed to achieve far-reaching reforms to risks they must design their systems to combat corruption. It also presents for signa- counter corruption. Many governments tories important anti-corruption mecha- have placed the development of national nisms, including public-sector reform, the e-government plans in the hands of IT staff right to information, extradition laws, anti- in ministries. While they may be able to money laundering laws, corporate social make the technology work, they are unlikely responsibility, strengthening the indepen- to know enough about corruption. They dence of anti-corruption agencies and ethical need to work therefore with legal and anti- codes of conduct for civil servants. corruption experts. Table 6.6 shows the regional pattern of E-governance needs to develop on a support of the Convention. Within the Group continuous basis and also to be guided by the of 8 industrialized nations, all are signatories. priorities of citizens. The opportunities for However only five have ratified (Canada, such involvement are likely to expand in the France, Russia, the United Kingdom and the years ahead. Second-generation telecentres, United States), meaning those that have only combined with the increasing power of signed the Convention are not willing to be mobile devices can enable citizens to partici- legally bound by it. Most Asia-Pacific coun- pate in governance not just once in five years tries that have signed the convention have through the ballot box, but on a daily basis abstained from being bound by paragraph 3 through their interaction with honest and of Article 66, which deals with ‘Settlement of responsive administrations. Disputes’ between state parties, with possible deference to the International Court of Cross-Border Cooperation Justice if a deadlock occurs. Other parties have abstained from this paragraph includ- In an increasingly integrated global economy, ing the United States, South Africa and the corruption too has become a cross-border European Union. issue. Some argue that globalization will have In addition to UNCAC, countries in Asia a positive effect on corruption and that open- and the Pacific are signatories to a number of ing up national processes to international other relevant international treaties. The only scrutiny and the pressures of a free market regional agreement for Asia-Pacific is the should make them more transparent. Others ADB/OECD Regional Anti-Corruption claim that deregulation of markets in the Action Plan (Box 6.1). The Pacific Plan, was South has in many ways made developing endorsed in October of 2005 by all member

124 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT states of the Pacific Island Forum. The Plan is TABLE 6.6 a central tool in the fight against corruption A REGIONAL SNAPSHOT OF THE UNCAC in the region (Box 6.2). The Plan endorses a Developing countries Number Number ratified, regional anti-corruption strategy which seeks by region who have signatories acceded, approved, to strengthen legislation and other measures ratified the UNCAC* accepted succeeded in many Pacific Island countries as well as Latin America, Caribbean** 26/38 (68%) 25/38 (66%) create regional anti-corruption institutions Eastern Europe & CIS 22/29 (76%) 21/29 (72%) such as a regional Ombudsman and an Audit Africa 33/44 (75%) 28/44 (64%) Arab States 15/18 (83%) 10/18 (56%) and Customs Office. Asia Pacific*** 19/35 (54%) 10/35 (29%) In addition, across the region there are 69 * based on UNDP programme countries over 70 bilateral treaties, specifying legal ** Including the overseas dependencies of Turks & Caicos, British surrender by one country to another of an Virgin Islands, Montserrat, Aruba and Netherlands Antilles which individual accused or convicted of an offence are all UNDP programme countries and agreeing on procedures gathering evidence *** The Cook Islands are in ‘free association’ with New Zealand and can independently sign up to UN conventions whereas Niue and for use in criminal cases, transferring crimi- Tokelau, while UNDP programme countries, have their foreign nal proceedings to another state or carrying affairs represented fully by New Zealand and are therefore not out foreign criminal sentences. Some of included. the agreements also cover mechanisms for Source: United Nations Office on Drugs and Crime. n.d. recovering corrupt funds and assets. in the region, but they have also been involved Controlling Transnational Corporations in dishonest and illegal practices, in some cases colluding with corrupt leaders, particu- Transnational enterprises have made an larly in the extraction of natural resources important contribution to economic growth and in pharmaceuticals.

BOX 6.1 ADB/OECD ANTI-CORRUPTION INITIATIVE FOR ASIA-PACIFIC

The ADB/OECD Anti-Corruption Initiative for Asia-Pacific nism, the Initiative has contributed to the fostering of anti- was launched in 1999 and supports its 28 member countries corruption reforms. Its role in supporting the implementation and economies in strengthening anti-corruption policies and of the UN Convention Against Corruption and other key anti- frameworks. The process is driven by the commitment of its corruption instruments is recognized by governments, inter- members to the goals, standards and implementation mecha- national and donor organizations, civil society and the private nism laid out in the Anti-Corruption Action Plan for Asia-Pacific. sector. The Action Plan sets standards for member governments The 28 member countries and economies that endorsed the in four areas: effective and transparent systems for public Anti-Corruption Plan and were members of the Initiative at service; anti-bribery actions, promoting integrity in business, the time of publication are: Australia, Bangladesh, Bhutan, and public involvement in the fight against corruption. These Cambodia, China, Cook Islands, Fiji Islands, Hong Kong areas reflect the range of issues covered by the UN Conven- (SAR), China, India, Indonesia, Japan, Republic of tion Against Corruption as well as other relevant interna- , Republic of Korea, Kyrgyz Republic, Macao tional instruments such as the OECD Anti-Bribery Conven- (SAR), China, Malaysia, Mongolia, Nepal, Pakistan, Republic tion. of Palau, Papua New Guinea, the Philippines, Samoa, A set of mechanisms supports the implementation of the Singapore, Sri Lanka, Thailand, Vanuatu, and Viet Nam. Action Plan by the Initiative’s member governments. These Membership in the Initiative is open to any economy mechanisms include the facilitation of regional policy dialogue within the Asia-Pacific region that recognizes the need and measurement of progress in anti-corruption reform; for action against corruption. Those members undertake provision and dissemination of good practices to support the corresponding action and commit to the standards of the regional dialogue; capacity building, as well as the facilitation Action Plan as well as to the implementation mechanisms. of partnerships with relevant constituencies in and beyond the Asia-Pacific region, such as UNDP. Source: ADB/OECD Anti Corruption Initiative for Asia- Through this unique implementation and review mecha- Pacific. n.d.

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 125 BOX 6.2 THE PACIFIC PLAN’S STRATEGY TO FIGHT CORRUPTION

The Pacific Plan is a regional agreement endorsed in October initiatives there are comprehensive frameworks for monitor- 2005 by the member states of the Pacific Island Forum – ing and evaluation involving a variety of stakeholders from Australia, Cook Islands, Federated States of Micronesia, Fiji, governments to civil society, led by the Pacific Plan Action Kiribati, Republic of Marshall Islands, Nauru, New Zealand, Committee. Importantly, many of these new governance struc- Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, tures will explicitly include issues pertaining to resource man- Tonga, Tuvalu and Vanuatu. Tokelau and Timor-Leste agement, perceived in the Pacific as an extremely ‘wet’ sector currently have ‘observer status’. for corruption. Underscoring all these reforms is the harmoni- The Pacific Plan contains robust initiatives to fight corrup- zation of traditional and introduced governance systems; tion. In its first implementation phase (2006 to 2008), these corruption is said to occur in the grey area between the two. include: setting up regional ombudsman and audit offices, Since many Pacific Island countries are very small and have establishing a regional customs revenue service, leadership limited capacity, rather than having national anti-corruption and accountability codes of conduct, setting up independent agencies, there could be a regional body to respond to the regional anti-corruption agencies, increasing the statistical special needs of such countries and promote effective capacity of the region on governance indicators, strengthen- economic integration and collective security. ing the judiciary through stronger departments of attorney general with judicial training and education. Along with these Source: Pacific Islands Forum Secretariat. n.d.

All would claim to be acting responsibly While many TNCs have developed their and contributing to prosperity and the deve- own codes of conduct, a number of interna- lopment of sustainable markets in the tional agencies and civil society organizations countries in which they operate. In practice, have also set up guidelines to encourage TNC however, they tend to operate more responsi- commitment to a corruption-free business bly in developed countries where they are environment. One of the most important mea- In the past, many usually under closer scrutiny. In the past, sures is the OECD Convention on Combating companies which many companies which would not dream of Bribery of Foreign Public Officials in Interna- would not dream of bribing officials in their own countries have tional Business Transactions – further deve- bribing officials in seen nothing wrong with bribery when loped at the global level by the United Nations their own countries operating abroad. However, this practice has Convention Against Corruption. have seen nothing become increasingly unacceptable and there This has spurred other international wrong with bribery have been initiatives to make the private initiatives such as the UN’s Global Compact when operating sector commit to a more transparent and framework. The latter is a voluntary initia- abroad honest global business environment. tive for businesses which are committed to Some companies, following a number of aligning their operations and strategies with corporate corruption scandals, and recogniz- ten universally accepted principles in the ing the public relations value of a clean image, areas of human rights, labour, the environ- have been developing comprehensive codes of ment and corruption. Principle 10 reads: conduct, conducting anti-corruption training ‘Businesses should work against corruption and establishing internal control systems. in all its forms, including extortion and Others have been less scrupulous. In Hong bribery.’ The Global Compact has so far en- Kong (SAR), China a survey in 2006 found listed over 2,900 businesses in 100 countries that 76 per cent of international companies to promote socially responsible policies in the believed that they had failed to win new busi- anti-corruption area.71 ness in the previous five years because a com- Civil society organizations have also been petitor had paid a bribe.70 very active in creating awareness of TNC

126 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT activities, exposing their misdeeds and lobby- these attract funds from depositors who have ing for legislation and initiatives to hold them acquired them illegally. Dirty money associ- accountable for their activities overseas. One ated with bribes received by public officials example is Transparency International’s from developing and transition countries and ‘Business Principles for Countering Bribery’ hidden in tax havens has been estimated at – developed in partnership with companies, $20 to $40 billion per year.73 A UNODC/ academia, trade unions and non-governmen- World Bank report says that offshore financ- tal bodies. International financial institutions ing is thought to have provided a shelter for such as the World Bank are beginning to take more than $600 million in misappropriated on an anti-corruption regulatory role when funds by former Philippines President their own financing is involved, by investigat- Ferdinand Marcos.74 ing and sanctioning companies. Globally, tax havens or harmful preferen- tial tax regimes have facilitated potential for Tax Havens and Money Laundering cross-border corruption. While many of them are promoted and protected by developed For developing countries, one of the main countries, Asia-Pacific is also home to a sub- problems in prosecuting and punishing stantial number. Major ones identified world- corrupt officials and businesses is that the wide in 2000 were 71 in number, including The proceeds of proceeds of corruption are laundered through 21 from OECD member countries and 13 corruption are offshore banks and held in secret accounts in from the Asia Pacific; in 2007 these have laundered through tax havens, concealing the dishonest and come down to 39 overall of which one is offshore banks and illegally obtained money and making it hard among the OECD members and 6 are in Asia held in secret to track down assets looted by corrupt Pacific, the later being all islands.75 In accounts in tax leaders. Singapore, foreigners have been allowed to havens A number of NGOs, like the Tax Justice acquire residency through investment. A Network, have lobbied to bring these issues to study, noted that in 2006, roughly “18,000 the discussion table, and governments and ‘high-net-worth individuals’ of Indonesian international development agencies are now origin resided in Singapore and held approxi- starting to respond. In 1989, for example, the mately US$ 87 billion in financial wealth”.76 G7 founded a Financial Action Task Force on Indonesian Government officials have been Money Laundering (FATF) which has listed critical of the lack of cooperation from their 40 anti-money laundering measures that have Singaporean counterparts when it comes to been accepted internationally as policy bench- anti-money laundering and extradition of marks. The members of FATF in Asia and fugitives. Singapore’s Prevention of Money the Pacific are Australia, China, Japan and Laundering Act of 2002 ensures robust inter- Singapore,72 which have committed to nal regulations, partly through the inclusion undergo the required mutual evaluation to of the ‘Know Your Customer’ initiative which assess the extent of implementation of the 40 requires financial institutions to report recommendations. Other countries in the suspicious transactions to the authorities. region that are not FATF members have also However, currently the scheme only applies been evaluated through an associate of FATF: to transactions linked to serious crime or the Asia-Pacific Group on Money Laundering. terrorism. Revenues derived from illegal Much laundered money ends up in tax logging or other environmental crimes appear havens. Levying minimal taxes, or none at all, to fall outside its scope.77

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOP 127 Tax havens are an issue that has to be As a part of the initiative, UNODC and addressed through global cooperation. There the World Bank appealed for all countries to is little point in closing down existing tax ratify and implement the UN Convention havens if they are replaced by new ones. Against Corruption (UNCAC), which only As a response to this, and to help five of the Group of Eight developed countries developing nations recover assets stolen by have done. Among the countries earlier seen corrupt leaders, UNODC and the World Bank as tax havens in Asia-Pacific, the Maldives in 2007 launched the Stolen Asset Recovery acceded to UNCAC in March 2007. China (StAR) initiative. This will give developing ratified in January 2006; the agreement will countries financial and technical assistance to be applicable also for Macao and Hong Kong. strengthen their institutional capacity to Singapore is a signatory to UNCAC but has retrieve stolen funds and invest them in yet to ratify the agreement. development programmes – and to monitor their use to ensure that they are not stolen a Governments Taking the Lead second time. It will also help countries bring their laws into compliance with the UN Corruption is such an insidious and pervasive Convention Against Corruption. phenomenon that it has to be tackled at many StAR emphasizes the need for developed levels simultaneously. But one thing is clear – and developing countries to work in tandem. governments have to set an example and take While such money frequently originates in the lead. They need take a determined stand, Corruption is such developing countries, much of it is being enacting the necessary legislation, launching an insidious and hidden in developed countries. Developing effective institutions to investigate corruption pervasive countries need to strengthen their public and root it out. A number of governments phenomenon that it institutions; at the same time developed have put together some of the required has to be tackled at countries must demonstrate stronger political ingredients: anti-corruption agencies, right to many levels will and carry out the necessary legal reforms information legislation, e-governance and simultaneously backed up with consistent investigation.78 By greater international cooperation, but most the end of 2007, Switzerland, one country still have a long way to go. However action known for its secretive banks, had signed on from the top is only a part of the picture. to the StAR initiative, hopefully making it This needs to be reinforced by pressure increasingly difficulty for corrupt money to from below, which is the subject of the find a safe hiding place. next chapter.

128 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT

Corruption is injustice, silence is consent.

SLOGAN AT A PUBLIC HEARING, INDIA

For devil’s sake, don’t give bribes.

MOTHER TERESA Citizens on Watch 77 Chapter

Tackling corruption is not a job for governments alone. Civil society must play its part – by monitoring and reporting on standards of government and also by refusing to pay bribes or collude with corrupt officials. Individuals, civil society organizations and the media all need to stay alert, demanding the highest ethical standards and resolving to reject corruption wherever it appears.

Corruption is often seen as an inevitable fact There have also been high-profile cases in of life in countries where systems of India. In 2001, for example, journalists from governance are still developing, government the website tehelka.com wrote about large- controls are weak and ill-paid civil servants scale corruption in defence procurement. This can be expected to try to supplement their eventually led to the resignation of the defence pay. Across the region many individuals and minister. Posing as representatives of a large Across the region groups are increasingly becoming less military supplier, journalists approached many individuals tolerant of corruption and the damage that it leaders of the ruling party and members of and groups are causes, and are taking direct action. the army’s top brass, showing that they were increasingly willing to accept bribes in the billions of becoming less tolerant of The Power of the Media rupees. This demonstrated what people had corruption and the long suspected: that defence and army damage that it One of the principal watch groups monitor- officials were skimming huge amounts from causes, and are ing and exposing corruption is the media – military contracts. This exposé shook the taking direct action press, radio, TV and increasingly the Indian political and defence establishments. internet. They can serve many important The tehelka.com journalists suffered some functions, beyond just exposing corruption. harassment and their website was forced to The media can sustain an open and trans- shut down, but they have now reappeared parent flow of information, fostering a producing a high-quality weekly paper.1 climate of opinion that is increasingly Journalists in China too have exposed intolerant of corruption. low- and mid-level corruption, contributing to The most dramatic cases of media inter- the removal of local officials from office, vention occur when investigative journalists often with the tacit endorsement of higher expose cases of grand corruption – leading to government officials. In 2005, for example, prosecution, or at least the resignation of Xinhua (the official news agency) publicized high-profile offenders. This has been seen the results of a government audit showing in many Asia-Pacific countries. In the that $1 billion meant for infrastructure Philippines, for example, investigative report- projects and public compensation in the poor, ing provided evidence that led to the impeach- north-western province of Gansu had been ment of political leaders. The investigations diverted or embezzled. More than 40 officers brought out instances of tax kickbacks and were caught, including a vice-mayor of an bribes. eastern city who was jailed for taking bribes.2

CHAPTER 7: CITIZENS ON WATCH 131 The Party eventually launched an investi- was revised, increasing the controls on indi- gation of the erring officials, with media vidual contributions. If any campaign worker publicity providing legitimacy and generating is found to have broken the rules, the election public support for the probe. Such tacit result can be overturned.5 Similarly, in the endorsement of exposés of corruption has Republic of Korea, the Government of encouraged ground-breaking journalistic President Kim Dae Jung, in 1999, responded investigations. In 2002, a journalist probed to a popular clamour for election reforms by corruption in the securities market in imposing ceilings on contributions to political Lanzhou – the capital of Gansu. His reports parties by individuals and companies and resulted in the closure of over 400 illegal establishing annual subsidies for political companies by the government. But the jour- parties.6 nalist also received death threats as a result, including one from a businessman whose Exposure on the Internet illegal practices he exposed. Gansu officials banned his reports, saying these contributed Those with vital information on corruption to instability in the province, prompting him can now use the internet, regardless of how eventually to move to .3 constrained the press is. During the 2000 Press publicity can be particularly effec- election campaign in the Republic of Korea a tive against two especially pernicious types of coalition of 600 grass roots organizations had corruption. The first is extortive corruption found that 15 per cent of the candidates for in which a government official demands a parliament had serious criminal records and bribe to provide a service. Victims tend to many others were guilty of tax evasion or report this type of corruption to the press. dodging the draft. They published the names The second type of corruption that the press of blacklisted candidates on a website. The can expose is collusion between bureaucrats website got 1.1 million hits on election day and their clients. In this case, neither has any and of 86 blacklisted candidates, 58 lost.7 incentive to expose malfeasance, but journa- Why did the newspapers not take the initia- lists do, motivated either by their professional tive? For three decades the country was in the ethos or the prospect of a good story.4 grip of dictatorship and despite today’s As well as As well as exposing individual cases, democracy, the mainstream media are exposing individual investigative exposure can lead to more generally timid.8 In this case, the web served cases, investigative profound reforms. The uncovering of serious as a virtual ‘town square’ where people could exposure can lead systemic flaws can catalyse public discussion discuss and debate, forcing the traditional to more profound and debate, ultimately leading to an overhaul media to follow suit. reforms of structures and systems. In many democra- Similarly, in China, blogs, of which there cies the exposure of corruption in electoral were as many as 33 million by the end of fund-raising, for example, has generated 2006,9 have led to a rise in public discussion lively public discussions and in some cases on corruption. One blog by an independent has led to greater restrictions on campaign journalist has exposed corruption, including finance. In Japan, for instance, scandals the case of a local official who stole linked to campaign contributions in the $400,000.10 1990s led to new laws designed to limit the In the Philippines, in the heat of the mass influence of corporate money in elections. In protests against a former president, the 1999, the Political Fund Control Law (1948) internet was a hive of activity for Filipino

132 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT activists who mounted ‘cyber-rallies’ and little freedom to act. The second comes from online signature campaigns, mobilizing proprietors; private media may appear more students, the middle class and also overseas independent, but often serve the interests of Filipinos. wealthy individuals or corporations who also In India, one woman set up a blog to may be corrupt. protect her husband – a whistle-blower work- A survey for this report of 28 Asia-Pacific ing in the civil service of the State of countries found that most had both private Karnataka. Her husband had reported on col- and government-owned media. For example, leagues who were supplementing their sala- 71 per cent of the countries in South Asia The press and ries with bribes. He was pushed around the have both private and government-owned other media will, civil service and forced to switch jobs seven newspapers (Table 7.1). The other 29 per cent however, only be times in nine months. Scared by the murder of countries have only privately-owned ones. able to report on of several people in India known to have But in East Asia and in the Pacific 30 per cent corruption if they exposed corruption, his wife built a website – and 36 per cent of the countries, respectively, are free to do so fightcorruption.wikidot.com – to make his report only government-owned newspapers. case known to the world. ‘In the YouTube era,’ Most countries in South Asia also she reasoned, ‘it is harder to kill a man who reported both government and private owner- has a bit of internet renown. I wanted to ship of radio stations, television channels and inform the people that this is happening, that internet websites. But in the Pacific, govern- my husband is a whistle-blower, so that it ment-owned radio stations are reported by 55 becomes the responsibility of every citizen to per cent of countries and television channels protect him’.11 62 per cent. In East Asia, the figures are 30 The internet has clearly provided a rela- per cent and 20 per cent respectively. tively free space where individuals and groups can articulate views and provide TABLE 7.1 information unavailable in the mainstream MEDIA OWNERSHIP – PERCENTAGE OF COUNTRIES media. But this is not an option open to most people. In the rural areas and among the semi- Newspaper Radio Television Internet literate in particular, few people have access ownership station channel site ownership ownership ownership to the internet. East Asia Government only 30 30 20 0 Press Freedom Private only 40 10 10 30 Govt. + private* 30 60 70 70 As Amartya Sen argues, the free flow of South Asia information and open public discussion ‘have Government only 0 0 14 0 a critical instrumental role in preventing Private only 29 0 0 0 corruption, financial irresponsibility and Govt. + private* 71 100 86 100 underhand dealings’.12 The press and other Pacific media will, however, only be able to report on Government only 36 55 62 10 corruption if they are free to do so. They face Private only 46 0 38 30 two main types of constraints. The first Govt. + private* 18 45 0 60 comes from governments. In some countries Notes: This is based on a sample of 28 countries: 7 in East Asia; 11 in the Pacific; in the region the press and TV are largely in 10 in South Asia. * Govt. + private indicates both options are available. the hands of the state, so they have relatively Source: Governance focal points in UNDP country offices.

CHAPTER 7: CITIZENS ON WATCH 133 Some journalists An indication of the extent of press European. The highest rated Asia-Pacific lack the skills for freedom can be gathered from the ratings of countries were New Zealand the at 15th, textured and in- independent organizations, such as Reporters followed by Australia at 28th (Table 7.2) depth reporting without Borders – an NGO which compiles position. an annual index of press freedom based on It should be emphasized that this index is 50 criteria. This represents the views of concerned with freedom and does not judge journalists, researchers, jurists and human quality. A free press may, for example, rights activists and is compiled with the concentrate less on news and more on assistance of the Statistics Institute of the entertainment. Nor does it say whether the University of Paris. The 2007 index rated 169 media report responsibly; rather than countries, of which the top 10 were all promoting a reasoned debate and consensus the press may simply exploit its freedom by peddling sensationalism or fomenting TABLE 7.2 cynicism and conflict. WORLDWIDE PRESS FREEDOM INDEX, ASIA-PACIFIC COUNTRIES, 2007 There can also be constraints on capacity. Some journalists lack the skills for textured Ranking Score and in-depth reporting. As a result, the most New Zealand 15 4.2 successful investigative reports tend to be Australia 28 8.8 those that focus on individual wrongdoing, on Japan 37 11.8 Republic of Korea 39 12.1 stories with clear villains, rather than on Hong Kong, China (SAR) 61 20.0 more complex issues linked with social Mongolia 74 23.4 inequality, injustice, harmful public policy, or Cambodia 85 25.3 unaccountable social and political structures. Timor-Leste 94 27.0 Indonesia 100 30.5 In practice, does a free press contribute to Fiji 107 33.5 the reduction of corruption? The picture is Bhutan 116 37.2 mixed. For one thing, the restrictions can Tonga 119 38.3 come from different directions. Those in India 120 39.3 Malaysia 124 41.0 countries towards the bottom of the list tend Philippines 128 44.8 to come from strong government control. This Maldives 129 45.2 is the case of Myanmar, for example. And in Bangladesh 134 53.2 Singapore a muzzled press, fearing restrictive Thailand 135 53.5 defamation laws and breaches of official Nepal 137 53.8 Singapore 141 56.0 secrets, practices considerable self censor- Afghanistan 142 56.5 ship. In any case, nearly all of Singapore’s Pakistan 152 64.8 media outlets, including internet service Sri Lanka 156 67.5 providers, are run by companies with close Lao PDR 161 75.0 Viet Nam 162 79.3 ties to the ruling party. China 163 89.0 In the Philippines the restrictions can Myanmar 164 93.8 also come from other directions. The Iran 166 96.5 Philippines has a liberal access-to-information DPR Korea 168 108.8 regime and an energetic and crusading media Note: The index for 2007 is based on events that took place between 1 September but has a low rating from Reporters Without 2006 and 1 September 2007. Borders because of the murder of a number Source: Reporters without Borders, 2007. of journalists.

