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Smarter Crowdsourcing for Anti-Corruption a Handbook of Innovative Legal, Technical, and Policy Proposals and a Guide to Their Implementation

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Smarter Crowdsourcing for Anti-Corruption a Handbook of Innovative Legal, Technical, and Policy Proposals and a Guide to Their Implementation SMARTER CROWDSOURCING ANTI-CORRUPTION Smarter Crowdsourcing for Anti-corruption A Handbook of Innovative Legal, Technical, and Policy Proposals and a Guide to their Implementation Beth Simone Noveck Kaitlin Koga Rafael Aceves Garcia Hannah Deleanu Dinorah Cantú-Pedraza APRIL 2018 anticorruption.smartercrowdsourcing.org SMARTER CROWDSOURCING anticorruption.smartercrowdsourcing.org ANTI-CORRUPTION Acknowledgments We acknowledge the contribution to the execution of this project to the following individuals from the Inter- American Development Bank (IDB): ‣ Nicolás Dassen, Senior Specialist, Modernization of the Public Sector (ICS/IFD) ‣ Arturo Muente, Senior Specialist, Modernization of the Public Sector (ICS/IFD) ‣ Mario Sanginés, Principal Specialist in Mexico, Modernization of the Public Sector (ICS/IFD) ‣ Darinka Vásquez Jordan, Consultant, Innovation in Citizen Services (ICS/IFD) ‣ Michelle Marshall, Consultant, Knowledge Management and Open Innovation (KNM/KNL) Copyright © 2018 Inter-American Development Bank (“IDB”). This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-ShareAlike license (CC-IGO 3.0 BY-NC-SA) (http:// creativecommons.org/licenses/by-nc-sa/3.0/igo/legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose in its original or in any derivative form, provided that the derivative work is licensed under the same terms as the original. The IDB is not liable for any errors or omissions contained in derivative works and does not guarantee that such derivative works will not infringe the rights of third parties. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB’s name for any purpose other than for attribution, and the use of IDB’s logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note that link provided above includes additional terms and conditions of the license. The opinions expressed in this work are those of the authors and do not necessarily reflect the views of the IDB, its Board of Directors, or the countries they represent. SMARTER CROWDSOURCING anticorruption.smartercrowdsourcing.org ANTI-CORRUPTION Contents FOREWORD ………………………………………………………….……….……….…….……….……….…. i ………… PREFACE ………………………………………………………….……….……….…….……….…….………… iii EXECUTIVE SUMMARY………………………………………………………………….…………………… iv ISSUE AREA 1: MEASURING CORRUPTION AND ITS COSTS …………………………………… 1 I. Project Background ……………………………………………………………………………………………………… 2 II. Problem Overview ……………………………………………………………………………………………………….. 3 III. Solutions …………………………………………………………………………………………………………………….. 5 ISSUE AREA 2: STRENGTHENING INTEGRITY IN THE JUDICIARY ..…………………………. 32 I. Project Background ………………………………………………………………………………………………………. 32 II. Problem Overview ………………………………………………………………………….……………………………. 33 III. Solutions ……………………………………………………………………………………………………………………… 35 ISSUE AREA 3: ENGAGING THE PUBLIC IN ANTI-CORRUPTION EFFORTS ………………. 50 I. Project Background ………………………………………………………………………………………………………. 50 II. Problem Overview ………………………………………………………………………….……………………………. 51 III. Solutions ……………………………………………………………………………………………………………………… 52 ISSUE AREA 4: WHISTLEBLOWING ..………………….………………………………………………….. 71 I. Project Background ………………………………………………………………………………………………………. 71 II. Problem Overview ………………………………………………………………………….……………………………. 72 III. Solutions ……………………………………………………………………………………………………………………… 72 ISSUE AREA 5: EFFECTIVE PROSECUTION ………………………………….………………………… 93 I. Project Background ………………………………………………………………………………………………………. 93 II. Problem Overview ………………………………………………………………………….……………………………. 93 III. Solutions ……………………………………………………………………………………………………………………… 94 ISSUE AREA 6: TRACKING AND ANALYZING MONEY FLOWS …………………………………. 108 I. Project Background ………………………………………………………………………………………………………. 108 II. Problem Overview ………………………………………………………………………….………………………….… 109 III. Solutions ……………………………………………………………………………………………………………………… 112 APPENDIX …………………………………………………………………………………………………………… 134 COMPREHENSIVE LIST OF SUPPORTERS AND PARTICIPANTS …………….