134 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT These countries also have very different freedom, the Singaporean press could expose experiences with corruption. In Singapore, such activities and make state entities more for example, corruption is low largely because transparent and accountable. The country a highly efficient government controls the would also benefit from more critical system from the top, punishing offenders reporting on the perks of high-level officials, severely and by paying bureaucrats quite well. their transactions and decisions. The Philippines, on the other hand, despite a lively press which has exposed the corruption Ethical Standards of Journalism of a number of presidents and high-ranking government officials, is thought to have high Even if the press is free, its ability to combat levels of corruption. After a former can be compromised by low ethical leader threatened tax audits and other standards. In many countries journalists are government sanctions against the owners of only too willing to accept payments from critical media outlets, they toned down their those on whom they are covering. In 2001, reporting on the corruption and other the Alliance of Independent Journalists in wrongdoing of his administration.13 Indonesia surveyed hundreds of reporters Other countries in the region have a and found that 70 per cent of those in East similar combination. India has one of the Java and 97 per cent in Jakarta were taking region’s longest traditions of press freedom envelopes of cash from their news sources.15 yet corruption remains rife. Indonesia too, The Jakarta office of the Southeast Asian especially since the fall of Suharto, has seen a Press Alliance also reported that 64 state- proliferation of new newspapers. Yet it is still owned firms and government departments perceived to be one of the more corrupt set aside $173 million for ‘cultivating countries in the region. journalists’ in 2001 (Box 7.1). Similarly the Clearly a free press is not enough. What Philippine Centre for Investigative Journalism these countries need in addition are clean and in 1998 polled 100 beat reporters in Metro efficient systems of justice that will follow up Manila and found that 71 had been offered money by their sources. Of these, 24 admitted on widely-reported allegations. Nevertheless Freedom has to be it would be wrong to say the media in these they took the money, with 16 keeping the cash balanced by countries has been completely ineffective. In for themselves and 8 turning it over to their responsibility, India, Indonesia and the Philippines, media editors.16 without which reporting has helped create public pressure credibility can be for reform, even if this has been slow to Enabling the Media to Expose Corruption seriously materialize. It could also be argued that compromised without a free press the situation in these The media can promote good governance if countries would have been far worse. Of they retain editorial independence, abide by course freedom has to be balanced by high ethical and professional standards and responsibility, without which credibility can know that their rights will be guaranteed. be seriously compromised.14 They are also more likely to expose A free press could further improve the corruption if their ownership is dispersed in situation in Singapore. The country controls a competitive market and they represent a corruption at home but has had less success diverse range of views. controlling the behaviour of its government- They must also be free of intimidation. owned enterprises overseas. With even greater Governments should not unduly penalize

CHAPTER 7: CITIZENS ON WATCH 135 BOX 7.1 AN ENVELOPE HEADACHE IN INDONESIA AND ATM JOURNALISM IN THE PHILIPPINES

In Indonesia the practice of giving out cash-filled envelopes magazine have a programme whereby money is received dates back to the 1950s (previously, friendly journalists were graciously and then given to charities. Bisnis Indonesia given rice). In the aftermath of the 1997 crash of the rupiah, publishes a monthly list of the amounts journalists have the practice became so endemic that members of the public received in envelopes. When journalists’ names are conspicu- with fake press cards made a living from going to press ously absent from the list, colleagues can guess they have conferences and accepting envelopes. Such people were known kept the envelope rather than handing it to the office as ‘bodrex’ – an Indonesian brand of headache tablet. secretary. The persistence of ‘envelopmental journalism’ is often Moving along the technological ladder, in the Philippines attributed to the generally low salaries journalists receive. in the 1990s, ‘envelopmental journalism’, which took place in Indonesian journalists earn less than $200 a month, making it the 1970s and 1980s, has been replaced by ‘ATM journalism’. easier to tempt them with cash gifts. Editors and publishers Reporters can now receive discreet and regular pay-offs share the blame, since they could correct the problem by through their automated teller machine (ATM) accounts. raising benefits and disciplining erring staff. Often, the accounts are in the names of relatives, rather than Few media organizations have an in-house code of ethics of the reporters themselves. about receiving the envelopes, although publications such as Bisnis Indonesia, Kompas, The Jakarta Post and Tempo Sources: Coronel 2002; Florentino-Hofilena 2004; Perry 2002.

those who reveal ‘state secrets’ nor compel corruption activities. Pro Public says its radio journalists to reveal their sources. In programmes have created over 5,500 Good addition, they need to ensure that laws on Governance Radio Clubs with 53,000 libel and defamation are not so restrictive members – largely educated adults who are that they prevent reporting on issues related sensitive to social concerns.17 Clubs are of to corruption. There is always the risk of three types: those that are general, those that media excesses, but these are best controlled are women-led, and those involving through independent press councils, media- marginalized groups. Their activities include watch groups, ombudsmen and other bodies publishing, raising awareness, visiting local independent of government. authorities to discuss corruption issues, Citizens need to be At the same time, citizens need to be able monitoring local governments and reporting able to interpret the to interpret the media critically and distin- cases of corruption to the Commission for the media critically and guish good journalism from bad. The press is Abuse of Authority (CIAA). distinguish good more likely do its job well if the public journalism from bad demands it. This awareness can be fostered Refusing envelopes in Indonesia. Journalist-led in schools, for example, by teaching media campaigns to combat corruption within the literacy. Media organizations should also be media have had some success. The Alliance more transparent about their ownership, of Independent Journalists began an ‘anti- editorial decision-making processes as well as envelope’ campaign in 2000 to raise aware- the pressures and restraints on their reporting. ness of the problem and its pernicious impact. Across the region there have been a The organization has also lobbied for higher number of examples of ways in which the wages for journalists. The anti-envelope media have helped combat corruption. campaigns were in the form of posters, research, pamphlets and in-house education. Community media in Nepal. The Civil Society Anti-corruption Project run by the NGO Pro Fem’Link in Fiji. Fem’Link is an NGO which Public uses local radio listener clubs and other broadcasts its regular FemTALK series of civil society organizations to encourage anti- community discussions using mobile radio

136 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT and television equipment, including a low- formed a partnership with the private sector, power FM radio transmitter that can be including the Siam Cement Group and carried from village to village. It aims to create PricewaterhouseCoopers, to train journalists a ‘safe space’ to encourage women to discuss across the region on how to cover corruption and build awareness of common problems. stories and understand basic ethics of Corruption is a recurring theme because it balanced reporting. More than 45 reporters Corruption is a hits women particularly hard as a result of from 11 countries in Asia and the Pacific have recurring theme their economic and political vulnerability and taken part in workshops that have allowed because it hits the adverse effects of corruption in govern- them to work through potential corruption women particularly ment services. stories. Journalists from Bangladesh, hard as a result of their economic and Cambodia, China, Fiji, Indonesia, Lao PDR, political A hotline in Papua New Guinea. Transparency the Philippines, Sri Lanka, Thailand, Timor- vulnerability International Papua New Guinea, the Leste and Viet Nam have shared their Ombudsman Commission and the Media experiences. Council run a hotline through which members Even when the media itself is not of the public can report suspected cases of launching investigations it can still play a vital corruption directly to the media.18 A task role through its normal reporting functions. force of senior journalists has been appointed Thus if it reports regularly on the activities of to investigate public complaints which if public anti-corruption bodies, it serves to verified are published in the press. The media reinforce their position and dissuade public council has built an extensive network of officials, who might otherwise meddle in their community groups. Besides reducing the work. By persistently snapping at the heels of scope for intimidation and harassment the public officials and keeping an eye on media council network is a source of support businesses, a lively press helps sustain a for whistle-blowers. democratic system and discourages those tempted to engage in corrupt practices. Radio station 68H in Indonesia. When the last independent magazine in Indonesia was Civil Society Organizations closed down in the late 1990s, a group of journalists formed the independent radio While media can prepare the ground work, station 68H to give uncensored news. Even accountable government has to be sustained after the restoration of democracy it conti- by citizens themselves, through the ballot box nues to broadcast and undertakes public and by acting through civil society organiza- service campaigns in partnership with rele- tions (CSOs). These are self-organizing vant Indonesian organizations.19 It has autonomous groups, such as trade unions or reported on a number of corruption issues, religious groups, that operate in the realm including the diversion of funds during between the household and the state, helping rehabilitation of tsunami-affected areas, a citizens to forge shared values, build trust, school rehabilitation project in South-East and engage in cooperative activity. They can Sulawesi and certain alleged business mal- also enable citizens to check abuses of power practices in North Sulawesi and Aceh by government. province.20 Corruption control would seem to be a compelling CSO cause. In practice, however, Covering corruption across the region. In 2007 such collective activity is vulnerable to the the United Nations Development Programme ‘free-rider’ problem. When everyone stands

CHAPTER 7: CITIZENS ON WATCH 137 SPECIAL CONTRIBUTION – FIGHTING CORRUPTION IN INDONESIA: FROM WHERE? By Teten Masduki Getting out of the trap of corruption is Likewise, the Judicial Commission, capacity of community institutions. not easy. This is particularly so in the Attorney’s Office and police face real Domestic philanthropy, still nascent, is case of Indonesia, which suffered from obstacles in carrying out their oversight unlikely and moreover, may not be a more than three decades of kleptocratic functions. good idea as there could be a clash of rule that still retains a strong grip on In general, the Indonesian commu- interests with many objectives of the the Government and business. In the nity has not truly experienced living in social movement. paternalistic culture of Indonesian a democratic culture, which was only Proposals for enlargement of society, I witness that corruption trickles reintroduced after being absent for a community participation in the oversight from the top down. long time. Since the 1999 election, a of corruption must be given stronger Yet even since the advent of demo- regional autonomy policy has been support by the Government and cracy in the country, neither global anti- intended to reduce the centralization of legislative branch, which have been very corruption programmes implemented in power in national authorities, who slow to move.23 The spirit to fight Indonesia, nor tens of millions of dollars were prone to an oligarchic abuse of against corruption that is growing in international aid, nor domestic efforts power. But as implemented, this policy within the community is facing a have motivated civil society, business has ended up distributing practices of powerful elite that is extremely corrupt and Government to jointly fight corrup- abuse of power to the regions, opening and prefers the status quo. To be sure, tion. A 2007 Governance Assessment access for local elites and politicians to the conspiracy of the elite is not a Survey conducted in 10 provinces and 10 regional resources susceptible to phenomenon exclusive to Indonesia. districts concluded that illegal charges manipulation. Local budgets have been This also takes place in developed are still common and corruption eradica- allocated more to serve officials’ interests countries, as shown by various electoral tion is hindered by the lack of serious rather than to improve public services. financing scandals. In Indonesia, attention from government and non- Meanwhile, the business community has however, the influence of the elite is government institutions alike. There- been burdened by ordinances enacted by huge, and could paralyse almost the fore, it is time to rethink our ways to local governments in efforts to increase entire democratic system. This must be fight corruption. Are they relevant to regional revenues, which leads to a vigorously countered by a grand coalition the issues in Indonesia? high-cost economy. Thus, the will to between government and non- Most anti-corruption programmes in change from within the Government is government reform forces in order to the country target the strengthening of barely there. overcome obstacles still posed by the government institutions, starting from At the same time, there has been bureaucracy and formal politics. the establishment of new institutions to little democratization process to open up Business and political conspiracy, the managerial reform of existing ones. opportunities for public participation in which flourished under the This may arise from the largely govern- local governance. Checks and balances and managed to control almost all ment-to-government funding for good practically do not work, not only because national economic resources, is governance programmes. But this sets of collusion with local government, but currently seeking a new relationship aside the strengthening of social institu- also insufficient control by the public that fits in with the newly fragmented tions and expansion of public participa- because civil society remains relatively political landscape. One tycoon complains tion channels. In this case, corruption weak. Given the continuing worrisome that channelling funds to a number of seems to be regarded as a managerial combination of State capture and petty influential, political powers is no longer problem or failure of government – or bureaucratic corruption, however, sufficient to secure business protection. judiciary, bureaucracy, fiscal systems, anti-corruption reform must be pushed And this offers hope for the future; parliament – instead of as a result of by civil society, the private sector and bribing what has been termed the imbalanced relations among the State, the media – a condition that the national ‘roving bandit’ may begin to be no society and business. anti-corruption programme overlooks. longer so effective, when corrupt actors Nothing is wrong with the objectives Each must be mobilized to increase and centres are spread out and no of reforming government institutions. external needs for economic and political longer monolithic, while policymaking However, with policymakers who have reform. is no longer centralized. When corrup- low political will and limited ownership Still, an anti-corruption social tion loses its benefits, it will shrink. of a reform agenda, this approach faces movement is burgeoning, even if it does Having a stronger civil society and a huge challenge in implementation and not yet have a strong enough foundation private sector can hasten that day in has led to democratic corruption. Efforts to make a significant difference. The Indonesia. to undermine new anti-corruption extraordinary growth of free speech and institutions in Indonesia, such as KPK free media since the start of the new Teten Masduki is an anti-corruption icon and the corruption court, have been democratic era has made major inroads in Indonesia. Since 1998 he has been head continuous,21 which can be viewed as toward this expansion. International of the Indonesia Corruption Watch (ICW). an expression of resistance from those donors should channel increased funds In 2005, he received the 2005 Ramon whose interests are being disturbed.22 to strengthen human resources and Magsaysay Award for public service.

138 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT to benefit from the actions of one individual Instead it is better to have more CSOs that or organization, then few will feel compelled see controlling corruption as an important to do the ‘heavy lifting’ themselves, especially contribution to their overall objectives. Those given the risks inherent in confronting the may be improving health, other services, or powerful and privileged who may resort to creating income-generation activities for the violence. Moreover, CSOs, being products of poor. Ideally, there should be a broad coalition the milieu in which they live and operate, can of CSOs that might share some public values themselves be corrupt. In some countries but are sustained by diverse incentives and ‘letter-head’ NGOs regularly spring up just appeals. Attempts to jump-start a network to take advantage of the availability of of CSOs which are aimed only at tackling donor funds. corruption may not produce sustainable When considering NGOs, it is important results, and may even waste scarce resources to distinguish between independent NGOs and political opportunities. from government-sponsored organizations, sometimes known as GONGOS, that rely on How Can CSOs Help Check Corruption? funds from governments from which they take their agendas. Some of these are genuine CSOs in the Asia-Pacific region that want to allies in the struggle for corruption control, counter corruption can face a number of while others are less benign or even sinister – obstacles. In some countries, particularly in often lobbying at the United Nations and East Asia, CSOs face quite a hostile environ- other international institutions on behalf of ment; they have limited resources and many the repressive regimes that fund them. of their members – often, those harmed most Care needs to be taken to ensure not just by corruption – are preoccupied with basic that CSOs are genuine, but that they them- survival. Tackling corruption means mobiliz- selves remain uncorrupted. Even reputable ing the weak against the strong – and with- groups may claim to speak for certain consti- standing the reactions of powerful people and tuencies while having little or no genuine entrenched interests, many of whom go to legitimacy to do so.24 In many countries, great lengths to protect their corrupt including mature democracies, some anti- advantages. corruption groups, ‘civic foundations’ and As a result, CSOs may make little head- pseudo-charities have become smokescreens way in poor and highly corrupt countries. for corrupt or borderline political dealings. CSOs might in principle help such countries With regard to micro-finance activities, a lack improve social conditions, support better of transparency can facilitate corrupt governance and contain corruption; but in transactions. Many micro-finance institutions these countries it is also difficult for CSOs to As NGOs and take root and survive. CSO action against do not maintain transparency in financial CSOs become more corruption is thus unlikely to bear fruit in disclosure; unlike organizations like Grameen attractive channels Bank in Bangladesh and Spandana in India.25 poor, undemocratic societies; indeed it is for aid, careful As NGOs and CSOs become more attractive more likely to result in risk, repression and scrutiny will be channels for aid, careful scrutiny will be apathy. required to required to distinguish the well-run and CSOs work best when they have material distinguish the effective, from the inept or corrupt. resources and the liberty to influence those in well-run and CSOs may find it very hard work if power. In Thailand after 1992, for example, effective, from the combating corruption is their sole objective. civil society organizations put themselves in inept or corrupt

CHAPTER 7: CITIZENS ON WATCH 139 strategic positions and became involved in against corruption might have origins, monitoring political activities. They agendas and incentive systems that have participated in poll-watch activities during nothing to do with good governance or public elections and advocated for social and life, but still teach organizational skills, build political reform.26 social networks and mutual trust, creating a Civil society groups Civil society groups sustained by a free sense of efficacy. The more diverse the range can monitor govern- flow of information can monitor government of groups active in civil society, the more they ment activities and activities and ensure that policies are carried will be able to stimulate citizen activity across ensure that policies out thereby fostering accountability and a whole range of concerns. are carried out contributing to better governance, especially in developing countries.27 But it is important Incentives for Participation to recognize their limitations, however, and appreciate what CSOs cannot and can do Even groups oriented primarily toward public (Box 7.2). goals must offer incentives to individual In poorer societies CSOs are more likely supporters. Those appeals might seem to to check corruption indirectly via their long- detract from the idealism and purity of term contributions to human development. reform, but in fact can be essential to Indeed, the CSOs most valuable in a struggle sustaining it over time. James Q. Wilson

BOX 7.2 WHAT CIVIL SOCIETY ORGANIZATIONS CANNOT DO – AND CAN DO

Civil society organizations can make a valuable contribution invaluable, building trust over time. to the struggle against corruption. But they work best within • Reinforce shared values. CSOs that draw upon existing val- a broader agenda. ues are more likely to be effective than those teaching new ones, though the latter also may be necessary. What CSOs cannot do: • Teach and diffuse organizational skills. People active in CSOs learn new ways to cooperate and organize activities, • Solve all problems. CSOs cannot be merely inserted into a and what appeals and incentives work in their communi- society and be expected to solve all problems; they need an ties. active base of citizen support, resources and opportunities • Offer diverse incentives to sustain participation. CSOs must for action. appeal to diverse motivations – self-interest, sociability, the • Operate in a vacuum. Some social, political and economic wish for recognition and prestige, as well as pursuing long- settings are risky or unpromising for CSO activity. CSOs term public goals. will succeed best where resources and a receptive regime • Foster the growth of local leadership. Over time CSOs create are in place. community leaders with skills, credible personal reputa- • Seek only civic or reform goals. CSOs must engage with the tions and extensive, rooted social networks. real needs and immediate interests of people. A wholly • Enable citizens to take advantage of political opportunities. civic or reform-oriented agenda will encounter severe free- Citizens with an organizational base, whatever its imme- rider problems. diate sources and agendas, will be better able to act. • Produce quick results. CSOs benefit society and citizens over • Spread risks more widely. Fighting corruption means oppos- time, through sustained effort and support. That is all the ing the powerful – at times a very risky business. more true for corruption issues, as they pose basic ques- • Link citizens to sources of international support. CSOs may tions of power and justice in both politics and the economy, have international affiliates, and can be effective partners tapping into basic social values. for international assistance organizations. • Provide visible examples of honest, accountable leadership. What CSOs can do: CSO leaders can show by example that good governance is a real possibility. • Create citizen awareness of shared problems. Never underes- • Promote human development. All of these accomplishments timate the value of showing people they are not alone. will promote and deepen development and thereby help • Build mutual trust among citizens. Repeated interactions are build a society’s anti-corruption strength.

140 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT offered an enduring typology of the incentives Specific solidary incentives. These can include that motivate and reward citizen participa- offices, awards, honours and citations along tion. He identified four types: material with exclusive access to information. For incentives, purposive incentives, specific example, where it is safe to do so, anti- solidary incentives, and collective solidary corruption CSOs could present well- incentives.28 If CSOs are to engage wholly or publicized ‘Corruption Fighter of the Year’ partly in combating corruption, how might awards. Some people will do a great deal to these incentives apply? earn such recognition. Such incentives usually cost little or nothing and help publicize the Material incentives. These are rewards of group as well as its honourees. This requires tangible value, such as money or goods. Anti- an audience, so CSO incentives will be corruption CSOs are unlikely to have enhanced by a relatively free press. extensive individual material rewards, but may be able to offer ‘exclusive material Collective solidary incentives. These are incentives’ – things of real value, perhaps intangible rewards created by the act of created by the group’s own efforts, that can associating. They include the prestige of be restricted to members only. Poor people’s affiliation, sociability and fellowship, and savings associations, for example, were perhaps a degree of exclusivity. This may be founded in difficult circumstances but still of particular value where civil society is weak. accumulated significant resources through For leaders and members, a kind of security small individual contributions. They offered can grow out of group strength. Conversely, valuable aid – money for burials, help in the coalition members who lapse into corruption time of emergency – on a members-only basis. have something important to lose: member- Anti-corruption groups might emulate this ship of a prestigious and visible group. model by setting up a kind of ‘corrup- Incentives should also take into account Incentives should tion insurance’ in which members pool the existing laws. For example, Nepalese and also take into information and small contributions, while Vietnamese laws, which contain no reporting account the making binding pacts not to compete obligations with respect to corruption, existing laws corruptly. Those who actively support the provide for the offering of rewards for group and abide by the non-corruption pledge relevant information, as does Pakistani law. could be given access to information, legal In the Republic of Korea, rewards for reports advice and even modest amounts of cash to on corruption go as high as about $160,000.29 reduce the impact of corrupt pressures they Other types of incentive will appeal to could not avoid. different constituencies. Table 7.3 illustrates what an anti-corruption CSO or, better yet, a Purposive incentives. These refer to the group of them building a coalition, can offer satisfaction of achieving a significant goal. In to potential supporters. fact, the most obvious incentives for an anti- In practice it will not always be easy to corruption CSO are purposive: after all, the distinguish one kind of incentive from organization seeks reform. Where those goals another. The best balance among them will are deeply personal, purposive incentives may depend on available resources, the stage of be enough, at least for a time. But as a group development of the CSO, the overall grows and matures, it will need more diverse corruption situation and broader social as appeals. well as cultural factors. There can be no

CHAPTER 7: CITIZENS ON WATCH 141 TABLE 7.3 INCENTIVES BY TYPE AND TARGET CONSTITUENCY

Material Purposive Specific solidary Collective solidary Exclusive Individual ‘Corruption insurance’ Economic benefits of an Reform as a public Data banks on corrupt Prestige, improved improved economy good agencies and officials image domestically and best practices and internationally Technical advice: vulne- Security from better Better governance. Research products Enhanced autonomy rability assessments; governance Fair political and Rewards, recognition for organization, prevention within economic processes press, opposition organizations; legal Stronger economic and leaders, civil society advice social organizations Enhanced rule of law Sociability, fellow- ship, mutual encouragement

Prime constituencies

Small firms, domestic Citizens generally Mass membership Professional coalition of Mass membership entrepreneurs and Civil society, NGOs NGOs staff and researchers NGO leaders investors Aid/lending partners Benefactors and Journalists financial supporters Democracy groups Anti-corruption Government elites and supporters champions

Source: Johnston and Kpundeh 2002.

Strong and overall master plan; strong and successful disturbed by the disruptions and may well successful CSOs CSOs will be better able to sustain themselves withdraw support and curtail access to will be better able by using a diverse repertoire of incentives and information, while the corrupt ones will just to sustain them- appeals. become even more hostile. And a reform- selves by using a What sort of relationship should CSOs oriented CSO getting into the business of diverse repertoire have with local regimes: contentious or offering ethical ‘seals of approval’ to leaders, of incentives and cooperative? To some extent, the answer parties, agencies or private interests would appeals depends upon the political options available, carry its own hazards; doing so will require and upon the state of and rule formidable resources and create risks of of law. CSOs must be forthright about oppos- embarrassment, should ‘approved’ people ing corruption, and when possible they should and groups be revealed as corrupt. CSOs can seek cooperative relationships with the contribute best by concentrating on providing regime, giving government officials reasons information, expertise, and sustaining a sense and incentives to oppose corruption, while of strength in numbers. helping them develop the means to do so. Under most circumstances, CSOs should Do CSOs Actually Help? avoid becoming investigative bodies, whistle- blowers, or forces of anti-corruption vigi- Does a strong civil society help weed out lantes. Political leaders are unlikely to corruption? One way to get a sense of this is welcome this. The honest ones will be to plot an index of corruption against an index

142 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT that represents the strength of civil society. For the corruption side, we use the World Bank’s Control of Corruption Index (CCI). There are two useful indices for the strength of civil society. One is also a component of the World Bank governance dataset, in this case, the ‘voice and accountability’ index. Based primarily on survey data and expert judgements, this compares the extent to which citizens in various countries can express their views freely and hold governments accountable. The second option comes from the Environmental Sustainability Index (ESI) – an initiative of Yale and Columbia Universities, in collaboration with Figure 7.1: Voice and Accountability Plotted Against Corruption Control the World Economic Forum and the European Source: World Bank 2007b. Commission. This includes an indicator of Institutional and Social Capacity based on interesting because both variables originate in among other things, the number of active the same project and reflect the same environment-related CSOs. methodology. The positive relationship could These indicators, like those for also result from the methods and assump- corruption, have limitations, notably that tions employed. However, it is reassuring that they are too often based on perceptions. Still, mapping the CCI with the ESI Institutional they provide a useful starting point. With the and Social Capacity measure, for those exception of the ESI social and institutional countries on which we have both the indices capacity indicator, which was calculated only produces a similar result (Figure 7.2). for 2005, the data used here refers to 2006. How do estimates of civil society strength relate to the corruption rankings? Figure 7.1 shows a scatter plot for values on the Corruption Control Index (CCI) and the Voice and Accountability indices for 2006, presented for the Asia-Pacific countries for which data are available. This indicates that countries with a marked tendency for stronger voice and accountability are more effective at corrup- tion control. The slight increasing slope suggests that the benefits may even increase at a positive rate. The result should however be treated with caution. Both variables are likely to be influenced by other factors not Figure 7.2: Institutional and Social Capacity Compared with Control of Corruption measured here, and there is no indication of the direction of causality. Still, the results are Sources: Esty et al. 2005; World Bank 2007b.

CHAPTER 7: CITIZENS ON WATCH 143 Given its underlying concept, democracy northern Philippines with the support of appears to play a visible role in the ESI UNDP. In 1987, for example, CCAGG indicator. Australia, New Zealand and Japan members saw a newspaper advertisement by lie to the upper right, while Myanmar the Ministry of Public Works and Highways anchors the less-favourable lower-left declaring that it had successfully completed quadrant. On the other hand, countries such 20 projects in Abra.30 The CCAGG members as Bangladesh and India, which hold collected evidence which showed something competitive elections, lie toward the lower left very different. An official government audit of the plot or no higher than the middling concurred with the CCAGG’s findings. As a areas. This suggests that where democracy is result, 11 government officials were found most effective at checking corruption it does guilty of dishonesty and misconduct and were not necessarily do so through the system-level suspended. The Chief and the Deputy Chief ‘hardware’ such as elections but through the Engineer of the Ministry of Public Works and deeper ability to voice demands that are taken Highways were also suspended without pay seriously by government – very much the role and were debarred from serving in the of CSOs. If that is so, then effective CSO province. Further, as a result of this case the action against corruption need not await the regional director of the Ministry of Public emergence of a fully-elaborated democratic Work and Highways issued a directive requir- system. Nevertheless, social restraints ing that projects in Abra province be funded evidently do not tell the whole story; Bhutan only after they had obtained clearances from and Lao PDR, with similar levels of CCAGG.31 Other activities include streng- institutional and social capacity, have quite thening the Northern Luzon Coalition for different levels of corruption control. Good Governance and monitoring the physi- cal sustainability of projects in the region. CSO Anti-Corruption Activities in the Asia-Pacific Region A in India. In 2007 a Chennai- based organization introduced a ‘zero rupee The Asia-Pacific region has a variety of note’ to assist citizens against corruption. organizations active in the anti-corruption Instead of the usual ‘I promise to pay the field. Some have a global focus, others a bearer a sum of x rupees’ pledge on a currency regional base. Transparency International note, the replica carried the pledge ‘I promise (TI), for example, opposes corruption around neither to accept nor give bribes’. Because the the world and also has 20 local chapters in note was distributed across the country, the the region. The Asia Foundation, on the other pledge was printed in the respective state hand, deals with corruption as part of a broad languages and caught the imagination of repertoire of regional concerns. Other high- many.32 level groups deal with technical aspects of governance or with human rights. Some Roadwatching in the Philippines. The examples of CSO action are: Transparency and Accountability Network (TAN), established in 1999, has around 20 Concerned citizens in the Philippines. The partner organizations or institutions. One Concerned Citizens of Abra Good Govern- project is Government Watch, which is ment (CCAGG) is an NGO that monitors affiliated with the Ateneo School of government projects in the Abra region of the Government. Among other activities, this

144 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT monitors road-building – examining the original plans then sending young people out into the field to discover what, if anything, was actually built, and if so, how well it was constructed. The TAN projects thus link anti- corruption advocacy with citizens’ and schoolchildren’s own interests, allowing them to learn valuable lessons about citizen power and good governance.

Clean hands in Cambodia. In 2005, in partner- ship with a wide range of organizations, the NGO Pact Cambodia launched the ‘Clean Hand Campaign Against Corruption’. The campaign aimed to mobilize public support for anti-corruption efforts and increase the willingness of people to talk openly about corruption. The campaign involved publica- tions, radio shows, television, posters and many other materials, including stickers and t-shirts. Source: 5th Pillar. New laws in the Republic of Korea. Over twenty national NGOs formed the Civic Solidarity would report a case of corruption if they knew Network for the Legislation of Law to Prevent about it – in order ‘to help to solve the Corruption. This law was proposed to parlia- problem’. The most common reason for non- ment in late 2000 through public hearings and reporting was the ‘feeling that it was no use, enacted in June 200133 and resulted in the no one would help’.35 establishment of the Korea Independent Commission Against Corruption.34 Public hearings in India. The NGO, MKSS has developed a strategy, based on jan sunwai or Social auditing in Pakistan. In 2001, the ‘public hearings’. First it obtains official National Reconstruction Bureau introduced documents – for example, related to construc- devolution of political authority to the district tion records for school buildings – then it level. The aim was to improve access to public brings people from villages where the cons- sector services, encourage sustainability of truction works were said to have taken place local development initiatives and mobilize and reads out the documents. It also invites community resources, while increasing local officials, giving them a spot on the transparency and reducing leakages of podium and videos of the events to promote resources. On way of checking whether the honesty and to add gravitas to the proceed- reforms are having the desired effect has been ings. Not infrequently, the official informa- through social audits. With regard to tion is wrong, exaggerating the distance corruption, the 2004/2005 social audits materials had been transported or the found that around 60 per cent of respondents amount of work done. These hearings and the

CHAPTER 7: CITIZENS ON WATCH 145 public awareness they create, have helped climate that is hostile to corruption. Clearly limit public-works corruption in Rajasthan. they have their limitations. In highly Their collective nature has largely neutralized corrupt and repressive societies they will find any feeling of intimidation that illiterate it very difficult to operate. Many struggle to labourers would have felt otherwise along survive. In numerous countries, however, with the fear of retribution. This can work they have shown how it is possible to keep up best when CSOs and public officials work the pressure on politicians, public services together. and hold them to account. And if they have the benefit of a supportive political Keeping Up the Pressure environment, they can amplify and reinforce a government’s commitment especially Both media and civil society organizations when action fails to live up to the official can thus help sustain a social and political rhetoric.

146 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT

There are two ways to wash the dishes. One way is to wash them to get them clean. The other way is to wash them in order to wash the dishes.

THICH NHAT HANH

It has been said that democracy is the worst form of government, except all the others that have been tried.

SIR WINSTON CHURCHILL Driving Out Corruption 88 Chapter

Corruption may have been viewed in the past as unpleasant and unethical and probably unavoidable. Now across the Asia-Pacific region it is being pushed more into the foreground and challenged as being damaging and unacceptable. Governments and civil society, at national and international levels, are finding new ways to drive out corruption, working both from the bottom up and top down.

By the end of 2007, across the world, 104 corruption: shortages. The day-to-day corrup- governments had ratified or acceded to the tion that affects daily lives of citizens is under United Nations Convention Against Corrup- check. Centuries of development in richer tion. This is a heartening indication of a countries have contributed to an age of changing international mood, as well as a abundance. This is evident in health services. fresh commitment from many developing With the notable exception of a few, most countries to tackle an age-old problem with advanced countries have health services that greater urgency and determination. provide basic and inexpensive or free access They have history on their side and for all. Electricity and water supplies too are particularly the experience of richer coun- widely available. Indeed, in countries where tries. Over the centuries, most of today’s utilities have been privatized, one of the main Most of today’s developed countries achieved greater control problems is to have an actual sense of quality developed countries over corruption as a by-product of the develop- service – since standards are difficult to achieved greater ment process. Steadily, they built stronger compare across competing providers – and control over institutions that operate within clearly defined fend off a barrage of sales calls from compe- corruption as a by- systems of incentives and rewards, checks ting providers. product of human and balances, separation of powers as well as The situation remains very different in development reduced red-tape. They also benefited from many developing countries of Asia and the relatively engaged and free media and other Pacific where government institutions are organizations of civil societies, which moni- often weak and thus susceptible to bribes tored governments and exposed misdeeds. from business interests, that take advantage The process is certainly incomplete while of the greed of corrupt politicians or civil the political and business landscape in servants. At the same time, most public developed countries is still regularly illumi- services and utilities remain plagued by nated by the flares of high-level scandal and extensive shortages, generating opportunities corruption. To some extent, governments for officials to demand ‘speed money’ or have even legalized corruption as is seen in ‘grease money’ to complete the simplest tasks; some types of permitted high-pressure also resulting in ‘survival corruption’ among lobbying. Nevertheless, it is now rare to see the poor. Even when dealing with some corruption on a large and systemic scale. relatively modern corporations, customers The developed countries have also been can be expected to bribe employees to get a able to reduce one of the principal causes of satisfactory service.