………………… 144 SMARTER CROWDSOURCING anticorruption.smartercrowdsourcing.org ANTI-CORRUPTION FOREWORD The rise in cybercrime and the proliferation of so-called “fake news” on social media have soured many people on the digital revolution. However, the same novel technologies that enable these distressing trends can also help us combat corruption much more effectively. There are several encouraging examples in Latin America, a region recently swept by major corruption scandals, where digital tools are becoming a powerful means of rooting out fraud in government and foiling unscrupulous officials and their accomplices. CUTTING RED TAPE Complex bureaucratic procedures requiring a myriad of steps and approvals typically set the stage for corruption. Opportunities to demand or offer bribes tend to multiply when transactions between citizens and officials happen in person, as is still often the case in our region. Recognizing this problem, governments across Latin America and the Caribbean are aggressively cutting red tape by simplifying and digitizing their administrative processes. By automating services and putting them online, governments leave corrupt officials less room to make arbitrary decisions. Uruguay, for example, is close to its goal of enabling citizens to initiate 100% of their government transactions online. Panama is embarking on an ambitious program to put 450 key services online, and Argentina is also moving to become a paperless government. Cutting red tape in these and other countries has proven to be a good thing. Apart from limiting corruption, simplifying and streamlining bureaucracy can make economies more competitive and strengthen trust in public institutions – two goals that our region must pursue with a passion. Ultimately, these efforts seek to deliver better services to meet the ever-rising expectations of our digital citizens. LEVERAGING BIG DATA The digital revolution is generating massive amounts of data that can be leveraged by governments, businesses and civil society organizations to make better informed decisions, improve services, and become more transparent and accountable. By opening access to their data, governments are enabling citizens to track more closely how their taxes are spent. In Brazil, the Public Expenditure Observatory uses big data analytic tools to detect potential fraud in procurement. In 2015 it scrutinized more than 120,000 contracts, raising red flags in more than 7,500 cases involving $104 million in business. One of its filters, for example, identify when big contracts are split into smaller deals to avoid more competitive bidding processes. The IDB is supporting several open data projects in the region, ranging from an anti-corruption package in Mexico, to local initiatives in Argentina and training Costa Rican officials in big data analysis. Countries are also carrying out their own experiments, such as the Mexican government’s testing of smarter crowdsourcing based on a methodology developed by New York University’s GovLab. TRACKING HIGH-RISK AREAS Since antiquity, public sector investments have been particularly vulnerable to corruption. But online data visualization platforms can be strong bulwarks against venality. Colombia has created a platform called MapaRegalías where anyone can track how royalties paid by mining companies are spent on public works. The central government uses it to police compliance. Last ii SMARTER CROWDSOURCING anticorruption.smartercrowdsourcing.org ANTI-CORRUPTION year it suspended transfers to 125 municipalities for not reporting data adequately. Similar platforms are being developed for Paraguay, Costa Rica and Peru. While excessive controls can paralyze governments, the smart use of technological solutions can help make audits work more nimbly. Chile’s Integrated Audit Control System provides a simplified and risk- based auditing process. The portal Contraloría-Ciuadadano is an effective communication channel between auditors and citizens, allowing the public to participate in the process. Technology-based integrity solutions can also help fight money laundering. Secure digital identity systems can make it easier for banks to comply with “know-your-customer” regulations. Jamaica is introducing a national identity system that will facilitate such compliance. Beneficial ownership information not only ensures financial sector integrity, but also helps fight tax evasion and money laundering. TESTING TRUST TECHNOLOGIES New digital technologies are emerging and proliferating rapidly. One example is blockchain, which creates secure distributed ledgers guarded by many parties, protecting transactions from tampering. Blockchain is widely known as the technology behind bitcoin, a digital currency. But it is also being tested to register property transactions and to combat blood diamond trafficking. The IDB is currently working with the Argentine customs agency and MIT’s Media Lab on a project to use blockchain technology to identify and track cargo shipments crossing borders. None of the benefits of the digital revolution will amount to much unless our countries embrace change. Technology is not a magic wand we can wave to fix everything. It is part of the solution, but its adoption must go hand in hand with a broader effort to strengthen institutions and rebuild civic capital. We are optimistic on that score, too. Next year, Peru will
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