CHAPTER 8: DRIVING OUT CORRUPTION 149 The Turning Tide goods and services offered but also in the way they produce them. Nevertheless the tide seems to be turning – This has been evident in campaigns to hesitantly, perhaps, and in uncertain eliminate child labour, for example, and to directions, but there are definite signs of ensure decent pay and conditions for actions that increasingly confront corruption. workers. Now the same impetus is reaching Citizens are becoming increasingly impatient into areas widely tainted by corruption; – expecting cleaner government and particularly the extraction of natural businesses – and governments are starting to resources. Consumers all over the world, respond. As ever, the first steps have been whether distressed at the losses of natural rhetorical. Sensing a change in voter mood, habitats or species, or fearful of global today’s politicians in the Asia-Pacific region warming, are demanding certification that the now find it worthwhile to place the fight goods they buy have been produced under against corruption high on their stated environmentally responsible conditions. As political agendas, to show that they are earlier chapters have indicated, in the Asia- tackling corruption. Pacific region this is often not the case. Many Military leaders who in the past might logging or mineral extraction companies work have justified coups to ‘save the nation’ from hand in hand with corrupt local and national allegedly dangerous political ideology, are now administrations. Indeed some transnational more likely to claim that they are seizing corporations have succeeded in ‘state power to protect the public from corrupt capture’. Now, however, these companies find politicians. A grave danger of this new ‘coup themselves under greater pressure from dispensation’ is that popular anger at official international buyers who are asking corruption can become a pretext for awkward questions about how these suppressing civil and political liberties, and, companies have acquired their privileged as a further consequence, even less public positions and where they have sourced their accountability. The growing distaste for raw materials. corruption among citizens sends an impor- Global commercial pressures are now Today, genuinely tant signal to democratic leadership – today, being complemented by international political combating genuinely combating corruption makes more action. In the past, the rich countries generally corruption makes political sense than ever before. This is turned a blind eye when their companies more political sense especially so in sectors like water and bribed officials in developing countries. Now, than ever before electricity, health and education, which not however, the OECD countries are setting only confers credibility to the government, it standards that their companies have to follow also greatly promotes everyday citizen anywhere in the world. Companies found to satisfaction, while helping achieve the MDGs be paying bribes overseas are now liable to be and further human development. prosecuted at home. National political imperatives are being reinforced by international economic Seizing the Moment: Combining Pressure pressures. The Asia-Pacific region is now the from Above with Voice from Below heartland of globalization. Its largest manufacturing and service corporations are This coming together of national and major players on the world stage. Having international pressures, reinforced through achieved global reach, they also have to meet the increased potential for networking global standards, not just in the quality of the without the limitations of national borders

150 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT through communications technologies, is education, can derive fresh sources of creating new opportunities across Asia and legitimacy from a more satisfied electorate. the Pacific. How can the countries of the And businesses that align themselves with region best seize the moment? As this Report higher standards of corporate governance can has illustrated, there is no one route or single devote their energies to boosting their own answer. Action has to come from many growth and profits legitimately rather than directions. Governments can achieve a great seeing their investment funds leech away deal by establishing a legal framework, unproductively into the pockets of corrupt strengthening public institutions and building officials. systems of control to ensure that their At the same time, governments and civil administrations operate openly and trans- society organizations working to combat parently. These systems will work best if they corruption will also be sustaining democratic are supported by many elements of civil governance. For just as democracies can be society, and in particular by NGOs and the undermined by corruption, so they can also media, which can monitor government and be fortified by effective, transparent, and businesses and help keep them honest. Action, closely monitored national institutions that thus, has to come simultaneously from above sustain their integrity within interlocking and below. systems of checks and balances. Empowering Any faltering resolution at the top needs people through citizen education is the to be propped up by ongoing pressure from foundation for prevention that can reduce the The Report has below – from a civil society that is aware, extent of catch now and punish later. identified three expects change, and that can rely on free and areas to consider competitive media for whom exposing Setting the Priorities for focus – the corruption is both a duty and an opportunity. police, social This combination of pressure from above and Nevertheless, addressing corruption can be a services, and from below – a ‘sandwich situation’ that daunting proposition. Governments may find natural resources triggers a symbiotic relationship, each themselves facing a broad array of complex strengthening the other1 – can dissuade and difficult issues, while lacking the funds potential corruptors and the corrupted from and personnel to respond effectively. There is pursuing immediate gain at the cost of always the danger therefore that the institutions. It can not only help build and responsibility of fighting corruption will fall retain political will over time, it can also on the shoulders of a small number of honest provide good reason for political leadership but already overburdened officials. to stay the course of public interest. It may be better therefore to focus initially Much of this involves the pursuit of on a few specific areas. Naturally those justice – exposing and prosecuting the guilty. priorities will depend very much on national But anti-corruption can also be viewed in a circumstances. Across a region as vast and more positive light. Politicians, civil society diverse as Asia and the Pacific, the approaches leaders and businessmen/women who work will often differ radically from one country to to combat corruption can also point to the another. The Report has identified three areas huge political and economic dividends on to consider for focus – the police, social offer. Politicians, for example, who can claim services, and natural resources – as, from a credit for rooting out corruption from sectors human development perspective, one criteria like water and electricity, health and is clear: governments should be seeking ways

CHAPTER 8: DRIVING OUT CORRUPTION 151 of reducing the forms of corruption that hit huge profit potential. The worst affected are the poor the hardest. Hauling the rich and people in remote locations and the poor. powerful before the courts may grab the headlines, but the poor will benefit more from An Agenda for Action efforts to eliminate the corruption that plagues their everyday lives. Although the appropriate measures for tack- Countries could make immediate ling corruption will depend on national cir- progress by identifying and dealing with some cumstances addressing local complexities, of the worst areas, whether in health services, some of which have been detailed in earlier education or in public utilities, and thus chapters, a number of options are common improve the access of the poor to essential across many countries. Drawing upon them, services. This will also have immediate here is a seven-point agenda: political dividends. Education, in particular, also is a means to help prevent corruption, 1. Join with International Efforts including its inter-generational spread. Some of this type of corruption is termed ‘petty’ in All countries in the region should become the literature. But this is clearly a misnomer. party to the United Nations Convention The dollar amounts may be relatively small, Against Corruption (UNCAC). Through but the demands are incessant, the number of UNCAC, both developed and developing Governments should people affected enormous, and the share of countries can cooperate to develop a common be seeking ways of incomes of the poor high. understanding of corruption issues and reducing the forms Another priority should be addressing devise a coherent set of strategies. By acting of corruption that corruption within police forces. This is partly together they can also frustrate corrupt indi- hit the poor the because of the immediate damage it causes, viduals and corporations who seek to exploit hardest since corrupt police officers are in a uniquely differences in national laws and procedures. powerful position – able to back demands for In addition, member countries can support bribes with physical or sexual violence – but each other in building technical capacity – also because addressing corruption within the establishing links between complementary police and justice systems can pave the way institutions and strengthening prosecuting for dealing with corruption elsewhere. agencies, while establishing broad frame- Improving police services so the personnel are works for prevention. seen as friends of honest citizens can greatly Another important international opportu- reduce the sense of fear and injustice among nity is afforded by the Stolen Assets Recovery the poor. (StAR) Initiative, a partnership between the All countries in the Natural resources need prioritized atten- World Bank and the United Nations Office of region should join tion as well before it is too late, especially Drugs and Crime, which allows developing the United Nations where they are the backbone of livelihood for countries for the first time to recover – from Convention Against the poor. With the growing international safe havens in developed nations – assets that Corruption recognition on the degradation of the environ- have been stolen by corrupt leaders. ment and climate change, there is little time Despite the value of these two inter- to lose in preserving our natural resources. national agreements, they are still far from Even when governments have laws in place achieving universal acceptance. As of for managing the utilization of forests, December 2007, of the 30 OECD countries fisheries, land and minerals, corruption can only 19 had acceded to UNCAC and of the undermine such legislation because of the 164 developing countries2 only 94 had done

152 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT so. In the Asia Pacific the proportion is even generally have weak civil services, with lower, 10 out of 35, so there is still a long underpaid and under-trained staff. This is a way to go. Thus, in addition to action by difficult issue, since raising standards or governments, CSOs and the media could join wages may require significant investment the debate to make constructive suggestions beyond the budgets of poorer countries. It in addressing the concerns of governments. may, however, be possible to raise salaries to Governments and levels that are at least closer to those prevail- donors will clearly 2. Establish Benchmarks of Quality ing in the private sector. But all governments need to invest should be able to create public bodies such as much more in local To reduce corruption, governments will want civil service commissions that can oversee government to design public institutions that incorporate recruitment and ensure that appointments the necessary controls, checks and balances. and promotions are based on merit, not This is a difficult task. So, to judge their favouritism. These measures would need to success, a starting point could be be complemented by rigorous systems of international benchmarks – standards that monitoring and control that can detect have been set around the world for different corruption swiftly and punish it severely. types of organizations. These can be tailored While it is necessary to strengthen to country contexts. Benchmarks can apply, national civil services, what is probably more for example, to anti-corruption agencies, important is to build capacity at the local level. using indicators that reflect the methods for A number of countries in the region are decen- appointing the head of the agency, the security tralizing many functions to lower tiers of govern- and independence of its funding, and its ment, but find that local officials or institutions staffing levels. The effectiveness of anti- lack the necessary funds or skills. Combined corruption agencies can also be assessed by with weak systems of monitoring and control, the number of offices or sectors that are this can lead to higher levels of corruption. immune from investigation, the protection Governments and donors will clearly that they afford to whistle-blowers, and the need to invest much more in local government. proportion of complaints that they In doing so, they should be able to capitalize investigate. Similar indicators could be on the knowledge and experience of honest devised for other institutions that have a public officials who can suggest the most strong bearing on corruption, such as the effective forms of control that will limit the There can also be offices of the auditor general. opportunities for corruption, while suppor- benchmarks for There can also be benchmarks for national ting their efforts to carry out their duties national media – press, radio, TV media – press, radio, TV and the internet – responsibly. on characteristics that affect their ability to and the internet – on characteristics expose corruption. These could include type 4. Encourage Codes of Conduct that affect their of ownership, editorial independence, in the Private Sector ability to expose freedom from censorship and the extent of corruption competition. These and other benchmarks The responsibility for controlling corruption can help assess gaps and deficiencies and cannot be left entirely in the hands of indicate what it would take to remedy them. governments and civil society. The private sector too should play its part, showing a 3. Strengthen the Civil Service determination first of all to obey the law and also to add its own expertise to the struggle Countries with high levels of corruption against corruption. This could include, for

CHAPTER 8: DRIVING OUT CORRUPTION 153 example, strengthening codes of conduct for obscurity of dusty files and complex business associations and professional bodies, administrative systems. Information techno- as well as voluntarily enlisting with the UN logy and e-governance, however, offer fresh Global Compact. Among the professions, the opportunities to make administration more most critical ones for corruption are those of open, transparent and neutral, reducing the lawyers and accountants – without them, layers and number of face-to-face interac- large scale corruption, specially that which tions, thus breaking the monopoly of corrupt crosses national borders, would not be officials and allowing citizens to keep abreast possible. In the codes of conduct, at both of administrative processes. national and international levels, they could Information technology has already incorporate ways to specifically take account shown its value in a number of countries by of corruption and establish appropriate speeding up court processes and systems of guidelines. Services of senior lawyers, accountants land registration. It is also, for example, and professional associations could be utilized allowing public utilities to establish ‘one-stop for this for better self-regulation and ensuring shops’ where all the elements required to that the codes of conduct are well publicized. achieve a new power connection are brought together for their convenience, without having 5. Establish the Right to Information to traipse from one office to another with One of the most multiple bribes harvested en route. powerful ways of One of the most powerful ways of controlling Public IT projects can have their problems. controlling corruption is by ensuring that citizens are Often they are overly ambitious and costs can corruption is by privy to most of the same information as their spiral out of control. There is always the risk ensuring that governments. Countries in the region could that officials may exploit the systems for citizens are privy enact laws on the right to information (RTI). their own corrupt purposes. But relatively to most of the They now have some tried and tested models modest IT systems can help to limit the exces- same information as to follow, including that of India, which has sive discretion of officials and help reassure their governments one of the most progressive acts in the citizens that they will be treated fairly. developing world. Information technology is one of the key However, fulfilling the right to informa- components of right to information processes, tion requires much more than legislation – it since responding over the internet can also demands a new public ethos of openness. dramatically reduce information publishing From the outset therefore, public officials costs. Here too there are hazards, notably the need to be engaged and convinced about the risks of releasing floods of electronic value of RTI and develop the capacity to deal documents that make it difficult to discern with requests promptly and appropriately. At the critical facts and figures. This is an area the same time, the media and other parts of where NGOs and the media can play an civil society have to learn how to use RTI sys- important part, training both themselves tems responsibly. This could be fostered by and the public on how to sift and analyze public campaigns on TV, radio, the internet the data. and newspapers, explaining what type of infor- New technology can also contribute to mation is available and how to apply for it. better monitoring of natural resources, through satellite imaging, and even at a more 6. Leverage New Technology modest level using digital cameras to monitor the daily performance of education and health Much corruption thrives in the gloom, in the services.

154 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT 7. Support Citizen Action WHAT INDIVIDUALS CAN DO The primary responsibility for tackling corruption lies with Some of the most striking successes in governments. However with cooperation from businesses and civil addressing corruption have occurred where society organizations that have the resources and the skills to carry local organizations have taken the initiative out the necessary changes, individuals also have the power to to monitor public works and investigate the contribute. What can individuals do? As citizens and consumers, some of the ways in which people can use their power include: extent to which officials and contractors have fulfilled their commitments. This has enabled Know your rights. Learn about your legal rights and entitlements such civil society organizations, local communities as the right to information or eligibility under government schemes. and local governments to work together to Exercise consumer power. Patronize only businesses you believe to be supervise public projects. Given that local behaving ethically and responsibly; your money is your economic vote. governments usually have a limited capacity Encourage politicians fighting corruption. Vote for people who vow to to monitor projects themselves, they could tackle corruption and check whether they are following through on take greater advantage of these opportunities their promises. by regularly publishing the basic information on contracts to facilitate citizen auditing. At Support community groups who check local services. This would include, for instance, parent-teacher associations to watch over the conduct of the same time there are many other actions school management and neighbourhood groups which monitor social that people can take as individuals to combat services. corruption – asking questions – resisting Learn how to file complaints. Find out how to lodge complaints against demands for bribes, reporting the activities of corrupt services, whether directly or through NGOs, trade unions, or corrupt officials and refusing to deal with business organizations. corrupt businesses. Report corruption. Take the time to report any instance of corruption you have encountered, however minor. Taking the Higher Path Resist demands for bribes. While it may seem easier to pay bribes to The developing countries of Asia and the sidestep red tape or gain quicker access, in the long run almost Pacific are likely to shed many corrupt prac- everyone loses. tices, in both government and business, as a natural by-product of modernization. How- progress towards the achievement of the ever, they do not have to wait for development MDGs and undermine the prospects of many to take its course for this. Nor should they. poor households. Uprooting corruption can Just as most countries in the Asia-Pacific, in thus improve the quality of governance and order to improve the conditions of their boost economic efficiency, while reducing poorest communities, are designing targeted poverty and promoting human development. policies and programmes to eliminate poverty In this light, anti-corruption measures are not and meet the other MDGs, so too can they just concerned about prevention or devise programmes specifically to tackle punishment but also about establishing the corruption. As we have seen in this Report, values, institutions and systems that form the The history of some are already doing so. basis of fairer societies. There are options – corruption does not Indeed this focus on corruption serves a the history of corruption does not have to be have to be the similar purpose, since corruption can hinder the region’s destiny. region’s destiny

CHAPTER 8: DRIVING OUT CORRUPTION 155 Notes

Chapter 1 Denominator – The deflator used is ‘Political’, i.e. the number of articles (or pages) 1. Dreze and Sen 2002; Sen 1997a; Sen 1997b; containing the word ‘political’ (and its Sen 1999. variants) which standardizes the numerator count and accounts for the amount of space 2. Rajivan 2007b. given in the newspapers to stories about 3. This distinguishes corruption from other corruption and fraud. The series are expressed crimes or undesirable phenomenon that may as three-year centered moving averages. also need regulation – murder, break-in, Data sources – The information is from two littering, etc. sources: (a) The NY Times, regarded as a 4. An example of differences in norms within national newspaper of record, distributed the same country relates to punctuality. In the internationally, and (b) Ancestry.com a UK, for example, while people are expected to website which has records of scanned come to a meeting on time, in social situations newspapers from small towns and cities across if the guests arrive on the dot they may find the USA, beginning in the late 1700s to the the hosts still in the process of getting dressed. present, providing data from a cluster of In the context of corruption, bribing a police newspapers. constable for a traffic violation is corruption, 11. Tran 2007. but when the same constable leaves a roadside café after a snack without paying, it may be 12. The Standard 2006. seen as perfectly natural. In fact if the 13. UNDP 2007b. constable insists on paying, that may be 14. See Technical note 1 for a summary of various considered odd, even suspicious – perhaps a measures of corruption. raid is being planned? 15. Lederman et al. 2001; Linz 1978; Panizza 2001. 5. For example, in rural India the poor may think 16. Gerring and Thacker 2004; Kunikova 2005. it is perfectly legitimate to draw water from 17. Fisman and Gatti 2002; Root 1999; Treisman pipelines that take water to the city (making 1999. unauthorized holes in the pipes with the knowledge of field staff of the water board – 18. Fisman and Gatti 2002; Huther and Shah 1998; even paying them a ‘fee’) when the pipes pass Knack and Azfar 2003. through wayside villages without serving 19. Durlauf et al. 2005; Mauro 1995. them. But the city dwellers, and even the 20. Bardhan 1997. water board, would consider such local 21. Kaufman and Wei 1999; Svensson 2003; collusion a form of corruption - field staff Seligson 2002. collecting bribes in return for turning a blind 22. Lui 1985. eye to the water theft and damage caused to the infrastructure. 23. Acemoglu and Verdier 1998; Murphy et al. 1993. 6. Kaufmann and Vicente 2005. 24. Sarte 2000. 7. Gampat 2007a. 25. Barro 1990. 8. La Porta et al. 1997; Lipset and Lenz 2000; Paldam 2002; Triesman 2000. 26. Murphy et al. 1993. 9. Kautilya, The Arthashastra. Edited, 27. Li, et al. 2000. rearranged, translated and introduced by L.N. 28. Gyimah-Brempong and Gyimah-Brempong Rangarajan in 1992. 2006. 10. Numerator – The count of the number of 29. Knack and Keefer 1995; Mauro 1995. articles or pages containing the words 30. Mo 2001. ‘corruption’ and ‘fraud’ (and their variants, 31. Rock and Bonnett 2004. such as ‘corrupt’ or ‘fraudulent’). 32. Shleifer and Vishny 1993.

156 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT 33. Campos, Lien and Pradhan 1999. 26. http://www.unodc.org/pdf/corruption/ 34. Rock and Bonnett 2004. corruption_judicial_res_e.pdf 35. Bardhan 1997. 27. Jayawickrama 2007. 36. Johnson and Mitton 2001. 28. Netto 2007. 37. Gampat, Sarangi and Wickramarathne 2007. 29. A television channel in India has used its 38. LankaNewspapers.com 2006. At the time of media power through a sting operation to publication SLR110 = $1. demonstrate how the legal system may have been subverted in cases concerning the rich. 39. Keen and Smith 2007. See Aggarwal 2007. 40. For a survey of the empirical evidence that 30. Rajivan 2007a. corruption reduces overall tax revenues, see Abed and Gupta 2002. 31. World Bank 2001. 41. Sanyal et al. 2000. 32. Bharuka 2005. 42. Mauro 1997; Shleifer and Vishny 1993. 33. Xie 2007. 43. Delavallade (n.d.) 44. Akcay 2006. Chapter 3 45. Gupta et al. 1998. 46. Kaufmann et al. 1999. 1. Prevenslik-Takeda 2006. 47. Gupta et al. 2002. 2. Lewis 2006. 48. Hunt and Laszlo 2006; Kaufmann et al. 2005. 3. Ibid. 4. Lewis 2007. Chapter 2 5. Prevenslik-Takeda 2006. 6. Lewis 2006. 1. UNODC 2005. 7. Azfar and Gurgur 2001; Azfar et al. 2001. 2. Azfar and Gurgur 2005. 8. Azfar and Gurgur 2001. 3. World Bank 2000. 9. Gupta et al. 2000. 4. Centre for Policy Alternatives 2007. 10. Lewis 2006. 5. Asian Human Rights Commission 2005. 11. Barber, Bonnet, and Bekedam 2004. 6. Olken and Barron 2007. 12. BBC News 2005. 7. Hasan 2006. 13. Campos and Pradhan 2007. 8. Nissen 2005. 14. Wei 2007. 9. Bhowmik 2005. 15. UNESCO and IIEP 2007. 10. At the time of publication INR 38 = $1. 16. Bennet 2000. 11. National Human Rights Commission n.d. 17. Community Information and Epidemological 12. Jha 2003. Technologies 1999. 13. Centre for Policy Alternatives 2007. 18. U4 Anti-Corruption Centre n.d. 14. Daily Times 2007. 19. Chaudhury et al. 2006. 15. Amnesty International Malaysia 2007; 20. Luo and Ye 2005. International Herald Tribune 2007. 21. Knack and Sanyal 2000; Mauro 1998. 16. Masud 2002. 22. Gupta et al. 2000. 17. Commonwealth Human Rights Initiative 2003. 23. Johnston 2007. 18. Transparency International 2007. 24. Banerjee and Duflo 2006. 19. Supreme Court of Pakistan 2007. 25. Chapman 2002. 20. UNDP and Center for Policy and Human 26. UNICEF Islamabad (Pakistan) 2007. Development 2007. 27. UNICEF Islamabad (Pakistan) 2007. 21. The Sunday Times 2000. 28. UNESCAP et al. 2007. 22. Rajivan 2007a. 29. DFID 2002. 23. Khan and Khan 2003. 30. Sohail and Cavill 2007. 24. Transparency International Bangladesh 2005b. 31. Stålgren 2006. 25. Ahmad et al. n.d. 32. Gulati and Rao 2007.

NOTES 157 33. The Economic Times 2007. 14. OECD 2007. 34. ADB 2005. 15. UNDP 2006. 35. Sohail and Cavill 2007. 16. Hussain 2005. 36. Wax, Emily 2007. 17. FAO 2006. 37. Transparency International India 2005. 18. OECD 2007. 38. Gulati and Rao 2007. 19. Tidwell n.d. 39. Ibid. 20. Lowe 2002. 40. Stålgren 2006. 21. FAO 2003. 41. Gulati and Rao 2007. 22. OECD 2007. 42. Lovei and Whittington 1993. 23. World Bank 2006c. 43. Marketplace 2007. 24. USAID 2004. 44. Bearse et al. 2000. 25. UNEP 2007. 26. Environmental Investigation Agency 2005. Chapter 4 27. Kinshor and Damania 2007. 28. UNEP 2003. 1. Escaleras et al. 2006. 29. Jarvie et al. 2004. 2. Le Billion 2005. 30. Kinshor and Damania 2007. 3. Le Billion 2005. 31. OECD 2007. 4. Le Billion 2005. 32. Lin 2005. 5. OECD 2005. 33. WWF/TRAFFIC 2002. 6. Schultz and Soreide 2006. 34. World Bank 2005. 7. Olken 2007b. 35. World Bank 2005. 8. Rajivan 2007c; Burra 2007. 36. World Resources Institute in collaboration with 9. Larmour and Barcham 2005. United Nations Development Programme, United Nations Environment Programme, and 10. UNESCAP 2001. World Bank 2003. 11. Burra 2007. 37. World Resources Institute in collaboration with 12. UNESCAP 2001. United Nations Development Programme, 13. Olken 2007a. United Nations Environment Programme, and 14. Burra 2007. World Bank 2003. 38. Transparency International 2006c. Chapter 5 39. Environmental Investigation Agency/Telapak 2002. 40. Goodman and Finn 2007. 1. World Resources Institute in collaboration with United Nations Development Programme, 41. ADB 2006b. United Nations Environment Programme, and 42. ADB 2006b. World Bank 2005. 43. WWF n.d. 2. Seneviratne 2007. 44. Goodman and Finn 2007. 3. Greenpeace International 1997. 45. People’s Daily 2005. 4. USAID 2005. 46. Wade 1982. 5. Robbins 2000. 47. UNDP 2007. 6. Transparency International 2002. 48. Briscoe 2005. 7. Transparency International 2004. 49. Kachin Development Network Group 2007. 8. Transparency International Bangladesh 2005a. 50. Environmental Investigation Agency/Telapak 9. Viet Nam Net 2005. 2007. 10. UNDP 2004. 51. UNDP 2007. 11. OECD 2007. 52. Renner 2002. 12. Shah 2004. 53. Ngamcharoen 2001. 13. World Bank 2002. 54. World Resources Institute in collaboration with

158 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT United Nations Development Programme, 25. UNDP 2005. United Nations Environment Programme, and 26. UNDP 2005. World Bank 2003. 27. UNDP 2005. 55. Dogra 2007. 28. ADB/OECD Anti-Corruption Initiative for 56. World Bank 2006a. Asia and the Pacific 2004. 57. OECD 2007. 29. Independent Commission Against Corruption 58. Global Witness 2005. (2004; 2007). 59. Hawley 2003. 30. Quah 2007a. 60. Harris and Rajora 2006. 31. Corrupt Practices Investigation Bureau 2006. 61. Lin 2005. 32. Tan 1999. 62. TRAFFIC 2004. 33. Quah 2007b. 63. World Bank 2007a. 34. Dhiravegin 1978; Gonzalez and Mendoza 2004. 35. Partnership for Governance Reform 2001. Chapter 6 36. Transparency International 2002. 37. Stanway 2007. 38. Warwick 1987. 1. Stanmayer 2004. 39. Republic of Korea 1998. 2. Elliott 2007. 40. 2006. 3. Anti Corruption Commission 2007. 41. Naidu 2006. 4. World Bank 2006d. 42. End-use exemptions are a major source of 5. A questionnaire was sent to the governance corruption for taxes on many commodities and focal points of 23 UNDP country offices services. covering 35 countries for information on anticorruption agencies and legislation, media 43. Hines 2005. and access to information. More information 44. Asher 2001. on the survey can be accessed from 45. Aggarwal 1991. www.undprcc.lk. 46. These criteria were: ownership of a credit 6. ADB/OECD Anti-Corruption Initiative for card, ownership of a house, ownership of a Asia and the Pacific 2004. car, payment of an electricity bill of more than 7. Quah 2007a. Rs. 50,000 per month, leaving the country 8. Republic of Singapore 1994. during the year and membership of a club. The scheme was eliminated in 2006-07 9. ICAC 1989. (Aggarwal 1991). 10. Quah 2007a. 47. International Tax Dialogue 2005; Keen and 11. http://cvc.nic.in/cvc_back.htm Smith 2007. 12. Quah 2007a. 48. Kpundeh 1998. 13. Section 8 Anti-Corruption Act of 1997. Cited 49. Chan 2007. in Quah 2007a. 50. Estache et al. 2000. 14. http://www.paclii.org/pg/OC/main.htm 51. Banisar 2006. 15. Transparency International 2003. 52. Inernational Press Institute 2006. 16. Quah 2007a. 53. No. 22 of the 2005 Indian Right to Information 17. Office of the Ombudsman Republic of the Act. Cited in Mendel 2007. Philippines n.d. 54. Articles 9-12. Cited in Mendel 2007. 18. Quah 2007a. 55. Mendel 2007. 19. Upadhyay 2002. 56. Section 4 (3) and (4) of the 2005 Indian Right 20. Korea Independent Commission Against to Information Act. Cited in Mendel 2007. Corruption 2006. 57. Article 9 under the 2002 Federal Transparency 21. Quah 2007a. and Access to Public Government Information 22. UNDP 2005. Law. Cited in Mendel 2007. 23. Commission Against Corruption 2006. 58. The Freedom of Information Act 2000, section 24. Davidsen et al. 2006. 19. Cited in Mendel 2007.

NOTES 159 59. Section 24(1) of the 2005 Indian Right to 8. Coronel 2007. Information Act. Cited in Mendel 2007. 9. Coronel 2007. 60. The 1999 Law Concerning Access to Informa- 10. Kristof 2005. tion Held by Administrative Organs – Article 11. Giridharadas 2007. 5. Cited in Mendel 2007. 12. Sen 1999. 61. Section 15(2) and 15(3) of the 1997 Thai 13. Coronel 2002. Official Information Act. Cited in Mendel 2007. 14. See the 2007 case of Uma Khurana in India. 62. Section 8(2) of the 2005 Indian Right to 15. Perry 2002. Information Act and Article 7 of the 1999 Law 16. Coronel 2002. Concerning Access to Information Held by 17. Khadka 2007. Administrative Organs. Cited in Mendel 2007. 18. Keaeke 2003. 63. Section 17 of Article XI of the 1987 Consti- 19. USAID 2006. tution. 20. Development Gateway Foundation 2004. 64. Section 8 of Republic Act No. 6713 on 21. For example, six attempts of judicial review standards for public officials. Cited in Mendel have been submitted to the Constitutional 2007. Court challenging the authority of KPK. 65. Bharuka 2005. 22. A senior Government official once attributed 66. Central Vigilance Commission n.d. the slow process of development in one region 67. Choi and Moon-Suk 2001. of the country to efforts to eradicate 68. Bhatnagar and Chawla 2001. corruption. 69. ADB/OECD 2006b. 23. Deliberation of draft laws initiated by the 70. Control Risks Group Limited and Simmons & public, such as those concerning Freedom for Simmons 2006. Public Information and establishment of an ombudsman’s office, has been delayed since 71. UNGC (United Nations Global Compact) n.d. 2000. 72. Financial Action Task Force on Money Laun- 24. Slim 2002. dering n.d. 25. Stephens and Tazi 2006. 73. World Bank and UNODC (United Nations Office on Drugs and Crime) 2007. 26. Pongsapich n.d. 74. World Bank and UNODC (United Nations 27. Fox 2000; Transparency International 2000a. Office on Drugs and Crime) 2007. 28. Wilson 1973. 75. In 2000, two countries, Australia and the 29. ADB/OECD 2006a. Republic of Korea, are in both the OECD and 30. Transparency International 2000b. Asia Pacific. Diamond and Diamond 2002; 31. Ramkumar and Krafchik 2005. Hines and Rice 1994; OECD n.d.(a); OECD 32. Dharmaraj 2007. n.d.(b). 33. ADB/OECD 2000. 76. Capgemini and Merrill Lynch 2006. 34. Korean Educational Development Institute 77. EIA 2007. 2003. 78. World Bank and UNODC (United Nations 35. Andersson et al. 2005. Office on Drugs and Crime) 2007.

Chapter 7 Chater 8

1. BBC News 2001. 1. The idea of a ‘sandwich’ situation in public 2. Taylor 2005. policy – a combination of pressure from above through political will, retained over time 3. Coronel 2007. through public expectations from below – has 4. Brunetti and Weder 2003. been discussed earlier in the context of 5. Ferdinand 2003. combating hunger and reducing malnutrition. 6. Ferdinand 2003. 2. Developing countries here refer to UNDP 7. Struck 2000. programme countries.

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BIBLIOGRAPHY 179

182 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Readers’ Guide and Notes to Tables

This guide contains statistics pertaining to Data Sources and Inconsistencies corruption and human development in all countries and territories of the Asia-Pacific The Regional Human Development Reports region. The indicators are grouped into three Unit is a user of datasets, not a producer. The broad categories: (1) popular measures of Report draws from data produced by inter- corruption, (2) political economy conditions national institutions with the resources and that could be linked to corruption, and expertise to collect them. Data sources are (3) socio-economic factors. This last category given in abbreviated form at the end of each includes the human development index table, while the full citations are available in (HDI) and indicators relating to the the statistical reference. These sources are Millennium Development Goals (MDGs). UNSTAT online, The World Bank, UNDP Global HDR (not a data producer), Univer- Data Coverage sity of Maryland, Transparency International and International Country Risk Guide For the purposes of this report, countries and (ICRG) ratings by Political Risk Service (PRS) territories in the Asia-Pacific region have been group. Use has also been made of online grouped into three categories: East Asia, sources but URLs may change over time, South and West Asia, and the Pacific. The which explains why the date of access of a total number of countries and territories is given website is mentioned for all online 44: 18 from East Asia (Brunei Darussalam, sources. Cambodia, China, Hong Kong China (SAR), Because international sources often rely Indonesia, Japan, Korea Rep. of, Korea DPR, on data supplied by national authorities, there Lao PDR, Macao China (SAR), Malaysia, can be inconsistencies between the data Mongolia, Myanmar, Philippines, Singapore, reported by these two sources. There are Thailand, Timor-Leste, Viet Nam); 9 from several reasons for this. International data South and West Asia (Afghanistan, agencies often apply international standards Bangladesh, Bhutan, India, Iran Islamic Rep. and harmonization procedures to improve of, Maldives, Nepal, Pakistan, Sri Lanka); comparability across countries. When inter- and 17 from the Pacific (Australia, Cook national data are based on national statistics, Islands, Fiji, Kiribati, Marshall Islands, as they usually are, national data may need to Micronesia Fed. Sts., Nauru, New Zealand, be adjusted. When data for a country are Niue, Palau, Papua New Guinea, Samoa, missing, an international agency may produce Solomon Islands, Tokelau, Tonga, Tuvalu, an estimate. Because of the difficulties in Vanuatu). They are presented in alphabetical coordination between national and interna- order within groups. Blanks (..) indicate non- tional data agencies, international data series availability of data. may not incorporate the most recent data.

INDICATORS 183 All these factors can lead to inconsistencies larly in terms of their empirical coverage of between national and international estimates. the Asia-Pacific region. First, the World As international data agencies conti- Bank’s Control of Corruption Index (CCI), nually improve their data series, including which captures corruption for a large number updating historical data periodically, the of countries, draws upon multiple sources of indicators across editions of the RHDR may data. Second, another popular measure of not be comparable. corruption is the International Country Risk Guide (ICRG) corruption risk ratings by the Timelines Political Risk Services (PRS) group. However, it primarily caters to business interests, This report uses the most recent information which limits its use for broader analytical available as of September 2007. In addition, purposes. Third, perhaps the most popular data are presented at different points in time, measure of corruption is Transparency in order to capture trends over a longer International’s (TI) Corruption Perceptions period. Thus, the tables present data on most Index (CPI). This report does not make indicators at five-year intervals (i.e. 1990, extensive use of the CPI because this index 1995, 2000) and the latest year for which relies heavily on perceptions. The three data are available for most countries. For indices are briefly discussed in the sections example, the latest Corruption Perceptions that follow. Index refer to 2007 while some socio- economic indicators refer to 2004. The latest Control of Corruption Index data for most indicators are for 2005. How- ever, data for all four reference points are not The CCI, produced by the World Bank, available for some indicators. This gap has measures the extent to which public power is been addressed, whenever possible, by report- exercised for private gain. This includes both ing data for the year nearest the reference petty and grand forms of corruption, as well points. as ‘capture’ of the state by elites and private actors. It is based upon surveys of business Country Notes leaders, public opinion and assessments by country analysts and is available for 213 Data for China do not encompass Hong Kong, countries and territories for the years 1996, China (SAR), Macao, China (SAR) or Taiwan 1998, 2000, and 2002 to 2006. The CCI Province of China, unless otherwise noted. values are normally distributed with a mean Timor-Leste became an independent country of zero and a standard deviation of one in each on May 20, 2002. Data for Indonesia include period. The values of the CCI range from Timor-Leste through 1999, unless otherwise minus (–)2.5 to 2.5, with higher values noted. indicating higher control of corruption; conversely, lower values indicate higher NOTES ON SELECT INDICATORS corruption. IN THE TABLES ICRG Corruption Score Table 1: Popular Measures of Corruption The ICRG corruption scores, produced by The RHDR tables present the three most PRS, are assessments by staff and relate to popular ‘measures’ of corruption, particu- actual and potential corruption in the

184 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT following forms: excessive patronage, nepo- To some extent, most of these measures tism, job reservations, ‘favour-for-favours’, rely on perceptions. Data based on percep- secret party funding and suspiciously close tions are generally problematic, in that they ties between politics and business. The ICRG tell us more about the respondents than corruption scores are available for 146 about corruption itself, and there is a wide countries from 1984 to 2006. The scores gap between perceived and ‘experienced’ range from 0 to 6, where 0 indicates the corruption. Perceptions are also particularly highest potential risk of corruption and 6 troublesome as a source of comparative data. indicates the lowest potential risk for any Specifically, once the reputation of a country country. Higher corruption signifies that high has been established – in part through media government officials are likely to demand attention to CPI rankings – it appears that special payments and that illegal payments subsequent CPI measures are strongly are generally expected throughout lower levels affected by previously published measures of government. This can transpire in the form and thus are not independent. There are also of bribes connected with import and export grounds for believing that measures may licenses, exchange control, tax assessment, reflect certain observable factors, such as police protection or loan transactions. poverty or poor economic performance, which are assumed to be consequences of corruption Corruption Perceptions Index and hence used to impute (backwards) the presence of corruption. In either case, because The CPI, produced by TI, is a composite index measures are not firmly rooted in first-hand that draws upon surveys of business people experience with corruption, it is hard to have and assessments done by country analysts. strong confidence in comparisons of percep- The CPI ranks countries in terms of the degree tion-based measures of corruption, over time. to which corruption is perceived to exist Then there is the issue of sample design among public officials and politicians. The and the design (and wording) of question- CPI started with 41 countries in 1995 and naires. Because ‘corruption’ can mean many expanded to 180 countries in 2007. The CPI things, questions that use this word without values vary from 0 to 10. A lower value defining it, are of little use in an attempt to indicates high corruption perception in any estimate the level of corruption across country, while a higher value is an indicator countries or over time. Indeed, it is hard to of low corruption perception. compare the responses from vaguely worded questions in any meaningful way. Yet such Comparison of Corruption Measures practices are common in questionnaires used Across Countries and Time to gather data for popular measures. Like- wise, when different questionnaires that use The above measures of corruption must be different questions are used to produce an interpreted and used with care, not only index, the lack of uniformity weakens the because corruption is largely an unobservable basis for comparison. The desire to construct phenomenon but also because different indices of broad empirical scope and to definitions, data sources and methodologies develop time series is understandable and to collect, process and aggregate data are often such attempts deserve to be supported. used.1 Nevertheless, it is also important to underline

1 For detailed discussion, See Hawken and Munck 2007.

INDICATORS 185 Name of index Strengths Weaknesses Control of corruption • Broad empirical scope • Perceptions-based, vague and variable ques- index (CCI) • Attempt to construct an index encompass- tions; variable sample design ing many manifestations of corruption • Aggregation of conceptually unrelated indica- tors; questionable aggregation rule • Many of the sources of data cater to the needs of the business interest Corruption perceptions • Broad empirical scope • Perceptions-based, vague and variable ques- index (CPI) • Attempt to construct an index that tions; variable sample design captures mostly bureaucratic corruption • Aggregation of conceptually unrelated indica- tors; questionable aggregation rule • The methodology of construction of index changes over time • CPI mostly captures bureaucratic corruption, not political • The subjective assessments by business people are prone to bias because of business interests ICRG corruption scores • Attempts to capture actual and potential • Assessments by staff corruption in the form of excessive • Looks at corruption through business interests patronage, nepotism, job reservations, only ‘favour-for-favours’, secret party funding, and suspiciously close ties between politics and business

Source: Based on Hawken and Munck 2007.

the problems involved in questionnaires that 62 low-, middle- and high-income countries. clearly were not designed to obtain equivalent The survey was carried out on behalf of TI by measures across time and space. Finally, Gallup International, as part of the Voice of sample sizes and the respondent pool of the the People Survey between July and surveys used to generate indices also vary September 2006. considerably, raising yet new questions about An interesting features of the GCB is that comparability. The need for further work to it measures the perception of corruption in develop and consistently apply an instrument different sectors/public institutions, such suitable for measuring corruption across time as: politician/political parties; parliament/ and space must be duly recognized. legislature; police; legal system /judiciary; tax revenue; business/private sector; medical Table 2: Corruption (Perceptions) in Public services; media; education system; utilities; Institutions, Media and NGOs registry and permit; services; the military; NGOs; religious bodies. These measures are Transparency International’s Global Corrup- ratings on a scale of 1 (not at all corrupt) and tion Barometer (GCB) explores how 5 (extremely corrupt). corruption affects ordinary people. The GCB provides an indication of both the form and Table 3: Impact of Corruption extent of corruption, from the viewpoint of (Perceptions) citizens around the world. The GCB 2006 is the fourth in a series from 2003 and reflects The Barometer, produced by TI, captures the the findings of a survey of 59,661 people in experience of bribery through sample surveys

186 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT during the previous 12 months. In addition, the military are not elected by anyone. The the Barometer measures people’s perception values of this indicator vary between 0 and 6. of the the impact of corruption on political Lower values indicate a greater degree of life, the business environment and on military participation in politics and a higher personal and family life. The scale goes from level of political risk. 1 (corruption has no impact) to 4 (corruption has a large impact). Table 5: Governance Climate

Table 4: Political Climate Political Stability

Extent of Democracy The index of political stability, produced by the World Bank, captures perceptions about Produced by the Centre for International the likelihood that the government will be Development and Conflict Management, destabilized or overthrown through unconsti- University of Maryland, the operational tutional or violent means, including political definition of a mature and internally coherent violence and terrorism. The index values vary democracy is one in which (a) political parti- between minus (–) 2.5 and 2.5; higher values cipation is fully competitive, (b) executive correspond to lower chances of government recruitment is elective, and (c) constraints on destabilization. the chief executive are substantial. The values of this measure vary between –10 (strongly Government Effectiveness autocratic) to +10 (strongly democratic). The index of government effectiveness, Durability of Current Political Regime produced by the World Bank, captures the following: quality of public services, quality Produced by the Centre for International of the civil service, degree of the civil services’ Development and Conflict Management at the independence from political pressures, qua- University of Maryland, this indicator refers lity of policy formulation and implementa- to the number of years since the most recent tion and credibility of the government’s regime change or the end of a transition commitment to such policies. The index period defined by the lack of stable political values vary between minus (–) 2.5 to 2.5; institutions. The first year of the new regime higher values correspond to better govern- is given the value 0. Each subsequent year ment effectiveness. adds one point. One must note that durability of the regime does not imply changes in the Government Stability political party in power but the number of years since the last substantive change in This indicator, produced by the PRS, authority characteristics. represents an assessment both of the government’s ability to carry out its declared Military in Politics programme(s) and its ability to stay in office. The indicator is composed of three sub- The PRS produced this measure which is components: government unity; legislative based on the premise that military involve- strength; popular support. The values of ment in politics (even at the peripheral level) this indicator vary between 0 and 12, where diminishes democratic accountability, since lower values indicate a lower degree of

INDICATORS 187 government stability and higher level of Rule of Law political risk. The rule of law, produced by the World Bank, Democratic Accountability measures the extent to which agents have confidence in and abide by the rules of society. The PRS-produced indicator of democratic It also measures in particular the quality of accountability is a measure of how responsive contract enforcement, the police and the a government is to its people. Its essential courts, as well as the likelihood of crime and message is that the less responsive it is, the violence. The index values vary between more likely the government is to fall, peace- minus (–)2.5 to 2.5; higher values correspond fully in a democratic society, but possibly to better rule of law. violently in a non-democratic one. The values depend on the type of governance experienced Law and Order in a particular country. The values of the indicator vary between 0 and 6. The highest Law and Order, produced by the PRS, are value (lowest risk) is assigned to alternating assessed separately, with each sub-component democracies, while the lowest value (highest comprising 0 to 3 points. The law sub- risk) is assigned to autarchies. component is an assessment of the strength and impartiality of the legal system, while the Bureaucracy Quality order sub-component is an assessment of popular observance of the law. Thus, a The indicator of bureaucracy quality, country can enjoy a high rating of 3 in terms produced by the PRS, measures the strength of its judicial system, but a low rating of 1 if and expertise of the bureaucracy to govern it suffers from a very high crime rate or if the without drastic changes in policy or interrup- law is routinely ignored without effective tions in government services. The values of sanction (i.e. widespread illegal strikes). The the indicator vary between 0 and 4. Higher values of the indicator vary between 0 and 6; values imply better bureaucracy. higher values indicate greater strength and implementation of the legal system. Table 6: Voice and Choice, and Legal Climate Table 7: Economic Climate

Voice and Accountability Regulatory Quality

The index of voice and accountability, The index of regulatory quality, produced by produced by the World Bank, measures the the World Bank, measures the ability of the extent to which a country’s citizens are able government to formulate and implement to participate in selecting their government, sound policies and regulations that permits as well as freedom of expression, freedom of and promotes private sector development. association and free media. The index values The index values vary between minus (–)2.5 vary between minus (–)2.5 to 2.5; higher to 2.5; higher values correspond to imple- values correspond to greater voice and mentation of sound policies and greater accountability. promotion of the private sector.

188 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Contd... c (CPI) TI’s corruption perceptions index b a Table 1: Popular Measures of Corruption Measures 1: Popular Table –0.79 –0.89 ...... 2.60 0.56 0.87 0.89 ...... 5.00 0.45 0.55 0.41 ...... 5.70 –1.91 –1.48 –1.47–0.14 –0.32 .. –0.51 ...... 2.50 1.80 .. .. 3.30 1.53 1.311.210.52 1.69 1.24 0.14 1.71 1.250.49 0.470.37 5.00 1.31 0.39 0.31 –0.31 3.25 5.002.25 0.25 –0.57 5.00 4.00 3.00 2.25 –0.54 0.38 3.00 4.00 3.50 2.25 4.00 4.00 2.50 7.01 3.50 2.30 3.00 3.00 2.50 7.70 7.05 4.00 2.00 2.42 5.02 8.30 6.40 4.00 2.00 2.38 4.00 8.30 7.30 4.50 5.30 5.00 .. 7.50 4.50 4.80 5.10 .. 8.80 5.05 3.00 9.10 5.10 3.00 9.40 9.30 0.37 0.35 0.25 0.24 4.00 3.00 2.50 2.50 ...... 1996 2000 2005 2006 1996 2000 2005 2006 1996 2000 2005 2007 –1.11 –0.91 –1.12 –1.19 ...... 2.29 2.00 –0.67 –0.72 –0.76–0.49 –0.66 –0.93–0.36–0.90 –1.23 –0.33 3.00 –0.51–0.31 –1.29 –0.33–1.04 2.00 –0.50 –0.43–0.27 –0.21 –0.76 2.00 1.50 –0.59 –0.73 –0.18 –1.03 3.00 2.00 –0.75 2.46 –0.30 4.00 –0.93 3.00 1.50 –0.29 4.00 .. .. 2.00 2.50 1.50 3.58 2.00 2.50 2.00 2.50 2.30 .. 4.00 2.00 2.58 1.50 2.60 2.50 – .. 2.60 1.50 .. 2.80 2.50 1.68 1.00 .. 2.91 .. 2.00 .. 3.50 .. 2.90 .. .. 2.09 2.50 .. 3.16 2.40 2.48 3.20 2.50 –0.09 –0.36–0.55 –0.68 –1.01 –0.53–0.33 –0.87–1.00 –1.93 2.00 –0.77 –0.90 –1.36 1.08 –1.08 3.00–1.21 –1.69–0.47 2.00 –1.05 –1.37 1.92 –0.50 2.50–0.39 1.88 –1.54 1.00 –0.59 .. –0.13 2.00 –1.68 2.40 2.33 –0.69 –0.22 1.00 1.83 .. 3.10 –0.26 2.70 3.00 1.00 1.00 3.22 3.00 .. 1.70 2.42 1.00 3.50 .. 2.25 2.23 2.00 .. 1.00 1.50 2.30 2.00 .. .. 1.50 .. 2.70 .. 3.30 2.80 .. .. 3.20 .. 2.50 3.27 1.80 3.81 2.50 1.90 1.40 3.30 Countries corruption index (CCI) Sub-regions / of Bank’s control The World ICRG corruption score China (SAR) Viet Nam Asia South and West AfghanistanBangladesh BhutanIndia of Islamic Rep. Iran, .. MaldivesNepal Pakistan Sri Lanka .. .. Indonesia of Rep. Korea, DPR Korea, Mongolia Myanmar Thailand Hong Kong, Japan Lao PDR Macao, China (SAR)Malaysia .. Philippines Singapore Timor-Leste .. .. East Asia Brunei Darussalam Cambodia China POPULAR MEASURES OF CORRUPTION POPULAR MEASURES OF CORRUPTION POPULAR MEASURES OF CORRUPTION POPULAR MEASURES OF CORRUPTION POPULAR MEASURES OF CORRUPTION

INDICATORS 189 higher values c tion. (CPI) TI’s corruption perceptions index b a –0.09 –0.07 ...... 0.15 –0.60 –0.35 ...... 4.00 .. –0.85 0.26 0.20 ...... 3.10 –0.10–0.22 0.63–0.68–0.32 0.22 0.66 –0.44 –0.28 0.08 –0.53 .. –0.27 .. ..–0.02 .. ..–0.98 0.17 ..–0.58 .. 0.02 .. .. 0.22 –1.29 –0.29 .. .. –1.29 ...... 3.30 ...... – ...... 2.80 .. 1.70 1.85 1.96 1.97 1.992.28 5.00 2.16 5.00 2.25 5.00 2.38 4.63 5.50 8.60 5.00 8.30 5.50 8.80 5.50 8.60 9.40 9.40 9.60 9.40 1996 2000 2005 2006 1996 2000 2005 2006 1996 2000 2005 2007 –0.31 –0.78 –1.12 –1.13 3.00 2.08 1.00 1.00 .. .. 2.30 2.00 (a) World Bank 2007a; (b) The PRS (Political Risk Services) Group 2007; (c) TI (Transparency International) 2007a (c) TI (Transparency 2007; Risk Services) Group (b) The PRS (Political Bank 2007a; (a) World CCI values range between –2.5 to 2.5; higher represent greater control of corruption. ICRG 0 6; Countries corruption index (CCI) Sub-regions / of Bank’s control The World ICRG corruption score represent low potential risk of corruption. CPI values range between 0 and 10; higher perception corrup Sources: Contd... Pacific Australia VanuatuNotes: .. Cook Islands .. NiuePalau Guinea New Papua ...... FijiKiribatiMarshall Islands Sts. Fed. Micronesia, NauruNew Zealand ...... SamoaSolomon Islands ..TokelauTongaTuvalu ...... 0.11 ......

190 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Contd... Media NGOs egistry and permit Utilities R system Education services revenue system/ Tax Medical Judiciary Table 2: Corruption (Perceptions) in Public Institutions, Media and NGOs 2: Corruption (Perceptions) Table Police Legal 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 tries Coun (SAR) China (SAR) of Rep. Sub-regions/ East Asia Brunei Darussalam ..CambodiaChina ..Hong Kong, ..Indonesia ..Japan 3.0 .. .. of Rep. Korea, .. 3.4 DPRKorea, .. 2.5 4.2 .. ..Lao PDR 3.8 2.6 4.2Macao, China .. 3.3 .. .. 3.9 .. 2.1 4.2 3.6Malaysia .. 3.6 .. 2.3 4.2 .. ..Mongolia 3.5 .. .. 3.1 2.1 4.0Myanmar .. .. 3.4 .. ..Philippines .. 3.0 .. 2.6 3.4 3.3 3.8 ..Singapore .. 3.4 .. .. 2.2 3.0 .. .. 3.4Thailand .. 3.8 3.2 .. 2.6 3.0 ..Timor-Leste .. .. 4.2 3.1 .. 2.9 ...... 3.7Viet Nam 2.0 3.2 3.9 3.5 .. 1.7 2.8 ...... Asia 3.6South and West 2.4 3.3 ...... 3.6 3.3 1.9 2.6 .. ..Afghanistan 3.1 .. 3.1 1.8 ...... 3.4 2.5 1.7 2.5 ...... Bangladesh .. 3.1 2.9 2.2 .. 3.6 .. 3.8 2.4 .. 2.0 2.2 ..Bhutan ...... 3.0 3.7 3.0 .. .. 3.0 3.7India 2.5 .. 1.6 2.1 ...... 3.0 3.6 3.7 ..Iran, Islamic 3.2 2.4 .. 1.8 .. .. 2.3 ...... 2.6 .. 2.6 2.6 2.4 .. .. 2.9 .. 3.6 .. 1.6 2.2 .. 3.4Maldives ...... 2.8 3.4 2.7 ...... 3.3 .. 3.5 1.8Nepal 2.2 ...... 2.4 3.3Pakistan .. .. 3.0 4.5 2.8 .. 2.8 1.6 2.2 ...... 3.0 2.9 Sri Lanka 3.4 ...... 3.3 4.3 2.9 1.8 3.2 ...... 2.9 ...... 2.9 4.0 1.5 .. 3.1 ...... 2.3 .. .. 3.0 .. .. 3.6 .. .. 3.4 1.8 4.4 2.4 .. .. 2.8 ...... 3.2 .. 3.4 4.4 1.5 2.4 ...... 2.8 .. 4.1 3.0 1.8 2.4 .. .. 2.8 ...... 2.5 ...... 2.5 3.8 2.0 3.8 2.2 ...... 2.9 4.0 2.2 3.1 ...... 2.6 2.6 3.0 .. 3.9 2.2 3.8 ...... 3.8 2.5 3.1 ...... 3.4 .. .. 3.5 ...... 2.9 .. .. 2.4 ...... 3.6 2.8 ...... 3.1 3.7 ...... 2.6 3.8 ...... 3.3 .. .. 2.8 ...... 3.8 .. 2.7 ...... 3.9 .. 2.4 .. 2.9 .. .. 2.7 3.9 ...... 2.7 ...... 3.5 .. 2.9 ...... 3.6 ...... 3.3 ...... 3.4 ......

INDICATORS 191 e 1 to 5. 1 = Not e 1 to 5. Media NGOs egistry and permit Utilities R system Education services revenue system/ Tax Medical Judiciary Police Legal 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 2004 2006 tries TI (Transparency International) 2007b. TI (Transparency TI’s Global Corruption Barometer measures people’s perception of corruption in different sectors/public institutions on a scal Coun Fed. Sts. Fed. Sub-regions/ Pacific AustraliaCook IslandsFijiKiribati .. ..Marshall IslandsMicronesia, ...... Nauru ...... New Zealand ..Niue 3.2 ...... Palau ...... Guinea New ..Papua ...... Samoa 3.2 ...... Solomon Islands ...... Tokelau ...... 3.3Tonga ...... Tuvalu ...... 3.1 ...... 3.0 ...... 3.3 ...... 3.0 ...... 2.7 ...... 2.2 ...... at all corrupt; 5 = Extremely corrupt. Source: Contd... VanuatuNotes: ......

192 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Table 3: Bribe Paying and Impact of Corruption (Perceptions)

Sub-regions/Countries Bribe paying in the past year Impact of corruption on 1 (% of sample persons) Political life business environment Personal and family life 2004 2006 2004 2006 2004 2006 2004 2006 East Asia Brunei Darussalam ...... Cambodia ...... China ...... Hong Kong, 1.0 6.0 2.9 3.4 2.6 3.2 2.2 2.8 China (SAR) Indonesia 13.0 18.0 3.2 3.4 3.1 3.2 2.6 2.9 Japan 1.0 3.0 2.3 3.1 2.2 2.7 1.8 1.9 Korea, Rep. of 6.0 2.0 3.5 3.7 3.4 3.6 3.0 3.0 Korea, DPR ...... Lao PDR ...... Macao, China (SAR) ...... Malaysia 3.0 3.0 3.0 2.9 2.9 2.7 1.6 1.6 Mongolia ...... Myanmar ...... Philippines 21.0 16.0 3.3 3.4 3.2 3.4 3.2 3.4 Singapore 1.0 1.0 2.2 2.9 2.3 3.0 1.7 2.2 Thailand .. 10.0 .. 3.0 .. 3.0 .. 2.7 Timor-Leste ...... Viet Nam ...... South and West Asia Afghanistan .. .. 2.4 .. 2.4 .. 2.0 .. Bangladesh ...... Bhutan ...... India 16.0 12.0 2.9 2.9 2.9 2.6 2.9 2.3 Iran, Islamic Rep. of ...... Maldives ...... Nepal ...... Pakistan 19.0 15.0 2.9 3.1 2.9 2.9 2.8 2.4 Sri Lanka ...... Pacific Australia ...... Cook Islands ...... Fiji .. 3.0 .. 3.1 .. 3.0 .. 2.5 Kiribati ...... Marshall Islands ...... Micronesia, Fed. Sts...... Nauru ...... New Zealand ...... Niue ...... Palau ...... Papua New Guinea ...... Samoa ...... Solomon Islands ...... Tokelau ...... Tonga ...... Tuvalu ...... Vanuatu ...... Notes: 1 Transparency International’s Global Corruption Barometer (GCB) reflects the findings of survey of ordinary people. The GCB 2006 survey covers 59,661 people in 62 countries and GCB 2004 survey covers over 50,000 people in 64 countries. Impact of corruption: The values of the indicators vary between 1 and 4. [1 = Not at all; 4 = to a large extent] Source: TI (Transparency International) 2007b.

INDICATORS 193 Contd... b (years) a Durability of current politicalpolitics in Military a Table 4: Political Economy – Political Climate – Political Economy 4: Political Table mocracy 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2006 Countries regime Sub-regions/ de of Extent China (SAR) East Asia Brunei DarussalamCambodiaChina ..Hong Kong,Indonesia ..Japan 1 of Rep. Korea, DPRKorea, .. –7 ..Lao PDR 1Macao, China (SAR) –7Malaysia 6 .. –7Mongolia .. .. –9 10Myanmar 2 –7Philippines –7 6 .. –7Singapore .. .. –9 10Thailand 2 6 –7Timor-Leste 4 –7 8 .. 2 –9Viet Nam 10 .. .. –7 0 8 Asia South and West 41 8 –7 3 8 –2 ..Afghanistan –9 10 9 –7 .. ..Bangladesh 23 .. 46 3 2 8 –7Bhutan –2 3 –7 42 2 .. 38India 10 –7 .. .. of Islamic Rep. 28Iran, 51 .. 9 2 –8 15 8Maldives –2 –7 47 3 43 10 7 –8 –5 –6 ..Nepal 5.0 55 ..Pakistan 1 20 .. 9 0 6 –2 8Sri Lanka –7 52 –8 19 48 27 12 –6 5.0 0 6 .. 2.0 .. 25 5 8 –7 25 6 9 .. –7 56 –8 3 24 52 .. 5.0 32 16 6.0 2.0 3 3 6 0.3 29 5 .. 8 30 9 2.0 12 .. 36 –8 6.0 .. 29 5 5.0 4.9 .. 37 8 2.0 6.0 .. –6 8 6 2.0 .. 1.0 35 5 6.0 10 .. 41 –8 8 5.0 33 9 3 3.0 41 3.0 .. 13 5 .. .. 8 12 1.8 8 1.0 39 6.0 5.0 5.0 83 46 .. –6 6 1.0 5.0 0 .. 17 9 8 .. 5 .. 2.5 13 5.0 .. 1.0 6.0 5.0 4 4.0 5.0 88 50 –5 0.0 –6 1.0 .. 40 12 4 .. 5.0 2 5 3 .. 6.0 5.0 2.2 0.0 93 9 3.0 2 1.0 45 0 .. 5.0 0 .. 42 .. 6.0 0 5.0 .. 2.0 0.5 97 4.0 13 3.0 50 5.0 7 5 47 .. 5.0 4.0 .. 2.0 3.5 1.0 .. 4.0 .. 54 10 1 52 5.0 .. 3.0 3.0 .. 3.9 .. 4.0 .. 2 56 5 5.0 3.0 .. .. 5.0 .. .. 5.0 5.0 0.0 .. 2.9 .. 3.0 4.4 .. 1.0 .. .. 4.0 2.0 0.0 .. .. 2.0 1.0 .. .. POLITICAL ECONOMY POLITICAL ECONOMY POLITICAL ECONOMY POLITICAL ECONOMY POLITICAL ECONOMY

194 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT of b (years) a Durability of current politicalpolitics in Military a mocracy : Does not imply change in the political party power but number of years since last substantive : The values vary between –10 (strongly autocratic) to +10 democratic). 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2006 : Values vary between 0 and 6. Lower scores indicate a greater degree of military participation in politics and a higher level of military participation in politics and a higher level degree indicate a greater scores 0 and 6. Lower between vary : Values (a) University of Maryland 2004; (b) The PRS (Political Risk Services) Group 2007. Risk Services) Group of Maryland 2004; (b) The PRS (Political (a) University Extent of Democracy

Countries regime Sub-regions/ de of Extent political risk. Sources: Contd... VanuatuNotes: ...... Durability of current political regime in authority characteristics. The first year of the new regime is given the value=0. Each subsequent year adds one. Each subsequent year the value=0. is given regime of the new The first year in authority characteristics. Military in Politics Pacific AustraliaCook IslandsFijiKiribatiMarshall Islands Sts. Fed. Micronesia, 10 ..NauruNew Zealand .. ..Niue 10 ..Palau .. 5 Guinea New Papua .. .. 10Samoa 10 ..Solomon Islands 10 .. 5 ..Tokelau .. 10 10 ..Tonga 10Tuvalu ...... 5 .. 8 .. 89 .. 10 .. 10 ...... 6 .. 8 94 .. 10 ...... 10 ...... 113 99 .. 0 .. 0 ...... 15 .. 118 103 ...... 5 .. 8 .. .. 20 .. 123 .. 6.0 ...... 12 .. 0 .. 25 127 ...... 6.0 ...... 17 .. 6.0 .. 3 29 .. 6.0 ...... 6.0 0 .. 5.0 .. 6.0 ...... 6.0 4.0 ...... 0 ...... 6.0 .. 3.0 ...... 4.5 ......

INDICATORS 195 b Contd... Bureaucracy quality b Democratic accountability b Government stability 10.0 10.0 10.8 11.5 2.0 1.0 0.0 0.5 3.5 3.5 3.0 3.2 a Government effectiveness Table 5: Political Economy – Governance Climate – Governance Economy 5: Political Table –0.5 –0.3 –0.5 5.4 6.0–0.2 9.9 –0.4 7.5 –0.4 2.0 6.0 2.0 7.4 4.4 11.0 10.5 4.0 1.4 2.9–0.1 3.0 2.0 0.5 1.0 2.0 0.0 1.0 2.0 .. 1.0 .. 2.0 2.0 .. 2.0 ...... a –1.0–1.0 0.4 0.1 .. 0.3 .. 5.8 –0.7 5.2 .. 10.0 8.6 .. 3.0 .. 3.4 4.0 .. 4.5 .. 3.5 .. 3.5 2.0 .. 2.0 ...... stability –0.7 –0.1 –0.1 –0.8 –0.9 ...... –1.4–0.3 –0.8 –0.5 –0.1 –0.4 –1.1–0.8 –0.8 0.2 –1.8 –1.0 0.0 –1.2–1.8 .. 0.0 0.1 –0.1 –0.5 4.0 .. –0.2 –0.4 7.7 –0.9 5.8 .. 12.0 –1.9 11.0 –1.7 7.0 ..–1.3 3.3 8.6 4.1–0.5 –1.6 .. 2.0 7.1 4.8 –0.8 –0.7 11.0 –1.3 –1.3 1.0 3.0 .. –1.2 8.5 0.0 1.0 3.0 –1.6 .. –0.2 3.0 2.0 4.0 1.0 0.0 2.0 2.7 .. 5.0–2.1 7.3 1.0 0.0 2.0–0.9 –2.7 0.0 11.2 .. 7.5 –2.3 –0.5 0.0 2.0 2.0 9.5–1.1 –1.6 8.9 .. 2.0 3.0 .. 1.0–0.7 –0.7 –0.6 5.7 1.0 –2.1 –0.3 –0.8 –0.5 2.0 .. 1.0 –1.4 3.8 –1.3 –0.2 –0.8 0.0 0.0–0.6 –0.8 –0.1 .. 4.0 2.2 0.0 ..–1.5 –1.2 0.0 –0.3 0.0 5.0 3.0–2.1 –0.9 –2.3 –0.8 0.0 .. 3.0 –1.6 –1.9 –0.3 5.0 8.3 6.8 1.0 –1.6 –0.4 –0.5 5.3 0.0 9.3 .. 6.0 –0.4 –0.9 –0.6 1.0 10.1 1.0 2.0 –0.3 –0.5 9.3 .. 1.0 7.7 .. –0.4 3.0 3.0 2.2 9.5 3.3 .. 1.8 3.0 5.0 .. 7.0 2.0 5.0 7.0 10.8 3.0 .. 4.0 .. 6.0 9.0 9.0 0.0 3.3 6.0 .. 7.5 2.0 .. 1.0 4.5 3.0 4.0 4.0 .. 2.0 .. 1.0 3.0 5.0 0.0 2.0 3.0 .. 3.0 .. 4.5 1.0 2.0 3.0 .. 4.0 2.0 .. 2.0 2.0 2.0 .. .. 2.0 2.0 .. .. 2.0 2.0 2.0 ...... 1996 2000 2006 1996 2000 2006 1990 1995 2000 2006 1990 1995 2000 2006 1990 1995 2000 2006 (SAR) Countries Sub-regions/ Political China (SAR) of Rep. Timor-LesteViet Nam .. 0.3 0.3 0.3 0.4 East Asia Brunei Darussalam 1.1China 1.2Hong Kong, 1.2 1.1Indonesia Japan 0.9 0.0 of Rep. Korea, 0.7 0.8 DPR Korea, 1.2Lao PDR 0.1 1.2 0.1 0.9 1.1 0.4 1.1 1.8 1.0 0.9 1.1 1.3 0.8Philippines 1.3 5.8 1.1Singapore 11.0 1.1Thailand 8.7 9.6 1.3 6.0 2.7 7.3 9.3 1.1 4.0 5.7 6.2 1.2 0.0 1.3 9.4 2.0 1.3 0.4 2.5Bangladesh 9.1 4.7Bhutan 2.3 2.0 6.0India 6.0 2.3 3.5 6.0Iran, Islamic 6.0 2.2 3.0 5.0 3.0 8.1Maldives 3.0 5.0 0.8 3.5 8.0 4.0 0.5Pakistan 11.0 3.0Sri Lanka 11.0 4.0 1.3 3.0 0.2 3.0 0.2 4.0 1.1 3.0 0.8 4.0 0.8 2.0 0.3 2.0 .. 3.5 .. 3.5 4.0 .. 4.0 ...... Cambodia Macao, ChinaMalaysiaMongolia ..Myanmar 0.4 1.0 0.6 0.6 0.2 .. 0.8 0.3 0.6 0.8 0.8 1.0 Asia South and West 0.8Afghanistan .. 1.0 6.3 .. 9.0 .. 11.0 9.9 .. 5.0Nepal .. 4.0 2.1 .. 4.5 .. 2.0 2.0 .. 3.0 .. 3.0 ......

196 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT b Bureaucracy quality b Democratic accountability b 10.3 6.1 6.0 6.0 6.0 6.0 4.0 4.0 4.0 4.0 10.9 10.3 6.0 6.0 6.0 6.0 4.0 4.0 4.0 4.0 Government stability a –1.3 ..–0.6–0.6 ...... –0.3 ...... –0.9–0.7 –1.1 –0.2 ...... Government effectiveness –0.2 –0.6 –0.4 ...... –0.4 0.4 0.1–0.2 –0.5 .. –0.6 ...... –0.1–0.3 –0.4 –0.1 –0.1 –0.5 ...... a stability –0.9 0.2 –1.0 –1.1 –0.9 ...... : Values vary between 0 and 6. Higher values indicate greater responsiveness of government to its people. of government responsiveness indicate greater 0 and 6. Higher values between vary : Values : Index values vary between –2.5 to 2.5. Higher correspond better public services and greater credibility of : Index values vary between –2.5 to 2.5. Higher correspond lower likelihood of destabilization government. –1.4 –0.5 –0.8 –0.3 –0.6 –0.8 3.6 6.0 9.8 6.7 5.0 5.0 3.9 4.5 3.0 3.0 2.0 2.0 1996 2000 2006 1996 2000 2006 1990 1995 2000 2006 1990 1995 2000 2006 1990 1995 2000 2006 : Values vary between 0 and 12. Higher values indicate greater government stability. government indicate greater 0 and 12. Higher values between vary : Values : Values vary between 0 and 4. Higher values indicate better bureacracy. 0 and 4. Higher values between vary : Values (a) World Bank 2007a; (b) The PRS (Political Risk Services) Group 2007. Risk Services) Group (b) The PRS (Political Bank 2007a; (a) World Political Stability

Countries Sub-regions/ Political Fed. Sts. Fed. Notes: government. Stability Government Accountability Democratic VanuatuGovernment Effectiveness 1.0 1.1 Quality Bureaucracy 1.4 Sources: Samoa 1.0 1.1 1.1 New ZealandNiuePalau 1.1 Guinea New Papua 1.2Solomon Islands 1.3Tokelau 2.2Tonga .. 1.0 ..Tuvalu 1.6 .. 1.9 .. .. 4.1 .. 1.1 6.5 ...... 0.7 1.4 ...... 0.5 ...... Nauru .. .. 1.1 .. .. Micronesia, .. .. 1.1 .. Pacific Australia 1.1 1.2 0.9 1.4 1.8 1.9 6.6 7.6 Cook IslandsFijiKiribatiMarshall Islands ...... 0.8 ...... 0.0 1.1 .. .. 0.1 1.4 .. 0.1 0.1 ...... Contd...

INDICATORS 197 Table 6: Political Economy – Voice and Choice, Legal Climate

Sub-regions/Countries Voice and accountabilitya Rule of lawa Law and orderb 1996 2000 2006 1996 2000 2006 1990 1995 2000 2006 East Asia Brunei Darussalam –1.1 –0.7 –1.1 0.6 0.6 0.3 4.0 5.9 6.0 5.0 Cambodia –0.8 –0.5 –1.0 –1.1 –0.9 –1.1 ...... China –1.4 –1.6 –1.7 –0.2 –0.4 –0.4 3.0 5.0 4.8 4.5 Hong Kong, China (SAR) 0.2 –0.1 0.6 1.1 0.9 1.4 4.0 6.0 5.0 5.0 Indonesia –1.2 –0.5 –0.2 –0.4 –0.8 –0.8 2.0 4.7 2.0 3.0 Japan 0.9 0.9 0.9 1.5 1.4 1.4 5.0 6.0 5.1 5.0 Korea, Rep. of 0.5 0.6 0.7 0.7 0.7 0.7 2.0 5.0 4.0 5.0 Korea, DPR –2.0 –2.1 –2.2 –1.2 –0.8 –1.3 2.0 4.9 5.0 5.0 Lao PDR –1.2 –1.5 –1.6 –1.6 –0.9 –0.9 ...... Macao, China (SAR) .. 0.2 0.4 .. 0.2 0.5 ...... Malaysia –0.1 –0.4 –0.3 0.7 0.4 0.6 3.0 5.0 3.0 4.0 Mongolia 0.3 0.7 0.1 0.1 0.0 –0.3 2.5 4.0 4.0 4.0 Myanmar –2.1 –2.1 –2.3 –1.3 –1.3 –1.4 2.0 4.9 3.0 3.0 Philippines 0.1 0.3 –0.2 0.0 –0.5 –0.5 1.0 4.0 3.1 2.5 Singapore –0.1 0.1 –0.1 1.8 1.4 1.8 5.0 6.0 6.0 5.0 Thailand 0.0 0.3 –0.5 0.5 0.4 0.0 4.0 5.0 5.0 2.5 Timor-Leste .. –0.1 –0.3 .. .. –1.2 ...... Viet Nam –1.4 –1.6 –1.5 –0.6 –0.5 –0.4 3.1 5.0 5.0 4.0 South and West Asia Afghanistan –1.7 –2.0 –1.3 –1.3 –2.0 –2.0 ...... Bangladesh –0.4 –0.4 –0.5 –0.8 –0.8 –0.9 1.0 3.0 2.1 2.5 Bhutan –1.5 –1.7 –1.0 –1.3 0.2 0.6 ...... India 0.2 0.4 0.3 0.3 0.2 0.2 1.1 4.0 4.0 4.0 Iran, Islamic Rep. of –1.3 –0.9 –1.3 –1.0 –0.4 –0.8 1.0 5.0 5.0 4.0 Maldives –1.1 –1.0 –1.0 .. 0.3 0.2 ...... Nepal 0.1 –0.2 –1.2 –0.1 –0.3 –0.7 ...... Pakistan –1.1 –1.6 –1.2 –0.6 –0.8 –0.8 1.1 3.0 3.0 3.0 Sri Lanka –0.3 –0.4 –0.4 –0.1 0.0 0.0 0.0 3.7 3.0 3.0 Pacific Australia 1.3 1.5 1.5 1.8 1.7 1.8 6.0 6.0 6.0 5.5 Cook Islands ...... 0.9 1.1 ...... Fiji –0.1 0.0 –0.4 0.2 –0.6 –0.1 ...... Kiribati 1.2 1.1 0.5 .. 0.4 0.8 ...... Marshall Islands 1.3 1.2 1.2 .. –0.5 –0.2 ...... Micronesia, Fed. Sts. 1.2 0.9 1.0 .. –0.4 0.7 ...... Nauru 1.0 0.8 1.1 .. .. 0.7 ...... New Zealand 1.6 1.7 1.6 2.0 1.8 1.9 6.0 6.0 6.0 5.5 Niue ...... Palau 1.1 1.1 1.2 .. .. 0.7 ...... Papua New Guinea 0.1 0.0 –0.1 –0.6 –0.9 –0.9 3.1 3.0 2.1 2.5 Samoa 0.7 0.7 0.5 –0.2 0.7 0.9 ...... Solomon Islands 1.1 0.0 0.1 .. –1.7 –0.9 ...... Tokelau ...... Tonga –0.1 –0.1 –0.1 .. –0.1 0.5 ...... Tuvalu 1.4 1.3 0.7 .. 1.7 1.1 ...... Vanuatu 0.6 0.6 0.5 .. –0.2 0.5 ......

Notes: Voice and Accountability: Index values vary between –2.5 to 2.5. Higher values correspond to greater freedom to citizens in exercising their right to select government and greater freedom of media. Rule of Law: Index values vary between –2.5 to 2.5. Higher values correspond to greater confidence of citizens in rule of law. Law and Order: Values vary between 0 and 6. Higher values indicate greater strength and implementation of legal system. Sources: (a) World Bank 2007a; (b) The PRS (Political Risk Services) Group 2007.

198 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT b Contd... rate (%) b 2004 2000 2004 Highest Highest tax rate, tax rate, marginal marginal rate (%) corporation individual 30.0 30.016.0 0.0 17.5 0.0 17.0 17.0 c tion Educa- 2002–04 2000 c Public (% of GDP) Health 30.6 2.0 4.2 30.0 30.0 37.0 37.0 2004 2003 b of expenditure government on expenditure) Subsidies and other b 12.1 14.2 62.912.8 53.4 8.6 50.2 .. 2.810.8 9.6 10.8 4.6 14.7 28.0 14.9 27.0 35.8 .. 40.0 33.3 36.0 .. 1.6 15.0 15.0 .. 25.5 15.0 12.0 20.0 28.0 22.0 expenditure (% of GDP) final consumption(% transfers General government 15.1 16.9 ..12.4 .. 10.4 12.9 .. 26.9 38.2 .. 6.4 .. 3.7 2.2 30.0 8.0 30.0 28.0 37.0 28.0 37.0 29.0 28.0 16.8 22.9 .. 1.6 1.5 1.7 5.5 8.1 ...... a Table 7: Political Economy – Economic Climate Economy 7: Political Table –0.1 11.4 13.1 9.7 .. .. 17.6 1.4 3.2 32.0 32.0 32.0 32.0 –1.5 .. 35.2 49.2–0.2 18.2 .. 21.2 .. ..–0.1 .. 15.1 11.5 7.3 6.8 10.5 8.4 8.5 .. 2.6 24.0 .. 21.0 .. 25.5 .. .. 1.6 ...... 35.0 .. 30.0 .. 35.0 30.0 –0.4 –0.3 7.8 6.5 8.1 40.8 .. 63.3 1.1 0.9 30.0 30.0 35.0 35.0 –2.7 –1.7 .. .. 8.6 .. .. 4.4 ...... egulatory quality –2.3–1.2 –2.2 –1.3 –2.5 –1.1–0.7–1.1 .. 0.3 .. –1.9 –0.3 .. –2.2 ...... 18.1 .. 14.0 ...... 1.2 .. .. 2.3 .. 0.5 ...... 30.0 40.0 ...... 30.0 .. .. –0.3–0.2 –0.1 0.0 –0.6 –0.2 5.8 13.8 5.2 15.8 4.1 14.1 ...... 18.2 63.8 2.1 2.0 2.0 .. 20.0 30.0 20.0 20.0 .. 20.0 45.0 45.0 –0.5 –0.7 –0.5–0.4 8.2 –0.2–0.1 6.4 –0.9–1.7 –0.3 –1.5 6.2 4.6 –0.1–0.3 –1.5–0.5 10.8 –0.5 4.6 .. 16.0 –0.8 12.6 –0.6 5.5 13.9 –0.4 11.3 .. 9.2 12.2 11.7 .. 33.2 8.9 .. 8.7 .. 10.2 .. .. 1.5 7.7 24.1 29.5 .. .. 35.3 2.0 1.1 .. 1.2 3.1 32.0 3.2 .. 2.2 28.0 25.5 3.3 4.8 .. .. 39.6 54.0 0.7 .. 1.5 35.9 25.0 .. 2.0 .. 30.0 54.0 3.4 30.0 35.0 ...... 41.0 .. 35.0 .. 35.0 .. .. 1996 2000 2006 1995 2000 2005 1995 2000 Korea, Rep. of Rep. Korea, DPR Korea, Lao PDR Macao, China (SAR)Malaysia 0.5Mongolia Myanmar .. 0.6PhilippinesSingapore 0.5 0.7Thailand 11.2 1.1 0.8 9.2 0.3 0.4 0.7 1.7 0.3 0.4 2.0 0.7 1.8 0.4 8.5 9.9 11.3 11.8 .. .. Cambodia China China (SAR)Hong Kong, Indonesia 1.6Japan 1.7 1.9 8.4 0.2 9.1 0.6 8.8 0.7 ..Timor-Leste 1.3 ...... 4.7 .. Viet Nam Asia South and West AfghanistanBangladesh BhutanIndia of Islamic Rep. Iran, MaldivesNepal .. Pakistan Sri Lanka 0.1 0.2 0.2 0.0 0.4 0.3 0.2 East Asia Brunei Darussalam 3.5 0.9 1.0 ...... 2.8 .. Sub-regions/Countries R

INDICATORS 199 b me) rate (%) b 2004 2000 2004 ry expenditures that ry expenditures Highest Highest tax rate, tax rate, marginal marginal rate (%) corporation individual c tion Educa- 2002–04 2000 c Public (% of GDP) Health 2004 2003 b of expenditure government on expenditure) Subsidies and other b expenditure (% of GDP) final consumption(% transfers includes all government current expenditures for purchases of goods and services (including for purchases expenditures current includes all government General government 18.3 18.2 .. ..17.5 67.3 17.5 71.4 .. 6.4 .. 4.8 34.0 .. 30.0 40.4 47.0 47.0 6.3 6.9 33.0 33.0 39.0 39.0 a –0.8 ...... –0.8–0.8 –1.0 0.1 ...... –0.7 –0.1 27.1 ...... 2.9 9.6 ...... egulatory quality –0.5–0.4 –0.9 –1.0 –0.4 –1.0 15.9 17.8 ..–0.8 .. ..–0.2 –0.7–1.3 –0.1 .. –0.7 .. –1.6–0.1 0.0 17.1 .. –1.1 .. –0.5 22.2 .. .. –0.8 .. .. 2.3 19.0 ...... 15.1 .. 6.4 25.5 .. .. 24.0 ...... 31.0 ...... 34.0 .. 3.0 31.0 ...... 25.0 4.3 4.5 5.5 .. .. 4.3 4.8 .. 47.0 .. .. 30.0 .. .. 30.0 .. .. 40.0 40.0 ...... 1996 2000 2006 1995 2000 2005 1995 2000 : Values vary between –2.5 to 2.5. Higher values indicate implementation of sound policies and better promotion of private indicate implementation of sound policies and better promotion –2.5 to 2.5. Higher values between vary : Values (a) World Bank 2007a; (b) World Bank (World Development Indicators online) 2007b; (c) UNDP (United Nations Development Program (c) UNDP (United Nations Development Indicators online) 2007b; Development Bank (World (b) World Bank 2007a; (a) World General government final consumption expenditure government General Regulatory quality Regulatory

2006. Notes: sector. compensation of employees). It also includes most expenditures on national defense and security, but excludes government milita government but excludes on national defense and security, It also includes most expenditures compensation of employees). are part of government capital expenditure. part of government are Sources: Pacific Australia 1.1 1.6 1.7 Cook IslandsFiji Kiribati Marshall Islands Sts. Fed. Micronesia, NauruNew Zealand ..Niue .. 0.0Palau .. Guinea New Papua 0.6Samoa Solomon Islands 1.6 ..TokelauTonga 1.5 ..Tuvalu .. 1.7 ...... 0.5 ...... Vanuatu 0.0 Sub-regions/Countries R Contd...

200 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT SOCIO ECONOMIC INDICATORS

Table 8: Human Development Index – Trends

Sub-regions/Countries HDI 1990 1995 2000 2005 East Asia Brunei Darussalam ...... 0.894 Cambodia .. 0.540 0.547 0.598 China 0.634 0.691 0.732 0.777 Hong Kong, China (SAR) 0.865 0.886 0.919 0.937 Indonesia 0.626 0.670 0.692 0.728 Japan 0.916 0.929 0.941 0.953 Korea, Rep. of 0.825 0.861 0.892 0.921 Korea, DPR ...... Lao PDR 0.478 0.524 0.563 0.601 Macao, China (SAR) ...... Malaysia 0.725 0.763 0.790 0.811 Mongolia 0.654 0.638 0.667 0.700 Myanmar ...... 0.583 Philippines 0.721 0.739 0.758 0.771 Singapore 0.827 0.865 .. 0.922 Thailand 0.712 0.745 0.761 0.781 Timor-Leste ...... 0.514 Viet Nam 0.620 0.672 0.711 0.733 South and West Asia Afghanistan ...... Bangladesh 0.422 0.453 0.511 0.547 Bhutan ...... 0.579 India 0.521 0.551 0.578 0.619 Iran, Islamic Rep. of 0.653 0.693 0.722 0.759 Maldives ...... 0.741 Nepal 0.427 0.469 0.502 0.534 Pakistan 0.467 0.497 0.516 0.551 Sri Lanka 0.702 0.721 0.731 0.743 Pacific Australia 0.894 0.934 0.949 0.962 Cook Islands ...... Fiji .. 0.743 0.747 0.762 Kiribati ...... Marshall Islands ...... Micronesia, Fed. Sts...... Nauru ...... New Zealand 0.880 0.908 0.927 0.943 Niue ...... Palau ...... Papua New Guinea 0.495 0.532 0.544 0.530 Samoa 0.721 0.740 0.765 0.785 Solomon Islands ...... 0.602 Tokelau ...... Tonga ...... 0.819 Tuvalu ...... Vanuatu ...... 0.674

Source: UNDP (United Nations Development Programme) 2007/2008.

INDICATORS 201 Contd... Life expectancy ages 15–64 42.5 35.2 28.7 51.8 53.4 60.3 66.8 65.0 67.5 69.5 71.1 Population ages 0–14 Population 21.5 22.3 21.8 19.5 72.9 71.5 71.1 72.0 74.3 76.4 78.1 79.7 Table 9: Demography Table 0.0 0.0 25.7 26.0 22.3 16.3 67.8 67.0 70.4 76.0 76.8 78.2 79.4 80.3 81.1 79.4 43.8 43.7 42.7 40.9 52.5 52.5 53.8 55.5 ...... total) (% of total) (% of total) at birth (years) population 0.0 0.0 0.0 21.5 19.1 16.5 14.4 70.0 71.2 72.4 73.6 77.4 78.7 80.9 81.6 80.3 78.7 77.1 ...... 34.2 31.4 28.9 26.5 34.5 33.0 31.3 29.6 62.8 64.4 65.8 67.3 74.2 75.3 76.2 77.0 79.2 77.3 75.5 73.5 41.5 41.9 45.592.8 41.1 91.7 56.5 90.4 55.8 88.9 51.7 41.6 56.074.2 43.2 46.1 74.4 41.2 50.7 72.5 38.4 54.1 70.4 54.7 56.7 46.5 52.7 46.1 54.5 43.8 57.0 40.7 50.2 .. 50.4 52.7 .. 55.8 60.5 .. 62.8 65.4 .. 67.6 48.3 26.2 21.8 20.4 19.2 25.8 23.4 20.8 18.6 69.2 70.8 71.8 72.0 71.3 73.4 75.9 77.6 21.9 22.5 41.6 40.9 39.8 38.4 26.9 27.2 26.5 25.0 68.4 67.9 67.9 68.2 65.3 63.8 63.1 63.9 12.7 14.1 87.4 85.8 83.1 80.3 44.5 46.4 40.7 37.1 52.7 50.7 56.1 59.5 54.3 55.1 55.6 57.0 78.5 83.1 79.7 77.8 75.7 73.6 38.9 37.0 33.5 29.5 56.1 58.0 61.1 65.0 64.8 67.1 69.1 70.7 2.3 2.4 2.6 43.0 43.2 43.4 43.3 41.7 38.9 35.1 30.5 54.3 57.3 61.1 65.8 62.7 64.2 65.1 66.8 192.8 206.3 220.6 69.4 64.4 58.0 51.9 35.8 33.0 30.2 28.3 60.4 62.8 64.9 66.2 61.7 64.0 65.8 67.8 Total population Rural 932.2 1015.9 1094.6 74.5 73.4 72.3 71.3 36.6 35.8 34.1 32.1 59.1 59.6 61.0 62.7 59.1 61.4 62.9 63.5 17.8 20.4 23.040.8 25.3 44.561.1 50.2 68.4 47.7 44.4 50.5 75.854.6 38.2 75.1 83.1 32.7 58.3 73.9 51.2 36.5 61.4 72.0 46.0 35.8 64.2 69.4 41.5 33.7 70.6 37.3 37.3 32.4 69.7 35.3 40.9 59.8 68.9 32.5 39.4 60.4 67.7 29.5 37.5 62.2 31.9 58.2 35.1 63.0 28.3 60.1 55.8 70.3 25.6 62.8 57.3 71.5 23.8 65.6 59.0 72.6 64.2 56.1 61.0 73.7 66.9 57.9 65.619.1 68.4 59.5 67.7 21.7 69.1 61.1 69.5 68.2 24.4 71.0 69.0 27.1 69.5 91.1 70.9 89.1 86.6 84.2 41.9 41.9 40.9 39.0 54.7 54.8 55.6 57.3 54.6 58.0 60.5 62.7 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 123.5 125.4 126.9 127.8 36.9 35.4 34.8 34.2 18.4 16.0 14.6 14.0 69.6 69.5 68.2 66.3 78.8 79.5 81.1 82.1 108.0 122.4 138.1 155.8 69.4 68.2 66.9 65.1 43.6 43.7 41.3 38.3 53.0 52.8 55.0 57.9 59.1 60.9 63.0 64.9 104.0 116.5 128.9 141.8 80.2 78.5 76.8 74.9 40.9 39.7 37.5 35.5 55.9 57.0 59.1 60.9 55.0 58.5 61.5 63.9 Countries (millions) (% of China (SAR) Sub-regions/ (SAR) of Rep. Korea, DPRKorea, Lao PDRMacao, China 19.7 20.9 0.4 4.1 0.4 4.7 0.4 5.3 0.5 5.9 84.6 0.2 82.8 0.1 Korea, Rep. of Rep. Korea, 42.9 45.1 47.0 IndonesiaJapan 178.2 CambodiaChinaHong Kong, 9.7 11.4 1135.2 5.7 1204.9 1262.6 1304.5 72.6 6.2 68.6 6.7 64.2 59.6 6.9 27.7 0.5 26.4 24.8 21.4 66.7 67.5 68.4 71.0 68.9 69.4 70.3 71.8 East Asia Brunei Darussalam 0.3 0.3 0.3 0.4 Thailand MongoliaPhilippines Singapore 2.1 Timor-Leste 3.0 3.5 0.7 0.8 4.0 4.3 0.8 0.0 1.0 0.0 0.0 0.0 Pakistan Sri Lanka 17.0 18.1 19.4 19.6 82.8 83.6 84.3 84.9 32.1 29.4 26.2 24.1 62.6 64.5 67.2 68.6 71.2 72.5 73.6 74.7 Malaysia Myanmar Viet Nam Asia South and West Afghanistan 66.2 73.0 India ..Iran, Islamic ..Maldives 54.4Nepal .. 849.5 59.0 63.7 .. 68.3 81.7 0.2 43.7 39.8 0.3 35.8 33.1 0.3 44.7 0.3 Bhutan 0.6 0.6 0.6 0.6 Bangladesh

202 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Population ages 15–64 Life expectancy 84.3 83.0 45.8 43.9 42.4 40.6 51.5 53.5 55.2 56.9 60.9 61.1 61.8 62.9 total) (% of total) (% of total)(years) birth at 58.4 54.565.0 51.7 63.635.3 49.2 57.0 34.774.2 37.9 52.6 34.2 74.9 35.7 33.3 77.7 33.3 .. 77.7 31.715.3 .. 44.1 59.0 14.7 .. 43.4 61.2 14.3 .. 40.1 63.3 13.8 .. 39.0 64.4 23.4 52.3 .. 66.7 23.0 .. 53.1 66.8 22.978.8 56.1 .. 67.4 21.3 78.5 .. 57.6 68.3 65.5 78.1 66.3 .. 65.3 77.6 66.8 .. 65.2 40.9 67.3 .. 66.4 39.3 68.1 .. 75.4 40.981.3 .. 76.7 40.7 79.8 .. 78.6 55.2 78.3 56.8 .. 79.6 56.4 76.5 59.4 71.0 54.8 43.9 61.9 69.1 54.8 43.4 65.2 66.3 42.1 .. 68.1 39.9 .. 69.1 52.5 70.7 53.1 54.6 56.7 63.5 65.7 67.7 69.5 0.02 30.4 28.6 30.4 30.4 ...... 0.1 0.1 77.3 77.1 76.8 76.0 39.3 40.0 37.5 35.9 56.2 55.1 57.0 58.1 69.9 70.8 71.7 72.6 illions) of (% Total population Rural population Population ages 0–14 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 17.1 18.1 19.2 20.3 14.6 13.9 12.8 11.8 21.9 21.9 21.2 19.6 66.9 66.6 66.6 67.7 77.0 78.1 79.6 80.6 World Bank (World Development Indicators online) 2007b. Development Bank (World World Countries (m Sub-regions/ Fed. Sts. Fed. Guinea Cook IslandsFiji .. .. 0.7 .. 0.8 .. 0.8 .. 0.8 ...... Pacific Australia KiribatiMarshall IslandsMicronesia, 0.0Nauru 0.1 0.1New Zealand 0.1 0.1 0.1Niue 0.1 0.1Palau 0.1 3.4 NewPapua 0.1 0.1 3.7 .. 0.1 Samoa 3.9Solomon Islands .. 4.1 4.1 ..Tokelau 4.7 .. 0.3Tonga .. .. 5.3Tuvalu 0.4 .. 0.2 ..Vanuatu 5.9 0.4 .. 86.9 0.2 .. Source: 0.5 .. .. 86.8 .. 86.3 0.2 86.8 0.1 85.3 86.6 .. .. 0.2 0.1 .. .. 41.3 0.1 41.8 .. 0.2 .. 41.5 .. .. 40.3 .. 0.2 .. 56.0 .. .. 0.2 55.7 .. 56.1 ...... 57.3 .. 52.3 ...... 53.4 .. 54.7 .. .. 56.4 ...... Contd...

INDICATORS 203 Contd... 14.0 ...... 3.9 ...... 68.1 Table 10: Macro Indicators: GDP, Trade and Tax Trade Indicators: GDP, Macro 10: Table 392.5 489.5 ..403.5 .. 344.5 0.5 .. 7.1 .. .. 13.7 .. 2.3 ...... 147.2 145.8 ...... per capitaper GDP growth Real Tax revenue Trade 226.4 287.8 403.6 .. 6.5 8.4 13.4 ...... 8.0 18.9 77.7 111.6 139.0 1661.3 2151.3 2424.1 .. .. 4.4 –4.1 14.0 13.6 13.8 16.5 .. 169.9 161.1 174.3 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 391.7 658.0 949.2612.4 1448.8 826.9 3.8 800.0 10.9 942.5231.0 8.4 273.8 9.0 10.2 331.7 8.4 414.4 4.0 4.9 5.0 6.7920.2 5.7 7.0 915.1 6.8 17.8 1001.9 5.8 15.0 1136.2 ..226.9 7.1 3.0 34.8 .. 305.2 4.7 43.9 .. 401.5 .. 44.2283.3 538.7 6.0 49.1508.5 .. 69.0 313.7 5.0 5.1317.2 655.0 54.0 365.3 14.1 .. 9.5 372.5 799.1 71.4 432.6 1010.2 453.0 16.3 61.5 6.8 .. 5.9 588.4 13.7175.7 7.7 8.4 36.5 4.9461.4 200.0 13.0 6.1 5.8577.2 60.6 510.4 224.7 5.9 60.8 .. 7.6 704.4 5.5 531.0 64.6 233.9 80.5 6.0 843.6 4.0 58.0 598.5 6.5 108.9 .. 1009.7 4.5 99.3 9.2 .. 4.5 4.4 3.3 6.4 .. 10.1 5.0 6.7 6.1 5.5 .. 9.4 4.3 .. 9.9 2.7 6.0 81.3 .. 9.0 7.3 7.0 6.0 .. 74.7 13.3 .. .. 19.0 112.5 57.6 9.0 13.2 145.2 19.7 17.8 15.7 81.0 10.2 8.7 28.2 14.5 23.2 76.4 10.1 9.5 33.2 14.2 27.4 83.6 31.6 39.6 38.9 43.6 67.2 58.8 36.1 81.6 55.7 28.4 88.6 48.7 34.8 79.4 6614.6 9159.1 10884.5 13239.5 9.22547.4 9.2 3510.1 3927.4 8.5 4436.8 4.2 9.0 14.41452.4 9.8 2057.1 14.2 1997.5 8.9 16.1 2446.0 15.7 5.2 11.2 57.0 18.9 9.2 58.7 19.6 4.8 78.5 14.31292.2 4.5 82.2 1409.1 .. 1591.0 .. 147.0 1943.1 192.1 13.7 .. 228.9 223.2 2.7 .. 5.1 17.2 4.4 75.8 6.0 90.4 124.9 6.6 149.2 6.3 7.9 37.7 34.8 40.1 69.0 14606.0 13803.9 12943.5 ..19006.5 23101.2 25319.4 2.7 30009.6 3.033279.5 35321.8 1.9 36648.7 2.8 39075.3 3.9 10.2 5.2 ..12058.2 14547.3 1.9 7.5 13248.6 22598.9 .. 2.9 .. 9.8 2.6 .. 3.9 .. 13.414657.8 .. 5.7 19350.4 23077.1 .. 25967.8 .. 6.7 .. 9.2 ...... 8.2 252.6 .. 290.9 .. 10.1 .. 282.7 .. 20.0 385.0 6.6 17.2 16.9 15.4 .. 22.1 20.6 193.9 16.4 .. 137.8 15.4 .. 171.4 155.3 ...... 459.1 Countries$)US 2000 (constant (annual %) (% of GDP) (% of GDP) Sub-regions/ GDP of Rep. Darussalam China (SAR) (SAR) Hong Kong, Japan Macao, China Singapore Asia South and West AfghanistanBhutan India ..Iran, Islamic Maldives ..Nepal Pakistan ..Sri Lanka ...... East Asia Brunei CambodiaChina Indonesia .. of Rep. Korea, DPRKorea, Lao PDR Malaysia ..MongoliaMyanmar ..Philippines ..Thailand ..Timor-Leste ..Viet Nam ...... Bangladesh ...... 2.8 6.9 .. 9.8 .. 5.0 6.2 .. 3.8 .. 3.0 ...... 7.5 3.1 ......

204 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT 6367.5 .. 10.9 0.3 5.5 ...... 78.0 115.7 158.8 per capitaper GDP growth Real Tax revenue Trade 1938.2 2038.6 2198.0 .. 2.5 –1.7 0.7 22.8 22.0 .. 23.5 129.5 113.0 124.6 .. 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 520.1 689.3123.8 645.4 1135.9819.7 1305.2 628.0 928.5 1547.4190.1 –3.0 714.7 1407.7 –4.4 –3.3 676.8 1470.5 6.6 –1.2 1628.7 1.8 7.0 3.3 –2.0 7.0 4.5 20.1 5.4 –14.3 20.8 5.4 5.0 .. 19.4 2.3 ...... 89.6 .. .. 105.6 .. 134.8 ...... 119.6 .. 94.5 135.5 99.0 91.0 98.6 52.1 .. .. 45.4 .. 420.8 464.9 540.5 523.8 2.1 5.4 1.9 –0.2 ...... 158.9 104.6 74.7 .. 1099.4 1314.4 1277.4 1212.2 0.04 –0.03 2.7 6.8 22.6 19.6 .. .. 126.2 100.6 .. .. 2724.1 2744.21927.9 2102.1 2135.3 2037.0 2014.2 1990.21552.0 12636.5 7.0 13654.0 15297.7 3.7 2.7 –0.02 2.6 0.9 4.2 8.4 3.5 2.1 1.5 .. 1.9 ...... 31.8 .. 53.4 .. 57.3 .. 69.3 ...... 16439.7 18268.0 20866.9 23039.4 –0.6 4.1 1.9 2.8 .. .. 22.1 23.9 32.6 38.7 44.8 .. World Bank (World Development Indicators online) 2007b. Development Bank (World World Trade as a share of GDP = (Exports + Imports)/GDP. as a share Trade Countries$)US 2000 (constant (annual %) (% of GDP) (% of GDP) Sub-regions/ GDP Fed. Sts. Fed. Guinea Contd... Vanuatu Note: Source: NauruNew Zealand 1 ..SamoaSolomon Islands ..TokelauTongaTuvalu 1 ...... 1 ...... Pacific Australia Cook IslandsFiji ..Micronesia, .. .. Niue ..Palau New Papua ...... Kiribati Marshall Islands

INDICATORS 205 b (% of GDP) Contd... a (% of GDP) a 16.3 15.7 14.7 .. 87.8 90.3 88.7 .. (% of GDP) 54.8 43.924.4 47.8 15.239.5 .. 13.341.6 34.4 42.8 41.9 9.2 32.4 53.5 40.7 75.4 49.5 .. 40.3 84.7 57.9 49.5 86.6 ..34.7 63.7 51.8 90.7 35.1 .. 65.8 54.4 35.6 .. 56.3 33.8 .. 64.9 .. .. 64.7 64.3 66.1 .. 36.1 ...... 24.5 ...... 39.4 .. a 33.8 23.7 ..25.8 31.8 .. 24.0 .. 38.8 .. .. 18.5 15.2 .. 42.1 .. 37.5 .. 16.2 55.7 53.0 45.1 Table 11: Macro Indicators: Structure of the Economy Indicators: Structure Macro 11: Table value added Industry, value added Services, value added ODA (% of GDP) 49.6 37.9 34.2 .. 14.8 23.0 26.7 .. 35.5 39.1 39.1 9.8 27.0 19.819.4 14.8 17.1 12.5 15.661.2 41.6 13.1 55.715.2 47.2 39.1 52.6 12.957.3 45.921.9 41.8 44.8 60.1 8.8 47.3 21.612.5 45.9 14.5 57.2 31.3 8.7 15.838.7 44.9 9.5 19.2 33.1 42.2 .. 14.3 27.2 41.5 22.9 9.0 39.3 41.4 10.5 34.530.3 24.5 41.1 29.5 10.036.7 40.1 50.7 32.1 26.431.3 9.8 20.9 38.5 24.3 37.2 33.619.1 0.1 51.8 32.3 25.5 28.2 22.7 42.0 9.7 25.1 40.7 28.5 18.450.6 42.6 32.2 20.1 23.4 28.826.0 24.5 42.0 .. 25.2 13.7 40.8 .. 45.626.3 43.6 21.5 18.3 36.7 26.1 25.7 44.2 26.3 10.4 39.6 32.2 40.5 23.0 46.3 24.6 27.6 41.0 11.0 26.2 50.3 34.4 28.7 38.2 30.1 39.6 19.9 25.3 52.0 28.1 38.6 22.2 49.7 35.2 34.2 15.9 33.1 16.8 0.2 53.4 27.2 26.2 44.1 25.2 49.0 38.1 36.7 22.2 26.0 48.3 0.5 27.3 .. 38.7 23.8 45.9 37.0 44.6 21.5 26.5 49.1 41.1 38.2 22.6 .. 32.0 52.2 21.0 .. 27.3 49.2 43.6 4.0 26.5 36.3 47.4 33.5 26.1 52.6 50.5 48.8 36.7 49.5 37.0 47.7 2.5 54.4 50.1 11.6 45.0 38.9 50.5 0.1 51.2 0.1 40.8 52.8 51.3 6.4 57.1 1.5 2.6 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 2004 China (SAR) Sub-regions/Countries Agriculture, East Asia Brunei Darussalam 2.4 2.5 2.7 .. Indonesia CambodiaChina Hong Kong,Japan .. of Rep. Korea, 0.2 DPRKorea, Lao PDR 0.1Macao, China (SAR) 8.9Malaysia 0.1 .. 2.6Mongolia 6.3 ..Myanmar 0.1 0.0Philippines 2.0 4.9Singapore ..Thailand 0.0 1.8 3.4 Timor-Leste .. ..Viet Nam 0.0 .. Asia South and West 0.4 .. ..Afghanistan .. ..Bangladesh 0.2Bhutan ..India 0.1 .. of Islamic Rep. Iran, ..Maldives .. 0.1 Nepal Pakistan .. ..Sri Lanka ...... 3.7

206 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT b 47.3 (% of GDP) a (% of GDP) a (% of GDP) 30.0 28.3 26.1 ..27.9 66.4 26.9 67.9 25.3 70.0 .. .. 65.1 65.6 .. 65.8 .. .. a value added Industry, value added Services, value added ODA (% of GDP) 16.0 .. ..18.5 .. 16.8 16.1 13.6 .. .. 29.6 .. 26.0 .. 27.3 67.9 .. .. 51.9 .. 57.2 59.1 .. 8.2 20.7 16.6 15.6 .. 12.3 11.5 9.3 .. 67.0 71.9 75.1 .. 11.9 35.6 30.3 29.7 .. 13.9 18.4 17.2 .. 50.5 51.3 53.1 .. 9.1 20.418.6 19.7 20.9 17.0 7.0 15.825.9 24.0 ..32.4 5.8 25.4 7.6 .. 25.8 3.9 5.1 28.4 25.3 3.1 9.7 55.6 .. .. 54.9 .. 34.1 9.3 57.2 73.8 .. 15.1 58.9 74.1 44.0 19.0 2.4 83.3 58.6 .. .. 83.5 45.5 .. 80.0 .. 76.9 27.7 .. .. 6.8 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 2004 (a) World Bank (World Development Indicators online) 2007b; (b) UNDP (United Nations Development Programme) 2006. Programme) (b) UNDP (United Nations Development Indicators online) 2007b; Development Bank (World (a) World Contd... Sub-regions/Countries Agriculture, Vanuatu Sources: TokelauTonga Tuvalu ...... Pacific Australia 3.6 3.8 4.0 .. Cook IslandsFiji Kiribati Marshall Islands Sts. Fed. Micronesia, ..Nauru ..New Zealand .. ..NiuePalau .. Guinea New Papua 7.0 ..SamoaSolomon Islands .. .. 7.5 ...... 8.9 ......

INDICATORS 207 Table 12: Macro Indicators: Sectoral Distribution of Workforce and Unemployment Rate

Sub-regions/ Employment in agriculture Employment in industry Employment in services Unemployment rate Countries (% of total employment) (% of total employment) (% of total employment) (% of total labour force) 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004 East Asia Brunei Darussalam ...... Cambodia .. .. 73.7 60.3 .. .. 8.4 12.5 .. .. 17.1 27.0 .. .. 2.5 0.8 China 53.4 48.5 46.3 .. 19.0 21.0 17.3 .. 9.9 12.2 12.7 .. 2.5 2.9 3.1 4.2 Hong Kong, 0.9 0.6 0.3 0.3 36.7 27.0 20.3 15.7 62.4 72.4 79.4 84.1 1.3 3.2 4.9 6.8 China (SAR) Indonesia 55.9 44.0 45.1 43.3 13.7 18.4 17.5 18.0 30.2 37.6 37.3 38.7 .. .. 6.1 9.9 Japan 7.2 5.7 5.1 4.5 34.1 33.6 31.2 28.4 58.2 60.4 63.1 66.0 2.1 3.2 4.8 4.7 Korea, Rep. of 17.9 12.4 10.6 8.1 35.4 33.3 28.1 27.5 46.7 54.2 61.2 64.3 2.5 2.1 4.1 3.5 Korea, DPR ...... Lao PDR .. 85.4 ...... 3.5 ...... 11.0 ...... 2.6 .. .. Macao, China 0.2 0.2 0.2 0.3 42.5 32.0 28.2 25.3 57.2 67.6 71.5 74.4 3.2 3.6 6.6 4.8 (SAR) Malaysia 26.0 20.0 18.4 14.8 27.5 32.3 32.2 30.1 46.5 47.7 49.5 52.5 4.7 3.1 3.0 3.5 Mongolia .. 46.1 48.6 40.2 .. 17.9 14.1 16.1 .. 35.9 37.2 43.7 .. .. 17.5 .. Myanmar 69.7 ...... 9.2 ...... 21.1 ...... 6.0 ...... Philippines 45.2 44.1 37.4 37.1 15.0 15.6 16.0 15.4 39.7 40.3 46.5 47.5 8.1 8.4 10.1 10.9 Singapore .. 0.2 0.2 0.3 .. 31.0 34.2 23.3 .. 67.9 65.4 76.3 1.7 2.7 4.4 .. Thailand 63.3 51.6 48.5 42.3 13.6 18.9 17.9 20.5 22.4 28.8 32.9 37.1 2.2 .. 2.4 1.5 Timor-Leste ...... Viet Nam .. .. 65.3 57.9 .. .. 12.4 17.4 .. .. 22.3 24.7 ...... 2.1 South and West Asia Afghanistan ...... Bangladesh 66.4 .. 62.1 .. 13.0 .. 10.3 .. 16.2 .. 23.5 .. 1.9 .. 3.3 .. Bhutan ...... India 69.1 66.7 .. .. 13.6 12.9 .. .. 17.3 20.3 ...... 4.3 5.0 Iran, Islamic 26.4 22.1 .. .. 28.3 31.4 .. .. 45.3 46.5 ...... 14.3 .. Rep. of Maldives .. 22.2 13.7 .. .. 23.9 19.0 .. .. 50.4 50.2 .. .. 0.8 2.0 .. Nepal 83.3 78.5 .. .. 2.3 5.5 .. .. 13.7 21.0 ...... Pakistan 51.1 46.8 48.4 .. 19.8 18.5 18.0 .. 28.9 34.6 33.5 .. 2.6 5.0 7.2 7.7 Sri Lanka 47.8 37.3 .. .. 20.6 23.4 .. .. 30.0 33.6 .. .. 14.4 12.4 7.4 8.5 Pacific Australia 5.6 5.0 5.0 3.8 25.1 22.8 21.7 21.2 69.3 72.2 73.3 74.8 7.0 8.1 5.9 5.4 Cook Islands ...... Fiji ...... 6.4 5.4 .. .. Kiribati ......

Contd...

208 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Contd... Sub-regions/ Employment in agriculture Employment in industry Employment in services Unemployment rate Countries (% of total employment) (% of total employment) (% of total employment) (% of total labour force) 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004 Marshall Islands ...... Micronesia, ...... Fed. Sts. Nauru ...... New Zealand 10.6 9.7 8.7 7.5 24.6 25.1 23.2 22.7 64.5 65.1 67.7 69.6 7.8 6.3 6.0 3.9 Niue ...... Palau ...... Papua New .. .. 72.3 ...... 3.6 ...... 22.7 .. 7.7 .. 2.8 .. Guinea Samoa ...... Solomon Islands ...... Tokelau ...... Tonga ...... Tuvalu ...... Vanuatu ......

Source: World Bank (World Development Indicators online) 2007b.

INDICATORS 209 Table 13: Access to Improved Water Source and Sanitation Facilities

MDG Sub-regions/ Population with sustainable access to Population with access to Countries an improved water source (%) improved sanitation (%) 1990 2004 1990 2004 Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total East Asia Brunei Darussalam ...... Cambodia ...... 64 35 41 ...... 53 8 17 China 99 59 70 93 67 77 64 7 23 69 28 44 Hong Kong, ...... China (SAR) Indonesia 92 63 72 87 69 77 65 37 46 73 40 55 Japan 100 100 100 100 100 100 100 100 100 100 100 100 Korea, Rep. of 97 97 71 92 ...... Korea, DPR 100 100 100 100 100 100 ...... 58 60 59 Lao PDR ...... 79 43 51 ...... 67 20 30 Macao, China (SAR) ...... Malaysia 100 96 98 100 96 99 95 .. .. 95 93 94 Mongolia 87 30 63 87 30 62 ...... 75 37 59 Myanmar 86 47 57 80 77 78 48 16 24 88 72 77 Philippines 95 80 87 87 82 85 66 48 57 80 59 72 Singapore 100 .. 100 100 .. 100 100 100 100 100 Thailand 98 94 95 98 100 99 95 74 80 98 99 99 Timor-Leste ...... 77 56 58 ...... 66 33 36 Viet Nam 90 59 65 99 80 85 58 30 36 92 50 61 South and West Asia Afghanistan 10 3 4 63 31 39 7 2 3 49 29 34 Bangladesh 83 69 72 82 72 74 55 12 20 51 35 39 Bhutan ...... 86 60 62 ...... 65 70 70 India 89 64 70 95 83 86 45 3 14 59 22 33 Iran, Islamic 99 84 92 99 84 94 86 78 83 ...... Rep. of Maldives 100 95 96 98 76 83 100 .. .. 100 42 59 Nepal 95 67 70 96 89 90 48 7 11 62 30 35 Pakistan 95 78 83 96 89 91 82 17 37 92 41 59 Sri Lanka 91 62 68 98 74 79 89 64 69 98 89 91 Pacific Australia 100 100 100 100 100 100 100 100 100 100 100 100 Cook Islands 99 87 94 98 88 94 100 91 94 100 100 100 Fiji ...... 43 51 47 87 55 68 87 55 72 Kiribati 76 33 49 77 53 65 33 21 25 59 22 40 Marshall Islands 95 97 96 82 96 87 88 51 74 93 58 82 Micronesia, 93 86 88 95 94 94 54 20 29 61 14 28 Fed. Sts. Nauru ...... New Zealand 100 82 97 100 ...... 88 ...... Niue 100 100 100 100 100 100 100 100 100 100 100 100 Palau 73 98 80 79 94 85 76 54 67 96 52 80 Papua New Guinea 88 32 39 88 32 39 67 41 44 67 41 44 Samoa 99 89 91 90 87 88 100 98 98 100 100 100 Solomon Islands ...... 94 65 70 98 .. .. 98 18 31 Tokelau .. 94 94 .. 88 88 .. 39 39 78 .. 78 Tonga 100 100 100 100 100 100 98 96 96 98 96 96 Tuvalu 92 89 89 94 92 100 83 74 78 93 84 90 Vanuatu 93 53 60 86 52 60 ...... 78 42 50

Note: Total is not the average of urban and rural. Source: UN (United Nations) 2007.

210 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Table 14: Maternal and Child Health

MDG Sub-regions/Countries Maternal mortality rate Infant mortality rate Child mortality rate under (per 100,000 live births)a (per 1,000 live births)a age 5yrs (per 1,000)b 1990 1995 2000 1990 1995 2000 2005 1990 1995 2000 2005 East Asia Brunei Darussalam 60 22 37 10 8 8 8 11 9 9 9 Cambodia 900 590 450 80 88 95 98 115 120 135 143 China 95 60 56 38 37 33 23 49 46 41 27 Hong Kong, China (SAR) 7 ...... Indonesia 650 470 230 60 48 36 28 91 66 48 36 Japan 18 12 10 5 4 3 3 6 6 5 4 Korea, Rep. of 130 20 20 8 6 5 5 9 6 5 5 Korea, DPR 70 35 67 42 42 42 42 55 55 55 55 Lao PDR 650 650 650 120 99 77 62 163 131 101 79 Macao, China (SAR) .. 20 ...... Malaysia 80 39 41 16 13 11 10 22 17 14 12 Mongolia 65 65 110 78 64 50 39 108 87 65 49 Myanmar 580 170 360 91 83 78 75 130 117 110 105 Philippines 280 240 200 41 35 30 25 62 49 40 33 Singapore 10 9 30 7 4 3 3 8 .. .. 3 Thailand 200 44 44 31 23 19 18 37 26 22 21 Timor-Leste .. 850 660 133 118 85 52 177 154 107 61 Viet Nam 160 95 130 38 32 23 16 53 44 30 19 South and West Asia Afghanistan 1700 820 1900 168 165 165 165 ...... Bangladesh 850 600 380 100 83 66 54 149 120 92 73 Bhutan 1600 500 420 107 93 77 65 166 133 100 75 India 570 440 540 84 74 69 56 123 104 94 74 Iran, Islamic Rep. of 120 130 76 54 43 36 31 72 55 44 36 Maldives .. 390 110 79 63 45 33 111 86 60 42 Nepal 1500 830 740 100 84 69 56 145 120 95 74 Pakistan 340 200 500 100 93 85 79 130 118 108 99 Sri Lanka 140 60 92 26 21 16 12 32 25 19 14 Pacific Australia 9 6 8 8 6 6 5 10 .. .. 6 Cook Islands ...... 26 24 20 17 ...... Fiji 90 20 75 19 17 16 16 22 19 18 18 Kiribati ...... 65 57 52 48 88 77 70 65 Marshall Islands ...... 63 59 55 51 92 81 68 58 Micronesia, Fed. Sts...... 45 41 37 34 58 52 47 42 Nauru ...... 25 25 25 ...... New Zealand 25 15 7 8 7 6 5 11 8 8 6 Niue ...... Palau ...... 18 15 13 10 21 17 14 11 Papua New Guinea 930 390 300 69 64 60 55 94 87 80 74 Samoa 35 15 130 40 33 28 24 50 41 34 29 Solomon Islands .. 60 130 31 29 26 24 38 35 32 29 Tokelau ...... Tonga ...... 26 24 22 20 32 29 26 24 Tuvalu ...... 42 38 35 31 ...... Vanuatu 280 32 130 48 40 38 31 62 50 48 38

Sources: (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b.

INDICATORS 211 b Contd... 12–23 months) a children 1yr old) a success (%) DOTS treatmentDOTS of(% measles (% of children ages a 876...... MDG 7644...... 7393969990748599 6543...... 8497969685989896 4543...... 8595999491989995 85739797919696999794949798 Tuberculosis death rate Tuberculosis,against Immunization Immunization, DPT Table 15: Incidence of Major Diseases Table a people) 1200 1111 1111 713 126 121 121 88 ...... 48 ...... 1990 1995 2000 2005 1990 1995 2000 2005 1995 2000 2003 1990 1995 2000 2005 1990 1995 2000 2005 Countries rate (per 100,000100,000 per China (SAR) Sub-regions/ Tuberculosis prevalence IndonesiaJapan 440 380 327 70 262 60 91 45 75 38 61 41Viet Nam 91 Asia South and West 87Afghanistan 87Bangladesh 58 470Bhutan 346 63India 607 251 of Islamic Rep. Iran, 72 571 235 630 449 72 50 575 41 288 494 60 55 374 31 69 406 272 69 40 24 570 65 76 218 75 30 23 533 174 52 66 70 457 91 40 57 35 299 92 30 47 42 .. 92 24 71 43 86 88 19 83 42 86 97 95 85 29 20 90 97 65 79 41 90 95 79 84 35 93 88 76 86 64 85 93 81 56 25 76 96 69 72 20 93 95 69 56 31 96 83 58 76 87 88 70 92 71 95 57 59 Korea, Rep. of Rep. Korea, DPRKorea, Lao PDR 123Macao, China (SAR) 110 123Malaysia 428 142Mongolia 95 400 135Myanmar 368 472 87 10Philippines 179 407 87 10Singapore 346 59 195 12Thailand 306 12 154 566 57Timor-Leste 10 417 139 486 37 11 820 35 131 385 285 33 773 7 .. 287 206 13 22 52 554 28 170 51 9 355 450 19 .. 49 .. 24 50 327 45 80 17 .. 39 .. 252 70 .. 50 36 74 16 204 28 .. 93 82 40 .. 23 58 70 27 93 79 15 .. 98Maldives 47 78 .. 27 95 32Nepal .. 67 .. 72 87 22 .. 99 68Pakistan 78 70 .. 88 19 88Sri Lanka .. 74 42 96 82 92 88 .. .. 99 41 151 .. 98 88 85 85 90 97 18 69 89 64 .. 621 90 94 429 72 82 96 54 90 73 109 524 56 424 90 99 .. 81 310 84 53 53 80 416 99 79 90 244 84 80 297 109 72 .. 49 91 95 51 88 88 49 80 88 94 .. 90 45 95 49 70 10 84 96 .. 28 99 48 80 10 82 92 23 37 79 10 73 96 70 .. 97 8 75 86 98 79 75 87 77 50 57 81 47 56 80 56 71 87 78 74 99 54 43 99 58 54 86 61 72 93 72 75 99 99 East Asia Brunei DarussalamCambodia 113China 93Hong Kong, 56 63 951 853 12 138 806 325 11 98 703 304 112 87 271 4 109 208 77 102 5 24 11 87 22 .. 91 20 63 91 16 60 93 96 99 34 95 99 62 94 99 65 98 97 79 80 93 38 85 99 39 86 99 50 97 99 82 80 85 87

212 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT b 12–23 months) a measles (% of(% measles (% of children ages children 1yr old) a treatment success (%) a 5433...... 67967699...... 75548686868494857097978975 6587...... 9899839899999698 5433...... 8996935790949964 6533...... 8694959994959599 Tuberculosis death rate Tuberculosis, DOTSagainst Immunization Immunization, DPT 91111...... 9084858290899089 MDG a people) 77661111..74828687919495869092 1990 1995 2000 2005 1990 1995 2000 2005 1995 2000 2003 1990 1995 2000 2005 1990 1995 2000 2005 (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b. Development Bank (World (b) World (a) UN (United Nations) 2007; Countries rate (per 100,000100,000 per Sub-regions/ Tuberculosis prevalence VanuatuSources: 212 162 87 84 21 17 7 10 ...... 66 60 94 70 76 73 90 66 NiuePalau 133 106 88 96 64 87 115 13 61 11 10 9 ...... 99 34 99 99 FijiKiribatiMarshall Islands Sts. Fed. Micronesia, Nauru 311 682 216New Zealand 547 1157 171 430 928 62 123 269 559 42 33 Guinea New 426Papua 68 10 38 115Samoa 328 24 789 56 11 30 Solomon Islands 263 96 722 19 47 206 11 Tokelau 637 64 14 156 475Tonga 32 658 49 33Tuvalu 68 .. 459 .. .. 27 289 64 44 .. 201 .. 21 .. 59 126 31 65 .. 18 112 .. 46 27 .. 112 53 47 1146 81 52 .. 27 75 112 .. 857 40 32 90 57 723 47 .. 63 9 34 23 82 495 94 80 58 .. 105 32 96 8 .. 86 56 67 81 85 12 .. 92 97 .. 42 73 83 12 70 .. 60 62 .. 55 85 39 .. 90 60 8 70 94 .. 77 62 .. 68 80 68 .. 62 87 .. .. 59 .. 72 .. .. 61 95 77 .. .. 94 69 .. .. 81 82 62 80 ...... Pacific Australia Cook Islands 49 39 26 26 Contd...

INDICATORS 213 Table 16: School Enrolment

MDG MDG Sub-regions/ School enrolment School enrolment Higher education Education: Youth literacy Countries (primary), net (%)a (secondary), enrolment, Children reaching rate (% of net (%)b gross (%)b grade 5 (% of pupils people ages starting grade 1)a 15–24)c

1990 2000 2004 2000 2005 1991 2000 2004 1990 2000 2003 1990 2004 East Asia Brunei Darussalam 89.7 ...... 87.3 .. 12.6 14.7 .. .. 98.0 .. .. Cambodia 66.6 91.1 97.6 15.4 24.5 0.7 2.2 2.9 .. 62.8 59.7 73.5 83.4 China 97.4 ...... 3.0 7.6 19.1 86.0 .. .. 95.3 98.9 Hong Kong, .. .. 97.1 .. 79.6 .. .. 30.4 100.0 99.6 .. .. China (SAR) Indonesia 96.7 97.9 99.0 48.6 58.3 9.2 .. 16.7 83.6 95.3 92.1 95.0 98.7 Japan 99.7 100.0 99.9 99.5 100.0 29.6 47.4 54.0 100.0 ...... Korea, Rep. of 99.7 96.8 99.8 94.5 90.4 38.6 72.6 88.5 99.5 99.5 99.8 .. .. Korea, DPR ...... Lao PDR 62.6 81.7 84.4 28.6 37.7 .. 2.8 5.9 .. 53.2 62.6 70.1 78.5 Macao, China (SAR) 81.1 85.7 89.3 65.5 78.2 25.4 26.4 68.8 ...... Malaysia 93.7 96.9 95.4 69.1 .. 8.2 26.3 32.0 98.2 87.1 .. 94.8 97.2 Mongolia 90.1 93.8 89.4 59.6 84.2 14.0 28.8 38.9 ...... 98.9 97.7 Myanmar 97.8 81.8 87.0 33.6 37.2 4.3 11.3 .. .. 55.2 69.0 .. .. Philippines 96.5 .. 94.4 .. 60.5 27.1 .. 28.8 .. 79.3 75.3 97.3 95.1 Singapore 96.4 ...... 20.5 ...... 99.0 .. Thailand 75.9 ...... 34.2 41.0 ...... 98.1 98.0 Timor-Leste ...... Viet Nam 90.5 95.4 .. 61.0 69.3 1.9 9.5 16.0 .. 85.7 .. 94.1 93.9 South and West Asia Afghanistan 26.5 ...... 1.1 ...... Bangladesh 71.2 93.1 97.6 46.9 .. .. 5.8 6.0 .. 65.5 65.1 42.0 .. Bhutan ...... 91.0 ...... India .. 87.4 96.1 .. .. 6.0 10.2 11.8 .. 59.0 78.9 64.3 76.4 Iran, Islamic Rep. of 92.3 79.8 88.7 .. 77.0 10.2 19.0 22.5 89.9 97.5 ...... Maldives 86.7 96.5 84.8 40.0 62.6 .. .. 0.2 ...... 98.1 98.2 Nepal .. 72.7 80.1 .. .. 5.6 4.1 5.6 51.3 45.8 67.1 46.6 70.1 Pakistan .. .. 65.7 .. 21.0 3.4 .. 3.2 .. .. 69.7 47.4 65.5 Sri Lanka 89.9 .. 97.1 .. .. 4.3 .. .. 94.4 .. .. 95.1 95.6 Pacific Australia 99.2 92.7 95.9 88.6 86.4 39.2 65.4 72.2 ...... Cook Islands .. 78.8 ...... Fiji 99.6 100.0 98.7 76.6 82.7 11.9 .. 15.3 87.0 89.8 98.7 97.8 .. Kiribati ...... 67.6 ...... 93.4 .. 81.4 .. .. Marshall Islands ...... Micronesia, Fed. Sts...... 14.1 ...... Nauru ...... New Zealand 99.6 99.1 99.4 .. .. 45.2 68.8 85.8 92.2 ...... Niue ...... Palau .. 96.4 ...... 40.6 ...... Papua New Guinea 66.0 ...... 59.1 50.6 .. 68.6 66.7 Samoa .. 92.2 99.1 64.0 .. .. 7.4 .. .. 95.9 .. .. 99.3 Solomon Islands 83.2 .. .. 17.7 ...... 84.9 ...... Tokelau ...... Tonga 91.8 .. .. 72.2 .. .. 4.7 6.1 89.6 94.6 ...... Tuvalu ...... 72.7 ...... Vanuatu 70.6 93.7 95.1 32.5 .. .. 4.0 5.0 ...... Sources: (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b; (c) UNDP (United Nations Development Programme) 2006.

214 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT b Contd... ment (%) seats held by b culture employees age of total non-agri-parlia- national women in non-agricul- 40.7 ...... 21.0 20.0 20.1 19.0 ...... 25.3 a 15-24 index, as ratio of literacy rates, aged tural sector as percent- women in MDG a rolment) a Table 17: Gender and Development Table dary school en enrolment) a 0.74 .. 0.48 0.66 .. 0.58 .. .. 0.49 0.54 .. 0.72 6.6 7.5 7.4 8.6 10.0 .. 21.3 school enrolment) Girls to boys Girls to boys Girls to boys to men parity Women employment of Wage of Proportion 0.94 0.990.81 0.99 0.880.93 1.07 0.89 1.011.01 1.06 0.43 1.00 0.96 1.06 0.56 0.75 0.950.98 0.60 0.92 1.05 0.981.00 .. 0.98 1.001.01 1.87 .. .. 0.83 1.00 1.01 1.74 0.37 0.97 0.98 0.52 1.02 1.00 0.40 0.99 1.01 0.97 .. 0.81 .. 1.01 .. 1.00 0.84 .. 0.65 1.00 .. 0.89 .. 0.76 0.85 .. 0.49 0.90 0.86 0.85 0.95 0.57 53.5 .. 0.97 .. 0.97 0.59 52.8 0.98 .. 0.99 51.9 .. 0.99 .. 0.99 .. 51.3 11.3 1.00 37.7 .. 17.2 29.2 .. 38.7 .. .. 30.3 29.0 39.7 .. 31.5 31.7 8.0 40.9 .. .. 31.1 21.0 .. 9.8 .. 12.0 22.0 .. 38.0 .. 20.3 41.2 38.9 38.1 .. .. 42.5 40.0 38.0 11.3 44.8 41.2 40.1 .. 47.3 41.6 1.0 2.0 5.0 .. 4.0 9.4 13.4 .. .. 0.79 0.860.96 0.86 0.951.00 0.62 0.95 1.001.02 0.72 1.11 1.00 1.040.95 0.73 1.04 1.07 1.03 0.990.99 1.04 1.11 1.14 1.00 1.000.97 .. 0.45 1.10 1.22 0.98 0.99 1.00 0.590.96 0.96 0.89 1.20 1.07 1.04 1.00 0.60 0.96 0.72 1.09 1.88 0.96 1.10 0.93 0.76 0.960.93 1.74 1.10 1.02 0.80 0.94 .. .. 0.94 1.74 .. 1.42 1.02 0.83 0.95 0.99 0.93 1.00 0.68 0.90 .. 1.00 0.910.55 .. .. 42.1 1.00 0.91 .. 0.000.86 1.76 1.29 .. .. 1.00 0.92 0.00 1.01 1.000.76 .. 37.8 0.52 .. .. 1.02 .. 1.000.76 .. 35.9 .. .. 1.12 1.01 0.52 1.00 .. 0.83 1.000.90 .. 36.7 42.7 0.74 1.09 .. 44.3 1.05 1.01 .. 0.85 0.950.97 36.9 45.3 0.76 0.99 47.0 0.00 1.10 39.7 0.98 .. 0.60 .. 0.96 .. 1.00 49.0 0.990.61 0.99 48.5 0.48 0.20 5.0 40.0 0.71 1.00 0.75 0.99 49.5 1.00 0.85 1.00 50.3 0.54 6.0 41.1 .. 0.74 .. 0.94 1.02 0.87 1.00 25.0 .. 0.50 21.00.96 40.4 .. 36.4 0.54 0.94 .. 1.07 0.44 .. .. 45.3 0.65 25.2 0.68 8.0 .. 0.48 42.5 9.0 1.07 9.1 0.73 0.99 44.0 0.68 .. .. 0.70 .. 0.87 41.0 12.0 0.75 52.1 6.6 .. 46.1 0.70 0.74 0.94 .. 45.4 15.7 .. 0.32 51.2 46.4 .. .. 0.78 .. 47.0 0.28 49.7 .. .. 1.09 0.81 3.0 ...... 0.28 49.1 5.0 17.6 .. 0.80 .. 6.0 0.41 18.0 20.6 0.36 12.7 .. 4.0 .. .. 0.48 .. 26.0 22.9 14.4 21.2 .. 0.56 1.00 .. 27.3 23.1 .. 16.6 ...... 0.59 1.00 10.0 17.8 17.3 0.68 .. 1.00 9.0 5.0 ...... 1.00 .. .. 15.1 .. 11.9 31.8 9.0 12.5 31.6 ...... 8.3 13.6 36.7 0.98 13.7 35.6 ...... 0.99 2.0 6.0 1.00 4.0 .. .. 1.01 5.0 12.0 .. 6.0 39.1 .. 4.1 12.0 44.0 6.0 27.3 .. 46.0 5.9 43.2 .. 5.0 .. 5.0 2.0 4.9 2.0 2.7 1990 2000 2001 1990 2000 2001 1990 2000 2001 1990 1995 2000 2004 1990 1995 2000 2004 1990 2000 2006 Countries ratio (primary ratio (secon- ratio (tertiary China (SAR) Sub-regions/ East Asia Brunei Darussalam Cambodia China Hong Kong, Indonesia Japan of Rep. Korea, DPRKorea, ...... Lao PDR Viet Nam Sri Lanka Macao, China (SAR) Malaysia Mongolia Myanmar Philippines Singapore Thailand Timor-Leste Asia South and West Afghanistan ..Bangladesh Bhutan ..India of Islamic Rep. Iran, ..Maldives ..Nepal Pakistan ......

INDICATORS 215 b ment (%) seats held by b culture employees age of total non-agri-parlia- national women in non-agricul- a 15-24 index, as ratio of literacy rates, aged tural sector as percent- women in MDG a rolment) a dary school en enrolment) a 0.98 0.950.99 .. 1.010.96 1.10 0.95 1.09 ..1.16 1.61 .. .. 1.07 1.39 ..0.97 ...... 0.940.97 1.21 .. .. 1.01 ...... 1.03 ...... 0.98 ...... 1.031.19 ...... 1.29 1.00 1.10 ...... 1.04 ...... 1.13 .. 2.35 0.94 ...... 2.16 1.22 ...... 0.93 ...... 0.0 ...... 5.0 ...... 7.1 ...... 3.0 ...... 0.0 ...... 0.0 ...... school enrolment) Girls to boys Girls to boys Girls to boys to men parity Women employment of Wage of Proportion 0.98 0.98 0.98 0.79 1.15 0.92 ...... 4.0 0.0 3.8 0.99 1.00 1.001.00 1.04 0.98 1.00 1.00 0.98 1.16 .. 1.23 1.09 1.23 1.070.98 .. 1.01 .. 1.00 1.00 1.02 ..0.86 1.07 .. 0.90 ..1.09 1.00 0.90 1.000.86 1.00 0.59 1.00 .. 1.10 0.92 0.79 1.22 44.6 1.45 0.94 .. 0.770.96 1.14 46.8 1.45 0.63 0.97 1.14 48.1 0.78 .. .. 0.98 1.00 48.6 0.81 .. 29.9 1.01 0.93 6.0 31.3 .. 1.10 0.93 .. .. 22.0 33.9 1.10 24.7 35.9 ...... 0.84 .. .. 0.87 1.60 ...... 11.0 0.89 1.62 47.9 0.93 11.3 .. 48.8 .. 20.3 .. 1.00 50.5 25.0 50.5 .. 32.1 .. .. 14.0 35.4 29.0 .. .. 0.0 .. 32.2 2.0 ...... 0.9 ...... 0.0 .. .. 8.0 .. .. 8.2 .. .. 0.0 0.0 2.0 .. 0.0 3.3 1990 2000 2001 1990 2000 2001 1990 2000 2001 1990 1995 2000 2004 1990 1995 2000 2004 1990 2000 2006 (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b. Development Bank (World (b) World (a) UN (United Nations) 2007; Countries ratio (primary ratio (secon- ratio (tertiary Sub-regions/ Sources: Vanuatu Pacific Australia Fiji Marshall Islands Sts. Fed. Micronesia, Nauru .. .. New Zealand ..Palau .. Guinea New Papua ...... Tonga ...... 0.0 0.0 Cook IslandsKiribati .. Niue .. Samoa Solomon Islands Tokelau .. Tuvalu .. .. Contd...

216 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Contd... b of energy use of oil equivalent) (constant 2000 PPP $ per kg 10.5 10.7 11.3 11.2 -1.0 3.4 3.2 4.3 4.6 a -24.0 0.0 6.5 6.2 6.2 6.4 Ozone-depleting CFCs GDP per unit consumption in ODP tons 195.0 281.0 805.0 263.0 9.8751.0 2104.0 9.6 1945.0 453.0 10.2 10.5 3.9 4.0 4.2 4.2 1366.0 4140.0 4157.0 2221.0 3.7 3.2 3.1 3.2 MDG a 0.04 0.03 .. 380.0 .. 141.0 ...... ), metric tons per capita 2 15.0 13.5 14.1 12.2 3167.0 774.0 22.0 (CO a Forest areaForest Carbon dioxide emissions Table 18: Environmental Sustainability: Forest Area and Carbon Dioxide Emission and Carbon Dioxide Area Sustainability: Forest 18: Environmental Table 64.568.1 63.875.0 56.6 63.5 71.6 51.468.1 5.6 69.9 12.2 65.759.6 8.3 0.1 11.9 63.635.5 52.5 9.2 26.7 0.1 3.4 3.1 49.031.2 24.065.0 9.8 0.2 3.4 29.0 5.8 0.128.8 57.4 0.7 28.4 0.2 5.4 37.7 0.2 .. 53.7 .. 10039.0 0.9 1.8 41.7 7395.0 7.0 825.0 0.2 .. 2730.0 3384.0 .. 1.0 3.264.6 0.3 77.0 3427.0 0.2 43.021.5 1980.0 4.5 66.8 1.0 3.3 92.0 0.4 .. 45.0 2981.0 22.7 668.0 68.0 .. 4.2 3382.0 4.3 0.7 19.0 22.833.7 2905.0 .. .. 6660.0 4.4 49.0 0.2 1014.0 4.0 8248.0 27.3 1.2 0.836.4 0.2 3568.0 26.0 .. 4.1 0.5 .. 25.4 9.1 1260.0 4.2 32.2 1.0 15.0 .. 0.7 4.2 .. 0.0 .. 29.9 7.5 5.7 480.0 .. 1.1 0.7 .. 4.1 0.1 220.0 0.2 7.2 5.8 1.2 .. .. 235.0 .. 0.1 0.3 .. .. 7.9 5.2 0.0 .. 3.3 .. 6402.0 0.1 0.5 0.0 5614.0 4.9 .. 3.7 1958.0 0.6 .. 0.0 .. 209.0 4.2 4.0 .. 25.0 0.0 .. 520.0 4.2 4.3 94.0 220.0 .. .. 149.0 4.8 0.0 7.3 .. .. 5.5 3.4 8.7 3.8 .. .. 8.7 4.0 .. 8.3 4.0 59.473.3 54.616.8 65.4 52.8 19.0 59.2 22.764.3 21.2 0.05 17.768.4 54.0 2.1 0.05 25.6 68.2 48.8 0.04 2.6 24.1 68.2 1.2 0.04 2.6 8.7 .. 1.5 3.8 .. 9.1 41829.0 65.0 1.7 75291.0 39124.0 94.0 9.5 13124.0 47.0 1.7 94.0 9.8 39.0 2.1 97723.0 45.0 23064.0 .. 3.1 8351.0 .. 5411.0 .. 2385.0 4.4 .. .. 4.1 4.4 .. 4.6 .. .. 4.3 .. 4.1 1990 2000 2005 1990 1995 2000 2004 1990 1995 2000 2005 1990 1995 2000 2003 Countries (% of land area) China (SAR) Sub-regions/ Korea, Rep. of Rep. Korea, Thailand BangladeshBhutan Maldives 6.8Nepal 6.8Sri Lanka 6.7 3.3 0.1 3.3 0.2 3.3 0.2 0.7 0.2 1.1 1.8 2.5 4.0 6.0 5.0 0.0 ...... Korea, DPR Korea, Lao PDR Macao, China (SAR)Malaysia ..MongoliaMyanmar ..Philippines Singapore .. 7.3Timor-Leste Viet Nam 2.8 6.8 Asia South and West 3.4 3.0 6.5Afghanistan 3.4 3.7 4.5 3.4 4.7India 3.3 of 2.0 Islamic Rep. Iran, 3.0 .. 6.8 1.6 3.3Pakistan 6.8 1.3 .. 6.8 .. 0.2 .. 3.9 0.1 7.0 3.3 4.3 .. 11.0 2.7 5.3 4.0 .. 2.5 6.3 .. .. 0.6 0.7 .. .. 0.7 .. .. 0.8 .. East Asia Brunei Darussalam Cambodia China Hong Kong,Indonesia Japan ...... 4.6 4.8 5.8 5.4 ......

INDICATORS 217 b unit of energy use of oil equivalent) (constant 2000 PPP $ per kg -51.0 4.2 4.6 4.7 5.2 a -3.0 0.0 4.3 4.4 4.5 5.1 Ozone-depleting CFCsper GDP consumption in ODP tons MDG a ), metric tons per capita 2 14.4 14.0 13.5 14.2 1.0 0.0 0.0 ...... (CO a is the PPP GDP per kilogram of oil equivalent of energy use. of energy of oil equivalent is the PPP GDP per kilogram Forest areaForest Carbon dioxide emissions 66.282.9 58.169.6 86.1 54.245.9 66.5 87.698.9 60.4 1.6 65.0 15.7 84.7 60.4 1.6 0.6 14.0 77.633.3 0.8 12.4 2.0 33.3 0.5 0.5 0.8 11.9 33.3 2.2 0.5 0.4 0.8 0.4 .. 0.4 0.8 0.4 2.0 .. .. 0.0 .. 2.0 10.0 1.0 0.0 .. 4.0 48.0 2.0 0.0 0.0 .. 15.0 1.0 0.0 .. .. 0.0 .. .. 1.0 .. 0.0 ...... 0.0 ...... 0.0 ...... 63.953.6 66.5 54.7 66.5 54.790.6 1.2 90.6 1.128.8 1.2 90.6 30.7 1.2 1.8 31.0 .. 1.1 2.0 6.6 1.3 .. 6.8 .. 38.0 .. 8.4 60.0 2.0 7.8 .. 0.0 0.0 558.0 0.0 0.0 189.0 .. .. 1.0 1.0 .. .. 0.0 ...... 36.1 36.1 36.1 0.4 0.4 0.4 0.4 .. 0.0 0.0 0.0 ...... 21.9 21.4 21.3 16.5 17.3 17.6 16.3 7416.0 2585.0 6.0 1990 2000 2005 1990 1995 2000 2004 1990 1995 2000 2005 1990 1995 2000 2003 (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b. Development Bank (World (b) World (a) UN (United Nations) 2007; GDP per unit of energy use energy GDP per unit of

Countries (% of land area) Sub-regions/ Niue Palau Guinea New Papua Samoa Solomon Islands TokelauTongaTuvalu .. 5.0 .. 5.0 5.0 .. 0.8 .. 1.1 .. 1.2 .. 1.2 .. .. 2.0 .. 0.0 .. 0.0 ...... Cook Islands Fiji KiribatiMarshall Islands Sts. Fed. Micronesia, Nauru .. 3.0 .. 3.0 3.0 .. .. 0.3 .. .. 0.3 .. 0.4 .. 0.3 .. .. 1.0 1.0 1.0 0.0 1.0 0.0 0.0 ...... New Zealand Note: Vanuatu Sources: Pacific Australia Contd...

218 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Table 19: Poverty, Inequality and Undernourishment

MDG MDG MDG Sub-regions/ Inequality:a Inequality: Inequality: Gini Poverty Poverty Poverty Prevalence of Countries Ratioi of Ratioi of Gini (Land)c headcount headcount gap at undernourish- expenditure expenditure indexa ratio at ratio at $1 a day ment (% of shares of shares of $1 per day $2 per day (PPP) population)b richest 20% richest 10% (PPP) (% (PPP) (% (%)b to poorest 10% to of popula- of popula- 20% poorest 10%a tion)a tion)a 1990-20041 1990-20041 1990-20041 1960-19941 1990-20041 1990-20041 1990-20041 2004 East Asia Brunei Darussalam ...... 4.0 Cambodia 6.9 11.6 40.4 .. 34.1 77.7 .. 33.0 China 10.7 18.4 44.7 43.8 16.6 46.7 2.1 12.0 Hong Kong, China (SAR) 9.7 17.8 43.4 ...... Indonesia 5.2 7.8 34.3 45.4 7.5 52.4 1.0 6.0 Japan 3.4 4.5 24.9 51.1 ...... 2.5 Korea, Rep. of 4.7 7.8 31.6 37.2 2.0 <2 0.5 2.5 Korea, DPR ...... 33.0 Lao PDR 5.4 8.3 34.6 .. 27.0 74.1 .. 19.0 Macao, China (SAR) ...... Malaysia 12.4* 22.1* 49.2* 38.2 2.0 9.3 0.5 3.0 Mongolia 9.1 17.8 30.3 68.0 27.0 74.9 3.1 27.0 Myanmar ...... 5.0 Philippines 9.7 16.5 46.1 54.7 15.5 47.5 2.9 18.0 Singapore 9.7 17.7 42.5 29.1 ...... Thailand 7.7 12.6 42.0 44.7 2.0 25.2 0.5 22.0 Timor-Leste ...... 9.0 Viet Nam 6.0 9.4 37.0 47.4 ...... 16.0 South and West Asia Afghanistan ...... Bangladesh 4.6 6.8 31.8 41.7 36.0 82.8 10.3 30.0 Bhutan ...... India 4.9 7.3 32.5 57.9 34.7 79.9 7.9 20.0 Iran, Islamic Rep. of 9.7 17.2 43.0 67.7 2.0 7.3 0.5 4.0 Maldives ...... 10.0 Nepal 9.1 15.8 47.2 54.2 24.1 68.5 5.4 17.0 Pakistan 4.3 6.5 30.6 55.0 17.0 73.6 2.4 24.0 Sri Lanka 5.1 8.1 33.2 62.3 5.6 41.6 1.0 22.0 Pacific Australia 7.0 12.5 35.2 80.5 ...... 2.5 Cook Islands ...... Fiji ...... 5.0 Kiribati ...... 7.0 Marshall Islands ......

Contd...

INDICATORS 219 Contd...

MDG MDG MDG Sub-regions/ Inequality:a Inequality: Inequality: Gini Poverty Poverty Poverty Prevalence of Countries Ratioi of Ratioi of Gini (Land)c headcount headcount gap at undernourish- expenditure expenditure indexa ratio at ratio at $1 a day ment (% of shares of shares of $1 per day $2 per day (PPP) population)b richest 20% richest 10% (PPP) (% (PPP) (% (%)b to poorest 10% to of popula- of popula- 20% poorest 10%a tion)a tion)a 1990-20041 1990-20041 1990-20041 1960-19941 1990-20041 1990-20041 1990-20041 2004 Pacific Micronesia, Fed. Sts...... Nauru ...... New Zealand 6.8 12.5 36.2 71.2 ...... 2.5 Niue ...... Palau ...... Papua New Guinea 12.6 23.8 50.9 ...... Samoa ...... 4.0 Solomon Islands ...... 21.0 Tokelau ...... Tonga ...... Tuvalu ...... Vanuatu ...... 11.0

Notes: 1 Data refer to the most recent year available during the period specified. * Malaysia data refers to income shares by percentile of population. Data for all other countries refer to expenditure shares. Gini index varies between 0 and 100. A value of 100 implies perfect inequality and 0 implies perfect equality. Prevalence of undernourishment indicates population below minimum level of dietary energy consumption. Sources: (a) UNDP (United Nations Development Programme) 2006; (b) World Bank (World Development Indicators online) 2007b; (c) Frankema 2006.

220 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Table 20: Access to Information

MDG Sub-regions/ Telephone lines and cellular Internet users Households with television Countries subscribers (per 100 people)a (per 100 people)a (%)b 1990 1995 2000 2004 1995 2000 2005 1990 1995 2000 2001 East Asia Brunei Darussalam 14.3 36.6 52.9 .. 1.10 9.00 36.10 .. 98.0 97.9 98.3 Cambodia .. 0.2 1.2 6.2 .. 0.05 0.31 4.7 .. 32.5 .. China 0.6 3.6 18.1 49.4 0.00 1.77 8.44 53.8 77.2 86.1 87.3 Hong Kong, 47.5 66.2 140.6 173.2 3.30 27.80 50.10 .. 97.9 98.0 99.0 China (SAR) Indonesia 0.6 1.8 5.0 18.1 0.03 0.92 7.18 25.2 43.8 53.8 54.5 Japan 44.8 58.9 101.4 118.2 1.60 29.90 66.60 81.7 80.2 99.2 99.0 Korea, Rep. of 30.8 45.4 114.6 131.4 0.80 41.40 68.30 92.5 98.0 .. .. Korea, DPR 2.5 2.3 2.2 ...... Lao PDR 0.2 0.4 1.0 4.8 .. 0.11 0.42 .. 5.6 30.0 29.9 Macao, China (SAR) 26.1 45.6 73.6 130.3 0.30 13.90 37.00 .. 80.4 79.2 92.5 Malaysia 9.4 21.6 41.9 74.5 0.15 21.39 42.37 64.0 73.3 82.5 85.9 Mongolia 3.2 3.5 11.5 21.9 0.01 1.26 10.14 .. 28.7 28.4 28.4 Myanmar 0.2 0.4 0.6 1.0 .. .. 0.10 1.4 2.4 3.0 3.0 Philippines 1.0 2.8 12.4 44.0 0.03 2.01 5.48 .. 46.5 52.8 61.5 Singapore 36.3 49.2 116.8 132.7 2.80 32.40 39.80 84.3 98.3 98.6 99.4 Thailand 2.5 8.2 14.1 53.7 0.09 3.74 11.34 72.3 84.4 90.6 90.6 Timor-Leste ...... Viet Nam 0.2 1.1 4.2 18.2 .. 0.25 12.72 .. 67.3 77.6 79.6 South and West Asia Afghanistan 0.2 0.1 0.1 2.6 .. .. 1.00 .. .. 6.2 6.3 Bangladesh 0.2 0.3 0.6 2.6 .. 0.08 0.26 3.8 9.3 17.5 17.2 Bhutan 0.4 0.9 2.2 6.3 .. 0.34 3.09 ...... India 0.6 1.3 3.5 9.1 0.03 0.54 5.44 7.4 23.0 30.0 31.6 Iran, Islamic Rep. of 4.0 8.6 16.4 .. 0.00 1.00 10.90 .. 65.3 67.8 67.4 Maldives 2.9 5.7 11.9 44.1 .. 2.22 19.7 34.5 56.7 61.5 Nepal 0.3 0.4 1.2 2.2 0.00 0.22 0.83 .. 1.6 3.5 13.2 Pakistan 0.8 1.7 2.4 6.2 0.00 0.22 6.82 13.7 27.0 37.4 38.5 Sri Lanka 0.7 1.5 6.5 16.5 0.01 0.66 1.69 .. 23.8 22.4 20.6 Pacific Australia 46.7 61.7 98.7 141.3 2.80 34.50 70.40 98.3 97.2 96.6 96.3 Cook Islands ...... Fiji 5.8 8.7 17.5 29.2 0.01 1.48 8.25 .. 39.1 53.7 55.1 Kiribati 1.7 2.6 4.3 .. .. 1.80 2.20 .. 11.9 22.4 23.3 Marshall Islands 1.1 7.2 8.6 .. .. 1.60 ...... Micronesia, Fed. Sts. 2.5 7.4 9.0 22.3 .. 3.70 12.60 .. .. 14.0 13.9 Nauru .. 18.6 26.1 ...... New Zealand 45.0 56.7 87.4 123.6 4.90 39.30 68.30 72.5 86.7 98.0 98.1 Niue ...... Palau ...... Papua New Guinea 0.8 1.0 1.4 1.9 .. 0.88 1.78 .. 13.6 7.8 8.1 Samoa 2.6 4.6 6.2 .. .. 0.60 3.40 .. 96.4 93.3 96.6 Solomon Islands 1.5 1.8 2.1 .. 0.00 0.50 0.80 .. 1.8 4.1 4.3 Tokelau ...... Tonga 4.6 7.1 10.0 .. 0.10 2.40 3.00 ...... Tuvalu 1.3 5.5 7.0 .. .. 1.00 ...... Vanuatu 1.8 2.6 3.7 8.1 .. 2.10 3.50 .. 5.0 5.6 5.6

Sources: (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b.

INDICATORS 221 Technical Note 1

Measuring Corruption

Just as it is difficult to define corruption across different cultures and political environments, it is also very difficult to measure it. Some of the existing efforts to assess corruption are summarized below:

Corruption: Some Popular Measures

Indicator/ Source Survey respondents Available Countries Scope index for years Control of World Bank (http:// Business leaders, 1996, 1998, 212 countries The extent to which Corruption info.worldbank.org/ opinion of general 2000, 2002 and territories public power is Index (CCI) governance/wgi2007/ public and to 2006 in 2006 exercised for private resources.htm) assessments by gain, including both country analysts petty and grand forms of corruption, as well as ‘capture’ of the state by elites and private interests Corruption Transparency Business leaders 1995 to 180 countries CPI ask questions that Perceptions International (http:// and assessments by 2007 in 2007 relate to the misuse of Index (CPI) www.transparency.org/ country analysts public power for policy_research/ private benefit, for surveys_indices/cpi) example bribery of public officials, kickbacks in public procurement, embezzlement of public funds) or questions that probe the strength of anti-corruption policies, thereby encompassing both administrative and political corruption. ICRG The PRS (Political Assessments of staff 1984 to 140 countries Potential corruption Corruption Risk Service) group 2006 in 2006 risks to international Risk Scores (https:// business operations www.prsgroup.com) which includes actual and potential corruption in the form of excessive patronage, nepotism, job reservations, ‘favour- for-favours’, secret party funding, and suspiciously close ties between politics and business.

222 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Indicator/ Source Survey respondents Available Countries Scope index for years Corruption World Economic Executive opinion Yearly 131 economies To the extent that Index Forum survey (expert (1996– in 2007-08 corruption affects (www.weforum.org) opinions of over 2007-08) business (Bribes for 11,000 business import and export leaders and permits, bribes for entrepreneurs) getting connected with public utilities, bribes in connection with annual tax payments) Corporate Daniel Kaufmann Based on the 2004 104 countries Corporate Illegal Corruption/ (http:// analysis of the 2004 Corruption Index, Ethics www.worldbank.org/ survey of enter- Corporate legal Indices wbi/governance/pubs/ prises by the World Corruption Index gcr2004.html) Economic Forum Global Global Integrity Based on indepen- 2006 41 countries The index measures Integrity (http:// dent social scientists the existence and Index www.globalintegrity.org/ and investigative effectiveness of data/downloads.cfm) journalists in practices that prevent respective countries corruption Global Transparency Interna- Based on Gallup 2003 to 62 countries Measures both percep- Corruption tional (http://www. International’s Voice 2006 in 2006 tion of corruption and Barometer transparency.org/ of the People Survey experience of bribery (GCB) policy_research/ which covers through public opinion surveys_indices/gcb) opinion of 59,661 survey people Bribe Payers Transparency The 2006 BPI based 1999, 2002, Ranks 30 Captures the supply Index (BPI) International (http:// on the responses of 2006 leading side of corruption – www.transparency.org/ 11,232 business exe- international the propensity of firms policy_research/ cutives from compa- or regional from industrialized surveys_indices/bpi) nies in 125 countries exporting countries to bribe to two questions countries in when operating abroad about the business 2006 practices of foreign firms operating in their country, as part of the World Economic Forum’s Executive Opinion Survey 2006 Country The World Bank Expert rating Yearly. The International Transparency, accoun- Policy (http://go.worldbank. latest CPIA development tability and corruption Institutional org/74EDY81YU0) is 2006 association in public sector; Assessment (IDA) eligible primarily used to link (CPIA) countries; 77 IDA resource allocation countries in 2006 Country Asian Development Expert rating, using 2005 and ADB’s deve- Transparency, Performance Bank (http://www. same framework of 2006 loping member accountability and Assessment adb.org/Documents/ the World Bank’s countries with corruption ratings; (CPAs) Reports/Country- Country Policy and access to primarily used to link Performance- Institutional Asian Deve- allocation of resources Assessment-Exercise/ Assessment (CPIA) lopment Fund IN76-07.pdf) (25 countries in 2006) Source: Based on Hawken and Munck 2007. INDICATORS 223 Technical Note 2

Mapping Vulnerability to Corruption High marginal tax rate. A high marginal tax rate The most popular measures of corruption are based, creates incentives for unscrupulous behaviour, at least in part, on perception but in any country including bribing of tax officials by individuals and corruption can be a response to structural and objective business to avoid compliance. Indeed, low tax revenue factors. This report has attempted to select some (to GDP) in many developing countries is partly appropriate indicators.1 explained by tax evasion. ‘Government imposes taxes A list of 21 observable indicators was selected, to finance public services. But taxes must first be based on theoretical and empirical justification and collected, and high tax rates do not always lead to high data availability. The summary data for the 21 tax revenues. Between 1982 and 1999 the average observable indicators based on 17 Asia-Pacific profit tax rate worldwide fell from 46 per cent to 33 countries are presented below. per cent, while profit tax collection rose from 2.1 per What are the links between these indicators and cent to 2.4 per cent of national income.’2 A recent public corruption? opinion survey by Global Corruption Barometer 2006

Indicators of Vulnerability to Corruption Max Min Mean Std Dev Highest marginal tax rate, individual rate (%) 47 20 33.7 6.24 Highest marginal tax rate, corporate rate (%) 41 20 30.0 4.28 Trade restrictiveness index [Tariff and NTF manufacturing] 0.22 0.04 0.1 0.06 Start-up procedures to register a business (number) 13 7 9.5 1.84 Procedures to enforce a contract (number) 56 20 34.6 11.68 Procedures to register property (number) 9 2 5.5 2.12 Military expenditure (% of GDP) 4.0 0.6 1.9 0.83 Public investment (% of GDP) 16.2 2.4 7.4 3.81 Ratio of the top 20% to bottom 20% 12.6 4.3 7.6 2.67 Improved water source (% of population with access) 99 39 73.2 19.48 Physicians (per 1,000 people) 2.6 0.1 0.6 0.66 Combined primary, secondary and tertiary gross enrolment ratio (%) 82 38 62.9 12.21 Mining (% of GDP) 19.5 0.4 5.2 6.34 Literacy rate, adult total (% of people ages 15 and above) 97.8 41.1 75.0 20.05 Internet users (per 1,000 people) 396.8 2.2 64.3 91.75 Fixed line and mobile phone subscribers (per 1,000 people) 765.6 14.6 214.1 220.42 Military personnel expenditure per capita/per capita income 12.1 0.5 4.8 3.25 FDI (% of GDP) 5.8 0.1 1.8 1.64 ODA (% of GDP) 16.2 0.1 5.8 9.01 Share of informal sector (trade + const + other) % of GDP 52.4 22.6 41.4 8.14 Currency in circulation (% of money supply) 25.5 4.9 13.9 5.67

Source: Gampat, Sarangi, Wickramarathne and Senarathne 2007.

224 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT found tax institutions to be the third most corrupt for corruption. ‘Enforcing a simple contract in India public institution in Asia-Pacific countries.3 takes 56 procedures and almost 4 years. We do not have any lawsuits pending – we simply avoid the Trade policy. The literature suggests that restrictions courts. By the time the judge decides the case, the generate a significant amount of rents and rent-seeking defendant’s assets have disappeared.’6 activities (Bhagawati 1982), including evasion of tariffs ‘but also efforts at premium seeking when agents Level and nature of public expenditure. A high share of compete for premium-fetching licenses, revenue seeking public investment could also be an indicator of high when agents try to appropriate a share of the revenue vulnerability to corruption among public officials: there resulting from import restrictions, and tariff seeking is considerable evidence of massive corruption in public when agents lobby for the imposition of protectionist procurement (contracts), poor quality of materials and tariffs . . . rents accruing from the imposition of trade work and widespread petty corruption in the public regulations are both theoretically and quantitatively sector. significant. . . . It follows that the degree of openness to Because military expenditures are exogenously foreign trade should be an important factor in determined and are out of public scrutiny, this is an determining the level of rent-seeking activities, or the area that offers much opportunities for rent-seeking extent of corruption.’4 Thus, regulatory trade policies behaviour, including grand corruption stemming from that restrict exports and imports or, more generally, military deals. that restrict market access to the rest of the world, affect business and the allocation of resources. Inequality. The literature suggests that inequality and Restrictions imposed by the rest of the world often corruption are linked: ‘High inequality and strong and induce exporters to adopt corrupt practices to gain distinct differences in power define the structural and market access in other countries. cultural setting in which corruption takes place – grand corruption as well as corrupt exchanges at the lower Regulatory and transaction costs. Multiple procedures ranks of society.’7 Further, it seems that the link (numerous gatekeepers) and high transaction costs can between corruption and inequality is not direct: ‘There encourage corruption. Regulations create opportunities is a causal spiral from inequality to corruption (and for rent-seeking, which mean that bureaucrats have to back) and from both inequality and corruption to low be bribed ‘to do what they are supposed to do’ (to avoid levels of trust and from low levels of . . . trust to delays in processing of documents) and also ‘to do corruption.’8 To capture this phenomenon, inequality what they are not supposed to do’ (to bypass rules and is proxied by the ratio of the income share of the top regulations that have high transaction costs).5 In terms 20 per cent to that of the bottom 20 per cent. of starting up a business, World Bank (2006) notes, ‘[C]umbersome entry procedures mean more hassle for Access to services. The empirical literature suggests that entrepreneurs and more corruption, particularly in a there is pervasive corruption in basic public services, developing country. . . . Each procedure is a point of such education and health: ‘Cross-national studies on contact – an opportunity to extract a bribe.’ Similarly, the relationship between corruption and health and if the registration of property is a complex, time- education outcomes find that health and education consuming and difficult task, it is, in effect, an outcomes are worse in countries with high levels of incentive for assets to remain in the informal sector. corruption.’9 There is a significant relationship Such assets cannot be used as collateral; property between corruption and child mortality. People who do values are also lower if formal titles do not exist. not have access to safe drinking water source are likely Similarly, if contracts can easily be enforced this to indulge in corrupt transactions to secure this basic encourages entrepreneurs, since it narrows the space necessity. Similarly, scarcity of medical practitioners

INDICATORS 225 and of essential medicines creates fertile grounds for fledgling democracy because it creates patronage corruption. Corruption in the education sector is machines and lowers the pressure to develop a social widespread and may take many forms, including contract that comes with effective taxation. The procurement of basic materials and services, associated increase in rent-seeking opportunities may contracting, poor quality of services, absenteeism and help to explain the paradox Sachs and Warner (1995) ‘ghost teachers’, bribes for admission and even noted: a negative relationship between natural resource certificates, etc. Gupta et al. (2000), using univariate abundance and long-run economic growth. Using data regressions, show that corruption is correlated with for some 70 countries, their estimates imply that an school enrolment, repeater (failure) rates, dropout increase of one standard deviation in natural resource rates, continued schooling through grade five and intensity (on average, 16 per cent of GNP), leads to a illiteracy. The coefficient for dropout rate is 0.36; for reduction of about 1 per cent per year in economic illiteracy and the repeater rate, it is 0.24. growth. Leite and Weidmann (1999) obtained results Education is also critical for access to resources that are consistent with theoretical predictions: capital- and opportunities. Higher access to public institutions intensive natural resource industries tend to induce a increases awareness about public programmes creates higher level of corruption.11 pressure among the public officials for improving transparency and accountability and encourages public Access to knowledge and information. The information debates about policies. There is also some evidence that revolution (internet, telephone and mobile phones) has improvement in education increases pressure (voice) substantially improved access to information in most from below. A fine example of this is work of a grass Asia-Pacific countries, particularly during the last root, mass-based initiative organization in India, decade. The diffusion of technology increases public known as Mazdoor Kisan Shakti Sangathan (MKSS), awareness about the government programmes and which was instrumental in the creation of Right to helps to increase access to public services and reduces Information Act. MKSS ‘walked from village to village irregularities in distribution. asking simple questions: Did the people know the amount of funds that was coming to their village for Relative wages in the public sector. Much has been said development? How was the money that came from about the link between low public sector wages and different sources actually spent? Although these corruption. Mauro (1997) noted that ‘when civil questions were simple, the poor and impoverished of service pay is low, civil servants may be obliged to use India had never dared to ask.’10 In short, MKSS armed their positions to collect bribes as a way of making ends the poor with knowledge that led to greater access to meet, particularly when the expected cost of being information, which, hopefully, will have a negative caught is low.’ Incentive structures thus become critical impact on corruption. The other side of the coin is also in the fight against corruption. One such incentive is true: a high rate of illiteracy mean that people will not efficiency wages according to which firms sometimes be able to scrutinize public programmes, and therefore, pay above-equilibrium wages to boost worker produc- vulnerability to corruption is high. tivity.12 Van Reickenghem and Weder (1997) uses efficiency wages to argue that, under certain circum- Dependence on natural resources. Natural resources stances, higher wages in the public sector can deter exploration is an extremely high rent-seeking activity, corruption by increasing the potential loss resulting possibly because a significant share of the revenues from detection. Using data on some 25 countries, this accrues direct to the government. Collier (2007), study finds a significant impact of the public-private discussing what he calls the natural-resource wage differential on the level of corruption. Rauch and dependence trap, pointed out that a centralized source Evans (1999), in a study covering 35 developing of easy and unaccountable cash is detrimental to a countries, present quantitative evidence to demons-

226 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT trate that corruption is higher in countries where civil turing, trade and transport services and other services service recruitment and promotion procedures rely less that are not counted by the formal sector. Particularly on merit-based considerations. in less developed countries, and even in developed ones, a relatively large number of firms operate in an Importance of FDI/ODA. High foreign investments may informal fringe. While these firms have the capacity to make a country more vulnerable to corruption, place their products in the markers, they do not pay especially ‘grand corruption’ involving businesses and taxes and go largely unnoticed by the authorities. The politicians. In fact there is a high correlation between very existence of the informal sector suggests that entry corruption and FDI in countries with high levels of into the formal sector is regulated or excessively costly. centralized corruption and state capture. Eggar and ‘This immediately suggests that corruption or Winner (2005), studying 73 developed and less administrative inefficiency could be on the basis of such developed economies, observed that ‘corruption is a phenomenon. Anecdotal as well as documented stimulus for FDI, on the grounds that corruption can evidence suggests that corruption, the informal sector be beneficial in circumventing regulatory and and government behaviour play an important role in administrative restrictions.’ In other words, there is ‘a the determination of welfare and growth in a clear positive relationship between corruption and developing economy, if not an advanced one.’14 De Soto FDI’. Wu (2006), studying cross-border direct invest- (1989, 2000) notes that start-up costs and red tape ment, used a distance measure of corruption between are a major determinant of the size of the informal host and source countries and finds that ‘corruption sector. Bureaucrats, in an effort to maximize private distance’ deters cross-border investment. Multina- gains, often have an incentive to set costly artificial tional firms with the capacity to engage in bribery do barriers, which not only push firms underground but so whether or not there is transparency; those accus- also has a negative effect on growth. tomed to operating in transparent environments find it difficult to overcome the administrative complexities Extent of cash transactions. Many empirical studies have in corrupt environments. Others find a negative shown that cash in circulation, especially if it relationship between corruption and FDI (using the constitutes a high share of money supply, is an CPI as the measure of corruption) Lambsdorff (2005) indicator of a sizeable black economy, corruption and argues that grand corruption deters investors for less money laundering. Currency in circulation as a than petty corruption because the former is more percentage of money supply is thus a reasonable predictable than the latter. It is plausible that ‘tax indicator of vulnerability to corruption. heavens’ and ‘special economic zones’, which are prevalent in Asia, create adequate space for corruption Notes because they invite investors with a series of 1. Gampat, Sarangi, Wickramarathne and Senarathne 2007. concessions. Nevertheless, the jury is still out on link 2. World Bank 2006. between corruption and FDI. ODA is also prone to 3. Tran 2007. 4. Leite and Weidmann 1999. corruption, as the literature on the link between ODA 5. Bardhan 2006. and growth suggests. If aid is given to corrupt regimes, 6. World Bank 2006b. then it can – and does – lead to corruption. ‘Too often, 7. Karstedt n.d. 8. Uslaner 2006. aid money is diverted for personal use. But some of it 9. Azfar and Azfar 2007. also ends up funding subversive activities – including 10. Kumar 2007. unjust wars – in sub-Saharan Africa.’13 11. Leite and Weidmann (1999) use the ICRG index as a measure of corruption. 12. Mookherjee and Png 1995; Basu et al. 1992. Informal sector. The ‘informal sector’, for the purposes 13. Okoye 2007. of this discussion, encompasses small-scale manufac- 14. Antunes 2007.

INDICATORS 227 Definitions of Technical Terms

Accession The act whereby a state accepts practices can institutionalize hegemonic elites the offer or the opportunity to become party and political corruption, often reaching the to a treaty already negotiated and signed by highest ranks of state power). other states. It has the same legal effect as ratification. Accession usually occurs after Collusion A usually secretive act of the treaty has entered into force. cooperation or collaboration among two or more parties to mislead or defraud others (of Anti-corruption agencies Separate, per- their rights). manent agencies with the primary function of providing centralized leadership in core Counterfeit drugs Medicines, which have areas of anti-corruption activity, including been deliberately and fraudulently mislabelled policy analysis and technical assistance in with respect to identity and or source. prevention, public outreach and information, Counterfeiting can apply to both branded and monitoring, investigation, and prosecution. generic products and counterfeit products may include products with the correct Bribery The act of offering someone ingredients or with the wrong ingredients, money, goods or services in order to persuade without active ingredients, with insuffi- him or her to perform an action, often illegal, cient active ingredients or with fake in the interests of the person offering the packaging. bribe. Cronyism Favouritism shown in treatment Civil service Refers to the civilian of friends and associates, without regard to employees of a government in the various their objective qualifications; could be treated ministries and includes teachers and as a form of corruption. policemen but not the military, judiciary or those employed in statutory boards or public Cultural determinism Refers to a convic- enterprises. tion that culture determines and dominates our behavioural and emotional approaches to Clientelism An informal form of social issues of society and existence. organization characterized by ‘patron-client’ relationships between people of different Cultural pluralism A term used when social and economic status: a ‘patron’ small groups within a larger society maintain (relatively powerful and wealthy) and his/her their unique cultural identities. In a pluralist ‘clients’ (relatively less powerful and culture, unique groups not only coexist side wealthy). The relationship includes a mutual by side, but also consider qualities of other but unequal exchange of favours, which can groups as traits worth incorporating into be corrupt. (Patrimonial and clientelist their own culture.

228 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Cultural relativism The principle that an Free-riders In the context of this report: individual human’s beliefs and activities individuals, concluding that reduced corrup- should be interpreted in terms of his or her tion will benefit nearly everyone, leave the own culture. hard work and risks of reform to others, knowing they stand to benefit from any Dry departments Government offices that successes whether they have participated or do traditional administrative work and have not. little contact with the public. Hence dry departments have reduced opportunities Gift economy An ‘economic system’ in for corruption compared with ‘wet depart- which goods and services are given without ments’. any explicit agreement for immediate or future quid pro quo. Typically, a ‘gift e-Governance Refers to government economy’ occurs in a culture or subculture agencies’ use of information technology (such that emphasizes social or intangible rewards as internet and mobile computing) that have for generosity and gratitude. In some cases, the anticipated ability to transform and simultaneous or recurring giving serves to improve relations with citizens, businesses circulate and redistribute valuables within a and other arms of government, as well as community. This can be considered a form of reducing corruption. reciprocal altruism. Sometimes, there is an implicit expectation of the return of compara- Embezzlement The misappropriation of ble goods or services, political support, or the property or money by a person in a formal gift being later passed on to a third party. position of trust or responsibility over those assets. Could also be a form of corruption, Ghost institutions Institutions that show depending on the definition adopted. up on account books but do not actually exist anywhere. Examples include ‘ghost schools’ Extortion Unlawful demand or receipt of that process vouchers without providing money or favour through the use of force or education; a form of corruption. intimidation. Ghost workers Staff that show up on Extradition Legal surrender by one account books but do not actually exist in country to another of an individual accused reality. They are fictitious workers invented or convicted of an offence within the to siphon off resources by corrupt persons. jurisdiction of the other country. Graft (Verb) To obtain money dishonestly Favouritism Abuse of power to favour by exploiting one’s position of power or friends and relatives over others. It can be a authority. (Noun) The rewards of corruption: form of corruption, for example when a the loot, booty, payoffs, or spoils. public officer gives priority to his/her family members. Grand corruption Corruption involving substantial amounts of money and usually Fraud An economic crime involving mis- high-level officials to secure commercial representation done to obtain unlawful gains. contracts or some other business advantage.

DEFINITIONS OF TECHNICAL TERMS 229 Grease money Facilitation payments, bestowed upon an individual based on the usually small amounts of money given to office/position held. officials to make things move more smoothly and speedily. Usually associated with petty Petty corruption Corruption involving corruption. smaller sums and typically involving more junior officials; also known as administrative Integrity system An integrity system is a corruption or retail corruption. It covers political and administrative arrangement that everyday corruption that takes place at the encourages integrity (adherence to a set of implementation end of policies, where public moral or ethical principles). A country’s officials interact with the public. Petty National Integrity System (NIS) comprises the corruption is bribery in connection with the whole of government and non-governmental implementation of existing laws, rules and institutions, laws and practices that can, if regulations. functioning properly, minimize levels of corruption and mismanagement. The concept Political will The demonstrated and of NIS has been developed and promoted by credible intent of political actors to attack Transparency International as a framework perceived causes or effects of corruption at a with which to analyse corruption in a given systemic level. national context, as well as the adequacy and effectiveness of national anti-corruption Principal-agent model Explains how efforts. corruption occurs when an agent betrays the power entrusted in him/her by a principal to Kickback An illegal secret payment made pursue his/her own interest by accepting or as a return for a favour or service rendered; a seeking a benefit from a service seeker, the form of corruption. client.

Lobbying An attempt to influence an out- Ratification Defines the international act come in favour of or against a specific cause, whereby a state indicates its consent to be typically directed at government and elected bound to a treaty if the parties intended to officials. show their consent by such an act.

Money laundering The process whereby Red tape Excessive formal rules and the origin of funds generated by illegal means procedures, which increases the potential for is concealed so that it appears to come from a corrupt interactions and impedes/retards legitimate source. Money laundering is often people’s access to public services. ‘Speed use to disguise the proceeds of corruption, money’ is often paid to bypass red tape and and aims at inserting them into economic speed up transactions. circulation. Relationship banking A long-term, inti- Nepotism Granting offices, contracts and mate and relatively open relationship estab- benefits to friends and relatives, regardless of lished between a corporation and its banks. merit. Banks often supply a range of tailor-made services rather than one-off services. In Perks Refer to entitlements or favours Japan, Relationship Banking is known as

230 ASIA-PACIFIC HUMAN DEVELOPMENT REPORT Kairetsu – a term also used in many other interests by offering private benefits to public East Asian countries during and following the officials, changing the rules of the game. It is economic crisis. a way of ‘legalizing’ corruption.

Rent seeking Rent seeking generally System of checks and balances A mecha- implies the extraction of uncompensated nism that allows each branch of a government value from others without making any to amend or veto acts of another branch so as contribution to productivity, such as by to prevent any other branch from exerting too gaining control of land and other pre- much power. existing natural resources, or by imposing burdensome regulations or other govern- Tax haven A country or independent ment decisions that may affect consumers region where there are no or nominal taxes or businesses. Rent seeking in the aggre- and there is lack of transparency and minimal gate may impose substantial losses on exchange of information. society. Wet departments Government offices that Right to information legislation Legis- deal with many people outside government lation that gives all citizens and organizations and are typically concerned with money, a legal right to demand and obtain informa- planning, banking, or public enterprises. tion from public bodies and those who are They are also usually generous with performing public functions, and an obliga- honoraria, allowances, service on committees tion on all public bodies to publish, on a and boards, and carry many opportunities for proactive or routine basis, key categories of foreign training ‘wet’ departments are more information. vulnerable to corruption than ‘dry’ departments because of their bigger budgets Speed money Bribes paid to quicken the and access to the public. delivery of services delayed by bureau- cratic holdup (red tape) and shortage of Whistle-blower protection Measures resources. (administrative or legislative) to protect people who alert the public or the autho- State capture Where the state is held rities about corrupt transactions they have captive to the actions of individuals, groups, witnessed or uncovered. Whistle-blower or firms who influence the formation of laws, protection shields these people from rules, and regulations to serve their private reprisals, from those they expose.

DEFINITIONS OF TECHNICAL TERMS 231 Statistical References

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